Exhibit 10(h)25

SERVICE AGREEMENT

 

THIS AGREEMENT, made and entered into by and between Entergy Services, Inc.
(hereinafter referred to as Services) a corporation organized under the laws of
the State of Delaware, and Entergy Texas, Inc. (hereinafter referred to as
Client Company) a corporation organized under the laws of the State of Texas
with its principal place of business at 350 Pine Street, Beaumont, Texas 77701.

WITNESSETH THAT:

WHEREAS, in 1963, the Securities and Exchange Commission entered an order under
the Public Utility Holding Company Act of 1935 authorizing the organization and
conduct of business of Services, a wholly-owned subsidiary of Entergy
Corporation (hereinafter referred to as Entergy or the Entergy System); and

WHEREAS, Services is organized, staffed and equipped to render services as
herein provided to Entergy and its associated companies (hereinafter referred to
as Client Companies), with whom Services is entering into agreements in the form
hereof; and

WHEREAS, economies and increased efficiencies will result from the performance
by Services of certain services for the Client Companies; and

WHEREAS, Services is willing to render such services at cost, determined in
accordance with applicable rules and regulations of the Federal Energy
Regulatory Commission (hereinafter referred to as the Commission) under the
Federal Power Act, as amended by the Public Utility Holding Company Act of 2005
(hereinafter referred to as the Act) except that there will be no charge for the
use of the initial equity capital of Services amounting to $20,000;

NOW, THEREFORE, in consideration of the premises and of the mutual agreements
herein, the parties hereto agree as follows:

I. AGREEMENT TO FURNISH SERVICES

> Services agrees to furnish to Client Company, upon the terms and conditions
> hereinafter set forth, such of the services described in Exhibit I hereto at
> such times, for such periods and in such manner as Client Company may from
> time to time require. (Reference herein to Exhibit I shall mean said Exhibit
> as it shall be in effect from time to time with amendments thereof or
> supplements thereto). Services will, as and to the extent required for Client
> Company, keep itself and its personnel available and competent to render such
> services to Client Company, to the extent it may be authorized so to do by
> Federal and State agencies having jurisdiction. Services will also provide for
> Client Company such special services not described in Exhibit I as Client
> Company may require and which Services concludes it is competent to perform.
> 
> In supplying the various services provided for under this agreement, Services
> may arrange for the services of such executives, accountants, financial
> Advisers, technical advisers, attorneys, engineers and other persons with the
> necessary qualifications and experience as are required for or pertinent to
> the rendition of such services.
> 
> Services, after consultation with Client Company, may arrange for the services
> of non-affiliated experts, consultants and attorneys in connection with the
> performance of any of the services supplied under this agreement.

II. AGREEMENT TO TAKE SERVICES

> Client Company agrees to take from Services such of the services described in
> Exhibit I as are required from time to time by the Client Company. Client
> Company further agrees to take from Services such other general or special
> services, whether or not described in Exhibit I and whether or not now
> contemplated, as Client Company may from time to time require and Services
> shall conclude it is competent to perform.

III. COMPENSATION AND ALLOCATION

> As compensation for services rendered (as provided in Section II above) to it
> by Services, Client Company hereby agrees to pay to Services the cost of such
> services. Bills will be rendered for the amount of such costs on or before the
> 15th day of the succeeding month and will be payable on or before the 25th day
> of such month. The methods for the determination and the allocation of the
> cost of services to be paid by Client Company are set forth in Exhibit II
> hereto.

IV. CLIENT COMPANIES

> Client Companies will consist of Entergy and its associated companies; all
> such companies will be served at cost as provided in Section III and Exhibit
> II.

V. TERM OF AGREEMENT - MODIFICATION

> This agreement shall become effective as of January 1, 2008, and shall
> continue until terminated as of the end of any calendar year by either party
> giving to the other at least 60 days written notice of its intention so to
> terminate.
> 
> This agreement shall be subject to the approval of any state commission or
> other regulatory body whose approval is, by the laws of said state, a legal
> prerequisite to the execution and delivery or the performance of this
> agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
as of the 1st day of January, 2008.

ENTERGY SERVICES, INC.

 

By: /s/ Gary J. Taylor
Name: Gary J. Taylor
Title: #9; President

 

ENTERGY TEXAS, INC.

 

By: /s/ Joseph F. Domino
Name: Joseph F. Domino
Title: President & Chief Executive Officer

 

 

Exhibit I

DESCRIPTION OF SERVICES WHICH WILL BE PROVIDED BY
ENTERGY SERVICES, INC.
UNDER THIS AND SIMILAR SERVICE AGREEMENTS

 

Consultation and advice on financial planning, sale of securities and temporary
cash investments, including assistance in connection with the preparation,
printing and filing of appropriate documents with regulatory authorities, and
provision of liaison with financial community;Consultation and advice on
budgeting and preparation of long-range forecasts; Consultation and advice on
employee benefit plans; Consultation and advice with respect to regulatory
matters, particularly those involving the Securities and Exchange Commission or
the Federal Energy Regulatory Commission, and provision of liaison and
assistance in processing matters with the staffs of such commissions;Planning
assistance and advice in the filed of nuclear activities including coordination
or research programs and other activities in such field;Liaison with special
counsel representing operating companies in proceedings involving the Entergy
System and with consultants retained to prepare testimony and other data for use
in such proceedings;Operation of a communications and public relations
department and placing of Entergy System national advertising;Tax services
relating to preparation and filing of returns for federal and state income taxes
and declaration of estimated income taxes; studies of adequacy of tax accruals;
and assistance in connection with audit of  returns by Internal Revenue Service
and State Tax Agencies;Insurance consulting and advisory services relating to
fire and allied lines of insurance, casualty and surety insurance, and employee
benefit insurance;General consultation on management, business problems and
strategic planning;Consultation on special accounting problems; Statistical
services, such as study of comparative operating results, and up-dating annually
System statistical data;Preparation of maps; General advisory engineering
services including system planning, operation, fuel supply and construction
management; Operation of a System Operations Center for the control of bulk
power supply and load dispatching within the System and with Interconnected
systems;Planning assistance and advice with respect to System sales of power
under the interconnection agreements among the operating companies and acting on
behalf of the operating companies in dealing with other electric utilities with
relation to the sale, purchase or exchange of bulk electric power and
energy;Operation of a data processing Computer Center to serve the Entergy
System; Consultation and advisory services with respect to rate studies, rate
design, cost studies, load research, weather analysis, economic studies,
forecasts of intra-system transactions, and computer rate analysis programs; and
Consultation, advice and services with respect to internal auditing.

 

Exhibit II

 

METHODS OF ALLOCATING COSTS AMONG CLIENT COMPANIES RECEIVING SERVICE UNDER THIS
AND SIMILAR SERVICE AGREEMENTS WITH ENTERGY SERVICES, INC. (SERVICES)

 

The costs of rendering service by Services will include all costs of doing
business including interest on debt but excluding a return for the use of
Services' initial equity capital amounting to $20,000. (a) Services will
maintain a separate record of the expenses of each department. The expenses of
each department will include:
 i.   those expenses that are directly attributable to such department,
 ii.  an appropriate portion of those office and housekeeping expenses that are
      not directly attributable to a department but which are necessary to the
      operation of such department, and
 iii. an appropriate portion of those expenses of other Services' departments
      necessary to support the operation of the department.

 b. Expenses of the department will include salaries and wages of employees,
    including social security taxes, vacations, paid absences, sickness,
    employee disability expenses, and other employee welfare expenses, rent and
    utilities, desktops, telephones, materials and supplies, and all other
    expenses attributable to the department.
 c. Departmental expense will be categorized into one of three classes:

 i.   those expenses which are directly attributable to specific services
      rendered to a Client Company or group of Client Companies (Departmental
      Direct Costs),
 ii.  those expenses which are attributable to the overall operation of the
      department and not to a specific service provided to Client Companies
      (Departmental Indirect Costs) (these expenses include not only the
      salaries and wages of employees, but also other related employment costs
      described in Section 2 (b) above), and
 iii. those expenses which are attributable to the operation of other
      departments of Services as well as to a specific service provided to the
      Client Companies (Departmental Support Service Costs).

 b. The indirect expenses of the department will not include:

 i.  those incremental out-of-pocket expenses that are incurred for the direct
     benefit and convenience of a Client Company or a group of Client Companies
     and are to be directly charged to such Client Company or group of Client
     Companies; and
 ii. Services' overhead expenses that are attributable to maintaining the
     corporate existence of Services, franchise and other general taxes, and all
     other incidental overhead expenses including those auditing fees and
     accounting department expenses attributable to Services (Indirect Corporate
     Costs).

 b. Services will establish annual budgets for controlling the expenses of each
    service department and those expenses outlined above in Section 2 (d), which
    are not department specific.

 1. Employees in each department will maintain a record of the time they are
    employed in rendering service to each Client Company or group of Client
    Companies. The hourly rate for each employee will be determined each pay
    period.
 2. (a) The charge to a Client Company or a group of Client Companies for a
    particular service will be the sum of the figures derived by multiplying the
    hours reported by each employee in rendering such service by the hourly rate
    applicable to such employee and other direct allocated expenses.

 b. Departmental Indirect Costs as defined in 2(c) (ii) will be loaded onto
    project codes in proportion to the direct salaries and wages charged to all
    project codes.
 c. Departmental Support Service Costs as defined in 2(c)(iii) will be allocated
    to other internal Services departments and the Client Companies using
    consumption-based billing methods, with these costs then distributed by
    function. Any costs that remain at Services after this initial billing will
    be loaded onto project codes in proportion to the direct salaries and wages
    charged to all project codes.

 1. Those expenses of Services that are not included in the expenses of a
    department under Section 2 above will be charged to Client Companies
    receiving service as follows:

 a. Incremental out-of-pocket costs incurred for the direct benefit and
    convenience of a Client Company or a group of Client Companies will be
    charged directly to such company or group of companies.
 b. The Indirect Corporate Costs of Services referred to above in Section
    2(d)(ii) will be allocated among the Client Companies in the same proportion
    as the charges to the Client Companies, excluding Indirect Corporate Costs.
 c. If the method of allocation of Departmental Indirect Costs (Section 4(b)),
    Departmental Support Service Costs (Section 4(c)), or Indirect Corporate
    Costs (Section 5(b)), would result in an inequity because of a change in
    operations or organization of the Client Companies, then Services may adjust
    the basis to effect an equitable distribution. Any such change in allocation
    shall be made only after first giving the Commission written notice of such
    proposed change not less than 60 days prior to the proposed effectiveness of
    any such change.

 1. On the basis of the foregoing, monthly bills will be rendered to Client
    Company. Billing procedures and amounts will be open to audit by Client
    Company and by any regulatory authority having jurisdiction in respect of
    the Client Company.
 2. When services are rendered to a group of Client Companies, costs of such
    service shall be allocated equitably among the Companies based on the nature
    and scope of the service rendered according to the formulae outlined in
    Exhibit II, Supplement.

Exhibit II, Supplement

 

ESI
ALLOCATION FORMULAE FOR
GROUPS OF CLIENT COMPANIES

 

Note: Each allocation formula will be based on data relevant to participating
Client Companies to whom the services are provided.

263 - SECTION 263A TAX BENEFITS

Based on Section 263A tax benefits for each Legal Entity.

Used for the allocation of costs associated with tax administration, planning,
and support related to Section 263A tax benefits.

ALO - ASSET LOCATIONS

Based on the number of asset locations at period end.

Used for the allocation of costs associated with the fixed asset accounting
function.

APT - ACCOUNTS PAYABLE TRANSACTIONS

Based on a twelve-month number of accounts payable transactions processed.

Used for the allocation of costs associated with the support of the accounts
payable function.

ARI - ACCOUNTS RECEIVABLE INVOICES

Based on a twelve-month number of accounts receivable transactions processed.

Used for the allocation of costs associated with the support of the accounts
receivable function.

AST - TOTAL ASSETS

Based on total assets at period end.

Used primarily to allocate costs associated with the oversight and safeguarding
of corporate assets. This would include services provided by financial
management and certain finance functions, among others. Also used when the
services provided are driven by the relative size and complexity of the System
Companies and there is no functional relationship between the services and any
other available allocation formula.

BNK - BANK ACCOUNTS

Based on the number of bank accounts at period end.

Used for the allocation of costs associated with daily cash management
activities.

CAL - NUMBER OF CALLS - CUSTOMER SERVICE CENTERS

Based on a twenty-four month average of customer calls for each Legal Entity.

Used for the allocation of costs associated with the administration and support
of Entergy's Customer Service Centers.

CAP - SYSTEM CAPACITY (NON-NUCLEAR)

Based on the power level, in kilowatts, that could be achieved if all
non-nuclear generating units were operating at maximum capability
simultaneously.

Used primarily for the allocation of costs associated with the support of the
fossil operations of the System. This would include services provided by plant
support, environmental and purchasing.

CEA - CAPITAL EXPENDITURE AUTHORIZATIONS

Based on a twelve-month average of outstanding Capital Expenditure
Authorizations and Storm Job Orders.

Used for the allocation of costs associated with the capital project costing
accounting function.

CHK - PAYCHECKS

Based on the number of paychecks issued at each Legal Entity at period end.

Used for the allocation of costs associated with the processing of payroll.

CLM - OPEN WORKERS' COMPENSATION CLAIMS

Based on the number of open claims for each Legal Entity.

Used for the allocation of costs associated with managing workers' compensation
claims processes and budgets.

COL - COAL CONSUMPTION

Based on the quantity of tons of coal delivered for a twelve-month period to
each coal plant within the Entergy System.

Used for the allocation of costs associated with services in support of coal
purchased for coal generating units.

CUS - CUSTOMERS

Based on a twelve-month average of residential, commercial, industrial,
government, and municipal general business electric and gas customers.

Used primarily for the allocation of costs associated with the support of
customer based services. Would include customer service and support, marketing,
economic forecasts, environmental services, financial and regulatory analyses
and customer information systems.

DLM - DISTRIBUTION LINE MILES

Based on the number of miles of distribution lines of 34.5kv or less.

Used primarily for the allocation of costs associated with project design,
maintenance and installation of Entergy distribution lines.

EMP - EMPLOYEES

Based on the number of full-time employees at period end.

Used primarily for the allocation of costs associated with the support of
employee-based services. Would include administration of employee benefits
programs, employee communications, employee training, and various
facilities-based benefits and information technology desktop support.

FBR - FIBER

Based on capacity and use of the Entergy System's fiber optic network.

Used primarily for the allocation of fiber optic operations and maintenance
expenses.

GAS - GAS CONSUMPTION

Based on the volume of natural gas consumed annually by all gas fired generating
units within the Entergy System.

Used for the allocation of costs associated with services in support of gas
purchased for generation units.

GCE - SERVER AND MAINFRAME USAGE COMPOSITE

Based on the use of historical expenditures.

Used primarily for the allocation of costs associated with mainframe, unix
servers and related database administration.

GLT - GENERAL LEDGER TRANSACTIONS

Based on the number of general ledger transactions for the period.

Used primarily for the allocation of costs associated with general ledger
activities, including related information systems, and for general accounting
activities.

GWH - ENERGY SALES

Based on total kilowatt-hours of energy sold to consumers.

Used primarily for the allocation of costs associated with the financial
analyses of sales and related items.

HUR - STORM COSTS

Based on estimated gross storm recovery costs for Hurricanes Katrina & Rita.

Used primarily for the allocation of costs associated with the analysis,
reporting and filings related to losses in connection with Hurricanes Katrina &
Rita.

ITS - TOTAL IT SPEND

Based on the total dollars spent in the Information Technology plan.

Used for the allocation of costs associated with the administration and support
of Entergy's IT business planning.

LVS - LEVEL OF ESI SERVICE

Based on ESI total billings to each System company, excluding corporate
overhead. Used for the allocation of costs associated with support of ESI as a
legal entity.

The variation of this cost driver, Labor Dollars Billed, is based on ESI total
labor dollars billed to each System company. Used primarily to allocate the
costs associated with employee benefit plans, payroll taxes, department indirect
costs, and performance based compensation plans for ESI employees.

MAT - SUPPLY CHAIN - Inventory Management Fossil, Transmission & Distribution
Issues, Transfers & Returns

Based on the number of issues, transfer & return transactions for each Legal
Entity at period end.

Used for the allocation of costs associated with the management and operations
of investment recovery, including Fossil, but excluding Nuclear.

MGA - MANAGED ACCOUNTS

Based on the number of industrial and commercial managed accounts.

Used for the allocation of costs associated with the maintenance of Entergy's
industrial and commercial customer accounts.

NST - NUCLEAR SITES

Based on the number of nuclear sites managed and operated by each Entergy System
Company.

Used to allocate miscellaneous nuclear-related services.

NUT - NUCLEAR UNITS

Based on the number of nuclear units managed and operated by each Entergy System
Company.

Used primarily to allocate nuclear fuel-related services.

PC - PERSONAL COMPUTERS

Based on the number of PC's within each Legal Entity at period end.

Used for the allocation of costs associated with maintenance and support of PC's

PLL - PROPERTY AND LIABILITY PAID LOSSES

Based on a five-year annual average of the property and liability losses paid by
the system companies.

Used for the allocation of costs associated with the operation and maintenance
of the Risk Information System.

PRM - INSURANCE PREMIUMS (NON-NUCLEAR)

Based on non-nuclear insurance premiums.

Used for the allocation of costs associated with risk management.

RAD - RADIO USAGE

Based on usage of Entergy's 2-way radio system.

Used for the allocation of costs associated with the administration and support
of Entergy's 2-way radio system.

RAS - REMOTE ACCESS SERVICES ID's

Based on the number of RAS ID's within each Legal Entity at period end.

Used for the allocation of costs associated with providing Remote Access Service
to Entergy employees and contractors.

RCM - RECORDS MANAGEMENT

Based on the number of employees at each Legal Entity using records management
services.

Used to allocate costs associated with the management and supervision of
non-nuclear business unit records management processes.

RES - RESPONSIBILITY RATIO

Based on the ratio of the company's load at time of system peak load. The peak
load is the average of the twelve monthly highest clock-hour demands in
kilowatts of the interconnected system occurring each month coincident with the
system peak load.

Used primarily for the allocation of costs incurred in fossil plant support and
integrated planning.

SCC - SUPPLY CHAIN MATERIALS TRANSACTIONS

Based on the number of Supply Chain materials transactions for each Legal
Entity.

Used for the allocation of costs associated with the support of systems that
manage Supply Chain materials.

SCL - SUPPLY CHAIN - Labor Dollars

Based on the labor dollars for the Transformer, Meter, and Light Shops.

Used primarily for the allocation of costs associated with services provided by
employees in the supply chain equipment refurbishment and repair department.

SCS - SUPPLY CHAIN - Procurement Total Spending

Based on the dollar amount of procurement spending within each Legal Entity at
period end.

Used for the allocation of costs associated with procurement activities for the
Entergy System.

SQF - SQUARE FOOTAGE

Based on occupied square footage administrated by ESI Administrated Services
units.

Used primarily to allocate the costs associated with facilities supervision and
support.

STR - DISTRIBUTION SUBSTATIONS TRANSFORMERS

Based on the number of transformers at the Distribution Substations at period
end.

Used primarily for the allocation of costs associated with the maintenance,
administrative activities, and technical analysis of all Distribution
Substations.

SUB - SUBSTATIONS

Based on the number of high voltage substations weighted for Voltage (Voltage <
500kv = 1; Voltage >= 500kv = 2).

Used primarily for the allocation of related engineering and technical support
for transmission and distribution substation operations and maintenance as well
as for engineering and project management associated with substation
construction.

TEL - TELEPHONES

Based on the number of telephones within each Legal Entity at period end.

Used for the allocation of costs associated with maintenance and support of
telephones.

TLN - TRANSMISSION LINE MILES

Based on the number of miles of transmission lines, weighted for design voltage
(Voltage < 400kv = 1; Voltage >=400kv =2).

Used primarily for the allocation of costs associated with project design,
maintenance and installation of Entergy transmission lines.

TSL - COMPOSITE - TRANSMISSION LINES/SUBSTATIONS

Based on two components: Transmission Line Miles (30% weighting) and the Number
of High Voltage Substations (70% weighting).

Used primarily for the allocation of the costs associated with the support of
the transmission and distribution function that has both a transmission line
component as well as a substation or load component.

UPS - UNIT POWER SALES AGREEMENT

Based on fixed allocation percentages under Entergy's Unit Power Sales
Agreement.

Used primarily for the allocation of certain Tax Department services in
connection with Entergy's Unit Power Sales Agreement.

VEH - VEHICLES

Based on the number of vehicles owned by each Legal Entity.

Used for the allocation of costs associated with the maintenance of company
vehicles.

CCP - CAPITAL CONSTRUCTION PLAN

Based on the total dollars budgeted for each Legal Entity in the annual capital
construction plans developed by the various functions.

Used for the allocation of costs associated with capital construction overheads.