Exhibit 10(g)12

 

Amendment To

Service Agreement

 

The parties hereto do hereby stipulate and agree to that the SERVICE AGREEMENT
entered into by and between them under date of April 1, 1963, and as heretofore
amended on January 1, 1972, April 27, 1984, August 1, 1988, January 28, 1991,
January 1, 1992, January 1, 1996, January 1, 1998 and January 1, 1999 be and the
same hereby is further amended by substituting for Exhibit II and the Supplement
to Exhibit II to the SERVICE AGREEMENT, the attached revised Exhibit II and
revised Supplement to Exhibit II. This

Amendment is made and entered into as of January 1, 2000.

 

ENTERGY SERVICES, INC.

By /s/ Nathan E. Langston
Nathan E. Langston
Vice President and Chief Accounting Officer

ENTERGY NEW ORLEANS, INC.

By /s/ Daniel F. Packer
Daniel F. Packer
President and CEO

 

 

 

Exhibit II

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

 

1.    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.

2.    (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).     

(d) 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 

(ii) are to be directly charged to such Client Company or group of Client
Companies; and 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). 

(e) 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.

3. 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. 

4. (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. 

5. 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. 

6. 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. 

7. 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 C

ALLOCATION FORMULAE FOR

GROUPS OF CLIENT COMPANIES

Exhibit II, Supplement

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

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.

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.

EMPLOYEES

Based on the number of full and part 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.

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.

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.

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.

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 have both a transmission line
component as well as a substation or load component.

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 gas fired generation units.

TAX INCOME AND DEDUCTION RATIO

Based on the prior years' Federal Income Tax return, total Income and
Deductions.

Used for the allocation of costs associated with the preparation of consolidated
Federal income tax returns and research of Federal tax issues.

LEVEL OF ESI SERVICE

Based on ESI total billings to each System Company, excluding ESI corporate
overhead.

Used for the allocation of costs associated with support of ESI as a legal
entity.

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.

LABOR DOLLARS BILLED

Based on total labor dollars billed to each System Company.

Used primarily to allocate certain employee-related costs and the costs
associated with depreciation.

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.

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

ACCOUNTS PAYABLE TRANSACTIONS

Based on the number of accounts payable transactions processed annually for each
Entergy System Company.

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

INSURANCE PREMIUMS (NON-NUCLEAR)

Based on non-nuclear insurance premiums.

Used for the allocation of costs associated with risk management.

ASSET RECORDS

Based on the number of asset records at period end.

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

AVERAGE OUTSTANDING CAPITAL EXPENDITURE AUTHORIZATIONS

(CEA'S)

Based on a twelve-month average of outstanding CEA's.

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

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.

BANK ACCOUNTS AND QPC'S

Based on the number of bank accounts and quick payment centers (QPC's) at period
end.

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

COMPUTER USAGE COMPOSITE

Based on three components: Customers (52% weighting), General Ledger
Transactions (29% weighting) and Employees (19% weighting), with weighting based
on historical usage.

Used primarily for the allocation of costs associated with the mainframe
computer and related database administration.

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.

FIBER

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

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

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.

NUCLEAR SITES

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

Used to allocate miscellaneous nuclear-related services.

TWO-WAY RADIOS

Based on the number of two-way radios within each Legal Entity.

Used for the allocation of costs associated with

the support and maintenance provided by the Information Technology department
for the two way radio system.

NUMBER OF PC's

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

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

PAYCHECKS ISSUED

Based on the number of paychecks issued to each Legal Entity.

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

REMOTE ACCESS SERVICE (RAS) 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.

SQUARE FOOTAGE

Based on square footage occupied by all Legal Entities (SALL) and the regulated
companies (SREG).

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

TRANSITION TO COMPETITION

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

Used primarily for the allocation of costs associated with the management
support of the Entergy System's strategy for and transition to competition.

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.

CALL CENTERS

Based on the number of customer calls for each Legal Entity at period end.

Used for the allocation of costs associated with customer service support
centers.

SUPPLY CHAIN - Inventory Management T & D Transfers

Based on the number of transfer transactions for transmission and distribution
(T & D) for each Legal Entity at period end.

Used for the allocation of costs associated with management and operation of
inventories, excluding Fossil and Nuclear.

SUPPLY CHAIN - Investment Recovery Total Revenue

Based on the dollar amount of investment recovery revenue generated within each
Legal Entity at period end.

Used for the allocation of costs associated with the management and operations
of investment recovery.

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.