__________________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Q

|(Mark One) |                                                                                         
|---------- | ----------------------------------------------------------------------------------------
|X          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 
|           |                                                                                         
|           | For the Quarterly Period Ended June 30, 2008                                            
|           | OR                                                                                      
|           | TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |                                                                                         
|           | For the transition period from ____________ to ____________                             



|Commission 
File Number | Registrant, State of Incorporation, Address of
Principal Executive Offices, Telephone Number, and
IRS Employer Identification No.                                  |  | Commission 
File Number | Registrant, State of Incorporation, Address of
Principal Executive Offices, Telephone Number, and
IRS Employer Identification No.                      
|----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|1-11299                 | ENTERGY CORPORATION
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
72-1229752                                    |  | 1-31508                 | ENTERGY MISSISSIPPI, INC.
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
64-0205830             
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        
|1-10764                 | ENTERGY ARKANSAS, INC.
(an Arkansas corporation)
425 West Capitol Avenue 
Little Rock, Arkansas 72201
Telephone (501) 377-4000
71-0005900                          |  | 0-5807                  | ENTERGY NEW ORLEANS, INC.
(a Louisiana corporation)
1600 Perdido Street, Building 505
New Orleans, Louisiana 70112
Telephone (504) 670-3700
72-0273040 
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        
|333-148557              | ENTERGY GULF STATES LOUISIANA, L.L.C.
(a Louisiana limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (800) 368-3749
74-0662730 |  | 000-53134               | ENTERGY TEXAS, INC.
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
61-1435798                                    
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        
|1-32718                 | ENTERGY LOUISIANA, LLC
(a Texas limited liability company)
446 North Boulevard
Baton Rouge, Louisiana 70802
Telephone (225) 381-5868
75-3206126                    |  | 1-9067                  | SYSTEM ENERGY RESOURCES, INC.
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
72-0752777
|                        |                                                                                                                                                                    |  |                         |                                                                                                                                                        

__________________________________________________________________________________________



Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes þNoo



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.





|                                      | Large
accelerated 
filer |  | Accelerated filer |  | Non-accelerated filer |  | Smaller
reporting
company
|------------------------------------- | ------------------------ |  | ----------------- |  | --------------------- |  | -------------------------
|Entergy Corporation                   | Ö                        |  |                   |  |                       |  |                          
|Entergy Arkansas, Inc.                |                          |  |                   |  | Ö                     |  |                          
|Entergy Gulf States Louisiana, L.L.C. |                          |  |                   |  | Ö                     |  |                          
|Entergy Louisiana, LLC                |                          |  |                   |  | Ö                     |  |                          
|Entergy Mississippi, Inc.             |                          |  |                   |  | Ö                     |  |                          
|Entergy New Orleans, Inc.             |                          |  |                   |  | Ö                     |  |                          
|Entergy Texas, Inc.                   |                          |  |                   |  | Ö                     |  |                          
|System Energy Resources, Inc.         |                          |  |                   |  | Ö                     |  |                          



Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).  Yes





|Common Stock Outstanding |                   | Outstanding at July 31, 2008
|------------------------ | ----------------- | ----------------------------
|Entergy Corporation      | ($0.01 par value) | 191,574,567                 

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Entergy Annual Report on Form 10-K for the calendar year ended December 31, 2007, the Entergy Texas Form 10, and the Entergy and Entergy Texas Quarterly Reports on Form 10-Q for the quarter ended March 31, 2008, filed by the individual registrants with the SEC, and should be read in conjunction therewith.





ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2008





|                                         | Page Number                                                                             
|---------------------------------------- | ----------------------------------------------------------------------------------------
|                                         |                                                                                         
|Definitions                              | 1                                                                                       
|Entergy Corporation and Subsidiaries     |                                                                                         
|                                         | Management's Financial Discussion and Analysis                                          
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         | Consolidated Statements of Income                                                       
|                                         | Consolidated Statements of Cash Flows                                                   
|                                         | Consolidated Balance Sheets                                                             
|                                         | Consolidated Statements of Retained Earnings, Comprehensive Income, and
	Paid-In Capital
|                                         | Selected Operating Results                                                              
|Notes to Financial Statements            | 29                                                                                      
|Part I. Item 4.  Controls and Procedures | 51                                                                                      
|Entergy Arkansas, Inc.                   |                                                                                         
|                                         | Management's Financial Discussion and Analysis                                          
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         | Income Statements                                                                       
|                                         | Statements of Cash Flows                                                                
|                                         | Balance Sheets                                                                          
|                                         | Selected Operating Results                                                              
|Entergy Gulf States Louisiana, L.L.C.    |                                                                                         
|                                         | Management's Financial Discussion and Analysis                                          
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         | Income Statements                                                                       
|                                         | Statements of Cash Flows                                                                
|                                         | Balance Sheets                                                                          
|                                         | Statements of Members' Equity and Comprehensive Income                                  
|                                         | Selected Operating Results                                                              
|Entergy Louisiana, LLC                   |                                                                                         
|                                         | Management's Financial Discussion and Analysis                                          
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         |                                                                                         
|                                         | Income Statements                                                                       
|                                         | Statements of Cash Flows                                                                



ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2008





|                              | Page Number                                                     
|----------------------------- | ----------------------------------------------------------------
|                              |                                                                 
|                              | Balance Sheets                                                  
|                              | Statements of Members' Equity and Comprehensive Income          
|                              | Selected Operating Results                                      
|Entergy Mississippi, Inc.     |                                                                 
|                              | Management's Financial Discussion and Analysis                  
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              | Income Statements                                               
|                              | Statements of Cash Flows                                        
|                              | Balance Sheets                                                  
|                              | Selected Operating Results                                      
|Entergy New Orleans, Inc.     |                                                                 
|                              | Management's Financial Discussion and Analysis                  
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              | Income Statements                                               
|                              | Statements of Cash Flows                                        
|                              | Balance Sheets                                                  
|                              | Selected Operating Results                                      
|Entergy Texas, Inc.           |                                                                 
|                              | Management's Financial Discussion and Analysis                  
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              | Consolidated Statements of Operations                           
|                              | Consolidated Statements of Cash Flows                           
|                              | Consolidated Balance Sheets                                     
|                              | Consolidated Statements of Retained Earnings and Paid-in-Capital
|                              | Selected Operating Results                                      
|System Energy Resources, Inc. |                                                                 
|                              | Management's Financial Discussion and Analysis                  
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              |                                                                 
|                              | Income Statements                                               
|                              | Statements of Cash Flows                                        
|                              | Balance Sheets                                                  



ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2008





|                            | Page Number                                                           
|--------------------------- | ----------------------------------------------------------------------
|                            |                                                                       
|Part II.  Other Information |                                                                       
|                            | Item 1.    Legal Proceedings                                          
|                            | Item 1A.  Risk Factors                                                
|                            | Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
|                            | Item 4.    Submission of Matters to a Vote of Security Holders        
|                            | Item 5.    Other Information                                          
|                            | Item 6.    Exhibits                                                   
|Signature                   | 148                                                                   







FORWARD-LOOKING INFORMATION



In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance.  Such statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "believes," "intends," "plans," "predicts," "estimates," and similar expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K and the Entergy Texas Form 10, (b) Management's Financial Discussion and Analysis in the Form 10-K, the Entergy Texas Form 10, and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

- resolution of pending and future rate cases and negotiations, including various performance-based rate discussions and implementation of Texas restructuring legislation, and other regulatory proceedings, including those related to Entergy's System Agreement, Entergy's utility supply plan, recovery of storm costs, and recovery of fuel and purchased power costs
- changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, the operations of the independent coordinator of transmission that includes Entergy's utility service territory, and the application of more stringent transmission reliability requirements or market power criteria by the FERC
- changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those in the Non-Utility Nuclear business
- resolution of pending or future applications for license renewals or modifications of nuclear generating facilities
- the performance of Entergy's generating plants, and particularly the capacity factors at its nuclear generating facilities
- Entergy's ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities
- prices for power generated by Entergy's unregulated generating facilities, the ability to hedge, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Non-Utility Nuclear plants, and the prices and availability of fuel and power Entergy must purchase for its utility customers, and Entergy's ability to meet credit support requirements for fuel and power supply contracts
- volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities
- changes in law resulting from federal energy legislation
- changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, mercury, and other substances
- uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal
- variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of Hurricanes Katrina and Rita and recovery of costs associated with restoration
- Entergy's and its subsidiaries' ability to manage their capital projects and operation and maintenance costs
- Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms
- the economic climate, and particularly growth in Entergy's service territory
- the effects of Entergy's strategies to reduce tax payments



FORWARD-LOOKING INFORMATION (Concluded)

- changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt, execute its share repurchase program, and fund investments and acquisitions
- actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies' ratings criteria
- changes in inflation and interest rates
- the effect of litigation and government investigations
- advances in technology
- the potential effects of threatened or actual terrorism and war
- Entergy's ability to attract and retain talented management and directors
- changes in accounting standards and corporate governance
- and the following transactional factors (in addition to others described elsewhere in this and in subsequent securities filings): (i) risks inherent in the contemplated Non-Utility Nuclear spin-off, joint venture and related transactions (including the level of debt incurred by the spun-off company and the terms and costs related thereto); (ii) legislative and regulatory actions; and (iii) conditions of the capital markets during the periods covered by the forward-looking statements.  Entergy Corporation cannot provide any assurances that the spin-off or any of the proposed transactions related thereto will be completed, nor can it give assurances as to the terms on which such transactions will be consummated.  The transaction is subject to certain conditions precedent, including regulatory approvals and the final approval by the Board.







(Page left blank intentionally)







DEFINITIONS



Certain abbreviations or acronyms used in the text and notes are defined below:





|Abbreviation or Acronym       | Term                                                                                                                                                                                                                                                                                                                                                           
|----------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|AEEC                          | Arkansas Electric Energy Consumers                                                                                                                                                                                                                                                                                                                             
|AFUDC                         | Allowance for Funds Used During Construction                                                                                                                                                                                                                                                                                                                   
|ALJ                           | Administrative Law Judge                                                                                                                                                                                                                                                                                                                                       
|ANO 1 and 2                   | Units 1 and 2 of Arkansas Nuclear One Steam Electric Generating Station (nuclear), owned by Entergy Arkansas                                                                                                                                                                                                                                                   
|APSC                          | Arkansas Public Service Commission                                                                                                                                                                                                                                                                                                                             
|Board                         | Board of Directors of Entergy Corporation                                                                                                                                                                                                                                                                                                                      
|capacity factor               | Actual plant output divided by maximum potential plant output for the period                                                                                                                                                                                                                                                                                   
|City Council or Council       | Council of the City of New Orleans, Louisiana                                                                                                                                                                                                                                                                                                                  
|Entergy                       | Entergy Corporation and its direct and indirect subsidiaries                                                                                                                                                                                                                                                                                                   
|Entergy Corporation           | Entergy Corporation, a Delaware corporation                                                                                                                                                                                                                                                                                                                    
|Entergy Gulf States, Inc.     | Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas                                                                                                                                                                 
|Entergy Gulf States Louisiana | Entergy Gulf States Louisiana, L.L.C., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
|Entergy-Koch                  | Entergy-Koch, LP, a joint venture equally owned by subsidiaries of Entergy and Koch Industries, Inc.                                                                                                                                                                                                                                                           
|Entergy Texas                 | Entergy Texas, Inc., a company created in connection with the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.                                                                                                               
|Entergy Texas Form 10         | Registration Statement on Form 10 filed with the SEC by Entergy Texas, as amended July 15, 2008.                                                                                                                                                                                                                                                               
|EPA                           | United States Environmental Protection Agency                                                                                                                                                                                                                                                                                                                  
|ERCOT                         | Electric Reliability Council of Texas                                                                                                                                                                                                                                                                                                                          
|FASB                          | Financial Accounting Standards Board                                                                                                                                                                                                                                                                                                                           
|FERC                          | Federal Energy Regulatory Commission                                                                                                                                                                                                                                                                                                                           
|firm liquidated damages       | Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset); if a party fails to deliver or receive energy, the defaulting party must compensate the other party as specified in the contract                                                                         
|Form 10-K                     | Annual Report on Form 10-K for the calendar year ended December 31, 2007 filed by Entergy Corporation and its Registrant Subsidiaries (other than Entergy Texas) with the SEC                                                                                                                                                                                  
|Grand Gulf                    | Unit No. 1 of Grand Gulf Steam Electric Generating Station (nuclear), 90% owned or leased by System Energy                                                                                                                                                                                                                                                     
|GWh                           | Gigawatt-hour(s), which equals one million kilowatt-hours                                                                                                                                                                                                                                                                                                      
|Independence                  | Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power                                                                                                                                                                                                                                 
|IRS                           | Internal Revenue Service                                                                                                                                                                                                                                                                                                                                       
|ISO                           | Independent System Operator                                                                                                                                                                                                                                                                                                                                    
|kW                            | Kilowatt                                                                                                                                                                                                                                                                                                                                                       
|kWh                           | Kilowatt-hour(s)                                                                                                                                                                                                                                                                                                                                               
|LPSC                          | Louisiana Public Service Commission                                                                                                                                                                                                                                                                                                                            
|MMBtu                         | One million British Thermal Units                                                                                                                                                                                                                                                                                                                              

1



DEFINITIONS (Continued)





|                            |                                                                                                                                                                                                                                                                    
|--------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|MPSC                        | Mississippi Public Service Commission                                                                                                                                                                                                                              
|MW                          | Megawatt(s), which equals one thousand kilowatt(s)                                                                                                                                                                                                                 
|MWh                         | Megawatt-hour(s)                                                                                                                                                                                                                                                   
|Net debt ratio              | Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents                                                                                                                                                           
|Net MW in operation         | Installed capacity owned or operated                                                                                                                                                                                                                               
|Non-Utility Nuclear         | Entergy's business segment that owns and operates six nuclear power plants and sells electric power produced by those plants to wholesale customers                                                                                                                
|NRC                         | Nuclear Regulatory Commission                                                                                                                                                                                                                                      
|NYPA                        | New York Power Authority                                                                                                                                                                                                                                           
|PPA                         | Purchased power agreement                                                                                                                                                                                                                                          
|production cost             | Cost in $/MMBtu associated with delivering gas, excluding the cost of the gas                                                                                                                                                                                      
|PUCT                        | Public Utility Commission of Texas                                                                                                                                                                                                                                 
|PUHCA 1935                  | Public Utility Holding Company Act of 1935, as amended                                                                                                                                                                                                             
|PUHCA 2005                  | Public Utility Holding Company Act of 2005, which repealed PUHCA 1935, among other things                                                                                                                                                                          
|Registrant Subsidiaries     | Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.                                                                
|River Bend                  | River Bend Steam Electric Generating Station (nuclear), owned by Entergy Gulf States Louisiana                                                                                                                                                                     
|SEC                         | Securities and Exchange Commission                                                                                                                                                                                                                                 
|SFAS                        | Statement of Financial Accounting Standards as promulgated by the FASB                                                                                                                                                                                             
|System Agreement            | Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources                                                                                                  
|System Energy               | System Energy Resources, Inc.                                                                                                                                                                                                                                      
|TIEC                        | Texas Industrial Energy Consumers                                                                                                                                                                                                                                  
|TWh                         | Terawatt-hour(s), which equals one billion kilowatt-hours                                                                                                                                                                                                          
|unit-contingent             | Transaction under which power is supplied from a specific generation asset; if the asset is unavailable, the seller is not liable to the buyer for any damages                                                                                                     
|Unit Power Sales Agreement  | Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy's share of Grand Gulf
|Utility                     | Entergy's business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution                                                                                                                       
|Utility operating companies | Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas                                                                                                                                    
|Waterford 3                 | Unit No. 3 (nuclear) of the Waterford Steam Electric Generating Station, 100% owned or leased by Entergy Louisiana                                                                                                                                                 
|weather-adjusted usage      | Electric usage excluding the effects of deviations from normal weather                                                                                                                                                                                             

2



ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Entergy operates primarily through two business segments: Utility and Non-Utility Nuclear.

- Utility



In addition to its two primary, reportable, operating segments, Entergy also operates the non-nuclear wholesale assets business.  The non-nuclear wholesale assets business sells to wholesale customers the electric power produced by power plants that it owns while it focuses on improving performance and exploring sales or restructuring opportunities for its power plants.

Plan to Pursue Separation of Non-Utility Nuclear

In November 2007, the Board approved a plan to pursue a separation of the Non-Utility Nuclear business from Entergy through a tax-free spin-off of the Non-Utility Nuclear business to Entergy shareholders.  Enexus Energy Corporation, a wholly-owned subsidiary of Entergy and formerly referred to as SpinCo, will be a new, separate, and publicly-traded company.  In addition, under the plan, Enexus and Entergy are expected to enter into a nuclear services business joint venture, EquaGen L.L.C., with 50% ownership by Enexus and 50% ownership by Entergy.  The EquaGen board of members will be comprised of equal membership from both Entergy and Enexus.

Upon completion of the spin-off, Entergy Corporation's shareholders will own 100% of the common stock in both Enexus and Entergy.  Entergy expects that Enexus' business will be substantially comprised of Non-Utility Nuclear's assets, including its six nuclear power plants, and Non-Utility Nuclear's power marketing operation.  Entergy Corporation's remaining business will primarily be comprised of the Utility business.  EquaGen is expected to operate the nuclear assets owned by Enexus, and provide certain services to the Utility's nuclear operations.  EquaGen is also expected to offer nuclear services to third parties, including decommissioning, plant relicensing, plant operations, and ancillary services.

Entergy Nuclear Operations, Inc., the current NRC-licensed operator of the Non-Utility Nuclear plants, filed an application in July 2007 with the NRC seeking indirect transfer of control of the operating licenses for the six Non-Utility Nuclear power plants, and supplemented that application in December 2007 to incorporate the planned business separation.  Entergy Nuclear Operations, Inc., which is expected to be wholly-owned by EquaGen, will remain the operator of the plants after the separation.  Entergy Operations, Inc., the current NRC-licensed operator of Entergy's five Utility nuclear plants, will remain a wholly-owned subsidiary of Entergy and will continue to be the operator of the Utility nuclear plants.  In the December 2007 supplement to the NRC application, Entergy Nuclear Operations, Inc. provided additional information regarding the spin-off transaction, organizational structure, technical and financial qualifications, and general corporate information.  The NRC published a notice in the Federal Register establishing a period for the public to submit a request for hearing or petition to intervene in a hearing proceeding.  The NRC notice period expired on February 5, 2008 and two petitions to intervene in the hearing proceeding were filed before the deadline.  Each of the petitions opposes the NRC's approval of the license transfer on various grounds, including contentions that the approval request is not adequately supported regarding the basis for the proposed structure, the adequacy of decommissioning funding, and the adequacy of financial qualifications.  Entergy submitted answers to the petitions on March 31 and April 8, and the NRC or a presiding officer designated by the NRC will determine whether a hearing will be granted.  If a hearing is granted, the NRC is expected to issue a procedural schedule providing for limited discovery, written testimony and a legislative-type hearing.  Under the NRC's procedural rules for license transfer approvals, the NRC Staff will continue to review the application,

3



prepare a Safety Evaluation Report and issue an approval or denial without regard to whether a hearing request is pending or has been granted.  Thus, resolution of the hearing requests is not a prerequisite to obtaining the required NRC approval.  On July 28, 2008 the NRC approved Entergy Nuclear Operations, Inc.'s application.

Pursuant to Federal Power Act Section 203, on February 21, 2008, an application was filed with the FERC requesting approval for the indirect disposition and transfer of control of jurisdictional facilities of a public utility. In June 2008 the FERC issued an order authorizing the requested indirect disposition and transfer of control.

On January 28, 2008, Entergy Nuclear Vermont Yankee and Entergy Nuclear Operations, Inc. requested approval from the Vermont Public Service Board for the indirect transfer of control, consent to pledge assets, issue guarantees and assign material contracts, amendment to certificate of public good, and replacement of guaranty and substitution of a credit support agreement for Vermont Yankee.  Two Vermont utilities that buy power from Vermont Yankee, the regional planning commission for the area served by Vermont Yankee, a municipality in which the Vermont Yankee training center is located, the union that represents certain Vermont Yankee employees, and two unions that represent certain employees at the Pilgrim plant in Massachusetts petitioned to intervene.  Although the Pilgrim unions' petition to intervene was denied, the Pilgrim unions filed for reconsideration or, in the alternative, for participation as amicus curiae, and the Vermont Public Service Board has allowed the unions to participate as amicus curiae.  Discovery is underway in this proceeding, in which parties can ask questions about or request the production of documents related to the transaction.

In addition, the Vermont Department of Public Service, which is the public advocate in proceedings before the Public Service Board, has prefiled its initial and rebuttal testimony in the case in which the Vermont Department of Public Service takes the position that Entergy Nuclear Vermont Yankee and Entergy Nuclear Operations, Inc. have not demonstrated that the restructuring promotes the public good because its benefits do not outweigh the risks, raising concerns that the target rating for Enexus Energy's debt is below investment grade and that the company may not have the financial capability to withstand adverse financial developments, such as an extended outage.  The Vermont Department of Public Service's testimony also expresses concern about the EquaGen joint venture structure and Enexus' ability, under the operating agreement between Entergy Nuclear Vermont Yankee and Entergy Nuclear Operations, Inc., to ensure that Vermont Yankee is well-operated.  Two distribution utilities that buy Vermont Yankee power prefiled testimony that also expresses concerns about the structure but found that there was a small net benefit to the restructuring.  The Vermont Public Service Board conducted hearings on July 28-30, 2008, during which it considered the testimony prefiled by Entergy Nuclear Vermont Yankee, Entergy Nuclear Operations, Inc., the Vermont Department of Public Service, and the two distribution utilities.  Briefing will now follow the hearings, and the Vermont Public Service Board will then issue a decision.

On January 28, 2008, Entergy Nuclear FitzPatrick, Entergy Nuclear Indian Point 2, Entergy Nuclear Indian Point 3, Entergy Nuclear Operations, Inc., and corporate affiliate NewCo (now named Enexus) filed a petition with the New York Public Service Commission (NYPSC) requesting a declaratory ruling regarding corporate reorganization or in the alternative an order approving the transaction and an order approving debt financing.  Petitioners also requested confirmation that the corporate reorganization will not have an effect on Entergy Nuclear FitzPatrick's, Entergy Nuclear Indian Point 2's, Entergy Nuclear Indian Point 3's, and Entergy Nuclear Operations, Inc.'s status as lightly regulated entities in New York, given that they will continue to be competitive wholesale generators.  The New York State Attorney General's Office, Westchester County, and Riverkeeper, Inc. have filed objections to the business separation and to the transfer of the FitzPatrick and Indian Point Energy Center nuclear power plants, arguing that the debt associated with the spin-off could threaten access to adequate financial resources for those nuclear power plants, that Entergy could potentially be able to terminate revenue sharing agreements with the New York Power Authority (NYPA), the entity from which Entergy purchased the FitzPatrick and Indian Point 3 nuclear power plants, and because the New York State Attorney General's Office believes Entergy must file an environmental impact statement assessing the proposed corporate restructuring.  In addition to the New York State Attorney General's Office, several other parties have also requested to be added to the service list for this proceeding.

4



On May 23, 2008, the NYPSC issued its Order Establishing Further Procedures in this matter.  In the order, the NYPSC determined that due to the nuclear power plants' unique role in supporting the reliability of electric service in New York, and their large size and unique operational concerns, a more searching inquiry of the transaction will be conducted than if other types of lightly-regulated generation were at issue.  Accordingly, the NYPSC assigned an ALJ to preside over this proceeding and prescribed a sixty (60) day discovery period.  The order provided that after at least sixty (60) days, the ALJ would establish when the discovery period would conclude.  The NYPSC stated that the scope of discovery will be tightly bounded by the public interest inquiry relevant to this proceeding; namely, adequacy and security of support for the decommissioning of the New York nuclear facilities; financial sufficiency of the proposed capital structure in supporting continued operation of the facilities; and, arrangements for managing, operating and maintaining the facilities.  The NYPSC also stated that during the discovery period, the NYPSC Staff may conduct technical conferences to assist in the development of a full record in this proceeding.

On July 23, 2008, the ALJs issued a ruling concerning discovery and seeking comments on a proposed process and schedule.  In the ruling, the ALJs proposed a process for completing a limited, prescribed discovery process, to be followed three weeks later by the filing of initial comments addressing defined issues, with reply comments due two weeks after the initial comment deadline.  Following receipt of all comments, a ruling will be made on whether, and to what extent, an evidentiary hearing is required.  The ALJs' ruling acknowledged that the proposed process will not facilitate a decision by the NYPSC in September 2008.  The ALJs asked the parties to address three specific topic areas: (1) the financial impacts related to the specific issues previously outlined by the NYPSC; (2) other obligations associated with the arrangement for managing, operating and maintaining the facilities; and (3) the extent that NYPA revenues from value sharing payments under the value sharing agreement between Entergy and NYPA would decrease.  The ALJs have indicated that the potential financial effect of the termination of the value sharing payments on NYPA and New York electric consumers are factors the ALJs believe should be considered by the NYPSC in making its public interest determination.  For further discussion of the value sharing agreements, see Note 1 to the financial statements herein.  Entergy continues to seek regulatory approval from the NYPSC in a timely manner.

In connection with the separation, Enexus is currently expected to incur up to $4.5 billion of debt in the form of debt securities.  The debt will be incurred in the following transactions:

Enexus is expected to issue up to $3.5 billion of debt securities in partial consideration of Entergy's transfer to it of the non-utility nuclear business.

These debt securities are expected to be exchanged for up to $3.5 billion of debt securities that Entergy plans to issue prior to the separation.  As a result of the exchange (should the exchange occur), the holders of the debt securities that Entergy plans to issue prior to the separation will become holders of the up to $3.5 billion of Enexus debt securities.

Enexus is expected to incur the balance of the debt through one or more public or private offerings of notes or other debt securities.



Out of the proceeds Enexus receives from the public or private offerings, it expects to retain approximately $500 million, which it intends to use for working capital and other general corporate purposes.  All of the remaining proceeds are expected to be transferred to Entergy to settle intercompany debt.  Enexus will not receive any proceeds from either the issuance of up to $3.5 billion of its debt securities or the exchange of its debt securities for Entergy debt securities.  Entergy expects to use the proceeds that it receives from the issuance of its debt securities to reduce outstanding Entergy debt or repurchase Entergy shares.  The amount to be paid to Entergy, the amount and term of the debt Enexus will incur, and the type of debt and entity that will incur the debt have not been finally determined, but will be determined prior to the separation.  A number of factors could affect this final determination, and the amount of debt ultimately incurred could be different from the amount disclosed.  Additionally, Entergy expects Enexus to enter into one or more credit facilities or other financing arrangements intended to support Enexus' working capital needs, collateral obligations, and other corporate needs arising from hedging and normal course of business requirements.

5



Entergy is targeting the fourth quarter 2008 as the effective date for the spin-off and EquaGen transactions to be completed.  Entergy expects the transactions to qualify for tax-free treatment for U.S. federal income tax purposes for both Entergy and its shareholders, and Entergy submitted a private letter ruling request to the IRS in April 2008 regarding the tax-free treatment.  Final terms of the transactions and spin-off completion are subject to several conditions, including the final approval of the Board.

Results of Operations

Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007

Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the second quarter 2008 to the second quarter 2007 showing how much the line item increased or (decreased) in comparison to the prior period:

|                                                                                                                       |  | Utility        |  | Non-Utility
Nuclear |  | Parent & Other (1) |  | Entergy 
|---------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | ------------------- |  | ------------------ |  | --------
|                                                                                                                       |  | (In Thousands)
|                                                                                                                       |  |                |  |                     |  |                    |  |         
|2nd Quarter 2007 Consolidated Net Income                                                                               |  | $148,194       |  | $108,726            |  | $10,682            |  | $267,602
|Net revenue (operating revenue less fuel 
   
  expense, purchased power, and other 
   
  regulatory charges/credits) |  | 52,329         |  | 134,664             |  | 8,595              |  | 195,588 
|Other operation and maintenance expenses                                                                               |  | 17,895         |  | 25,546              |  | 27,198             |  | 70,639  
|Taxes other than income taxes                                                                                          |  | 5,980          |  | 4,156               |  | (542)              |  | 9,594   
|Depreciation and amortization                                                                                          |  | 2,547          |  | 6,612               |  | 165                |  | 9,324   
|Other income                                                                                                           |  | 4,895          |  | (24,551)            |  | (1,941)            |  | (21,597)
|Interest charges                                                                                                       |  | (929)          |  | 9,227               |  | (19,739)           |  | (11,441)
|Other expenses                                                                                                         |  | 6,250          |  | 9,709               |  | 3                  |  | 15,962  
|Income taxes                                                                                                           |  | 13,961         |  | 19,973              |  | 42,627             |  | 76,561  
|                                                                                                                       |  |                |  |                     |  |                    |  |         
|2nd Quarter 2008 Consolidated Net Income                                                                               |  | $159,714       |  | $143,616            |  | ($32,376)          |  | $270,954



|(1) | Parent & Other includes eliminations, which are primarily intersegment activity.
|--- | --------------------------------------------------------------------------------

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

6



Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the second quarter 2008 to the second quarter 2007.

|                 |  | Amount       
|---------------- |  | -------------
|                 |  | (In Millions)
|                 |  |              
|2007 net revenue |  | $1,129.5     
|Volume/weather   |  | 42.3         
|Other            |  | 10.0         
|2008 net revenue |  | $1,181.8     

The volume/weather variance is primarily due to increased electricity usage, including the effect of more favorable weather compared to the same period in 2007 and higher sales during the unbilled period.  Billed retail electricity usage increased a total of 594 GWh in the residential and commercial sectors, an increase of 4.4%.

Non-Utility Nuclear

Net revenue increased for Non-Utility Nuclear from $419 million for the second quarter 2007 to $553 million for the second quarter 2008 primarily due to higher pricing in its contracts to sell power and increased production resulting from fewer outage days and the acquisition of the Palisades plant on April 11, 2007.  In addition to refueling outages, second quarter 2007 was affected by a 28 day unplanned outage.  Following are key performance measures for Non-Utility Nuclear for the second quarter 2008 and 2007:

|                               |  | 2008   |  | 2007  
|------------------------------ |  | ------ |  | ------
|                               |  |        |  |       
|Net MW in operation at June 30 |  | 4,998  |  | 4,998 
|Average realized price per MWh |  | $58.22 |  | $51.28
|GWh billed                     |  | 10,145 |  | 8,896 
|Capacity factor                |  | 92%    |  | 82%   
|Refueling Outage Days:         |  |        |  |       
|Indian Point 2                 |  | 19     |  | -     
|Pilgrim                        |  | -      |  | 33    
|Vermont Yankee                 |  | -      |  | 24    

Other Operation and Maintenance Expenses

Utility

Other operation and maintenance expenses increased from $461 million for the second quarter 2007 to $479 million for the second quarter 2008 primarily due to:

7



These increases were partially offset by a reimbursement of $7 million of costs in connection with a litigation settlement.

Non-Utility Nuclear

Other operation and maintenance expenses increased from $175 million for the second quarter 2007 to $201 million for the second quarter 2008 primarily due to deferring costs from one refueling outage in 2008 compared to two refueling outages in second quarter 2007, in addition to the acquisition of the Palisades plant in April 2007.  Other operation and maintenance expenses associated with the Palisades plant were $31 million for the second quarter 2008 compared to $24 million for the second quarter 2007.

Parent & Other

Other operation and maintenance expenses increased for the parent company, Entergy Corporation, for the second quarter 2008 primarily due to outside services costs related to the planned spin-off of the Non-Utility Nuclear business.

Other Income

Other income decreased primarily due to a $24.4 million charge to interest income in the second quarter 2008 resulting from the recognition of the other than temporary impairment of certain securities held in Non-Utility Nuclear's decommissioning trust funds.

Income Taxes



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Following are income statement variances for Utility, Non-Utility Nuclear, Parent & Other, and Entergy comparing the six months ended June 30, 2008 to the six months ended June 30, 2007 showing how much the line item increased or (decreased) in comparison to the prior period:



|                                                                                                                           |  | Utility        |  | Non-Utility
Nuclear |  | Parent & Other (1) |  | Entergy 
|-------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | ------------------- |  | ------------------ |  | --------
|                                                                                                                           |  | (In Thousands)
|                                                                                                                           |  |                |  |                     |  |                    |  |         
|2007 Consolidated Net Income                                                                                               |  | $252,644       |  | $236,896            |  | ($9,743)           |  | $479,797
|Net revenue (operating revenue less fuel 
     
  expense, purchased power, and other 
     
  regulatory charges/credits) |  | 79,620         |  | 338,153             |  | 7,258              |  | 425,031 
|Other operation and maintenance expenses                                                                                   |  | 29,871         |  | 60,183              |  | 27,477             |  | 117,531 
|Taxes other than income taxes                                                                                              |  | (8,518)        |  | 9,243               |  | (5,243)            |  | (4,518) 
|Depreciation and amortization                                                                                              |  | 1,572          |  | 20,071              |  | 256                |  | 21,899  
|Other income                                                                                                               |  | (13,572)       |  | (21,687)            |  | (5,929)            |  | (41,188)
|Interest charges                                                                                                           |  | (6,403)        |  | 13,732              |  | (14,213)           |  | (6,884) 
|Other expenses                                                                                                             |  | 7,797          |  | 24,608              |  | 6                  |  | 32,411  
|Income taxes                                                                                                               |  | 17,512         |  | 60,211              |  | 45,775             |  | 123,498 
|                                                                                                                           |  |                |  |                     |  |                    |  |         
|2008 Consolidated Net Income                                                                                               |  | $276,861       |  | $365,314            |  | ($62,472)          |  | $579,703

8



|(1) | Parent & Other includes eliminations, which are primarily intersegment activity.
|--- | --------------------------------------------------------------------------------

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2008 to the six months ended June 30, 2007.

|                         |  | Amount       
|------------------------ |  | -------------
|                         |  | (In Millions)
|                         |  |              
|2007 net revenue         |  | $2,136.8     
|Volume/weather           |  | 43.4         
|Fuel recovery            |  | 18.3         
|Rider revenue            |  | 15.3         
|Base revenues            |  | 15.1         
|Purchased power capacity |  | (19.1)       
|Other                    |  | 6.6          
|2008 net revenue         |  | $2,216.4     

The volume/weather variance is primarily due to increased electricity usage, including the effect of more favorable weather compared to the same period in 2007.  Billed retail electricity usage increased a total of 936 GWh in the residential and commercial sectors, an increase of 3.4%.

The fuel recovery variance resulted primarily from a reserve for potential rate refunds in the first quarter 2007 in Texas as a result of a PUCT ruling related to the application of past PUCT rulings addressing transition to competition in Texas.



a storm damage rider that became effective in October 2007 at Entergy Mississippi; and

an Energy Efficiency rider that became effective in November 2007 at Entergy Arkansas.



The establishment of the storm damage rider and the Energy Efficiency rider results in an increase in rider revenue and a corresponding increase in other operation and maintenance expense with no impact on net income.

The base revenues variance is primarily due to the interim surcharge to collect $10 million in under-recovered incremental purchased capacity costs incurred through July 2007 in Texas.  The surcharge was collected over a two-month period beginning February 2008.  The incremental capacity recovery rider and PUCT approval is discussed in Note 2 to the financial statements in the Form 10-K.  The variance is also due to a formula rate plan increase effective July 2007 at Entergy Mississippi.

The purchased power capacity variance is due to the amortization of deferred capacity costs and is partially offset in base revenues due to the incremental purchased capacity costs recovered through the interim surcharge, as discussed above.

9



Non-Utility Nuclear

Net revenue increased for Non-Utility Nuclear from $840 million for the six months ended June 30, 2007 to $1,178 million for the six months ended June 30, 2008 primarily due to higher pricing in its contracts to sell power, additional production resulting from the acquisition of the Palisades plant in April 2007, and fewer outage days.  In addition to refueling outages, second quarter 2007 was affected by a 28 day unplanned outage.  Palisades contributed $154 million of net revenue for the six months ended June 30, 2008 compared to $70 million of net revenue for the six months ended June 30, 2007.  Included in the Palisades net revenue is $38 million and $15 million for the six months ended June 30, 2008 and 2007, respectively, of amortization of the Palisades purchased power agreement liability, which is non-cash revenue and is discussed in Note 15 to the financial statements in the Form 10-K.  Following are key performance measures for Non-Utility Nuclear for the six months ended June 30, 2008 and 2007:

|                               |  | 2008   |  | 2007  
|------------------------------ |  | ------ |  | ------
|                               |  |        |  |       
|Net MW in operation at June 30 |  | 4,998  |  | 4,998 
|Average realized price per MWh |  | $59.89 |  | $53.13
|GWh billed                     |  | 20,905 |  | 17,211
|Capacity factor                |  | 95%    |  | 86%   
|Refueling Outage Days:         |  |        |  |       
|Indian Point 2                 |  | 26     |  | -     
|Indian Point 3                 |  | -      |  | 24    
|Pilgrim                        |  | -      |  | 33    
|Vermont Yankee                 |  | -      |  | 24    

Other Operation and Maintenance Expenses

Utility

Other operation and maintenance expenses increased from $870 million for the six months ended June 30, 2007 to $899 million for the six months ended June 30, 2008 primarily due to:

The increase was partially offset by a reimbursement of $7 million of costs in connection with a litigation settlement.

Non-Utility Nuclear

Other operation and maintenance expenses increased from $322 million for the six months ended June 30, 2007 to $382 million for the six months ended June 30, 2008 primarily due to deferring costs from one refueling outage in 2008 compared to three refueling outages in 2007, in addition to the acquisition of the Palisades plant in April 2007.  Other operation and maintenance expenses associated with the Palisades plant were $60 million for the six months ended June 30, 2008 compared to $24 million for the six months ended June 30, 2007.

10



Parent & Other

Other operation and maintenance expenses increased for the parent company, Entergy Corporation, for the six months ended June 30, 2008 primarily due to outside services costs related to the planned spin-off of the Non-Utility Nuclear business, including approximately $23.7 million of such costs in the second quarter 2008.

Other Income

Other income decreased primarily due to approximately $27 million in charges to interest income in 2008 resulting from the recognition of the other than temporary impairment of certain securities held in Non-Utility Nuclear's decommissioning trust funds.  Other factors contributing to the decrease were a reduction in the allowance for equity funds used during construction in the Utility due to a revision in the first quarter 2007 related to removal costs and a reduction in carrying charges on storm costs as recovery of some of those costs has been completed.

Income Taxes



Liquidity and Capital Resources

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy's capital structure, capital expenditure plans and other uses of capital, and sources of capital.  Following are updates to that discussion.

Capital Structure

Entergy's capitalization is balanced between equity and debt, as shown in the following table.  The increase in the debt to capital percentage from 2007 to 2008 is primarily the result of additional borrowings under Entergy Corporation's revolving credit facilities, along with a decrease in shareholders' equity primarily due to an increase in accumulated other comprehensive loss and repurchases of common stock, offset by an increase in retained earnings.  The increase in accumulated other comprehensive loss is primarily due to derivative instrument fair value changes.  See Note 1 (Derivative Financial Instruments and Commodity Derivatives)

|                                     |  | June 30,
 2008 |  | December 31,
2007
|------------------------------------ |  | -------------- |  | -----------------
|                                     |  |                |  |                  
|Net debt to net capital              |  | 58.3%          |  | 54.7%            
|Effect of subtracting cash from debt |  | 2.4%           |  | 2.9%             
|Debt to capital                      |  | 60.7%          |  | 57.6%            

Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, common shareholders' equity, and preferred stock without sinking fund.  Net capital consists of capital less cash and cash equivalents.  Entergy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy's financial condition.

11



As discussed in the Form 10-K, Entergy Corporation has in place a $3.5 billion credit facility that expires in August 2012.  Entergy Corporation has the ability to issue letters of credit against the total borrowing capacity of the facility.  As of June 30, 2008, amounts outstanding under the credit facility are:

|Capacity      |  | Borrowings |  | Letters
of Credit |  | Capacity
Available
|------------- |  | ---------- |  | ----------------- |  | ------------------
|(In Millions)
|              |  |            |  |                   |  |                   
|$3,500        |  | $2,772     |  | $72               |  | $656              

Entergy Corporation's credit facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  If Entergy fails to meet this ratio, or if Entergy or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility's maturity date may occur.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2008 through 2010.  Following is an update to the discussion in the Form 10-K.

Little Gypsy Repowering Project

The preconstruction and operating air permits for the Little Gypsy repowering project were issued by the Louisiana Department of Environmental Quality (LDEQ) in November 2007 under then-effective federal and state air regulations, including the EPA's Clean Air Mercury Rule that had been issued in 2005 (CAMR 2005).  As discussed in more detail in part I, Item 1, "Environmental Regulation, Clean Air Act and Subsequent Amendments, Hazardous Air Pollutants" in the Form 10-K, in February 2008 the U.S. Court of Appeals for the D.C. Circuit struck down CAMR 2005.  The D.C. Circuit decision requires utilities that have not yet begun construction of the facility in question to undergo a case-by-case Maximum Achievable Control Technology (MACT) analysis for construction or reconstruction of emission units pursuant to the Clean Air Act before beginning construction.  The Little Gypsy project as currently configured is expected to meet MACT standards.  Little Gypsy received its construction permit before a formal MACT analysis was required, however, and Entergy Louisiana has sought a MACT determination from the LDEQ.  The filing was made in June 2008, and the LDEQ has certified that the filing is complete.  A decision on the MACT determination is expected by first quarter 2009.  Entergy Louisiana also is awaiting permit determinations from several additional agencies.  These permits are unrelated to CAMR 2005 and always have been part of the construction process.  Onsite construction of the project was scheduled to begin in July 2008, but obtaining the MACT determination will cause a delay in the start of construction, which Entergy Louisiana now expects to begin in mid-year 2009.  This delays the expected commercial operation date of the project to mid-2013.  The LPSC approved the temporary suspension of Phase II of the Little Gypsy proceedings because Entergy Louisiana must update its estimated project cost and schedule in order to support the request to recover cash earnings on its construction work in progress costs.  Entergy Louisiana plans to refile the Phase II case in September 2008, and a decision is expected in the first quarter 2009.  The LPSC Phase I order has been appealed to the state district court in Baton Rouge, Louisiana by a group led by the Sierra Club and represented by the Tulane Environmental Law Clinic.  A procedural schedule for the appeal has not been set.

The delayed construction of the Little Gypsy repowering project
is expected to increase the total project cost from approximately $1.55 billion to $1.76 billion, primarily due to price escalation on non-contracted equipment and material and increased carrying cost due to the extended construction period.

12



Waterford 3 Steam Generator Replacement Project

As discussed in more detail in the Form 10-K, Entergy Louisiana plans to replace the Waterford 3 steam generators, along with the reactor vessel closure head and control element drive mechanisms, in 2011.  In June 2008, Entergy Louisiana filed with the LPSC for approval of the project, including full cost recovery.  Entergy Louisiana estimates in the filing that it will spend approximately $511 million on this project.  The filing seeks relief in two phases.  Phase I seeks certification within 120 days that the public convenience and necessity would be served by undertaking this project.  Among other relief requested, Entergy Louisiana is also seeking approval for a procedure to synchronize permanent base rate recovery when the project is placed in service, either by a formula rate plan or base rate filing.  In Phase II, Entergy Louisiana will seek cash earnings on construction work in progress.  A status conference was held on July 31, 2008, and a procedural schedule for Phase I was adopted providing for hearings in October 2008 and LPSC consideration in December 2008.

White Bluff Environmental Project

The planned construction and other capital investments disclosure in the Form 10-K includes approximately $24 million for initial spending during the 2008-2010 period on installation of scrubbers and low NOx burners at Entergy Arkansas' White Bluff coal plant, which under current environmental regulations must be operational by September 2013.  The project remains in the planning stages and has not been fully designed, but the latest conceptual cost estimate has gone up significantly from previous estimates due to increases in equipment, commodity, and labor costs.  These estimates indicate that Entergy Arkansas' share of the project could cost approximately $630 million compared to the $375 million reported in the Form 10-K.  Entergy continues to review potential environmental spending needs and financing alternatives for any such spending, and future spending estimates could change based on the results of this continuing analysis.

Sources of Capital

The short-term borrowings of the Registrant Subsidiaries and certain other Entergy subsidiaries are limited to amounts authorized by the FERC.  The current FERC-authorized limits are effective through March 31, 2010, as established by a FERC order issued March 31, 2008 (except for Entergy Gulf States Louisiana and Entergy Texas, which are effective through November 8, 2009, as established by an earlier FERC order).  See Note 4 to the financial statements for further discussion of Entergy's short-term borrowing limits.

Hurricane Katrina and Hurricane Rita

In August and September 2005, Hurricanes Katrina and Rita caused catastrophic damage to large portions of the Utility's service territory in Louisiana, Mississippi, and Texas, including the effect of extensive flooding that resulted from levee breaks in and around the greater New Orleans area.  The storms and flooding resulted in widespread power outages, significant damage to electric distribution, transmission, and generation and gas infrastructure, and the loss of sales and customers due to mandatory evacuations and the destruction of homes and businesses.  Entergy has pursued a broad range of initiatives to recover storm restoration and business continuity costs, including obtaining reimbursement of certain costs covered by insurance and pursuing recovery through existing or new rate mechanisms regulated by the FERC and local regulatory bodies, including the issuance of securitization or bonds.  Following are updates regarding Entergy's cost recovery efforts.

Storm Cost Financings

In March 2008, Entergy Gulf States Louisiana, Entergy Louisiana, and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed at the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana and Entergy Louisiana storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Legislature (Act 55 financings).  The Act 55 financings are expected to produce additional customer benefits as compared to Act 64 traditional securitization.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow

13



charges and savings to customers via a Storm Cost Offset rider.  On April 3, 2008, the Louisiana State Bond Commission granted preliminary approval for the Act 55 financings.  On April 8, 2008, the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds pursuant to the Act 55 financings, approved requests for the Act 55 financings.  On April 10, 2008, Entergy Gulf States Louisiana and Entergy Louisiana and the LPSC Staff filed with the LPSC an uncontested stipulated settlement that includes Entergy Gulf States Louisiana and Entergy Louisiana's proposals under the Act 55 financings,
which includes a commitment to pass on to customers a minimum of $10 million and
$30 million of customer benefits, respectively.  On April 16, 2008, the LPSC
approved the settlement and issued two financing orders and one ratemaking order
intended to facilitate implementation of the Act 55 financings.  On May 6, 2008,
the State Bond Commission voted to approve the Act 55 financings.

On
July 29, 2008, the LPFA issued $679 million in bonds under the aforementioned
Act 55.  From the bond proceeds received by Entergy Louisiana from the
LURC, Entergy Louisiana invested $527 million in affiliate securities.  The LURC
deposited $152 million in a restricted escrow account as a storm damage reserve
for Entergy Louisiana.  As approved by the April 16, 2008 LPSC orders, Entergy
Louisiana withdrew $17.8 million from the restricted escrow account and also
invested this amount in affiliate securities.

Entergy Gulf States Louisiana expects that in September 2008 the LPFA will issue
$273 million in bonds under the aforementioned Act 55.  From the bond proceeds
expected to be received by Entergy Gulf States Louisiana from the LURC, Entergy
Gulf States Louisiana is expected to invest $186 million in affiliate
securities.  In addition, Entergy Gulf States Louisiana expects the LURC to
deposit $87 million to a restricted escrow account as a storm damage reserve for
Entergy Gulf States Louisiana.  As approved by the April 16, 2008 LPSC
orders, it is expected that Entergy Gulf States Louisiana will withdraw
$1.7 million from the restricted escrow account and will also invest this amount
in affiliate securities.

Insurance Claims

See Note 8 to the financial statements in the Form 10-K for a discussion of Entergy's conventional property insurance program and its Hurricane Katrina and Hurricane Rita claims.

In April 2008, Entergy received from its primary insurer $53.6 million of additional insurance proceeds on its Hurricane Katrina claim, and almost all of the April 2008 proceeds were allocated to Entergy New Orleans.

Entergy has settled its lawsuit against one of its excess insurers on the Hurricane Katrina claim, and in July 2008 received $71.5 million in proceeds on the claim.  The July 2008 proceeds were allocated as follows: $2.0 million to Entergy Arkansas, $3.7 million to Entergy Gulf States Louisiana, $12.4 million to Entergy Louisiana, $1.8 million to Entergy Mississippi, and $48.4 million to Entergy New Orleans, with the remainder allocated in smaller amounts to other Entergy subsidiaries.

14



Cash Flow Activity

As shown in Entergy's Consolidated Statements of Cash Flows, cash flows for the six months ended June 30, 2008 and 2007 were as follows:



|                                                     |                      | 2008          |         | 2007  
|---------------------------------------------------- | -------------------- | ------------- | ------- | ------
|                                                     |                      | (In Millions)
|                                                     |                      |               |         |       
|Cash and cash equivalents at beginning of period     |                      | $1,253        |         | $1,016
|                                                     |                      |               |         |       
|Effect of reconsolidating Entergy New Orleans        |                      | -             |         | 17    
|                                                     |                      |               |         |       
|Cash flow provided by (used in):                     |                      |               |         |       
|                                                     | Operating activities |               | 914     |       
|                                                     | Investing activities |               | (1,008) |       
|                                                     | Financing activities |               | (73)    |       
|Net increase (decrease) in cash and cash equivalents |                      | (167)         |         | 287   
|                                                     |                      |               |         |       
|Cash and cash equivalents at end of period           |                      | $1,086        |         | $1,320

Operating Activities

Entergy's cash flow provided by operating activities decreased by $50 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007.  Following are cash flows from operating activities by segment:

Investing Activities

Net cash used in investing activities decreased by $8 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007.  The following significant investing cash flow activity occurred in the six months ended June 30, 2008 and 2007:

15



Financing Activities

Financing activities used $73 million for the six months ended June 30, 2008 and provided $339 million for the six months ended June 30, 2007.  The following significant financing cash flow activity occurred in the six months ended June 30, 2008 and 2007:

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for discussions of rate regulation, federal regulation, and market and credit risk sensitive instruments.  Following are updates to the information provided in the Form 10-K.

State and Local Rate Regulation



Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings.  Following are updates to that discussion.

System Agreement Proceedings

Production Cost Equalization Proceeding Commenced by the LPSC

See the Form 10-K for a discussion of the June 2005 FERC decision in the System Agreement litigation that had been commenced by the LPSC, which was essentially affirmed in the FERC's decision in a December 2005 order on rehearing.  The LPSC, APSC, MPSC, and the AEEC appealed the FERC's decision to the United States Court of Appeals for the D.C. Circuit.  Entergy and the City of New Orleans intervened in the various appeals.  The D.C. Circuit issued its decision in April 2008.  The D.C. Circuit affirmed the FERC's decision in most respects, but remanded the case to the FERC for further proceedings and reconsideration of its conclusion that it was prohibited from ordering refunds and its determination to

16



implement the bandwidth remedy commencing with calendar year 2006 production costs (with the first payments/receipts commencing in June 2007), rather than commencing the remedy on June 1, 2005.  The D.C. Circuit concluded the FERC had failed so far in the proceeding to offer a reasoned explanation regarding these issues.  On July 17, 2008, the Utility operating companies filed with FERC a motion proposing additional procedures on the remanded issues.

Rough Production Cost Equalization Rates

2007 Rate Filing Based on Calendar Year 2006 Production Costs



As discussed in the Form 10-K, the Utility operating companies had also filed with the FERC during 2007 certain proposed modifications to the rough production cost equalization calculation.  The FERC rejected certain of the proposed modifications, accepted certain of the proposed modifications without further proceedings, and set two of the proposed modifications for hearing and settlement procedures.  With respect to the proceeding involving changes to the functionalization of costs to the production function, a hearing was held in March 2008 and the ALJ issued an Initial Decision in June 2008 finding the modifications proposed by the Utility operating companies to be just and reasonable.  Following briefing, the matter will be submitted to the FERC for decision.  In the second proceeding, a contested settlement supported by the Utility operating companies has been submitted to the Settlement ALJ.  In conjunction with the second proceeding, the LPSC has appealed to the Court of Appeals for the D.C. Circuit the FERC's determination that changes proposed by the Utility operating companies and accepted by the FERC can become effective for the next bandwidth calculation even though such bandwidth calculation may include production costs incurred prior to the date the change is proposed by the Utility operating companies.

The intervenor AmerenUE has argued that its current wholesale power contract with Entergy Arkansas, pursuant to which Entergy Arkansas sells power to AmerenUE, does not permit Entergy Arkansas to flow through to AmerenUE any portion of Entergy Arkansas' bandwidth payment.  According to AmerenUE, Entergy Arkansas has sought to collect from AmerenUE approximately $14.5 million of the 2007 Entergy Arkansas bandwidth payment.  The AmerenUE contract is scheduled to expire in August 2009.  In April 2008, AmerenUE filed a complaint with the FERC seeking refunds of this amount, plus interest, in the event the FERC ultimately determines that bandwidth payments are not properly recovered under the AmerenUE contract.

On March 31, 2008, the LPSC filed a complaint with the FERC seeking, among other things, three amendments to the rough production cost equalization bandwidth formula.  On April 22, 2008, the Utility operating companies filed an answer to the LPSC complaint urging the FERC to reject two of the proposed amendments and not opposing the third.  On July 2, 2008, the FERC issued an order that, among other things, ordered the Utility operating companies to implement the LPSC's proposed amendment that they did not oppose and setting two of the LPSC's proposed amendments for hearing and settlement proceedings.

17



2008 Rate Filing Based on Calendar Year 2007 Production Costs

In May 2008, Entergy filed with the FERC the rates for the second year to implement the FERC's orders in the System Agreement proceeding that are discussed in the Form 10-K.

|                              | Payments or
(Receipts)
|----------------------------- | ----------------------
|                              | (In Millions)         
|Entergy Arkansas              | $252                  
|Entergy Gulf States Louisiana | ($124)                
|Entergy Louisiana             | ($35)                 
|Entergy Mississippi           | ($20)                 
|Entergy New Orleans           | ($7)                  
|Entergy Texas                 | ($66)                 

Several parties intervened in the proceeding at the FERC, including the APSC, the LPSC, and AmerenUE, which have also filed protests.  Several other parties, including the MPSC and the City Council, have intervened in the proceeding without filing a protest.  On July 29, 2008, the FERC set the proceeding for hearing and settlement procedures.  A settlement judge should be appointed and a conference scheduled in August 2008.

Entergy Arkansas will pay $36 million per month for seven months in 2008, and began making the payments in June 2008.  As discussed in Note 2 to the financial statements, the APSC has approved a production cost allocation rider for recovery from customers of the retail portion of the costs allocated to Entergy Arkansas.

Independent Coordinator of Transmission

In the FERC's April 2006 order that approved Entergy's ICT proposal, the FERC stated that the weekly procurement process (WPP) must be operational within approximately 14 months of the FERC order, or June 24, 2007, or the FERC may reevaluate all approvals to proceed with the ICT.  The Utility operating companies have been working with the ICT and a software vendor to develop the software and systems necessary to implement the WPP.  The Utility operating companies also filed with the FERC in April 2007 a request to make certain corrections and limited modifications to the current WPP tariff provisions.  The Utility operating companies have filed status reports with the FERC notifying the FERC that, due to unexpected issues with the development of the WPP software and testing, the WPP is still not operational.  The Utility operating companies filed a revised tariff with the FERC on January 31, 2008 to address issues identified during the testing of the WPP.  The Utility operating companies requested the FERC to rule on the proposed amendments by April 30, 2008 and allow them to go into effect May 11, 2008, following which the WPP would be expected to become operational.  In May 2008, the FERC determined it would be premature to implement the WPP on May 11, 2008 as the WPP has not been shown to be just and reasonable.  Accordingly, the FERC conditionally accepted and suspended Entergy's proposed tariff amendments for five months from the requested effective date, to become effective October 11, 2008, or on an earlier date, subject to refund and subject to a further order on proposed tariff revisions directed to be filed in the order.  The FERC stated that it will consider allowing an effective date earlier than October 11, 2008, if the ICT agrees that the model is ready and Entergy files the required tariff revisions no later than 60 days before that date.  The FERC also denied the requests for a technical conference at this time and indicated it will reassess the need for such a technical conference after the WPP is functioning.

18



Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As discussed more fully in the Form 10-K, the sale of electricity from the power generation plants owned by Entergy's Non-Utility Nuclear business, unless otherwise contracted, is subject to the fluctuation of market power prices.  Following is an updated summary of the amount of the Non-Utility Nuclear business' output that is sold forward as of June 30, 2008 under physical or financial contracts (2008 represents the remaining two quarters of the year):

|                                               |                                                  | 2008 |     | 2009 |     | 2010 |     | 2011 |     | 2012
|---------------------------------------------- | ------------------------------------------------ | ---- | --- | ---- | --- | ---- | --- | ---- | --- | ----
|Non-Utility Nuclear:                           |                                                  |      |     |      |     |      |     |      |     |     
|Percent of planned energy output sold forward: |                                                  |      |     |      |     |      |     |      |     |     
|                                               | Unit-contingent                                  |      | 48% |      | 48% |      | 31% |      | 29% |     
|                                               | Unit-contingent with availability guarantees (1) |      | 40% |      | 35% |      | 28% |      | 14% |     
|                                               | Firm liquidated damages                          |      | 5%  |      | 0%  |      | 0%  |      | 0%  |     
|                                               | Total                                            |      | 93% |      | 83% |      | 59% |      | 43% |     
|Planned energy output (TWh)                    |                                                  | 21   |     | 41   |     | 40   |     | 41   |     | 41  
|Average contracted price per MWh (2)           |                                                  | $55  |     | $61  |     | $58  |     | $55  |     | $54 



|(1) | A sale of power on a unit-contingent basis coupled with a guarantee of availability provides for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold.  All of Entergy's outstanding guarantees of availability provide for dollar limits on Entergy's maximum liability under such guarantees.                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Vermont Yankee acquisition included a 10-year PPA under which the former owners will buy most of the power produced by the plant, which is through the expiration in 2012 of the current operating license for the plant.  The PPA includes an adjustment clause under which the prices specified in the PPA will be adjusted downward monthly, beginning in November 2005, if power market prices drop below PPA prices, which has not happened thus far and is not expected in the foreseeable future.

Entergy's Non-Utility Nuclear business' purchase of the FitzPatrick and Indian Point 3 plants from NYPA included value sharing agreements with NYPA.  In October 2007, NYPA and the subsidiaries that own the FitzPatrick and Indian Point 3 plants amended and restated the value sharing agreements to clarify and amend certain provisions of the original terms.  Under the amended value sharing agreements, Entergy's Non-Utility Nuclear business agreed to make annual payments to NYPA based on the generation output of the Indian Point 3 and FitzPatrick plants from January 2007 through December 2014.  Entergy's Non-Utility Nuclear business will pay NYPA $6.59 per MWh for power sold from Indian Point 3, up to an annual cap of $48 million, and $3.91 per MWh for power sold from FitzPatrick, up to an annual cap of $24 million.  The annual payment for each year is due by January 15 of the following year.  If Entergy or an Entergy affiliate ceases to own the plants, then, after January 2009, the annual payment obligation terminates for generation after the date that Entergy ownership ceases.  We believe that the contractual obligation to make value sharing payments to NYPA, other than for 2008 generation output, will terminate if the Non-Utility Nuclear spin-off transaction is completed.  On June 3, 2008, NYPA informed Entergy in writing that it disagrees with Entergy's interpretation of the termination provisions of the agreement.  In addition, in regulatory proceedings in New York, the Administrative Law Judges have indicated that the potential financial effect of the termination of the value sharing payments on NYPA and New York electric consumers are factors the Administrative Law Judges believe should be considered by the New York Public Service Commission in making its public interest determination.

Some of the agreements to sell the power produced by Entergy's Non-Utility Nuclear power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements.  The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Non-Utility Nuclear sells power.  The primary form of

19



collateral to satisfy these requirements is an Entergy Corporation guaranty. Cash and letters of credit are also acceptable forms of collateral. At June 30, 2008, based on power prices at that time, Entergy had in place as collateral $1,501 million of Entergy Corporation guarantees for wholesale transactions, including $64 million of guarantees that support letters of credit and $102 million of cash collateral.  The assurance requirement associated with Non-Utility Nuclear is estimated to increase by an amount of up to $302 million if gas prices increase $1 per MMBtu in both the short- and long-term markets.  In the event of a decrease in Entergy Corporation's credit rating to below investment grade, Entergy will be required to replace Entergy Corporation guarantees with cash or letters of credit under some of the agreements.

In addition to selling the power produced by its plants, the Non-Utility Nuclear business sells installed capacity to load-serving distribution companies in order for those companies to meet requirements placed on them by the ISO in their area.  Following is a summary of the amount of the Non-Utility Nuclear business' installed capacity that is currently sold forward, and the blended amount of the Non-Utility Nuclear business' planned generation output and installed capacity that is currently sold forward as of June 30, 2008 (2008 represents the remaining two quarters of the year):

|                                                  |                                       | 2008  |     | 2009  |     | 2010  |     | 2011  |     | 2012 
|------------------------------------------------- | ------------------------------------- | ----- | --- | ----- | --- | ----- | --- | ----- | --- | -----
|Non-Utility Nuclear:                              |                                       |       |     |       |     |       |     |       |     |      
|Percent of capacity sold forward:                 |                                       |       |     |       |     |       |     |       |     |      
|                                                  | Bundled capacity and energy contracts |       | 26% |       | 27% |       | 26% |       | 27% |      
|                                                  | Capacity contracts                    |       | 62% |       | 38% |       | 31% |       | 15% |      
|                                                  | Total                                 |       | 88% |       | 65% |       | 57% |       | 42% |      
|Planned net MW in operation                       |                                       | 4,998 |     | 4,998 |     | 4,998 |     | 4,998 |     | 4,998
|Average capacity contract price per kW per month  |                                       | $2.0  |     | $2.0  |     | $3.4  |     | $3.7  |     | $3.5 
|Blended Capacity and Energy (based on revenues)   |                                       |       |     |       |     |       |     |       |     |      
|% of planned generation and capacity sold forward |                                       | 87%   |     | 74%   |     | 47%   |     | 31%   |     | 15%  
|Average contract revenue per MWh                  |                                       | $57   |     | $62   |     | $61   |     | $57   |     | $54  

As of June 30, 2008, approximately 96% of Non-Utility Nuclear's counterparty exposure from energy and capacity contracts is with counterparties with public investment grade credit ratings.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy's accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

In March 2008 the FASB issued Statement of Financial Accounting Standards No. 161 "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which requires enhanced disclosures about an entity's derivative and hedging activities.  SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements.  SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

20



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands, Except Share Data)OPERATING REVENUESElectric

$2,524,222

$2,194,644

$4,570,449

$4,306,104Natural gas

53,985

42,909

143,380

127,861Competitive businesses

686,064

531,799

1,415,176

1,029,446TOTAL

3,264,271

2,769,352

6,129,005

5,463,411OPERATING EXPENSESOperating and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

726,836

595,602

1,267,337

1,383,014Purchased power

748,203

601,000

1,368,845

1,045,239Nuclear refueling outage expenses

55,840

44,614

107,098

87,589Other operation and maintenance

710,309

639,670

1,321,577

1,204,046Decommissioning

46,816

42,080

92,812

79,910Taxes other than income taxes

125,942

116,348

234,513

239,031Depreciation and amortization

247,977

238,653

492,962

471,063Other regulatory charges - net

34,239

13,345

69,519

36,885TOTAL

2,696,162

2,291,312

4,954,663

4,546,777OPERATING INCOME

568,109

478,040

1,174,342

916,634OTHER INCOMEAllowance for equity funds used during construction

9,085

7,459

18,371

24,717Interest and dividend income

23,399

53,948

77,680

111,058Equity in earnings (loss) of unconsolidated equity affiliates

(2,572)

477

(3,501)

2,101Miscellaneous - net

3,916

(6,459)

(7,640)

(11,778)TOTAL

33,828

55,425

84,910

126,098INTEREST AND OTHER CHARGESInterest on long-term debt

119,903

124,057

243,047

247,156Other interest - net

28,030

33,553

60,567

65,768Allowance for borrowed funds used during construction

(4,937)

(4,386)

(10,053)

(14,915)Preferred dividend requirements and other

4,975

6,188

9,973

12,409TOTAL

147,971

159,412

303,534

310,418INCOME BEFORE INCOME TAXES

453,966

374,053

955,718

732,314Income taxes

183,012

106,451

376,015

252,517CONSOLIDATED NET INCOME

$270,954

$267,602

$579,703

$479,797Earnings per average common share:Basic

$1.42

$1.36

$3.02

$2.41Diluted

$1.37

$1.32

$2.93

$2.34Dividends declared per common share

$0.75

$0.54

$1.50

$1.08Basic average number of common shares outstanding

191,326,928

196,979,140

191,983,266

198,754,673Diluted average number of common shares outstanding

197,864,459

203,423,646

198,101,863

204,785,090See Notes to Financial Statements.


21



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESConsolidated net income

$579,703

$479,797Adjustments to reconcile consolidated net income to net cash flowprovided by operating activities:Reserve for regulatory adjustments

(2,808)

8,038Other regulatory charges - net

69,519

36,885Depreciation, amortization, and decommissioning

585,774

550,973Deferred income taxes, investment tax credits, and non-current taxes accrued

365,337

507,929Equity in earnings of unconsolidated equity affiliates - net of dividends

3,501

(2,101)Changes in working capital:Receivables

(216,810)

(123,088)Fuel inventory

(12,257)

(10,533)Accounts payable

357,503

(137,102)Taxes accrued

-

(189,410)Interest accrued

(48,799)

(29,093)Deferred fuel

(555,444)

37,705Other working capital accounts

(218,001)

(169,775)Provision for estimated losses and reserves

10,680

56,241Changes in other regulatory assets

39,964

132,989Other

(44,293)

(185,323)Net cash flow provided by operating activities

913,569

964,132INVESTING ACTIVITIESConstruction/capital expenditures

(778,818)

(717,115)Allowance for equity funds used during construction

18,371

24,717Nuclear fuel purchases

(217,487)

(219,328)Proceeds from sale/leaseback of nuclear fuel

152,353

124,185Proceeds from sale of assets and businesses

30,725

13,063Payment for purchase of plant

(56,409)

(336,211)Insurance proceeds received for property damages

63,088

82,081Changes in transition charge account

9,171

-NYPA value sharing payment

(72,000)

-Decrease (increase) in other investments

(95,166)

73,969Proceeds from nuclear decommissioning trust fund sales

748,181

1,013,414Investment in nuclear decommissioning trust funds

(809,653)

(1,075,084)Net cash flow used in investing activities

(1,007,644)

(1,016,309)See Notes to Financial Statements.


22



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)FINANCING ACTIVITIESProceeds from the issuance of:Long-term debt

1,800,543

2,042,123Common stock and treasury stock

27,862

53,706Retirement of long-term debt

(1,383,393)

(699,906)Repurchase of common stock

(369,612)

(825,460)Redemption of preferred stock

-

(2,250)Changes in credit line borrowings - net

150,000

-Dividends paid:Common stock

(288,172)

(215,472)Preferred stock

(10,030)

(13,344)Net cash flow provided by (used in) financing activities

(72,802)

339,397Effect of exchange rates on cash and cash equivalents

(430)

(243)Net increase (decrease) in cash and cash equivalents

(167,307)

286,977Cash and cash equivalents at beginning of period

1,253,728

1,016,152Effect of the reconsolidation of Entergy New Orleans on cash and cash equivalents

-

17,093Cash and cash equivalents at end of period

$1,086,421

$1,320,222SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$340,077

$297,229Income taxes

$127,856

$228,750See Notes to Financial Statements.


23



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents:Cash

$168,624

$126,652Temporary cash investments - at cost,which approximates market

917,797

1,127,076Total cash and cash equivalents

1,086,421

1,253,728Securitization recovery trust account

10,102

19,273Accounts receivable:Customer

755,425

610,724Allowance for doubtful accounts

(20,357)

(25,789)Other

310,645

303,060Accrued unbilled revenues

347,163

288,076Total accounts receivable

1,392,876

1,176,071Deferred fuel costs

500,498

-Accumulated deferred income taxes

-

38,117Fuel inventory - at average cost

220,841

208,584Materials and supplies - at average cost

725,176

692,376Deferred nuclear refueling outage costs

194,736

172,936System agreement cost equalization

215,869

268,000Gas hedge contracts

122,971

-Prepayments and other

268,505

129,162TOTAL

4,737,995

3,958,247OTHER PROPERTY AND INVESTMENTSInvestment in affiliates - at equity

76,959

78,992Decommissioning trust funds

3,154,962

3,307,636Non-utility property - at cost (less accumulated depreciation)

224,536

220,204Other

176,500

82,563TOTAL

3,632,957

3,689,395PROPERTY, PLANT AND EQUIPMENTElectric

33,650,605

32,959,022Property under capital lease

738,492

740,095Natural gas

297,622

300,767Construction work in progress

1,026,306

1,054,833Nuclear fuel under capital lease

429,414

361,502Nuclear fuel

609,426

665,620TOTAL PROPERTY, PLANT AND EQUIPMENT

36,751,865

36,081,839Less - accumulated depreciation and amortization

15,457,574

15,107,569PROPERTY, PLANT AND EQUIPMENT - NET

21,294,291

20,974,270DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net

615,832

595,743Other regulatory assets

2,932,336

2,971,399Deferred fuel costs

168,122

168,122Goodwill

377,172

377,172Other

934,636

908,654TOTAL

5,028,098

5,021,090TOTAL ASSETS

$34,693,341

$33,643,002See Notes to Financial Statements.


24



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSLIABILITIES AND SHAREHOLDERS' EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESCurrently maturing long-term debt

$397,527

$996,757Notes payable

175,037

25,037Accounts payable

1,388,805

1,031,300Customer deposits

298,632

291,171Accumulated deferred income taxes

118,061

-Interest accrued

139,162

187,968Deferred fuel costs

-

54,947Obligations under capital leases

151,721

152,615Pension and other postretirement liabilities

35,765

34,795System agreement cost equalization

215,909

268,000Fair value of derivative instruments

363,957

60,025Other

167,654

154,139TOTAL

3,452,230

3,256,754NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued

6,306,393

6,379,679Accumulated deferred investment tax credits

334,552

343,539Obligations under capital leases

287,641

220,438Other regulatory liabilities

576,601

490,323Decommissioning and asset retirement cost liabilities

2,575,683

2,489,061Accumulated provisions

144,875

133,406Pension and other postretirement liabilities

1,299,857

1,361,326Long-term debt

10,755,654

9,728,135Fair value of derivative instruments

370,374

26,964Other

955,657

1,039,544TOTAL

23,607,287

22,212,415Commitments and ContingenciesPreferred stock without sinking fund

311,019

311,162SHAREHOLDERS' EQUITYCommon stock, $.01 par value, authorized 500,000,000shares; issued 248,174,087 shares in 2008 and in 2007

2,482

2,482Paid-in capital

4,860,481

4,850,769Retained earnings

7,027,630

6,735,965Accumulated other comprehensive income (loss)

(510,958)

8,320Less - treasury stock, at cost (57,633,453 shares in 2008 and55,053,847 shares in 2007)

4,056,830

3,734,865TOTAL

7,322,805

7,862,671TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$34,693,341

$33,643,002See Notes to Financial Statements.


25



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITALFor the Three Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)RETAINED EARNINGSRetained Earnings - Beginning of period



$6,900,345



$6,211,617Add: Consolidated net income



270,954

$270,954

267,602

$267,602Deduct:Dividends declared on common stock



143,669



106,532Retained Earnings - End of period



$7,027,630



$6,372,687ACCUMULATED OTHER COMPREHENSIVE LOSSBalance at beginning of period:Accumulated derivative instrument fair value changes



($191,306)



($64,111)Pension and other postretirement liabilities



(111,281)



(105,431)Net unrealized investment gains



89,061



108,547Foreign currency translation



6,377



6,435Total



(207,149)



(54,560)Net derivative instrument fair value changesarising during the period (net of tax expense (benefit) of ($160,474) and $1,851)



(285,280)

(285,280)

4,549

4,549Pension and other postretirement liabilities (net of tax expense of $348 and $1,092)



2,247

2,247

(339)

(339)Net unrealized investment gains (losses) (net of tax expense (benefit) of ($7,901) and $4,317)



(21,223)

(21,223)

8,350

8,350Foreign currency translation (net of tax expense of $241 and $124)



447

447

231

231Balance at end of period:Accumulated derivative instrument fair value changes



(476,586)



(59,562)Pension and other postretirement liabilities



(109,034)



(105,770)Net unrealized investment gains



67,838



116,897Foreign currency translation



6,824



6,666Total



($510,958)



($41,769)Comprehensive Income (Loss)





($32,855)



$280,393PAID-IN CAPITALPaid-in Capital - Beginning of period



$4,853,837



$4,831,803Add:Common stock issuances related to stock plans



6,644



9,256Paid-in Capital - End of period



$4,860,481



$4,841,059See Notes to Financial Statements.


26



ENTERGY CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITALFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)RETAINED EARNINGSRetained Earnings - Beginning of period



$6,735,965



$6,113,042Add:Consolidated net income



579,703

$579,703

479,797

$479,797Adjustment related to FIN 48 implementation



-



(4,600)Total



579,703



475,197Deduct:Dividends declared on common stock



288,038



215,552Retained Earnings - End of period



$7,027,630



$6,372,687ACCUMULATED OTHER COMPREHENSIVE LOSSBalance at beginning of period:Accumulated derivative instrument fair value changes



($12,540)



($105,578)Pension and other postretirement liabilities



(107,145)



(105,909)Net unrealized investment gains



121,611



104,551Foreign currency translation



6,394



6,424Total



8,320



(100,512)Net derivative instrument fair value changesarising during the period (net of tax expense (benefit) of ($259,574) and $30,176)



(464,046)

(464,046)

46,016

46,016Pension and other postretirement liabilities (net of tax expense of $4,325 and $1,366)



(1,889)

(1,889)

139

139Net unrealized investment gains (losses) (net of tax expense (benefit) of ($34,531) and $7,107)



(53,773)

(53,773)

12,346

12,346Foreign currency translation (net of tax expense of $232 and $130)



430

430

242

242Balance at end of period:Accumulated derivative instrument fair value changes



(476,586)



(59,562)Pension and other postretirement liabilities



(109,034)



(105,770)Net unrealized investment gains



67,838



116,897Foreign currency translation



6,824



6,666Total



($510,958)



($41,769)Comprehensive Income





$60,425



$538,540PAID-IN CAPITALPaid-in Capital - Beginning of period



$4,850,769



$4,827,265Add (Deduct):Common stock issuances related to stock plans



9,712



13,794Paid-in Capital - End of period



$4,860,481



$4,841,059See Notes to Financial Statements.


27



ENTERGY CORPORATION AND SUBSIDIARIESSELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars in Millions)Utility Electric Operating Revenues:Residential

$808

$691

$117

17Commercial

661

576

85

15Industrial

739

640

99

15Governmental

59

54

5

9Total retail

2,267

1,961

306

16Sales for resale

108

98

10

10Other

149

136

13

10Total

$2,524

$2,195

$329

15Utility Billed Electric EnergySales (GWh):Residential

7,372

6,985

387

6Commercial

6,688

6,481

207

3Industrial

9,730

9,814

(84)

(1)Governmental

586

562

24

4Total retail

24,376

23,842

534

2Sales for resale

1,440

1,428

12

1Total

25,816

25,270

546

2Non-Utility Nuclear:Operating Revenues

$610

$472

$138

29Billed Electric Energy Sales (GWh)

10,145

8,896

1,249

14Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars in Millions)Utility Electric Operating Revenues:Residential

$1,539

$1,435

$104

7Commercial

1,209

1,132

77

7Industrial

1,345

1,273

72

6Governmental

113

105

8

8Total retail

4,206

3,945

261

7Sales for resale

196

189

7

4Other

168

172

(4)

(2)Total

$4,570

$4,306

$264

6Utility Billed Electric EnergySales (GWh):Residential

15,384

14,777

607

4Commercial

12,926

12,597

329

3Industrial

19,107

19,137

(30)

-Governmental

1,155

1,111

44

4Total retail

48,572

47,622

950

2Sales for resale

2,729

3,066

(337)

(11)Total

51,301

50,688

613

1Non-Utility Nuclear:Operating Revenues

$1,290

$930

$360

39Billed Electric Energy Sales (GWh)

20,905

17,211

3,694

21


28



ENTERGY CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS 
(Unaudited)

NOTE 1.  COMMITMENTS AND CONTINGENCIES

Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory commissions, and governmental agencies in the ordinary course of business.  While management is unable to predict the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy's results of operations, cash flows, or financial condition.  Entergy discusses regulatory proceedings in Note 2 to the financial statements in the Form 10-K, the Entergy Texas Form 10, and herein and discusses tax proceedings in Note 3 to the financial statements in the Form 10-K and the Entergy Texas Form 10, and in Note 10 to the financial statements herein.

Nuclear Insurance

See Note 8 to the financial statements in the Form 10-K for information on nuclear liability and property insurance associated with Entergy's nuclear power plants.

Conventional Property Insurance

See Note 8 to the financial statements in the Form 10-K and Note 6 to the financial statements in the Entergy Texas Form 10 for information regarding Entergy's non-nuclear property insurance program.  In April 2008, Entergy received from its primary insurer $53.6 million of additional insurance proceeds on its Hurricane Katrina claim, and almost all of the April 2008 proceeds were allocated to Entergy New Orleans.

Entergy has settled its lawsuit against one of its excess insurers on the Hurricane Katrina claim, and in July 2008 received $71.5 million in proceeds on the claim.  The July 2008 proceeds were allocated as follows: $2.0 million to Entergy Arkansas, $3.7 million to Entergy Gulf States Louisiana, $12.4 million to Entergy Louisiana, $1.8 million to Entergy Mississippi, and $48.4 million to Entergy New Orleans, with the remainder allocated in smaller amounts to other Entergy subsidiaries.

NYPA Value Sharing Agreements

Entergy's Non-Utility Nuclear business' purchase of the FitzPatrick and Indian Point 3 plants from NYPA included value sharing agreements with NYPA.  In October 2007, NYPA and the subsidiaries that own the FitzPatrick and Indian Point 3 plants amended and restated the value sharing agreements to clarify and amend certain provisions of the original terms.  Under the amended value sharing agreements, Entergy's Non-Utility Nuclear business agreed to make annual payments to NYPA based on the generation output of the Indian Point 3 and FitzPatrick plants from January 2007 through December 2014.  Entergy's Non-Utility Nuclear business will pay NYPA $6.59 per MWh for power sold from Indian Point 3, up to an annual cap of $48 million, and $3.91 per MWh for power sold from FitzPatrick, up to an annual cap of $24 million.  The annual payment for each year is due by January 15 of the following year.  If Entergy or an Entergy affiliate ceases to own the plants, then, after January 2009, the annual payment obligation terminates for generation after the date that Entergy ownership ceases.  We believe that the contractual obligation to make value sharing payments to NYPA, other than for 2008 generation output, will terminate if the Non-Utility Nuclear spin-off transaction is completed.  On June 3, 2008, NYPA informed Entergy in writing that it disagrees with Entergy's interpretation of the termination provisions of the agreement.  In addition, in regulatory proceedings in New York, the Administrative Law Judges have indicated that the potential financial effect of the termination of the value sharing payments on NYPA and New York electric consumers are factors the Administrative Law Judges believe should be considered by the New York Public Service Commission in making its public interest determination.

29



Employment Litigation

The Registrant Subsidiaries and other Entergy subsidiaries are responding to various lawsuits in both state and federal courts and to other labor-related proceedings filed by current and former employees and third parties not selected for open positions.  These actions include, but are not limited to, allegations of wrongful employment actions; wage disputes and other claims under the Fair Labor Standards Act or its state counterparts; claims of race, gender and disability discrimination; disputes arising under collective bargaining agreements; unfair labor practice proceedings and other administrative proceedings before the National Labor Relations Board; claims of retaliation; and claims for or regarding benefits under various Entergy Corporation sponsored plans. Entergy and the Registrant Subsidiaries are responding to these suits and proceedings and deny liability to the claimants.

Asbestos and Hazardous Material Litigation  (Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)

See Note 8 to the financial statements in the Form 10-K for information regarding asbestos and hazardous material litigation involving Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans and see Note 6 to the financial statements in the Entergy Texas Form 10 for information regarding asbestos and hazardous material litigation involving Entergy Texas.

NOTE 2.  RATE AND REGULATORY MATTERS

Regulatory Assets

Other Regulatory Assets

See Note 2 to the financial statements in the Form 10-K and in the Entergy Texas Form 10 for information regarding regulatory assets in the Utility business reflected on the balance sheets of Entergy and the Registrant Subsidiaries.

Fuel and purchased power cost recovery

See Note 2 to the financial statements in the Form 10-K for information regarding fuel proceedings involving the Utility operating companies.  Following are updates to that information.

Entergy Arkansas

Production Cost Allocation Rider

In its June 2007 decision on Entergy Arkansas' August 2006 rate filing, the APSC approved a production cost allocation rider for recovery from customers of the retail portion of the costs allocated to Entergy Arkansas as a result of the System Agreement proceedings, but set a termination date of December 31, 2008 for the rider.  In December 2007, the APSC issued a subsequent order stating the production cost allocation rider will remain in effect, and any future termination of the rider will be subject to eighteen months advance notice by the APSC, which would occur following notice and hearing.  On March 18, 2008, the Arkansas attorney general and the AEEC filed a notice of appeal of the December 2007 APSC order.  The Arkansas attorney general's and the AEEC's appeal briefs are due September 5, 2008, and the appellees' briefs, including Entergy Arkansas', are due October 5, 2008.

In June 2008, Entergy Arkansas filed with the APSC its annual redetermination of the production cost allocation rider.  The redetermination resulted in a slight increase in the rates beginning with the first billing cycle of July 2008.

See Entergy Corporation and Subsidiaries' "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends - Federal Regulation -System Agreement Proceedings" in the Form 10-K and herein for a discussion of the System Agreement proceedings.

30



Energy Cost Recovery Rider

Entergy Arkansas' retail rates include an energy cost recovery rider.  In December 2007, the APSC issued an order stating that Entergy Arkansas' energy cost recovery rider will remain in effect, and any future termination of the rider will be subject to eighteen months advance notice by the APSC, which would occur following notice and hearing.  On March 18, 2008, the Arkansas attorney general and the AEEC filed a notice of appeal of the December 2007 APSC order.  The Arkansas attorney general's and the AEEC's appeal briefs are due September 5, 2008, and the appellees' briefs, including Entergy Arkansas', are due October 5, 2008.

In March 2008, Entergy Arkansas filed with the APSC its annual energy cost rate for the period April 2008 through March 2009.  The filed energy cost rate increased from $0.01179/kWh to $0.01869/kWh.  The increase was caused by the following: 1) all three of the nuclear power plants from which Entergy Arkansas obtains power, ANO 1 and 2 and Grand Gulf, will have refueling outages in 2008, and the energy cost rate is adjusted to account for the replacement power costs that will be incurred while these units are down; 2) Entergy Arkansas has a deferred fuel cost balance from under-recovered fuel costs at December 31, 2007; and 3) fuel and purchased power prices have increased.

Entergy Mississippi

In May 2008, Entergy Mississippi filed its quarterly fuel adjustment factor for the third quarter 2008, effective beginning with July 2008 bills.  The third quarter 2008 factor is $0.038861/kWh, which is an increase from the $0.010878/kWh factor for the second quarter 2008.  The increase is due to a significant increase in fuel prices, and Entergy Mississippi has gone from an over-recovery to an under-recovery position during 2008.  In July 2008, the MPSC began a proceeding to investigate the fuel procurement practices and fuel adjustment schedules of the Mississippi utility companies, including Entergy Mississippi.  A two-day public hearing was held in July 2008, and after a recess as the MPSC reviewed information, the hearing resumed on August 5, 2008 for additional testimony by an expert witness retained by the MPSC.  The expert witness presented testimony regarding a review of the utilities' fuel adjustment clauses.  The MPSC stated that the goal of the proceeding is fact-finding so that the MPSC may decide whether to amend the current fuel cost recovery process.

Entergy Texas

In January 2008, Entergy Texas made a compliance filing with the PUCT describing how its 2007 Rough Production Cost Equalization receipts under the System Agreement were allocated between Entergy Gulf States, Inc.'s Texas and Louisiana jurisdictions.  Several parties have intervened in the proceeding.  A hearing was held at the end of July 2008, and a decision is pending.

In October 2007, Entergy Texas filed a request with the PUCT to refund $45.6 million, including interest, of fuel cost recovery over-collections through September 2007.  In January 2008, Entergy Texas filed with the PUCT a stipulation and settlement agreement among the parties that updated the over-collection balance through November 2007 and establishes a refund amount, including interest, of $71 million.  The PUCT approved the agreement in February 2008.  The refund was made over a two-month period beginning February 2008, but was reduced by $10.3 million of under-recovered incremental purchased capacity costs.  Amounts refunded through the interim fuel refund are subject to final reconciliation in a future fuel reconciliation proceeding.

Storm Cost Recovery Filings

See Note 2 to the financial statements in the Form 10-K for information regarding storm cost recovery filings involving the Utility operating companies.  The following is an update to the Form 10-K.

31



Entergy Gulf States Louisiana and Entergy Louisiana - Act 55 Storm Cost Financings

In March 2008, Entergy Gulf States Louisiana, Entergy Louisiana, and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed at the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana and Entergy Louisiana storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Legislature (Act 55 financings).  The Act 55 financings are expected to produce additional customer benefits as compared to Act 64 traditional securitization.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and savings to customers via a Storm Cost Offset rider.  On April 3, 2008, the Louisiana State Bond Commission granted preliminary approval for the Act 55 financings.  On April 8, 2008, the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds pursuant to the Act 55 financings, approved requests for the Act 55 financings.  On April 10, 2008, Entergy Gulf States Louisiana and Entergy Louisiana and the LPSC Staff filed with the LPSC an uncontested stipulated settlement that includes Entergy Gulf States Louisiana and Entergy Louisiana's proposals under the Act 55 financings,
which includes a commitment to pass on to customers a minimum of $10 million and
$30 million of customer benefits, respectively.  On April 16, 2008, the LPSC
approved the settlement and issued two financing orders and one ratemaking order
intended to facilitate implementation of the Act 55 financings.  On May 6, 2008,
the State Bond Commission voted to approve the Act 55 financings.

On
July 29, 2008, the LPFA issued $679 million in bonds under the aforementioned
Act 55.  From the bond proceeds received by Entergy Louisiana from the
LURC, Entergy Louisiana invested $527 million in affiliate securities.  The LURC
deposited $152 million in a restricted escrow account as a storm damage reserve
for Entergy Louisiana.  As approved by the April 16, 2008 LPSC orders, Entergy
Louisiana withdrew $17.8 million from the restricted escrow account and also
invested this amount in affiliate securities.

Entergy Gulf States Louisiana expects that in September 2008 the LPFA will issue
$273 million in bonds under the aforementioned Act 55.  From the bond proceeds
expected to be received by Entergy Gulf States Louisiana from the LURC, Entergy
Gulf States Louisiana is expected to invest $186 million in affiliate
securities.  In addition, Entergy Gulf States Louisiana expects the LURC to
deposit $87 million to a restricted escrow account as a storm damage reserve for
Entergy Gulf States Louisiana.  As approved by the April 16, 2008 LPSC
orders, it is expected that Entergy Gulf States Louisiana will withdraw
$1.7 million from the restricted escrow account and will also invest this amount
in affiliate securities.

Retail Rate Proceedings

See Note 2 to the financial statements in the Form 10-K for information regarding retail rate proceedings involving the Utility operating companies.  The following are updates to the Form 10-K.

Filings with the APSC (Entergy Arkansas)

Ouachita Acquisition

Entergy Arkansas filed with the APSC in September 2007 for its approval of the Ouachita plant acquisition, including full cost recovery.  The APSC Staff and the Arkansas attorney general supported Entergy Arkansas' acquisition of the plant, but oppose the sale of one-third of the capacity and energy to Entergy Gulf States Louisiana.  The industrial group AEEC opposes Entergy Arkansas' purchase of the plant.  The Arkansas attorney general opposes recovery of the non-fuel costs of the plant through a separate rider, while the APSC Staff recommended revisions to the rider.  In December 2007, the APSC issued an order approving recovery through a rider of the capacity costs associated with the interim tolling agreement, which will be in effect until APSC action on the acquisition of the plant.  A hearing before the APSC was held in April 2008 to address Entergy Arkansas' request for acquisition of the plant and concurrent cost recovery.  In June 2008 the APSC approved Entergy Arkansas' acquisition of the Ouachita plant and approved recovery of the acquisition and ownership costs through a rate rider.  The APSC also approved the planned sale of one-third of the capacity and energy to Entergy Gulf States Louisiana.  The Arkansas attorney general, the AEEC, and Entergy Arkansas have

32



requested rehearing of the APSC order.  Entergy Arkansas' request for rehearing concerns the 7.61% before-tax return on rate base approved by the APSC, which reflects significant sources of zero-cost capital already reflected in base rates.  Entergy Arkansas had requested a 10.87% before-tax return on rate base reflecting the cost of the debt and equity capital resources available to finance the Ouachita plant acquisition.

On March 18, 2008 the Arkansas attorney general and the AEEC filed a notice of appeal of the December 2007 APSC order that approved recovery through a rider of the capacity costs associated with the interim tolling agreement.  The Arkansas attorney general's and the AEEC's appeal briefs are due September 20, 2008, and the appellees' briefs, including Entergy Arkansas', are due October 20, 2008.

Storm Cost Recovery Proposal

In June 2008, together with other Arkansas utilities, Entergy Arkansas filed a joint application for approval of storm cost recovery accounting and a storm damage rider.  To enable recovery of 2008 storm cost expenditures through the rider and storm reserve accounting, the applicants requested that the APSC establish a procedural schedule that would allow resolution of this proceeding no later than December 15, 2008.

Filings with the LPSC

Retail Rates - Electric

(Entergy Louisiana)

In May 2008, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2007 test year, seeking an $18.4 million rate increase, comprised of $12.6 million of recovery of incremental and deferred capacity costs and $5.8 million related to lost contribution to fixed costs associated with the loss of customers due to Hurricane Katrina.  The filing includes two alternative versions of the calculated revenue requirement, one that reflects Entergy Louisiana's full request for recovery of the loss of fixed cost contribution and the other that reflects the anticipated rate implementation in September 2008, subject to refund, of only a portion of the full request, with the remainder deferred, until the lost fixed cost contribution issue is resolved.  Under the first alternative, Entergy Louisiana's earned return on common equity was 9.44%, whereas under the other alternative, its earned return on common equity was 9.04%.  The LPSC staff and intervenors issued their reports on Entergy Louisiana's filing on July 31, 2008 and, with minor exceptions, primarily raised proposed disallowance issues that were previously raised with regard to Entergy Louisiana's May 2007 filing and remain at issue in that proceeding.  Entergy Louisiana disagrees with the majority of the proposed adjustments.

In May 2007, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2006 test year, indicating a 7.6% earned return on common equity.  That filing included Entergy Louisiana's request to recover $39.8 million in unrecovered fixed costs associated with the loss of customers that resulted from Hurricane Katrina, a request that was recently reduced to $31.7 million.  In September 2007, Entergy Louisiana modified its formula rate plan filing to reflect its implementation of certain adjustments proposed by the LPSC Staff in its review of Entergy Louisiana's original filing with which Entergy Louisiana agreed, and to reflect its implementation of an $18.4 million annual formula rate plan increase comprised of (1) a $23.8 million increase representing 60% of Entergy Louisiana revenue deficiency, and (2) a $5.4 million decrease for reduced incremental and deferred capacity costs.  The LPSC authorized Entergy Louisiana to defer for accounting purposes the difference between its $39.8 million claim, now at $31.7 million, for unrecovered fixed cost and 60% of the revenue deficiency to preserve Entergy Louisiana's right to pursue that claim in full during the formula rate plan proceeding.  In October 2007, Entergy Louisiana implemented a $7.1 million formula rate plan decrease that was due primarily to the reclassification of certain franchise fees from base rates to collection via a line item on customer bills pursuant to an LPSC Order.  The LPSC staff and intervenors have recommended disallowance of certain costs included in Entergy Louisiana's filing.  Entergy Louisiana disagrees with the majority of the proposed disallowances and a hearing on the disputed issues is set to begin in late September 2008.

33



In May 2006, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2005 test year.  Entergy Louisiana modified the filing in August 2006 to reflect a 9.45% return on equity which is within the allowed bandwidth.  The modified filing includes an increase of $24.2 million for interim recovery of storm costs from Hurricanes Katrina and Rita and a $119.2 million rate increase to recover LPSC-approved incremental deferred and ongoing capacity costs.  The filing requested recovery of approximately $50 million for the amortization of capacity deferrals over a three-year period, including carrying charges, and approximately $70 million for ongoing capacity costs.  The increase was implemented, subject to refund, with the first billing cycle of September 2006.  Entergy Louisiana subsequently updated its formula rate plan rider to reflect adjustments proposed by the LPSC Staff with which it agrees.  The adjusted return on equity of 9.56% remains within the allowed bandwidth.  Ongoing and deferred incremental capacity costs were reduced to $118.7 million.  The updated formula rate plan rider was implemented, subject to refund, with the first billing cycle of October 2006.  An uncontested stipulated settlement was filed in February 2008 that will leave the current base rates in place, and the LPSC approved the settlement in March 2008.  In the settlement Entergy Louisiana agreed to credit customers $7.2 million, plus $0.7 million of interest, for customer contributions to the Central States Compact in Nebraska that was never completed and agreed to a one-time $2.6 million deduction from the deferred capacity cost balance.  The credit, for which Entergy Louisiana had previously recorded a provision, was made in May 2008.

(Entergy Gulf States Louisiana)

In May 2008, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2007 test year.  The filing reflected a 9.26% return on common equity, which is below the allowed earnings bandwidth, and indicated a $5.4 million revenue deficiency, offset by a $4.1 million decrease in required additional capacity costs.  Consideration of the filing is pending, and under the formula rate plan Entergy Gulf States Louisiana would implement new rates in September 2008.

In May 2007, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2006 test year.  The filing reflected a 10.0% return on common equity, which is within the allowed earnings bandwidth, and an anticipated formula rate plan decrease of $23 million annually attributable to adjustments outside of the formula rate plan sharing mechanism related to capacity costs and the anticipated securitization of storm costs related to Hurricane Katrina and Hurricane Rita and the securitization of a storm reserve.  In September 2007, Entergy Gulf States Louisiana modified the formula rate plan filing to reflect a 10.07% return on common equity, which is still within the allowed bandwidth.  The modified filing also reflected implementation of a $4.1 million rate increase, subject to refund, attributable to recovery of additional LPSC-approved incremental deferred and ongoing capacity costs.  The rate decrease anticipated in the original filing did not occur because of the additional capacity costs approved by the LPSC, and because securitization of storm costs associated with Hurricane Katrina and Hurricane Rita and the establishment of a storm reserve have not yet occurred.  In October 2007, Entergy Gulf States Louisiana implemented a $16.4 million formula rate plan decrease that is due to the reclassification of certain franchise fees from base rates to collection via a line item on customer bills pursuant to an LPSC order.  The LPSC staff issued its final report in December 2007, indicating a $1.6 million decrease in formula rate plan revenues for which interim rates were already in effect.  In addition, the LPSC staff recommended that the LPSC give a one-year extension of Entergy Gulf States Louisiana's formula rate plan to synchronize with the final year of Entergy Louisiana's formula rate plan, or alternatively, to extend the formula rate plan for a longer period.  Entergy Gulf States Louisiana indicated it is amenable to a one-year extension.  An uncontested stipulated settlement was filed in February 2008 that will leave the current base rates in place and extend the formula rate plan for one year, and the LPSC approved the settlement in March 2008.

Retail Rates - Gas (Entergy Gulf States Louisiana)

In January 2008, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ending September 30, 2007.  The filing showed a revenue deficiency of $3.7 million based on a return on common equity mid-point of 10.5%.  Entergy Gulf States Louisiana implemented a $3.4 million rate increase in April 2008 pursuant to an uncontested agreement with the LPSC staff.

34



Filings with the PUCT and Texas Cities

Entergy Texas made a rate filing in September 2007 with the PUCT requesting an annual rate increase totaling $107.5 million, including a base rate increase of $64.3 million and riders totaling $43.2 million.  The base rate increase includes a $12.2 million annual increase for the storm damage reserve.  Entergy Texas requested an 11% return on common equity.  In December 2007 the PUCT issued an order setting September 26, 2008 as the effective date for the rate change from the rate filing.  In May 2008, Entergy Texas and certain parties in the rate case filed a non-unanimous settlement that provides for a $42.5 million base rate increase beginning in October 2008 and an additional $17 million base rate increase beginning in October 2009.  The non-unanimous settlement also provides that $25 million of System Agreement rough production cost equalization payments will offset the effect on customers of the rate increase.  The non-unanimous settlement further provides that an additional $17 million on an annual basis of System Agreement rough production cost equalization payments will be retained by Entergy Texas from January 2009 through September 2009.  The non-unanimous settlement also resolves the fuel reconciliation portion of the proceeding with a $4.5 million disallowance.  The PUCT staff, the Texas Industrial Energy Consumers (TIEC), and the state of Texas did not join in the settlement and filed a separate agreement among them that provides for a rate decrease, later revised to a slight increase, and a $4.7 million fuel cost disallowance.  In May 2008 the ALJs issued an order stating that the proceeding will continue with Entergy Texas having the burden of proof to show that the non-unanimous settlement results in reasonable rates.  The hearing on the merits of the non-unanimous settlement was held from June 23 through July 2, 2008, and post-hearing briefing by the parties is ongoing.

Filings with the MPSC

In March 2008, Entergy Mississippi made its annual scheduled formula rate plan filing for the 2007 test year with the MPSC.  The filing showed that a $10.1 million increase in annual electric revenues is warranted.  In June 2008, Entergy Mississippi reached a settlement with the Mississippi Public Utilities Staff that results in a $3.8 million rate increase.  An MPSC decision on the settlement is pending.

Filings with the New Orleans City Council

Retail Rates



In January 2008, Entergy New Orleans voluntarily implemented a 6.15% base rate credit (the recovery credit) for electric customers, which Entergy New Orleans estimates will return approximately $10.6 million to electric customers in 2008.  Entergy New Orleans was able to implement this credit because during 2007 the recovery of New Orleans after Hurricane Katrina was occurring faster than expected in 2006 projections.  In addition, Entergy New Orleans committed to set aside $2.5 million for an energy efficiency program focused on community education and outreach and weatherization of homes.



On July 31, 2008, Entergy New Orleans filed an electric and gas base rate case with the City Council.  The filing requests an 11.75% return on common equity.  The filing calls for a $23.0 million decrease in electric base rates, which includes keeping the recovery credit in effect, as well as realigning approximately $12.3 million of capacity costs from recovery through the fuel adjustment clause to electric base rates.  The filing also calls for a $9.1 million increase in gas base rates to fund on-going operations.  This request is unrelated to the on-going rebuild of Entergy New Orleans' natural gas system.  The procedural schedule calls for a hearing on the filing to commence on January 5, 2009, with certification of the evidentiary record by a hearing officer on or before February 28, 2009.

Fuel Adjustment Clause Litigation



See Note 2 to the financial statements in
the Form 10-K for a discussion of the complaint filed in April 1999 by a group
of ratepayers against Entergy New Orleans, Entergy Corporation, Entergy
Services, and Entergy Power in state court in Orleans Parish purportedly on
behalf of all Entergy New Orleans ratepayers and a corresponding complaint filed
with the City Council. In February 2004, the City Council approved a resolution
that resulted in a refund to customers of $11.3 million, including interest,
during the months of June through September 2004. In May 2005 the Civil District
Court

35



for the Parish of Orleans affirmed the City Council
resolution, finding no support for the plaintiffs' claim that the refund amount
should be higher. In June 2005, the plaintiffs appealed the Civil District Court
decision to the Louisiana Fourth Circuit Court of Appeal. On February 25, 2008,
the Fourth Circuit Court of Appeal issued a decision affirming in part, and
reversing in part, the Civil District Court's decision.  Although the
Fourth Circuit Court of Appeal did not reverse any of the substantive findings
and conclusions of the City Council or the Civil District Court, the Fourth
Circuit found that the amount of the refund was arbitrary and capricious and
increased the amount of the refund to $34.3 million.  Entergy New Orleans
believes that the increase in the refund ordered by the Fourth Circuit is not
justified. Entergy New Orleans, the City Council, and the plaintiffs requested
rehearing, and in April 2008, the Fourth Circuit granted the plaintiffs' request
for rehearing. In addition to changing the basis for the court's decision in the
manner requested by the plaintiffs, the court also granted the plaintiffs'
request that it provide for interest on the refund amount. The court denied the
motions for rehearing filed by the City Council and Entergy New Orleans. In May
2008, Entergy New Orleans and the City Council filed with the Louisiana Supreme
Court applications for a writ of certiorari seeking, among other things,
reversal of the Fourth Circuit decision.

System Energy Rate Proceeding



In March 2008, the LPSC filed a complaint at the FERC under Federal Power Act section 206 against System Energy and Entergy Services.  The complaint requests that the FERC set System Energy's rate of return on common equity at no more than 9.75%.  The LPSC's complaint further requests that System Energy base its decommissioning and depreciation expenses on a 60-year useful life for Grand Gulf as opposed to the 40-year life specified in the existing NRC operating license.  The APSC, the City of New Orleans, the MPSC, and other parties have intervened in the proceeding.  System Energy filed its answer to the complaint in April 2008, in which it denies the allegations of the LPSC and requests that the FERC dismiss the complaint without a hearing.  On July 1, 2008, the FERC issued an order denying the relief requested by the LPSC.

Electric Industry Restructuring in Texas



Refer to Note 2 to the financial statements in the Form 10-K and Entergy Texas Form 10 for a discussion of electric industry restructuring activity that involves Entergy Texas.



NOTE 3.  COMMON EQUITY

Common Stock

Earnings per Share

The following tables present Entergy's basic and diluted earnings per share calculations included on the consolidated income statement:





|                                                        |                | For the Three Months Ended June 30, 
|------------------------------------------------------- | -------------- | ------------------------------------
|                                                        |                | 2008                                
|                                                        |                | (In Millions, Except Per Share Data)
|                                                        |                |                                     
|Consolidated net income                                 |                | $271.9                              
|                                                        |                |                                     
|Average number of common shares
  outstanding - basic   |                | 191.3                               
|Average dilutive effect of:                             |                |                                     
|                                                        | Stock Options  |                                     
|                                                        | Equity Units   |                                     
|                                                        | Deferred Units |                                     
|Average number of common shares
  outstanding - diluted |                | 197.9                               
|                                                        |                |                                     



36



|                                                        |                | For the Six Months Ended June 30,   
|------------------------------------------------------- | -------------- | ------------------------------------
|                                                        |                | 2008                                
|                                                        |                | (In Millions, Except Per Share Data)
|                                                        |                |                                     
|Consolidated net income                                 |                | $580.6                              
|                                                        |                |                                     
|Average number of common shares
  outstanding - basic   |                | 192.0                               
|Average dilutive effect of:                             |                |                                     
|                                                        | Stock Options  |                                     
|                                                        | Equity Units   |                                     
|                                                        | Deferred Units |                                     
|Average number of common shares
  outstanding - diluted |                | 198.1                               
|                                                        |                |                                     



Entergy's stock option and other equity compensation plans are discussed in Note 12 to the consolidated financial statements in the Form 10-K.

Treasury Stock



During the six months ended June 30, 2008, Entergy Corporation issued 687,693 shares of its previously repurchased common stock to satisfy stock option exercises and other stock-based awards.  Also, during the six months ended June 30, 2008, Entergy Corporation purchased 3,267,299 shares of common stock for a total purchase price of $369.6 million.

Retained Earnings



On July 28, 2008, Entergy Corporation's Board of Directors declared a common stock dividend of $0.75 per share, payable on September 2, 2008 to holders of record as of August 8, 2008.

Accumulated Other Comprehensive Income (Loss)



Based on market prices as of June 30, 2008, cash flow hedges with net unrealized losses of approximately $233.2 million net-of-tax at June 30, 2008 are expected to be reclassified from accumulated other comprehensive income to operating revenues during the next twelve months.  The actual amount reclassified from accumulated other comprehensive income, however, could vary due to future changes in market prices.  See Note 1 (Derivative Financial Instruments and Commodity Derivatives)and Note 16 to the financial statements in the Form 10-K for additional discussion of the accounting treatment of cash flow hedges.



NOTE 4.  LINES OF CREDIT, RELATED SHORT-TERM BORROWINGS, AND LONG-TERM DEBT

Entergy Corporation has in place a credit facility that expires in August 2012 and has a borrowing capacity of $3.5 billion.  Entergy Corporation also has the ability to issue letters of credit against the total borrowing capacity of the credit facility.  The facility fee is currently 0.09% of the commitment amount.  Facility fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation.  The weighted average interest rate as of June 30, 2008 was 3.002% on the drawn portion of the facility.  Following is a summary of the borrowings outstanding and capacity available under the facility as of June 30, 2008.

37





|Capacity      |  | Borrowings |  | Letters
of Credit |  | Capacity
Available
|------------- |  | ---------- |  | ----------------- |  | ------------------
|(In Millions)
|              |  |            |  |                   |  |                   
|$3,500        |  | $2,772     |  | $72               |  | $656              

Entergy Corporation's facility requires it to maintain a consolidated debt ratio of 65% or less of its total capitalization.  If Entergy fails to meet this ratio, or if Entergy or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility maturity date may occur.



Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, and Entergy Texas each had credit facilities available as of June 30, 2008 as follows:





|Company                       |  | Expiration Date |  | Amount of 
Facility |  | Interest Rate (a) |  | Amount Drawn as of June 30, 2008
|----------------------------- |  | --------------- |  | ------------------- |  | ----------------- |  | --------------------------------
|                              |  |                 |  |                     |  |                   |  |                                 
|Entergy Arkansas              |  | April 2009      |  | $100 million (b)    |  | 4.50%             |  | $100 million                    
|Entergy Gulf States Louisiana |  | August 2012     |  | $100 million (c)    |  | 5.00%             |  | $30 million                     
|Entergy Louisiana             |  | August 2012     |  | $200 million (d)    |  | 2.91%             |  | $200 million                    
|Entergy Mississippi           |  | May 2009        |  | $30 million (e)     |  | 3.926%            |  | $30 million                     
|Entergy Mississippi           |  | May 2009        |  | $20 million (e)     |  | 3.926%            |  | $20 million                     
|Entergy Texas                 |  | August 2012     |  | $100 million (f)    |  | 2.9075%           |  | -                               



|(a) | The interest rate is the weighted average interest rate as of June 30, 2008 applied or that would be applied to the outstanding borrowings under the facility.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The credit facility requires Entergy Arkansas to maintain a debt ratio of 65% or less of its total capitalization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(c) | The credit facility allows Entergy Gulf States Louisiana to issue letters of credit against the borrowing capacity of the facility.  As of June 30, 2008, no letters of credit were outstanding.  The credit facility requires Entergy Gulf States Louisiana to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Pursuant to the terms of the credit agreement, the amount of debt assumed by Entergy Texas ($930 million as of June 30, 2008 and $1.079 billion as of December 31, 2007) is excluded from debt and capitalization in calculating the debt ratio.
|(d) | The credit facility allows Entergy Louisiana to issue letters of credit against the borrowing capacity of the facility.  As of June 30, 2008, no letters of credit were outstanding.  The credit facility requires Entergy Louisiana to maintain a consolidated debt ratio of 65% or less of its total capitalization.                                                                                                                                                                                                                                                                          
|(e) | Borrowings under the Entergy Mississippi credit facilities may be secured by a security interest in its accounts receivable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(f) | The credit facility allows Entergy Texas to issue letters of credit against the borrowing capacity of the facility.  As of June 30, 2008, no letters of credit were outstanding.  The credit facility requires Entergy Texas to maintain a consolidated debt ratio of 65% or less of its total capitalization.  Pursuant to the terms of the credit agreement, the transition bonds issued by Entergy Gulf States Reconstruction Funding I, LLC, a subsidiary of Entergy Texas, are excluded from debt and capitalization in calculating the debt ratio.                                        



The facility fees on the credit facilities range from 0.09% to 0.15% of the commitment amount.



The short-term borrowings of the Registrant Subsidiaries and certain other Entergy subsidiaries are limited to amounts authorized by the FERC.  The current FERC-authorized limits are effective through March 31, 2010 (except Entergy Gulf States Louisiana and Entergy Texas, which are effective through November 8, 2009).  In addition to borrowings from commercial banks, these companies are authorized under a FERC order to borrow from the Entergy System money pool.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' dependence on external short-term borrowings.  Borrowings from the money pool and external borrowings combined may not exceed the FERC
authorized limits. As of June 30, 2008, Entergy's subsidiaries' aggregate money
pool and external short-term borrowings authorized limit was $2.1



38



billion, the aggregate outstanding borrowing from the money
pool was $403 million, and Entergy's subsidiaries' had $380 million in
outstanding short-term borrowing from external sources.





|                              |  | Authorized    |  | Borrowings
|----------------------------- |  | ------------- |  | ----------
|                              |  | (In Millions)
|                              |  |               |  |           
|Entergy Arkansas              |  | $250          |  | $125.5    
|Entergy Gulf States Louisiana |  | $200          |  | -         
|Entergy Louisiana             |  | $250          |  | $52.4     
|Entergy Mississippi           |  | $175          |  | $50.0     
|Entergy New Orleans           |  | $100          |  | -         
|Entergy Texas                 |  | $200          |  | -         
|System Energy                 |  | $200          |  | -         

Debt Issuances and Redemptions

(Entergy Arkansas)



In July 2008, Entergy Arkansas issued $300 million of 5.4% Series First Mortgage Bonds due August 2013. Entergy Arkansas intends to use the proceeds to fund the purchase of, and improvements relating to, the Ouachita power plant and for general corporate purposes.  Pending the application of the net proceeds, Entergy Arkansas intends to use the proceeds for working capital purposes, including repayment of short-term debt, and it may invest them in temporary cash investments or the Entergy System money pool.



(Entergy Gulf States Louisiana)



In May 2008, Entergy Gulf States Louisiana issued $375 million of 6.00% Series First Mortgage Bonds due May 2018.  The proceeds were used to pay at maturity the portion of the $325 million of the 3.6% Series First Mortgage Bonds due June 2008 that had not been assumed by Entergy Texas and to redeem, prior to maturity, $189.7 million of the $350 million Floating Rate series of First Mortgage Bonds due December 2008, and for other general corporate purposes.



The portion of the $325 million of 3.6% Series First Mortgage Bonds due June 2008 that had been assumed by Entergy Texas was paid at maturity by Entergy Texas in June 2008, and that bond series is no longer outstanding.  The remainder of the $350 million Floating Rate series of First Mortgage Bonds due December 2008 had been assumed by Entergy Texas, and management expects Entergy Texas to redeem those bonds by their maturity date.



(Entergy Louisiana)



In April 2008, Entergy Louisiana repurchased, prior to maturity, $60 million of Auction Rate governmental bonds, which are being held for possible remarketing at a later date.



(Entergy Mississippi)



In April 2008, Entergy Mississippi repurchased its $30 million series of Independence County Pollution Control Revenue Bonds due July 2022.  At the time of repurchase, the bonds were converted from an Auction Rate mode to a Daily Mode.  In June 2008, Entergy Mississippi remarketed the series and converted the bonds to a Multi-Annual Mode and fixed the rate to maturity at 4.90%.  Entergy Mississippi used the proceeds from the remarketing to repay short-term borrowings that were drawn on its credit facilities to repurchase the bonds in April 2008.

39



(Entergy New Orleans)



On August 1, 2008, Entergy New Orleans paid, at maturity, its $30 million of 3.875% Series first mortgage bonds.

Tax Exempt Bond Audit



The IRS completed an audit of certain Tax Exempt Bonds (Bonds) issued by St. Charles Parish, State of Louisiana (the Issuer).  The Bonds were issued to finance previously unfinanced acquisition costs expended by Entergy Louisiana to acquire certain radioactive solid waste disposal facilities (the Facilities) at the Waterford Steam Electric Generating Station.  In March and April 2005, the IRS issued proposed adverse determinations that the Issuer's 7.0% Series bonds due 2022, 7.5% Series bonds due 2021, and 7.05% Series bonds due 2022 were not tax exempt.  The stated basis for these determinations was that radioactive waste did not constitute "solid waste" within the provisions of the Internal Revenue Code and therefore the Facilities did not qualify as solid waste disposal facilities.  The three series of Bonds are the only series of bonds issued by the Issuer for the benefit of Entergy Louisiana that were the subject of audits by the IRS.  Because the Issuer, Entergy Louisiana, and IRS Office of Appeals desired to settle the issue that was raised, Entergy Louisiana made a $1.25 million payment to the IRS.  The terms of the settlement have no effect on the Issuer or the bondholders.





NOTE 5.  STOCK-BASED COMPENSATION



Entergy grants stock options, which are described more fully in Note 12 to the consolidated financial statements in the Form 10-K.  Entergy adopted SFAS 123R, "Share-Based Payment" on January 1, 2006.  The adoption of the standard did not materially affect Entergy's financial position, results of operations, or cash flows because Entergy adopted the fair value based method of accounting for stock options prescribed by SFAS 123, "Accounting for Stock-Based Compensation" on January 1, 2003.  Prior to 2003, Entergy applied the recognition and measurement principles of APB Opinion 25, "Accounting for Stock Issued to Employees," and related Interpretations in accounting for those plans.  Awards under Entergy's plans generally vest over three years.



The following table includes financial information for stock options for the second quarter and six months ended June 30 for each of the years presented:





|                                                                                        | 2008          |  | 2007
|--------------------------------------------------------------------------------------- | ------------- |  | ----
|                                                                                        | (In Millions)
|Compensation expense included in Entergy's Net Income for the second quarter            | $4.7          |  | $3.9
|Tax benefit recognized in Entergy's Net Income for the second quarter                   | $1.8          |  | $1.5
|                                                                                        |               |  |     
|Compensation expense included in Entergy's Net Income for the six months ended June 30, | $9.1          |  | $7.1
|Tax benefit recognized in Entergy's Net Income for the six months ended June 30,        | $3.5          |  | $2.7
|Compensation cost capitalized as part of fixed assets and inventory                     | $1.7          |  | $1.2



Entergy granted 1,617,400 stock options during the first quarter 2008 with a weighted-average fair value of $14.43.  At June 30, 2008, there were 11,464,959 stock options outstanding with a weighted-average exercise price of $65.49.  The aggregate intrinsic value of the stock options outstanding was $631 million.

40



NOTE 6.  RETIREMENT AND OTHER POSTRETIREMENT BENEFITS

Components of Net Pension Cost

Entergy's qualified pension cost, including amounts capitalized, for the second quarters of 2008 and 2007, included the following components:





|                                                 |  | 2008           |  | 2007    
|------------------------------------------------ |  | -------------- |  | --------
|                                                 |  | (In Thousands)
|                                                 |  |                |  |         
|Service cost - benefits earned during the period |  | $22,598        |  | $24,141 
|Interest cost on projected benefit obligation    |  | 51,646         |  | 46,292  
|Expected return on assets                        |  | (57,640)       |  | (50,880)
|Amortization of prior service cost               |  | 1,266          |  | 1,383   
|Amortization of loss                             |  | 6,482          |  | 11,444  
|Net pension costs                                |  | $24,352        |  | $32,380 

Entergy's qualified pension cost, including amounts capitalized, for the six months ended June 30, 2008 and 2007, included the following components:





|                                                 |  | 2008           |  | 2007     
|------------------------------------------------ |  | -------------- |  | ---------
|                                                 |  | (In Thousands)
|                                                 |  |                |  |          
|Service cost - benefits earned during the period |  | $45,196        |  | $48,038  
|Interest cost on projected benefit obligation    |  | 103,293        |  | 92,154   
|Expected return on assets                        |  | (115,279)      |  | (101,506)
|Amortization of prior service cost               |  | 2,532          |  | 2,766    
|Amortization of loss                             |  | 13,416         |  | 22,888   
|Net pension costs                                |  | $49,158        |  | $64,340  



The Registrant Subsidiaries' qualified pension cost, including amounts capitalized, for the second quarters of 2008 and 2007, included the following components:

|                               |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |        
|------------------------------ |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | -------
|                               |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System 
|2008                           |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy 
|                               |  | (In Thousands)
|Service cost - benefits earned |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|during the period              |  | $3,584         |  | $1,841      |  | $2,058    |  | $1,063      |  | $445        |  | $968    |  | $930   
|Interest cost on projected     |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|benefit obligation             |  | 11,616         |  | 5,047       |  | 6,784     |  | 3,627       |  | 1,415       |  | 3,882   |  | 1,937  
|Expected return on assets      |  | (11,765)       |  | (7,165)     |  | (8,134)   |  | (4,075)     |  | (1,839)     |  | (5,047) |  | (2,452)
|Amortization of prior service  |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|cost                           |  | 223            |  | 110         |  | 119       |  | 90          |  | 52          |  | 80      |  | 9      
|Amortization of loss           |  | 2,303          |  | 115         |  | 920       |  | 485         |  | 319         |  | 156     |  | 90     
|Net pension cost/(income)      |  | $5,961         |  | ($52)       |  | $1,747    |  | $1,190      |  | $392        |  | $39     |  | $514   

41



|                               |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |        
|------------------------------ |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | -------
|                               |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System 
|2007                           |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy 
|                               |  | (In Thousands)
|Service cost - benefits earned |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|during the period              |  | $3,638         |  | $3,011      |  | $2,231    |  | $1,089      |  | $470        |  | $1,012  |  | $1,021 
|Interest cost on projected     |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|benefit obligation             |  | 10,498         |  | 8,139       |  | 6,251     |  | 3,371       |  | 1,260       |  | 3,439   |  | 1,710  
|Expected return on assets      |  | (11,009)       |  | (10,750)    |  | (7,808)   |  | (3,837)     |  | (1,446)     |  | (4,536) |  | (2,136)
|Amortization of prior service  |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|cost                           |  | 412            |  | 304         |  | 160       |  | 114         |  | 44          |  | 133     |  | 12     
|Amortization of loss           |  | 2,721          |  | 623         |  | 1,433     |  | 749         |  | 368         |  | 262     |  | 151    
|Net pension cost               |  | $6,260         |  | $1,327      |  | $2,267    |  | $1,486      |  | $696        |  | $310    |  | $758   

The Registrant Subsidiaries' qualified pension cost, including amounts capitalized, for the six months ended June 30, 2008 and 2007, included the following components:

|                               |  |                |  | Entergy     |  |           |  |             |  |             |  |          |  |        
|------------------------------ |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | -------- |  | -------
|                               |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy  |  | System 
|2008                           |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas    |  | Energy 
|                               |  | (In Thousands)
|Service cost - benefits earned |  |                |  |             |  |           |  |             |  |             |  |          |  |        
|during the period              |  | $7,168         |  | $3,682      |  | $4,116    |  | $2,126      |  | $890        |  | $1,936   |  | $1,860 
|Interest cost on projected     |  |                |  |             |  |           |  |             |  |             |  |          |  |        
|benefit obligation             |  | 23,232         |  | 10,094      |  | 13,568    |  | 7,254       |  | 2,830       |  | 7,764    |  | 3,874  
|Expected return on assets      |  | (23,530)       |  | (14,330)    |  | (16,268)  |  | (8,150)     |  | (3,678)     |  | (10,094) |  | (4,904)
|Amortization of prior service  |  |                |  |             |  |           |  |             |  |             |  |          |  |        
|cost                           |  | 446            |  | 220         |  | 238       |  | 180         |  | 104         |  | 160      |  | 18     
|Amortization of loss           |  | 4,606          |  | 230         |  | 1,840     |  | 970         |  | 638         |  | 312      |  | 180    
|Net pension cost/(income)      |  | $11,922        |  | ($104)      |  | $3,494    |  | $2,380      |  | $784        |  | $78      |  | $1,028 



|                               |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |        
|------------------------------ |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | -------
|                               |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System 
|2007                           |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy 
|                               |  | (In Thousands)
|Service cost - benefits earned |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|during the period              |  | $7,276         |  | $6,022      |  | $4,462    |  | $2,178      |  | $940        |  | $2,024  |  | $2,042 
|Interest cost on projected     |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|benefit obligation             |  | 20,996         |  | 16,278      |  | 12,502    |  | 6,742       |  | 2,520       |  | 6,878   |  | 3,420  
|Expected return on assets      |  | (22,018)       |  | (21,500)    |  | (15,616)  |  | (7,674)     |  | (2,892)     |  | (9,072) |  | (4,272)
|Amortization of prior service  |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|cost                           |  | 824            |  | 608         |  | 320       |  | 228         |  | 88          |  | 266     |  | 24     
|Amortization of loss           |  | 5,442          |  | 1,246       |  | 2,866     |  | 1,498       |  | 736         |  | 524     |  | 302    
|Net pension cost               |  | $12,520        |  | $2,654      |  | $4,534    |  | $2,972      |  | $1,392      |  | $620    |  | $1,516 

42



Entergy recognized $4.3 million and $4.0 million in pension cost for its non-qualified pension plans in the second quarters of 2008 and 2007, respectively.  Entergy recognized $8.5 million and $8.0 million in pension cost for its non-qualified pension plans for the six months ended June 30, 2008 and 2007, respectively.



The Registrant Subsidiaries recognized the following pension cost for their non-qualified pension plans in the second quarters of 2008 and 2007:



|                                                     |  |                |  | Entergy     |  |           |  |             |  |             |  |        
|---------------------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | -------
|                                                     |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy
|                                                     |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas  
|                                                     |  | (In Thousands)
|Non-Qualified Pension Cost
   
  Second Quarter 2008 |  | $133           |  | $78         |  | $7        |  | $54         |  | $12         |  | $227   
|Non-Qualified Pension Cost
   
  Second Quarter 2007 |  | $123           |  | $317        |  | $6        |  | $44         |  | $57         |  | $231   



The Registrant Subsidiaries recognized the following pension cost for their non-qualified pension plans for the six months ended June 30, 2008 and 2007:



|                                                                |  |                |  | Entergy     |  |           |  |             |  |             |  |        
|--------------------------------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | -------
|                                                                |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy
|                                                                |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas  
|                                                                |  | (In Thousands)
|Non-Qualified Pension Cost Six
   
  Months Ended June 30, 2008 |  | $266           |  | $156        |  | $14       |  | $108        |  | $24         |  | $454   
|Non-Qualified Pension Cost Six
   
  Months Ended June 30, 2007 |  | $246           |  | $634        |  | $12       |  | $88         |  | $114        |  | $462   



Components of Net Other Postretirement Benefit Cost

Entergy's other postretirement benefit cost, including amounts capitalized, for the second quarters of 2008 and 2007, included the following components:





|                                                 |  | 2008           |  | 2007   
|------------------------------------------------ |  | -------------- |  | -------
|                                                 |  | (In Thousands)
|                                                 |  |                |  |        
|Service cost - benefits earned during the period |  | $11,800        |  | $11,034
|Interest cost on APBO                            |  | 17,824         |  | 15,808 
|Expected return on assets                        |  | (7,027)        |  | (6,325)
|Amortization of transition obligation            |  | 957            |  | 958    
|Amortization of prior service cost               |  | (4,104)        |  | (3,959)
|Amortization of loss                             |  | 3,890          |  | 4,743  
|Net other postretirement benefit cost            |  | $23,340        |  | $22,259

43



Entergy's other postretirement benefit cost, including amounts capitalized, for the six months ended June 30, 2008 and 2007, included the following components:



|                                                 |  | 2008           |  | 2007    
|------------------------------------------------ |  | -------------- |  | --------
|                                                 |  | (In Thousands)
|                                                 |  |                |  |         
|Service cost - benefits earned during the period |  | $23,600        |  | $21,927 
|Interest cost on APBO                            |  | 35,648         |  | 31,494  
|Expected return on assets                        |  | (14,054)       |  | (12,585)
|Amortization of transition obligation            |  | 1,914          |  | 1,916   
|Amortization of prior service cost               |  | (8,208)        |  | (7,918) 
|Amortization of loss                             |  | 7,780          |  | 9,486   
|Net other postretirement benefit cost            |  | $46,680        |  | $44,320 



The Registrant Subsidiaries' other postretirement benefit cost, including amounts capitalized, for the second quarters of 2008 and 2007, included the following components:



|                                        |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |       
|--------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------
|                                        |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System
|2008                                    |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy
|                                        |  | (In Thousands)
|Service cost - benefits earned          |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|during the period                       |  | $1,706         |  | $1,251      |  | $1,099    |  | $514        |  | $295        |  | $606    |  | $513  
|Interest cost on APBO                   |  | 3,443          |  | 1,917       |  | 2,187     |  | 1,141       |  | 953         |  | 1,440   |  | 531   
|Expected return on assets               |  | (2,492)        |  | -           |  | -         |  | (905)       |  | (789)       |  | (1,885) |  | (511) 
|Amortization of transition              |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|obligation                              |  | 205            |  | 84          |  | 96        |  | 88          |  | 415         |  | 66      |  | 2     
|Amortization of prior service           |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|cost                                    |  | (197)          |  | 146         |  | 117       |  | (62)        |  | 90          |  | 72      |  | (283) 
|Amortization of loss                    |  | 1,440          |  | 494         |  | 677       |  | 534         |  | 291         |  | 357     |  | 177   
|Net other postretirement
  benefit cost |  | $4,105         |  | $3,892      |  | $4,176    |  | $1,310      |  | $1,255      |  | $656    |  | $429  



|                                          |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |       
|----------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------
|                                          |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System
|2007                                      |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy
|                                          |  | (In Thousands)
|Service cost - benefits earned            |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|during the period                         |  | $1,525         |  | $1,547      |  | $973      |  | $476        |  | $255        |  | $500    |  | $451  
|Interest cost on APBO                     |  | 3,037          |  | 2,876       |  | 1,941     |  | 1,049       |  | 870         |  | 1,260   |  | 433   
|Expected return on assets                 |  | (2,231)        |  | (1,697)     |  | -         |  | (819)       |  | (682)       |  | (1,697) |  | (470) 
|Amortization of transition                |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|obligation                                |  | 205            |  | 151         |  | 96        |  | 88          |  | 416         |  | 67      |  | 2     
|Amortization of prior service             |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|cost                                      |  | (197)          |  | 218         |  | 117       |  | (62)        |  | 90          |  | 72      |  | (283) 
|Amortization of loss                      |  | 1,500          |  | 793         |  | 764       |  | 613         |  | 282         |  | 349     |  | 149   
|Net other postretirement
    benefit cost |  | $3,839         |  | $3,888      |  | $3,891    |  | $1,345      |  | $1,231      |  | $551    |  | $282  



44



The Registrant Subsidiaries' other postretirement benefit cost, including amounts capitalized, for the six months ended June 30, 2008 and 2007, included the following components:

|                                         |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |        
|---------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | -------
|                                         |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System 
|2008                                     |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy 
|                                         |  | (In Thousands)
|Service cost - benefits earned           |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|during the period                        |  | $3,412         |  | $2,502      |  | $2,198    |  | $1,028      |  | $590        |  | $1,212  |  | $1,026 
|Interest cost on APBO                    |  | 6,886          |  | 3,834       |  | 4,374     |  | 2,282       |  | 1,906       |  | 2,880   |  | 1,062  
|Expected return on assets                |  | (4,984)        |  | -           |  | -         |  | (1,810)     |  | (1,578)     |  | (3,770) |  | (1,022)
|Amortization of transition               |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|obligation                               |  | 410            |  | 168         |  | 192       |  | 176         |  | 830         |  | 132     |  | 4      
|Amortization of prior service            |  |                |  |             |  |           |  |             |  |             |  |         |  |        
|cost                                     |  | (394)          |  | 292         |  | 234       |  | (124)       |  | 180         |  | 144     |  | (566)  
|Amortization of loss                     |  | 2,880          |  | 988         |  | 1,354     |  | 1,068       |  | 582         |  | 714     |  | 354    
|Net other postretirement 
  benefit cost |  | $82,10         |  | $7,784      |  | $8,352    |  | $2,620      |  | $2,510      |  | $1,312  |  | $858   



|                                         |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |       
|---------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------
|                                         |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System
|2007                                     |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy
|                                         |  | (In Thousands)
|Service cost - benefits earned           |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|during the period                        |  | $3,050         |  | $3,094      |  | $1,946    |  | $952        |  | $510        |  | $1,000  |  | $902  
|Interest cost on APBO                    |  | 6,074          |  | 5,752       |  | 3,882     |  | 2,098       |  | 1,740       |  | 2,520   |  | 866   
|Expected return on assets                |  | (4,462)        |  | (3,394)     |  | -         |  | (1,638)     |  | (1,364)     |  | (3,394) |  | (940) 
|Amortization of transition               |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|obligation                               |  | 410            |  | 302         |  | 192       |  | 176         |  | 832         |  | 134     |  | 4     
|Amortization of prior service            |  |                |  |             |  |           |  |             |  |             |  |         |  |       
|cost                                     |  | (394)          |  | 436         |  | 234       |  | (124)       |  | 180         |  | 144     |  | (566) 
|Amortization of loss                     |  | 3,000          |  | 1,586       |  | 1,528     |  | 1,226       |  | 564         |  | 698     |  | 298   
|Net other postretirement 
  benefit cost |  | $7,678         |  | $7,776      |  | $7,782    |  | $2,690      |  | $2,462      |  | $1,102  |  | $564  

Employer Contributions

Based on current assumptions, Entergy expects to contribute $268 million to its qualified pension plans in 2008.  As of the end of July 2008, Entergy had contributed $164 million to its pension plans.  Therefore, Entergy presently anticipates contributing an additional $104 million to fund its qualified pension plans in 2008.



45



Based on current assumptions, the Registrant Subsidiaries expect to contribute the following to qualified pension plans in 2008:





|                                                                    |  |                |  | Entergy     |  |           |  |             |  |             |  |         |  |       
|------------------------------------------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------
|                                                                    |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | Entergy     |  | Entergy |  | System
|                                                                    |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | New Orleans |  | Texas   |  | Energy
|                                                                    |  | (In Thousands)
|Expected 2008 pension
   
  contributions                           |  | $70,863        |  | $27,143     |  | $   -     |  | $19,182     |  | $   -       |  | $14,960 |  | $144  
|Pension contributions made 
   
  through July 2008                 |  | $21,420        |  | $21,324     |  | $   -     |  | $5,798      |  | $   -       |  | $11,752 |  | $88   
|Remaining estimated pension 
   
  contributions to be made in 2008 |  | $49,443        |  | $5,819      |  | $   -     |  | $13,384     |  | $   -       |  | $3,208  |  | $56   

Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Act)

Based on actuarial analysis, the estimated effect of future Medicare subsidies reduced the December 31, 2007 Accumulated Postretirement Benefit Obligation (APBO) by $182 million, and reduced the second quarter 2008 and 2007 other postretirement benefit cost by $6.2 million and $6.6 million, respectively.  It reduced the six months ended June 30, 2008 and 2007 other postretirement benefit cost by $12.4 million and $13.2 million, respectively.



Based on actuarial analysis, the estimated effect of future Medicare subsidies reduced the December 31, 2007 APBO, the second quarters 2008 and 2007 other postretirement benefit cost and the six months ended June 30, 2008 and 2007 other postretirement benefit cost for the Registrant Subsidiaries as follows:



|                                  |  |                |  | Entergy     |  |           |  |             |  | Entergy  |  |           |  |         
|--------------------------------- |  | -------------- |  | ----------- |  | --------- |  | ----------- |  | -------- |  | --------- |  | --------
|                                  |  | Entergy        |  | Gulf States |  | Entergy   |  | Entergy     |  | New      |  | Entergy   |  | System  
|                                  |  | Arkansas       |  | Louisiana   |  | Louisiana |  | Mississippi |  | Orleans  |  | Texas     |  | Energy  
|                                  |  | (In Thousands)
|Reduction in 12/31/2007 APBO      |  | ($39,653)      |  | ($19,662)   |  | ($21,797) |  | ($13,223)   |  | ($9,487) |  | ($15,270) |  | ($6,185)
|Reduction in second quarter 2008  |  |                |  |             |  |           |  |             |  |          |  |           |  |         
|other postretirement benefit cost |  | ($1,266)       |  | ($876)      |  | ($706)    |  | ($406)      |  | ($279)   |  | ($263)    |  | ($236)  
|Reduction in second quarter 2007  |  |                |  |             |  |           |  |             |  |          |  |           |  |         
|other postretirement benefit cost |  | ($1,376)       |  | ($1,222)    |  | ($762)    |  | ($438)      |  | ($311)   |  | ($172)    |  | ($246)  
|Reduction in six months ended     |  |                |  |             |  |           |  |             |  |          |  |           |  |         
|June 30, 2008 other               |  |                |  |             |  |           |  |             |  |          |  |           |  |         
|postretirement benefit cost       |  | ($2,532)       |  | ($1,752)    |  | ($1,412)  |  | ($812)      |  | ($558)   |  | ($526)    |  | ($472)  
|Reduction in six months ended     |  |                |  |             |  |           |  |             |  |          |  |           |  |         
|June 30, 2007 other               |  |                |  |             |  |           |  |             |  |          |  |           |  |         
|postretirement benefit cost       |  | ($2,752)       |  | ($2,444)    |  | ($1,524)  |  | ($876)      |  | ($622)   |  | ($344)    |  | ($492)  



For further information on the Medicare Act refer to Note 11 to the financial statements in the Form 10-K.



NOTE 7.  BUSINESS SEGMENT INFORMATION

Entergy Corporation

Entergy's reportable segments as of June 30, 2008
are Utility and Non-Utility Nuclear. Utility generates, transmits, distributes,
and sells electric power in portions of Arkansas, Louisiana, Mississippi, and
Texas, and provides natural gas utility service in portions of Louisiana.
Non-Utility Nuclear owns and operates six nuclear power plants and is primarily
focused on selling electric power produced by those plants to wholesale

46



customers. "All Other" includes the parent company,
Entergy Corporation, and other business activity, including the non-nuclear
wholesale assets business and earnings on the proceeds of sales of
previously-owned businesses.



Entergy's segment financial information for the second quarters of 2008 and 2007 is as follows:



|                                 | Utility        |  | Non-Utility
Nuclear* |  | All Other* |  | Eliminations |  | Consolidated
|-------------------------------- | -------------- |  | -------------------- |  | ---------- |  | ------------ |  | ------------
|                                 | (In Thousands)
|2008                             |                |  |                      |  |            |  |              |  |             
|Operating Revenues               | $2,579,303     |  | $609,730             |  | $82,088    |  | ($6,850)     |  | $3,264,271  
|Equity in earnings of            |                |  |                      |  |            |  |              |  |             
|unconsolidated equity affiliates | $-             |  | $-                   |  | ($2,572)   |  | $-           |  | ($2,572)    
|Income Taxes (Benefit)           | $112,421       |  | $83,902              |  | ($13,311)  |  | $-           |  | $183,012    
|Net Income                       | $159,714       |  | $143,616             |  | ($32,376)  |  | $-           |  | $270,954    
|                                 |                |  |                      |  |            |  |              |  |             
|2007                             |                |  |                      |  |            |  |              |  |             
|Operating Revenues               | $2,238,555     |  | $471,521             |  | $65,817    |  | ($6,541)     |  | $2,769,352  
|Equity in earnings of            |                |  |                      |  |            |  |              |  |             
|unconsolidated equity affiliates | $-             |  | $-                   |  | $477       |  | $-           |  | $477        
|Income Taxes (Benefit)           | $98,460        |  | $63,929              |  | ($55,938)  |  | $-           |  | $106,451    
|Net Income                       | $148,194       |  | $108,726             |  | $10,682    |  | $-           |  | $267,602    



Entergy's segment financial information for the six months ended June 30, 2008 and 2007 is as follows:



|                                 | Utility        |  | Non-Utility
Nuclear* |  | All Other* |  | Eliminations |  | Consolidated
|-------------------------------- | -------------- |  | -------------------- |  | ---------- |  | ------------ |  | ------------
|                                 | (In Thousands)
|2008                             |                |  |                      |  |            |  |              |  |             
|Operating Revenues               | $4,715,633     |  | $1,290,215           |  | $136,889   |  | ($13,732)    |  | $6,129,005  
|Equity in earnings (loss) of     |                |  |                      |  |            |  |              |  |             
|unconsolidated equity affiliates | $-             |  | $-                   |  | ($3,501)   |  | $-           |  | ($3,501)    
|Income Taxes (Benefit)           | $196,664       |  | $208,875             |  | ($29,524)  |  | $-           |  | $376,015    
|Net Income (Loss)                | $276,861       |  | $365,314             |  | ($62,472)  |  | $-           |  | $579,703    
|Total Assets                     | $26,807,661    |  | $7,326,735           |  | $1,984,560 |  | ($1,425,615) |  | $34,693,341 
|                                 |                |  |                      |  |            |  |              |  |             
|2007                             |                |  |                      |  |            |  |              |  |             
|Operating Revenues               | $4,435,654     |  | $929,772             |  | $110,865   |  | ($12,880)    |  | $5,463,411  
|Equity in earnings (loss) of     |                |  |                      |  |            |  |              |  |             
|unconsolidated equity affiliates | $-             |  | $-                   |  | $2,101     |  | $-           |  | $2,101      
|Income Taxes (Benefit)           | $179,152       |  | $148,664             |  | ($75,299)  |  | $-           |  | $252,517    
|Net Income (Loss)                | $252,644       |  | $236,896             |  | ($9,743)   |  | $-           |  | $479,797    
|Total Assets                     | $26,244,883    |  | $6,654,700           |  | $2,815,623 |  | ($2,300,479) |  | $33,414,727 



Businesses marked with * are sometimes referred to as the "competitive businesses," with the exception of the parent company, Entergy Corporation.  Eliminations are primarily intersegment activity.  Almost all of Entergy's goodwill is related to the Utility segment.

47



Registrant Subsidiaries

The Registrant Subsidiaries' have one reportable segment, which is an integrated utility business, except for System Energy, which is an electricity generation business.  The Registrant Subsidiaries' operations are managed on an integrated basis because of the substantial effect of cost-based rates and regulatory oversight on the business process, cost structures, and operating results.





NOTE 8.  ACQUISITION



Calcasieu (Entergy Gulf States Louisiana)



In March 2008, Entergy Gulf States Louisiana purchased the Calcasieu Generating Facility, a 322 MW simple-cycle gas-fired power plant located near the city of Sulphur in southwestern Louisiana, for approximately $56.4 million from Dynegy, Inc.  Entergy Gulf States Louisiana received the plant, materials and supplies, SO2 emission allowances, and related real estate in the transaction.  The FERC and the LPSC approved the acquisition.





NOTE 9.  RISK MANAGEMENT AND FAIR VALUE

Fair Values

See Note 16 to the financial statements in the Form 10-K for a discussion of Entergy's and the Registrant Subsidiaries' exposure to market and commodity risks.  See Note 17 to the financial statements in the Form 10-K for a discussion of Entergy's and the Registrant Subsidiaries' decommissioning trust funds.



Effective January 1, 2008, Entergy and the Registrant Subsidiaries adopted Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements.  SFAS 157 generally does not require any new fair value measurements.  However, in some cases, the application of SFAS 157 in the future may change Entergy's and the Registrant Subsidiaries' practice for measuring and disclosing fair values under other accounting pronouncements that require or permit fair value measurements.



SFAS 157 defines fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at date of measurement.  Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value.  The inputs can be readily observable, corroborated by market data, or generally unobservable.  Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value.

SFAS 157 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.  The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs.  The three levels of fair value hierarchy defined in SFAS 157 are as follows:

- Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  Level 1 primarily consists of individually owned common stocks and debt instruments.

48



- Level 2 - Level 2 inputs are inputs other than quoted prices included in level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Level 2 inputs include the following:

> quoted prices for similar assets or liabilities in active markets;
>     quoted prices for identical assets or liabilities in inactive markets;
>     inputs other than quoted prices that are observable for the asset or liability; or
>     inputs that are derived principally from or corroborated by observable
>     market data by correlation or other means.

Level 2 consists primarily of individually owned debt instruments or shares in common trusts.

The following table sets forth, by level within the fair value hierarchy established by SFAS 157, Entergy's assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2008.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.



|                            |  | Level 1       |  | Level 2 |  | Level 3 |  | Total 
|--------------------------- |  | ------------- |  | ------- |  | ------- |  | ------
|                            |  | (In Millions)
|Assets:                     |  |               |  |         |  |         |  |       
|Decommissioning trust funds |  | $476          |  | $2,646  |  | $-      |  | $3,122
|Gas hedge contracts         |  | 123           |  | -       |  | -       |  | 123   
|                            |  | $599          |  | $2,646  |  | $-      |  | $3,245
|                            |  |               |  |         |  |         |  |       
|Liabilities:                |  |               |  |         |  |         |  |       
|Power contracts             |  | $-            |  | $-      |  | $734    |  | $734  



A small portion of the assets in the decommissioning trust funds are cash and cash equivalents.

The following table sets forth a reconciliation of changes in the liabilities for the fair value of derivatives classified as level 3 in the SFAS 157 fair value hierarchy (in millions):



|                                  |  | Second Quarter 2008 |  | Six Months Ended June 30, 2008
|--------------------------------- |  | ------------------- |  | ------------------------------
|Balance as of beginning of period |  | $288                |  | $12                           
|                                  |  |                     |  |                               
|Price changes                     |  | 480                 |  | 676                           
|Originated                        |  | 3                   |  | 77                            
|Settlements                       |  | (37)                |  | (31)                          
|                                  |  |                     |  |                               
|Balance as of June 30, 2008       |  | $734                |  | $734                          

The following table sets forth, by level within the fair value hierarchy established by SFAS 157, the Registrant Subsidaries' assets that are accounted for at fair value on a recurring basis as of June 30, 2008.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.



49





|                               |  | Level 1       |  | Level 2 |  | Level 3 |  | Total 
|------------------------------ |  | ------------- |  | ------- |  | ------- |  | ------
|                               |  | (In Millions)
|Entergy Arkansas:              |  |               |  |         |  |         |  |       
|Assets:                        |  |               |  |         |  |         |  |       
|Decommissioning trust funds    |  | $16.1         |  | $419.7  |  | $-      |  | $435.8
|                               |  |               |  |         |  |         |  |       
|Entergy Gulf States Louisiana: |  |               |  |         |  |         |  |       
|Assets:                        |  |               |  |         |  |         |  |       
|Decommissioning trust funds    |  | $15.6         |  | $327.8  |  | $-      |  | $343.4
|Gas hedge contracts            |  | 25.1          |  | -       |  | -       |  | 25.1  
|                               |  | $40.7         |  | $327.8  |  | $-      |  | $368.5
|                               |  |               |  |         |  |         |  |       
|Entergy Louisiana:             |  |               |  |         |  |         |  |       
|Assets:                        |  |               |  |         |  |         |  |       
|Decommissioning trust funds    |  | $40.0         |  | $165.1  |  | $-      |  | $205.1
|Gas hedge contracts            |  | 52.8          |  | -       |  | -       |  | 52.8  
|                               |  | $92.8         |  | $165.1  |  | $-      |  | $257.9
|                               |  |               |  |         |  |         |  |       
|Entergy Mississippi:           |  |               |  |         |  |         |  |       
|Assets:                        |  |               |  |         |  |         |  |       
|Gas hedge contracts            |  | $44.8         |  | $-      |  | $-      |  | $44.8 
|                               |  |               |  |         |  |         |  |       
|System Energy:                 |  |               |  |         |  |         |  |       
|Assets:                        |  |               |  |         |  |         |  |       
|Decommissioning trust funds    |  | $42.9         |  | $259.6  |  | $-      |  | $302.5



In the second quarter 2008 Non-Utility Nuclear recorded a $24.4 million charge to interest income resulting from the recognition of the other than temporary impairment of certain securities held in its decommissioning trust funds.



NOTE 10.  INCOME TAXES

Income Tax Audits and Litigation

Entergy expects to reach a final agreement with the IRS relating to the method of allocating overhead.  Under this agreement Entergy will concede certain deductions that will result in an increase to taxable income for income tax purposes of $361 million for 2005 and $240 million for 2006.  Because Entergy has a consolidated net operating loss carryover into these years, this concession has the effect of reducing the consolidated net operating loss carryover.  Entergy's concession will not have a material effect on the Registrant Subsidiaries' net income.  Of the total increase to taxable income for income tax purposes of $601 million, the taxable income for income tax purposes of the Registrant Subsidiaries will increase as follows: Entergy Arkansas, $173 million; Entergy Gulf States Louisiana, $200 million, of which Entergy Texas is accountable for $104 million in accordance with the jurisdictional separation plan; Entergy Louisiana, $15 million; Entergy Mississippi, $89 million; Entergy New Orleans, $15 million; and System Energy, $20 million.

50



NOTE 11.  ENTERGY GULF STATES LOUISIANA AND ENTERGY TEXAS BASIS OF PRESENTATION



Effective December 31, 2007, Entergy Gulf States, Inc. completed a jurisdictional separation into two vertically integrated utility companies, one operating under the sole retail jurisdiction of the PUCT, Entergy Texas, and the other operating under the sole retail jurisdiction of the LPSC, Entergy Gulf States Louisiana.  Entergy Texas now owns all Entergy Gulf States, Inc. distribution and transmission assets located in Texas, the gas-fired generating plants located in Texas, undivided 42.5% ownership shares of Entergy Gulf States, Inc.'s 70% ownership interest in Nelson 6 and 42% ownership interest in Big Cajun 2, Unit 3, which are coal-fired generating plants located in Louisiana, and other assets and contract rights to the extent related to utility operations in Texas.  Entergy Gulf States Louisiana now owns all of the remaining assets that were owned by Entergy Gulf States, Inc.  On a book value basis, approximately 58.1% of the Entergy Gulf States, Inc. assets were allocated to Entergy Gulf States Louisiana and approximately 41.9% were allocated to Entergy Texas.



As the successor to Entergy Gulf States, Inc. for financial reporting purposes, Entergy Gulf States Louisiana's income statements for the three and six months ended June 30, 2007 and cash flow statement for the six months ended June 30, 2007 include the operations of Entergy Texas.  Entergy Gulf States Louisiana's income statements for the three and six months ended June 30, 2008, cash flow statement for the six months ended June 30, 2008, and balance sheets as of December 31, 2007 and June 30, 2008 reflect the effects of the separation of the Texas business.



Because the jurisdictional separation was a transaction involving entities under common control, Entergy Texas recognized the assets and liabilities allocated to it at their carrying amounts in the accounts of Entergy Gulf States, Inc. at the time of the jurisdictional separation.  Entergy Texas' financial statements herein report results of operations for 2007 as though the jurisdictional separation had occurred at the beginning of 2007.





NOTE 12.  NEW ACCOUNTING PRONOUNCEMENTS



In March 2008 the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which requires enhanced disclosures about an entity's derivative and hedging activities.  SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements.  SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.



__________________________________



In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented.  The business of the Registrant Subsidiaries is subject to seasonal fluctuations, however, with the peak periods occurring during the third quarter.  The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year.



Part I, Item 4.  Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2008, evaluations were performed under the
supervision and with the participation of Entergy Corporation, Entergy Arkansas,
Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy
New Orleans, Entergy Texas, and System Energy Resources (individually
"Registrant" and collectively the "Registrants") management, including their
respective Chief Executive Officers (CEO) and Chief

51



Financial Officers (CFO). The evaluations assessed the
effectiveness of the Registrants' disclosure controls and procedures. Based on
the evaluations, each CEO and CFO has concluded that, as to the Registrant or
Registrants for which they serve as CEO or CFO, the Registrant's or Registrants'
disclosure controls and procedures are effective to ensure that information
required to be disclosed by each Registrant in reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms; and that the Registrant's or Registrants' disclosure controls
and procedures are also effective in reasonably assuring that such information
is accumulated and communicated to the Registrant's or Registrants' management,
including their respective CEOs and CFOs, as appropriate to allow timely
decisions regarding required disclosure.

52



ENTERGY ARKANSAS, INC.



MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2008 Compared to Second Quarter 2007

Net income decreased $3.1 million primarily due to a higher effective income tax rate, partially offset by higher net revenue.  Also contributing to the decrease were higher taxes other than income taxes and higher depreciation and amortization expenses.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007



Net income decreased $9.2 million primarily due to higher other operation and maintenance expenses and a higher effective income tax rate, partially offset by higher net revenue and lower interest and other charges.   Also contributing to the decrease were higher depreciation and amortization expenses and lower other income.



Net Revenue

Second Quarter 2008 Compared to Second Quarter 2007

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the second quarter 2008 to the second quarter 2007.





|                         |  | Amount       
|------------------------ |  | -------------
|                         |  | (In Millions)
|                         |  |              
|2007 net revenue         |  | $267.6       
|Net wholesale revenue    |  | 11.1         
|Rider revenue            |  | 2.3          
|Purchased power capacity |  | (3.4)        
|Other                    |  | 2.3          
|2008 net revenue         |  | $279.9       



The net wholesale revenue variance is primarily due to improved results from wholesale contracts and higher sales to affiliated companies.



The purchased power capacity variance is primarily due to higher purchased power capacity charges, including the Ouachita interim tolling agreement, partially offset by lower reserve equalization expenses.

53



Gross operating revenues, fuel and purchased power expenses, and other regulatory credits

Gross operating revenues increased primarily due to:



Fuel and purchased power expenses increased primarily due to:

Other regulatory credits decreased primarily due to increased recovery of Grand Gulf costs due to increased usage and higher rates.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits.  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2008 to the six months ended June 30, 2007.





|                              |  | Amount       
|----------------------------- |  | -------------
|                              |  | (In Millions)
|                              |  |              
|2007 net revenue              |  | $520.9       
|Net wholesale revenue         |  | 14.2         
|Deferred fuel costs revisions |  | (5.8)        
|Purchased power capacity      |  | (5.2)        
|Other                         |  | 4.0          
|2008 net revenue              |  | $528.1       



The net wholesale revenue variance is primarily due to improved results from wholesale contracts and higher billings to affiliated companies.



The deferred fuel cost revisions variance is primarily due to the 2006 energy cost recovery true-up, made in the first quarter 2007, which increased prior year net revenue by $6.6 million.



The purchased power capacity variance is primarily due to higher purchased power capacity charges, including the Ouachita interim tolling agreement, partially offset by lower reserve equalization expenses.

54



Gross operating revenues, fuel and purchased power expenses, and other regulatory credits

Gross operating revenues increased primarily due to:

The increase was partially offset by a decrease of $50.8 million in fuel cost recovery revenues due to a change in the energy cost recovery rider effective April 2007.  The energy cost recovery rider filings are discussed in Note 2 to the financial statements in the Form 10-K.

> Fuel and purchased power expenses increased due to:

The increase was partially offset by a decrease in deferred fuel expense due to a lower energy cost recovery rate.

Other regulatory credits decreased primarily due to increased recovery of Grand Gulf costs due to increased usage and higher rates.

Other Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007

Taxes other than income taxes increased primarily due to an increase in local franchise taxes as a result of higher residential and commercial revenue and an increase in ad valorem taxes due to a higher millage rate and a higher 2008 assessment.



Depreciation and amortization expenses increased primarily due to an increase in plant in service.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Other operation and maintenance expenses increased primarily due to an increase of $16.4 million in storm damage charges as a result of several storms hitting Entergy Arkansas' service territory in the first quarter 2008.  Entergy Arkansas discontinued regulatory storm reserve accounting beginning July 2007 as a result of the APSC order issued in Entergy Arkansas' rate case.  As a result, non-capital storm expenses are charged to other operation and maintenance expenses.  The increase was partially offset by a reimbursement of $7 million of costs in connection with a litigation settlement.



Depreciation and amortization expenses increased primarily due to an increase in plant in service.



Other income decreased primarily due to a revision in 2007 to the allowance for equity funds used during construction related to removal costs and a decrease in interest earned on money pool investments.



55



Interest and other charges decreased primarily due to interest expense of $2.9 million recorded in the first quarter 2007 on advances from independent power producers per a FERC order and a decrease in interest accrued on the long-term DOE spent fuel obligation, partially offset by a revision to the allowance for borrowed funds used during construction related to removal costs.

Income Taxes

The effective income tax rate was 47.9% for the second quarter of 2008 and 45.3% for the six months ended June 30, 2008. The difference in the effective income tax rate for the second quarter 2008 versus the federal statutory rate of 35.0% is primarily due to book and tax differences related to utility plant items and state income taxes. The difference in the effective income tax rate for the six months ended June 30, 2008 versus the federal statutory rate of 35.0% is primarily due to book and tax differences related to utility plant items, state income taxes, and an adjustment of the federal tax reserve for prior years, partially offset by flow-through book and tax timing differences.



The effective income tax rate was 36.8% for the second quarter of 2007 and 41.3% for the six months ended June 30, 2007.  The difference in the effective income tax rate for the second quarter of 2007 versus the federal statutory rate of 35.0% is primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by an adjustment of the federal tax reserve for prior years and book and tax differences related to the allowance for equity funds used during construction.  The difference in the effective income tax rate for the six months ended June 30, 2007 versus the federal statutory rate of 35.0% is primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by a downward revision in the estimate of federal income tax expense related to tax depreciation.

Liquidity and Capital Resources

Cash Flow



Cash flows for the six months ended June 30, 2008 and 2007 were as follows:





|                                                 |                      | 2008           |           | 2007   
|------------------------------------------------ | -------------------- | -------------- | --------- | -------
|                                                 |                      | (In Thousands)
|                                                 |                      |                |           |        
|Cash and cash equivalents at beginning of period |                      | $212           |           | $34,815
|                                                 |                      |                |           |        
|Cash flow provided by (used in):                 |                      |                |           |        
|                                                 | Operating activities |                | 151,750   |        
|                                                 | Investing activities |                | (179,625) |        
|                                                 | Financing activities |                | 38,222    |        
|Net increase in cash and cash equivalents        |                      | 10,347         |           | 32,023 
|                                                 |                      |                |           |        
|Cash and cash equivalents at end of period       |                      | $10,559        |           | $66,838

Operating Activities

Cash flow from operations decreased $73.4 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to decreased recovery of deferred fuel costs, an increase in income taxes paid, the timing of payments to vendors, and an increase of $10.7 million in pension contributions.

56



Investing Activities

Net cash flow used in investing activities increased $20.5 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to an increase in fossil construction expenditures resulting from a coal plant equipment purchase in 2008.

Financing Activities

Financing activities provided $38.2 million of cash for the six months ended June 30, 2008 compared to using $33.9 million of cash for the six months ended June 30, 2007 primarily due to borrowings of $100 million on Entergy Arkansas' credit facility, partially offset by money pool activity.  Decreases in Entergy Arkansas' payable to the money pool are a use of cash flow, and Entergy Arkansas' payable to the money pool decreased by $52.3 million for the six months ended June 30, 2008.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Capital Structure



Entergy Arkansas' capitalization is balanced between equity and debt, as shown in the following table.



|                                     |  | June 30,
2008 |  | December 31,
2007
|------------------------------------ |  | ------------- |  | -----------------
|                                     |  |               |  |                  
|Net debt to net capital              |  | 50.2%         |  | 49.0%            
|Effect of subtracting cash from debt |  | 0.1%          |  | 0.0%             
|Debt to capital                      |  | 50.3%         |  | 49.0%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and shareholders' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Arkansas uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas' financial condition.



Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources"in the Form 10-K for a discussion of Entergy Arkansas' uses and sources of capital.  Following are updates to the information provided in the Form 10-K.



The planned construction and other capital investments disclosure in the Form 10-K includes approximately $24 million for initial spending during the 2008-2010 period on installation of scrubbers and low NOx burners at Entergy Arkansas' White Bluff coal plant, which under current environmental regulations must be operational by September 2013.  The project remains in the planning stages and has not been fully designed, but the latest conceptual cost estimate has gone up significantly from previous estimates due to increases in equipment, commodity, and labor costs.  These estimates indicate that Entergy Arkansas' share of the project could cost approximately $630 million compared to the $375 million reported in the Form 10-K.  Entergy Arkansas continues to review potential environmental spending needs and financing alternatives for any such spending, and future spending estimates could change based on the results of this continuing analysis.



In July 2008, Entergy Arkansas issued $300 million of 5.4% Series First Mortgage Bonds due August 2013. Entergy Arkansas intends to use the proceeds to fund the purchase of, and improvements relating to, the Ouachita power plant and for general corporate purposes.  Pending the application of the net proceeds, Entergy Arkansas intends to use the proceeds for working capital purposes, including repayment of short-term debt, and it may invest them in temporary cash investments or the Entergy System money pool.



57



In April 2008, Entergy Arkansas renewed its $100 million credit facility through April 2009.  As of June 30, 2008, $100 million was outstanding on the credit facility.



Entergy Arkansas' receivables from or (payables to) the money pool were as follows:



|June 30,
2008  |  | December 31,
2007 |  | June 30,
2007 |  | December 31,
2006
|-------------- |  | ----------------- |  | ------------- |  | -----------------
|(In Thousands)
|               |  |                   |  |               |  |                  
|($25,541)      |  | ($77,882)         |  | $26,450       |  | $16,109          



In May 2007, $1.8 million of Entergy Arkansas' receivable from the money pool was replaced by a note receivable from Entergy New Orleans.  See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for a discussion of state and local rate regulation, federal regulation, Energy Policy Act of 2005, utility restructuring, nuclear matters, and environmental risks.  Following are updates to the information provided in the Form 10-K.



State and Local Rate Regulation

Ouachita Acquisition

Entergy Arkansas filed with the APSC in September 2007 for its approval of the Ouachita plant acquisition, including full cost recovery.  The APSC Staff and the Arkansas attorney general supported Entergy Arkansas' acquisition of the plant, but oppose the sale of one-third of the capacity and energy to Entergy Gulf States Louisiana.  The industrial group AEEC opposes Entergy Arkansas' purchase of the plant.  The Arkansas attorney general opposes recovery of the non-fuel costs of the plant through a separate rider, while the APSC Staff recommended revisions to the rider.  In December 2007, the APSC issued an order approving recovery through a rider of the capacity costs associated with the interim tolling agreement, which will be in effect until APSC action on the acquisition of the plant.  A hearing before the APSC was held in April 2008 to address Entergy Arkansas' request for acquisition of the plant and concurrent cost recovery.  In June 2008 the APSC approved Entergy Arkansas' acquisition of the Ouachita plant and approved recovery of the acquisition and ownership costs through a rate rider.  The APSC also approved the planned sale of one-third of the capacity and energy to Entergy Gulf States Louisiana.  The Arkansas attorney general, the AEEC, and Entergy Arkansas have requested rehearing of the APSC order.  Entergy Arkansas' request for rehearing concerns the 7.61% before-tax return on rate base approved by the APSC, which reflects significant sources of zero-cost capital already reflected in base rates.  Entergy Arkansas had requested a 10.87% before-tax return on rate base reflecting the cost of the debt and equity capital resources available to finance the Ouachita plant acquisition.



On March 18, 2008 the Arkansas attorney general and the AEEC filed a notice of appeal of the December 2007 APSC order that approved recovery through a rider of the capacity costs associated with the interim tolling agreement.  The Arkansas attorney general's and the AEEC's appeal briefs are due September 20, 2008, and the appellees' briefs, including Entergy Arkansas', are due October 20, 2008.

Production Cost Allocation Rider

In its June 2007 decision on Entergy Arkansas' August 2006 rate filing, the APSC approved a production cost allocation rider for recovery from customers of the retail portion of the costs allocated to Entergy Arkansas as a result of the System Agreement proceedings, but set a termination date of December 31, 2008 for the rider.  In December 2007, the APSC issued a subsequent order stating the production cost allocation rider will remain



58



in effect, and any future termination of the rider will be subject to eighteen months advance notice by the APSC, which would occur following notice and hearing.  On March 18, 2008 the Arkansas attorney general and the AEEC filed a notice of appeal of the December 2007 APSC order.  The Arkansas attorney general's and the AEEC's appeal briefs are due September 5, 2008, and the appellees' briefs, including Entergy Arkansas', are due October 5, 2008.



In June 2008, Entergy Arkansas filed with the APSC its annual redetermination of the production cost allocation rider.  The redetermination resulted in a slight increase in the rates beginning with the first billing cycle of July 2008.

Energy Cost Recovery Rider

Entergy Arkansas' retail rates include an energy cost recovery rider.  In December 2007, the APSC issued an order stating that Entergy Arkansas' energy cost recovery rider will remain in effect, and any future termination of the rider will be subject to eighteen months advance notice by the APSC, which would occur following notice and hearing.  On March 18, 2008 the Arkansas attorney general and the AEEC filed a notice of appeal of the December 2007 APSC order.  The Arkansas attorney general's and the AEEC's appeal briefs are due September 5, 2008, and the appellees' briefs, including Entergy Arkansas', are due October 5, 2008.



In March 2008, Entergy Arkansas filed with the APSC its annual energy cost rate for the period April 2008 through March 2009.  The filed energy cost rate increased from $0.01179/kWh to $0.01869/kWh.  The increase was caused by the following: 1) all three of the nuclear power plants from which Entergy Arkansas obtains power, ANO 1 and 2 and Grand Gulf, will have refueling outages in 2008, and the energy cost rate is adjusted to account for the replacement power costs that will be incurred while these units are down; 2) Entergy Arkansas has a deferred fuel cost balance from under-recovered fuel costs at December 31, 2007; and 3) fuel and purchased power prices have increased.

Storm Cost Recovery Proposal

In June 2008, together with other Arkansas utilities, Entergy Arkansas filed a joint application for approval of storm cost recovery accounting and a storm damage rider.  To enable recovery of 2008 storm cost expenditures through the rider and storm reserve accounting, the applicants requested that the APSC establish a procedural schedule that would allow resolution of this proceeding no later than December 15, 2008.



Federal Regulation



See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Significant Factors and Known Trends" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Arkansas' accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

59



ENTERGY ARKANSAS, INC.INCOME STATEMENTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$580,462

$434,027

$1,079,835

$936,765OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

83,703

(17,191)

167,265

120,847Purchased power

223,318

193,089

389,842

309,495Nuclear refueling outage expenses

7,286

7,260

14,217

14,274Other operation and maintenance

116,547

115,203

223,671

215,058Decommissioning

8,696

8,134

17,248

16,134Taxes other than income taxes

22,480

16,251

38,219

36,234Depreciation and amortization

59,066

56,764

116,303

112,829Other regulatory credits - net

(6,435)

(9,462)

(5,392)

(14,491)TOTAL

514,661

370,048

961,373

810,380OPERATING INCOME

65,801

63,979

118,462

126,385OTHER INCOMEAllowance for equity funds used during construction

1,563

1,800

3,341

7,396Interest and dividend income

5,547

4,150

10,804

11,733Miscellaneous - net

(722)

(601)

(1,735)

(1,805)TOTAL

6,388

5,349

12,410

17,324INTEREST AND OTHER CHARGESInterest on long-term debt

18,207

19,776

36,835

39,130Other interest - net

1,907

1,918

3,845

6,815Allowance for borrowed funds used during construction

(749)

(767)

(1,599)

(3,510)TOTAL

19,365

20,927

39,081

42,435INCOME BEFORE INCOME TAXES

52,824

48,401

91,791

101,274Income taxes

25,303

17,809

41,552

41,799NET INCOME

27,521

30,592

50,239

59,475Preferred dividend requirements and other

1,718

1,718

3,437

3,437EARNINGS APPLICABLE TOCOMMON STOCK

$25,803

$28,874

$46,802

$56,038See Notes to Financial Statements.




60



ENTERGY ARKANSAS, INC.STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income

$50,239

$59,475Adjustments to reconcile net income to net cash flow provided by operating activities:Reserve for regulatory adjustments

(3,010)

658Other regulatory credits - net

(5,392)

(14,491)Depreciation, amortization, and decommissioning

133,551

128,963Deferred income taxes and investment tax credits, and non-current taxesaccrued

34,884

76,124Changes in working capital:Receivables

(273)

49,691Fuel inventory

(8,846)

(10,150)Accounts payable

(85,077)

198,752Taxes accrued

-

(37,161)Interest accrued

(670)

(2,962)Deferred fuel costs

38,826

46,850Other working capital accounts

21,347

(245,647)Provision for estimated losses and reserves

(37)

(29)Changes in other regulatory assets

8,739

(23,273)Other

(32,531)

(1,675)Net cash flow provided by operating activities

151,750

225,125INVESTING ACTIVITIESConstruction expenditures

(174,456)

(150,285)Allowance for equity funds used during construction

3,341

7,396Nuclear fuel purchases

(60,335)

(40,129)Proceeds from sale/leaseback of nuclear fuel

60,377

42,220Proceeds from nuclear decommissioning trust fund sales

104,860

14,075Investment in nuclear decommissioning trust funds

(113,412)

(20,290)Change in money pool receivable - net

-

(12,152)Net cash flow used in investing activities

(179,625)

(159,165)FINANCING ACTIVITIESChange in credit borrowings - net

100,000

-Change in money pool payable - net

(52,341)

-Dividends paid:Common stock

(6,000)

(30,500)Preferred stock

(3,437)

(3,437)Net cash flow provided by (used in) financing activities

38,222

(33,937)Net increase in cash and cash equivalents

10,347

32,023Cash and cash equivalents at beginning of period

212

34,815Cash and cash equivalents at end of period

$10,559

$66,838SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$36,634

$41,895Income taxes

$36,174

$18,643See Notes to Financial Statements.


61



ENTERGY ARKANSAS, INC.BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents

$10,559

$212Accounts receivable:Customer

103,694

85,414Allowance for doubtful accounts

(15,551)

(16,649)Associated companies

74,409

75,756Other

92,507

124,111Accrued unbilled revenues

82,086

68,240Total accounts receivable

337,145

336,872Deferred fuel costs

75,937

114,763Fuel inventory - at average cost

29,351

20,505Materials and supplies - at average cost

111,515

106,165Deferred nuclear refueling outage costs

27,257

17,623System agreement cost equalization

215,869

268,000Prepayments and other

38,690

16,511TOTAL

846,323

880,651OTHER PROPERTY AND INVESTMENTSInvestment in affiliates - at equity

11,203

11,203Decommissioning trust funds

439,344

466,348Non-utility property - at cost (less accumulated depreciation)

1,441

1,442Other

5,391

5,391TOTAL

457,379

484,384UTILITY PLANTElectric

6,950,028

6,792,825Property under capital lease

1,478

2,436Construction work in progress

128,358

146,651Nuclear fuel under capital lease

144,125

124,585Nuclear fuel

15,713

19,548TOTAL UTILITY PLANT

7,239,702

7,086,045Less - accumulated depreciation and amortization

3,188,094

3,112,896UTILITY PLANT - NET

4,051,608

3,973,149DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net

99,452

93,557Other regulatory assets

526,173

534,937Other

32,294

33,128TOTAL

657,919

661,622TOTAL ASSETS

$6,013,229

$5,999,806See Notes to Financial Statements.


62



ENTERGY ARKANSAS, INC.BALANCE SHEETSLIABILITIES AND SHAREHOLDERS' EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESNotes payable

$100,000

$-Accounts payable:Associated companies

325,278

486,201Other

123,751

100,246Customer deposits

60,483

57,751Accumulated deferred income taxes

18,355

26,964Interest accrued

16,777

17,447Obligations under capital leases

48,805

49,738Other

14,537

10,890TOTAL

707,986

749,237NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued

1,374,017

1,330,324Accumulated deferred investment tax credits

53,868

55,854Obligations under capital leases

96,798

77,283Other regulatory liabilities

81,953

117,510Decommissioning

522,875

505,626Accumulated provisions

14,377

14,414Pension and other postretirement liabilities

251,660

260,381Long-term debt

1,316,750

1,314,525Other

51,230

73,739TOTAL

3,763,528

3,749,656Commitments and ContingenciesSHAREHOLDERS' EQUITYPreferred stock without sinking fund

116,350

116,350Common stock, $0.01 par value, authorized 325,000,000shares; issued and outstanding 46,980,196 shares in 2008and 2007

470

470Paid-in capital

588,527

588,527Retained earnings

836,368

795,566TOTAL

1,541,715

1,500,913TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$6,013,229

$5,999,806See Notes to Financial Statements.


63



ENTERGY ARKANSAS, INC.SELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$ 158

$ 126

$ 32

25Commercial

109

83

26

31Industrial

110

81

29

36Governmental

5

4

1

25Total retail

382

294

88

30Sales for resaleAssociated companies

115

70

45

64Non-associated companies

44

36

8

22Other

39

34

5

15Total

$ 580

$ 434

$ 146

34Billed Electric EnergySales (GWh):Residential

1,551

1,523

28

2Commercial

1,384

1,383

1

-Industrial

1,765

1,799

(34)

(2)Governmental

66

67

(1)

(1)Total retail

4,766

4,772

(6)

-Sales for resaleAssociated companies

1,964

1,578

386

24Non-associated companies

590

586

4

1Total

7,320

6,936

384

6Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$ 337

$ 307

$ 30

10Commercial

203

182

21

12Industrial

202

183

19

10Governmental

9

9

-

-Total retail

751

681

70

10Sales for resaleAssociated companies

211

148

63

43Non-associated companies

77

70

7

10Other

41

38

3

8Total

$ 1,080

$ 937

$ 143

15Billed Electric EnergySales (GWh):Residential

3,694

3,555

139

4Commercial

2,731

2,711

20

1Industrial

3,478

3,520

(42)

(1)Governmental

131

132

(1)

(1)Total retail

10,034

9,918

116

1Sales for resaleAssociated companies

3,918

3,571

347

10Non-associated companies

1,130

1,255

(125)

(10)Total

15,082

14,744

338

2


64



ENTERGY GULF STATES LOUISIANA, L.L.C.



MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Jurisdictional Separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas

See Part I, Item 1 in the Form 10-K and Entergy Gulf States Louisiana's Management's Financial Discussion and Analysis in the Form 10-K for a discussion of the jurisdictional separation of Entergy Gulf States, Inc. into two vertically integrated utility companies, one operating under the sole retail jurisdiction of the PUCT, Entergy Texas, and the other operating under the sole retail jurisdiction of the LPSC, Entergy Gulf States Louisiana.



Entergy Gulf States Louisiana is the successor for financial reporting purposes to Entergy Gulf States, Inc. Entergy Gulf States Louisiana's Income Statement for the three and six months ended June 30, 2008 and Entergy Gulf States Louisiana's Cash Flow Statement for the six months ended June 30, 2008, reflect the effects of the separation of the Texas business.  Entergy Gulf States Louisiana's Income Statement for the three and six months ended June 30, 2007 and Entergy Gulf States Louisiana's Cash Flow Statement for the six months ended June 30, 2007, include the operations of Entergy Texas.  Entergy Gulf States Louisiana's balance sheets as of June 30, 2008 and December 31, 2007 reflect the effects of the separation of the Texas business.



Pursuant to the LPSC order approving the jurisdictional separation plan, Entergy Gulf States has made two compliance filings in 2008.  On March 31, 2008, Entergy Gulf States Louisiana made its jurisdictional separation plan balance sheet compliance filing with the LPSC.  On June 11, 2008, Entergy Gulf States Louisiana made its revenue and expense compliance filing.

Results of Operations

Following are income statement variances for Entergy Gulf States Louisiana comparing the second quarter 2008 to the second quarter 2007 showing how much the line item increased or (decreased) in comparison to the prior period:

|                                                                                                               |  | Second Quarter 
2007 |  | Variance caused directly by the jurisdictional separation |  | Variance caused by other factors |  | Second Quarter 2008
|-------------------------------------------------------------------------------------------------------------- |  | -------------------- |  | --------------------------------------------------------- |  | -------------------------------- |  | -------------------
|                                                                                                               |  | (In Thousands)      
|                                                                                                               |  |                      |  |                                                           |  |                                  |  |                    
|Net revenue (operating revenue less fuel expense,
  
purchased power, and other regulatory
   charges/credits) |  | $308,654             |  | ($90,646)                                                 |  | ($11,086)                        |  | $206,922           
|Other operation and maintenance expenses                                                                       |  | 141,275              |  | (47,239)                                                  |  | (2,549)                          |  | 91,487             
|Taxes other than income taxes                                                                                  |  | 34,830               |  | (12,871)                                                  |  | (2,556)                          |  | 19,403             
|Depreciation and amortization                                                                                  |  | 53,060               |  | (17,346)                                                  |  | (1,606)                          |  | 34,108             
|Other expenses                                                                                                 |  | 6,718                |  | (43)                                                      |  | 4,509                            |  | 11,184             
|Other income                                                                                                   |  | 18,578               |  | 4,759                                                     |  | (3,754)                          |  | 19,583             
|Interest charges                                                                                               |  | 36,634               |  | (3,259)                                                   |  | (1,880)                          |  | 31,495             
|Income taxes                                                                                                   |  | 22,755               |  | (5,291)                                                   |  | (1,823)                          |  | 15,641             
|                                                                                                               |  |                      |  |                                                           |  |                                  |  |                    
|Net Income (Loss)                                                                                              |  | $31,960              |  | $162                                                      |  | ($8,935)                         |  | $23,187            

65



Following are income statement variances for Entergy Gulf States Louisiana comparing the six months ended June 30, 2008 to the six months ended June 30, 2007 showing how much the line item increased or (decreased) in comparison to the prior period:





|                                                                                                               |  | Six months 
ended 
June 30, 2007 |  | Variance caused directly by the jurisdictional separation |  | Variance caused by other factors |  | Six months 
ended 
June 30, 2008
|-------------------------------------------------------------------------------------------------------------- |  | -------------------------------- |  | --------------------------------------------------------- |  | -------------------------------- |  | --------------------------------
|                                                                                                               |  | (In Thousands)                  
|                                                                                                               |  |                                  |  |                                                           |  |                                  |  |                                 
|Net revenue (operating revenue less fuel expense,
  
purchased power, and other regulatory
   charges/credits) |  | $587,107                         |  | ($166,220)                                                |  | ($18,475)                        |  | $402,412                        
|Other operation and maintenance expenses                                                                       |  | 267,129                          |  | (89,190)                                                  |  | (6,975)                          |  | 170,964                         
|Taxes other than income taxes                                                                                  |  | 66,142                           |  | (26,004)                                                  |  | (3,453)                          |  | 36,685                          
|Depreciation and amortization                                                                                  |  | 105,475                          |  | (34,480)                                                  |  | (3,761)                          |  | 67,234                          
|Other expenses                                                                                                 |  | 13,217                           |  | (85)                                                      |  | 4,790                            |  | 17,922                          
|Other income                                                                                                   |  | 39,383                           |  | 8,768                                                     |  | (4,995)                          |  | 43,156                          
|Interest charges                                                                                               |  | 73,983                           |  | (8,233)                                                   |  | (2,744)                          |  | 63,006                          
|Income taxes                                                                                                   |  | 40,987                           |  | (3,018)                                                   |  | (2,225)                          |  | 35,744                          
|                                                                                                               |  |                                  |  |                                                           |  |                                  |  |                                 
|Net Income (Loss)                                                                                              |  | $59,557                          |  | $3,558                                                    |  | ($9,102)                         |  | $54,013                         



Net Income



Second Quarter 2008 Compared to Second Quarter 2007



Net income decreased by $8.8 million primarily due to lower net revenue, other than the effect on net revenue directly caused by the jurisdictional separation.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net income decreased by $5.5 million primarily due to lower net revenue, other than the effect on net revenue directly caused by the jurisdictional separation, partially offset by lower other operation and maintenance expenses and the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.  For the six months ended June 30, 2007, Entergy Texas reported a net loss of $3.6 million.

Net Revenue

Second Quarter 2008 Compared to Second Quarter 2007



66



|                          |  | Amount       
|------------------------- |  | -------------
|                          |  | (In Millions)
|                          |  |              
|2007 net revenue          |  | $308.7       
|Jurisdictional separation |  | (90.6)       
|Volume/weather            |  | 11.1         
|Other                     |  | (22.3)       
|2008 net revenue          |  | $206.9       



Net revenue decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



The volume/weather variance is due to increased electricity usage in the residential and commercial sectors primarily as a result of more favorable weather compared to the same period in 2007 and increased electricity sales during the unbilled sales period.  Billed retail electricity usage increased a total of 91 GWh in the residential and commercial sectors.  See Note 1 to the financial statements in the Form 10-K for a discussion of the accounting for unbilled revenues.



The Other variance is primarily caused by various operational effects of the jurisdictional separation on revenues and fuel and purchased power expenses.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges (credits)

Gross operating revenues decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007, partially offset by an increase in fuel cost recovery revenues due to higher fuel rates and increased usage.



Fuel and purchased power expense decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Other regulatory charges decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007 and a decrease in capacity charges.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing six months ended June 30, 2008 to the six months ended June 30, 2007.



|                          |  | Amount       
|------------------------- |  | -------------
|                          |  | (In Millions)
|                          |  |              
|2007 net revenue          |  | $587.1       
|Jurisdictional separation |  | (166.2)      
|Volume/weather            |  | 10.5         
|Other                     |  | (29.0)       
|2008 net revenue          |  | $402.4       



Net revenue decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.

67



The volume/weather variance is due to increased electricity usage in the residential and commercial sectors primarily as a result of more favorable weather compared to the same period in 2007.  Billed retail electricity usage increased a total of 119 GWh for the residential and commercial sectors.



The Other variance is primarily caused by various operational effects of the jurisdictional separation on revenues and fuel and purchased power expenses.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges

Gross operating revenues decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007, partially offset by an increase in fuel cost recovery revenues due to higher fuel rates and increased usage.



Fuel and purchased power expense decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Other regulatory charges decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007 and a decrease in capacity charges.

Other Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007

Other operation and maintenance decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Taxes other than income taxes decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Depreciation and amortization decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Nuclear refueling outage expenses increased due to the amortization of higher expenses associated with the planned maintenance and refueling outage at River Bend in the first quarter 2008 as well as the delay of this outage from late 2007 to early 2008 resulting in a shorter amortization period for these costs.



Other income includes $15 million in interest and dividend income in 2008 related to the debt assumption agreement between Entergy Gulf States Louisiana and Entergy Texas and the $1.079 billion of debt assumed by Entergy Texas as of December 31, 2007.  Entergy Gulf States Louisiana remains primarily liable on this debt.  The increase in interest income is partially offset by $10 million of other income reported by Entergy Texas for the second quarter 2007.  The income from the debt assumption agreement offsets the interest expense on the portion of long-term debt assumed by Entergy Texas.  The remaining variance was caused by various individually insignificant factors.



Interest and other charges decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007 and due to a decrease in long-term debt outstanding.

68



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Other operation and maintenance decreased primarily due to:

a decrease of $89.2 million due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007;

a decrease of $7.9 million in nuclear labor and contract costs due to a non-refueling plant outage in March 2007; and

a decrease of $2.9 million in payroll-related costs.



The decrease was partially offset by an increase of $4.8 million in transmission spending due to higher transmission equalization expenses.



Taxes other than income taxes decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Depreciation and amortization decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007.



Nuclear refueling outage expenses increased due to the amortization of higher expenses associated with the planned maintenance and refueling outage at River Bend in the first quarter 2008 as well as the delay of this outage from late 2007 to early 2008 resulting in a shorter amortization period for these costs.



Other income includes $30 million in interest and dividend income in 2008 related to the debt assumption agreement between Entergy Gulf States Louisiana and Entergy Texas and the $1.079 billion of debt assumed by Entergy Texas as of December 31, 2007.  Entergy Gulf States Louisiana remains primarily liable on this debt.  The increase in interest income is partially offset by $21 million of other income reported by Entergy Texas for the six months ended June 30, 2007.  The income from the debt assumption agreement offsets the interest expense on the portion of long-term debt assumed by Entergy Texas.  The remaining variance was caused by various individually insignificant factors.



Interest and other charges decreased primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007 and due to a decrease in long-term debt outstanding.

Income Taxes

The effective income tax rate was 40.3% for the second quarter 2008 and 39.8% for the six months ended June 30, 2008.  The differences in the effective income tax rate for the second quarter 2008 and the six months ended June 30, 2008 versus the federal statutory rate of 35% are due to book and tax differences related to utility plant items and state income taxes, partially offset by flow-through book and tax timing differences, the amortization of investment tax credits, and book and tax differences related to allowance for equity funds used during construction.



The effective income tax rate was 41.6% for the second quarter 2007 and 40.8% for the six months ended June 30, 2007.  The differences in the effective income tax rate for the second quarter 2007 and the six months ended June 30, 2007 versus the federal statutory rate of 35.0% are primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by flow-through book and tax timing differences related to a pension payment, book and tax differences related to allowance for equity funds used during construction, and the amortization of investment tax credits.

69



Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2008 and 2007 were as follows:





|                                                     |                      | 2008           |           | 2007    
|---------------------------------------------------- | -------------------- | -------------- | --------- | --------
|                                                     |                      | (In Thousands)
|                                                     |                      |                |           |         
|Cash and cash equivalents at beginning of period     |                      | $108,036       |           | $180,381
|                                                     |                      |                |           |         
|Cash flow provided by (used in):                     |                      |                |           |         
|                                                     | Operating activities |                | 107,817   |         
|                                                     | Investing activities |                | (176,998) |         
|                                                     | Financing activities |                | (5,379)   |         
|Net increase (decrease) in cash and cash equivalents |                      | (74,560)       |           | 271,175 
|                                                     |                      |                |           |         
|Cash and cash equivalents at end of period           |                      | $33,476        |           | $451,556

Operating Activities

Net cash flow provided by operating activities decreased $137.8 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas, effective December 31, 2007 and decreased recovery of deferred fuel costs, partially offset by the timing of payments to vendors.  Fuel prices have been increasing, and due to the time lag before the fuel adjustment rate increases in response, Entergy Gulf States Louisiana has under-recovered fuel costs thus far in 2008.

Investing Activities



Net cash flow used in investing activities decreased $69.7 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to the effect of the jurisdictional separation on money pool activity and construction expenditures.  The decrease was partially offset by the purchase of the Calcasieu Generating Facility for $56.4 million and an increase in nuclear construction expenditures of $19.1 million primarily due to the rescheduling of the River Bend refueling outage from late 2007 to early 2008.  See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of the Calcasieu purchase which was completed in March 2008.



Increases in Entergy Gulf States Louisiana's receivable from the money pool are a use of cash flow, and Entergy Gulf States Louisiana's receivable from the money pool increased by $19.5 million the six months ended June 30, 2008 compared to increasing by $117.7 million the six months ended June 30, 2007.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Financing Activities

Financing activities used $5.4 million for the six months ended June 30, 2008 compared to providing $272.3 million for the six months ended June 30, 2007 primarily due to the issuance of $329.5 million of securitization bonds in June 2007, partially offset by borrowings of $30 million on Entergy Gulf States Louisiana's credit facility.

70



Capital Structure



Entergy Gulf States Louisiana's capitalization is balanced between equity and debt, as shown in the following table.





|                                     |  | June 30,
 2008 |  | December 31,
2007
|------------------------------------ |  | -------------- |  | -----------------
|                                     |  |                |  |                  
|Net debt to net capital              |  | 63.9%          |  | 64.4%            
|Effect of subtracting cash from debt |  | 0.3%           |  | 1.0%             
|Debt to capital                      |  | 64.2%          |  | 65.4%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and members' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Gulf States Louisiana uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Gulf States Louisiana's financial condition.



Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Gulf States Louisiana's uses and sources of capital.  Following are updates to the information provided in the Form 10-K.



Entergy Gulf States Louisiana's receivables from the money pool were as follows:





|June 30,
2008  |  | December 31,
2007 |  | June 30,
2007 |  | December 31,
2006
|-------------- |  | ----------------- |  | ------------- |  | -----------------
|(In Thousands)
|               |  |                   |  |               |  |                  
|$74,961        |  | $55,509           |  | $192,747      |  | $75,048          



See Note 4 to the financial statements in the Form 10-K for a description of the money pool.



As discussed in the Form 10-K, Entergy Gulf States Louisiana has a credit facility in the amount of $100 million scheduled to expire in August 2012.  As of June 30, 2008, $30 million was outstanding on the credit facility.



In May 2008, Entergy Gulf States Louisiana issued $375 million of 6.00% Series First Mortgage Bonds due May 2018.  The proceeds were used to pay at maturity the portion of the $325 million of 3.6% Series First Mortgage Bonds due June 2008 that had not been assumed by Entergy Texas and to redeem, prior to maturity, $189.7 million of the $350 million Floating Rate series of First Mortgage bonds due December 2008, and for other general corporate purposes.



The portion of the $325 million of 3.6% Series First Mortgage Bonds due June 2008 that had been assumed by Entergy Texas was paid at maturity by Entergy Texas in June 2008, and that bond series is no longer outstanding.  The remainder of the $350 million Floating Rate series of First Mortgage bonds due December 2008 had been assumed by Entergy Texas, and management expects Entergy Texas to redeem those bonds by their maturity date.

Hurricane Rita and Hurricane Katrina

See the Form 10-K for a discussion of the
effects of Hurricanes Katrina and Rita, which hit Entergy Gulf States Inc.'s
jurisdictions in Louisiana and Texas in August and September 2005, which
resulted in power outages, significant damage to electric distribution,
transmission, and generation

71



infrastructure, the temporary loss of sales and customers due
to mandatory evacuations, and Entergy Gulf States, Inc.'s initiatives to recover
storm restoration and business continuity costs and incremental losses.



Act 55 Storm Cost Financings



In March 2008, Entergy Gulf States Louisiana, Entergy Louisiana, and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed at the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana and Entergy Louisiana storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Legislature (Act 55 financings).  The Act 55 financings are expected to produce additional customer benefits as compared to Act 64 traditional securitization.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and savings to customers via a Storm Cost Offset rider.  On April 3, 2008, the Louisiana State Bond Commission granted preliminary approval for the Act 55 financings.  On April 8, 2008, the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds pursuant to the Act 55 financings, approved requests for the Act 55 financings.  On April 10, 2008, Entergy Gulf States Louisiana and Entergy Louisiana and the LPSC Staff filed with the LPSC an uncontested stipulated settlement that includes Entergy Gulf States Louisiana and Entergy Louisiana's proposals under the Act 55 financings,
which includes a commitment to pass on to customers a minimum of $10 million and
$30 million of customer benefits, respectively.  On April 16, 2008, the LPSC
approved the settlement and issued two financing orders and one ratemaking order
intended to facilitate implementation of the Act 55 financings.  On May 6, 2008,
the State Bond Commission voted to approve the Act 55 financings.

Entergy Gulf States Louisiana expects that in September 2008 the LPFA will issue
$273 million in bonds under the aforementioned Act 55.  From the bond proceeds
expected to be received by Entergy Gulf States Louisiana from the LURC, Entergy
Gulf States Louisiana is expected to invest $186 million in affiliate
securities.  In addition, Entergy Gulf States Louisiana expects the LURC to
deposit $87 million to a restricted escrow account as a storm damage reserve for
Entergy Gulf States Louisiana.  As approved by the April 16, 2008 LPSC
orders, it is expected that Entergy Gulf States Louisiana will withdraw
$1.7 million from the restricted escrow account and will also invest this amount
in affiliate securities.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for a discussion of state and local rate regulation; transition to retail competition; federal regulation; the Energy Policy Act of 2005; industrial and commercial customers; nuclear matters; and environmental risks.  Following are updates to the information disclosed in the Form 10-K.



State and Local Rate Regulation

Retail Rates - Electric

In July 2008, the LPSC approved an uncontested settlement between Entergy Gulf States Louisiana and the LPSC Staff authorizing Entergy Gulf States Louisiana's purchase of one-third of the capacity and energy from the 789 MW Ouachita plant, which Entergy Arkansas plans to acquire in 2008.  Entergy Gulf States Louisiana expects to purchase one-third of the plant's capacity and output from Entergy Arkansas under a life-of-unit agreement.



In May 2008, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2007 test year.  The filing reflected a 9.26% return on common equity, which is below the allowed earnings bandwidth, and indicated a $5.4 million revenue deficiency, offset by a $4.1 million decrease in required additional capacity costs.  Consideration of the filing is pending, and under the formula rate plan Entergy Gulf States Louisiana would implement new rates in September 2008.



In May 2007, Entergy Gulf States Louisiana made its formula rate plan filing with the LPSC for the 2006 test year.  The filing reflected a 10.0% return on common equity, which is within the allowed earnings bandwidth, and an anticipated formula rate plan decrease of $23 million annually attributable

72



to adjustments outside of the formula rate plan sharing mechanism related to capacity costs and the anticipated securitization of storm costs related to Hurricane Katrina and Hurricane Rita and the securitization of a storm reserve.  In September 2007, Entergy Gulf States Louisiana modified the formula rate plan filing to reflect a 10.07% return on common equity, which is still within the allowed bandwidth.  The modified filing also reflected implementation of a $4.1 million rate increase, subject to refund, attributable to recovery of additional LPSC-approved incremental deferred and ongoing capacity costs.  The rate decrease anticipated in the original filing did not occur because of the additional capacity costs approved by the LPSC, and because securitization of storm costs associated with Hurricane Katrina and Hurricane Rita and the establishment of a storm reserve have not yet occurred.  In October 2007, Entergy Gulf States Louisiana implemented a $16.4 million formula rate plan decrease that is due to the reclassification of certain franchise fees from base rates to collection via a line item on customer bills pursuant to an LPSC order.  The LPSC staff issued its final report in December 2007, indicating a $1.6 million decrease in formula rate plan revenues for which interim rates were already in effect.  In addition, the LPSC staff recommended that the LPSC give a one-year extension of Entergy Gulf States Louisiana's formula rate plan to synchronize with the final year of Entergy Louisiana's formula rate plan, or alternatively, to extend the formula rate plan for a longer period.  Entergy Gulf States Louisiana indicated it is amenable to a one-year extension.  An uncontested stipulated settlement was filed in February 2008 that will leave the current base rates in place and extend the formula rate plan for one year, and the LPSC approved the settlement in March 2008.



Retail Rates - Gas



In January 2008, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ending September 30, 2007.  The filing showed a revenue deficiency of $3.7 million based on a return on common equity mid-point of 10.5%.  Entergy Gulf States Louisiana implemented a $3.4 million rate increase in April 2008 pursuant to an uncontested agreement with the LPSC staff.



Federal Regulation

See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Significant Factors and Known Trends" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Gulf States Louisiana's accounting for nuclear decommissioning costs, the application of SFAS 71, unbilled revenue, and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

73



ENTERGY GULF STATES LOUISIANA, L.L.C.INCOME STATEMENTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$681,491

$864,568

$1,201,787

$1,659,822Natural gas

21,045

17,090

59,313

55,018TOTAL

702,536

881,658

1,261,100

1,714,840OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

56,394

192,623

82,116

432,190Purchased power

440,379

376,395

772,185

683,199Nuclear refueling outage expenses

8,084

3,816

11,783

7,472Other operation and maintenance

91,487

141,275

170,964

267,129Decommissioning

3,100

2,902

6,139

5,745Taxes other than income taxes

19,403

34,830

36,685

66,142Depreciation and amortization

34,108

53,060

67,234

105,475Other regulatory charges (credits) - net

(1,159)

3,986

4,387

12,344TOTAL

651,796

808,887

1,151,493

1,579,696OPERATING INCOME

50,740

72,771

109,607

135,144OTHER INCOMEAllowance for equity funds used during construction

1,222

1,999

2,915

6,430Interest and dividend income

19,461

15,920

42,269

32,294Miscellaneous - net

(1,100)

659

(2,028)

659TOTAL

19,583

18,578

43,156

39,383INTEREST AND OTHER CHARGESInterest on long-term debt

31,486

34,797

63,252

69,690Other interest - net

740

3,122

1,564

8,466Allowance for borrowed funds used during construction

(731)

(1,285)

(1,810)

(4,173)TOTAL

31,495

36,634

63,006

73,983INCOME BEFORE INCOME TAXES

38,828

54,715

89,757

100,544Income taxes

15,641

22,755

35,744

40,987NET INCOME

23,187

31,960

54,013

59,557Preferred distribution requirements and other

207

929

413

1,891EARNINGS APPLICABLE TO COMMON EQUITY

$22,980

$31,031

$53,600

$57,666See Notes to Financial Statements.


74



ENTERGY GULF STATES LOUISIANA, L.L.C.STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income

$54,013

$59,557Adjustments to reconcile net income to net cash flow provided by operating activities:Reserve for regulatory adjustments

-

11,534Other regulatory charges - net

4,387

12,344Depreciation, amortization, and decommissioning

73,373

111,220Deferred income taxes, investment tax credits, and non-current taxes accrued

77,410

(11,844)Changes in working capital:Receivables

(74,624)

(171,125)Fuel inventory

(3,458)

(14,410)Accounts payable

81,767

40,920Taxes accrued

-

(12,913)Interest accrued

(376)

58Deferred fuel costs

(65,694)

25,258Other working capital accounts

(98,852)

133,953Provision for estimated losses and reserves

1,398

(1,163)Changes in other regulatory assets

(935)

10,539Other

59,408

51,647Net cash flow provided by operating activities

107,817

245,575INVESTING ACTIVITIESConstruction expenditures

(100,924)

(139,892)Allowance for equity funds used during construction

2,915

6,430Insurance proceeds

-

6,580Nuclear fuel purchases

(21,807)

(7,542)Proceeds from sale/leaseback of nuclear fuel

21,755

9,923Payment for purchase of plant

(56,409)

-Proceeds from nuclear decommissioning trust fund sales

26,318

29,533Investment in nuclear decommissioning trust funds

(33,328)

(36,404)Change in money pool receivable - net

(19,452)

(117,699)Changes in other investments - net

3,934

2,381Net cash flow used in investing activities

(176,998)

(246,690)FINANCING ACTIVITIESProceeds from the issuance of long-term debt

369,549

321,938Retirement of long-term debt

(366,681)

-Redemption of preferred stock

-

(2,250)Changes in credit borrowing - net

30,000

-Dividends/distributions paid:Common equity

(37,800)

(45,500)Preferred membership interests

(447)

(1,898)Net cash flow provided by (used in) financing activities

(5,379)

272,290Net increase (decrease) in cash and cash equivalents

(74,560)

271,175Cash and cash equivalents at beginning of period

108,036

180,381Cash and cash equivalents at end of period

$33,476

$451,556SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$63,446

$73,694Income taxes

$11,154

$9,559Noncash financing activities:Repayment by Entergy Texas of assumed long-term debt

$148,837

$-See Notes to Financial Statements.


75



ENTERGY GULF STATES LOUISIANA, L.L.C.BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents:Cash


$86

$233Temporary cash investments - at cost,which approximates market


33,390

107,803Total cash and cash equivalents


33,476

108,036Accounts receivable:Customer


88,533

62,408Allowance for doubtful accounts


(1,259)

(979)Associated companies


274,645

218,891Other


63,246

59,059Accrued unbilled revenues


62,311

54,021Total accounts receivable


487,476

393,400Deferred fuel costs


71,338

5,644Accumulated deferred income taxes


-

21,938Fuel inventory - at average cost


35,268

31,810Materials and supplies - at average cost


103,032

100,161Deferred nuclear refueling outage costs


31,219

5,155Debt assumption by Entergy Texas


160,286

309,123Gas hedge contracts


25,089

-Prepayments and other


53,093

23,533TOTAL


1,000,277

998,800OTHER PROPERTY AND INVESTMENTSDecommissioning trust funds


344,859

366,062Non-utility property - at cost (less accumulated depreciation)


112,534

109,517Other


12,990

17,350TOTAL


470,383

492,929UTILITY PLANTElectric


6,285,221

6,132,362Natural gas


102,463

98,484Construction work in progress


100,379

141,528Nuclear fuel under capital lease


122,393

110,769Nuclear fuel


9,047

11,256TOTAL UTILITY PLANT


6,619,503

6,494,399Less - accumulated depreciation and amortization


3,460,471

3,433,131UTILITY PLANT - NET


3,159,032

3,061,268DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net


308,009

299,023Other regulatory assets


330,454

335,897Deferred fuel costs


100,124

100,124Long-term receivables


1,311

1,872Debt assumption by Entergy Texas


769,971

769,971Other


19,721

12,807TOTAL


1,529,590

1,519,694TOTAL ASSETS


$6,159,282

$6,072,691See Notes to Financial Statements.


76



ENTERGY GULF STATES LOUISIANA, L.L.C.BALANCE SHEETSLIABILITIES AND MEMBERS' EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESCurrently maturing long-term debt

$160,286

$675,000Accounts payable:Associated companies


273,316

201,217Other


121,247

111,579Customer deposits


39,885

38,061Accumulated deferred income taxes


12,191

-Interest accrued


29,022

29,398Obligations under capital leases


28,795

28,795Pension and other postretirement liabilities


7,255

7,064System agreement cost equalization


106,581

124,775Other


9,928

9,052TOTAL


788,506

1,224,941NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued


1,268,194

1,219,568Accumulated deferred investment tax credits


93,690

95,745Obligations under capital leases


93,598

81,974Other regulatory liabilities


87,111

69,890Decommissioning and asset retirement cost liabilities


213,687

204,828Accumulated provisions


13,285

11,887Pension and other postretirement liabilities


88,823

102,510Long-term debt


2,077,190

1,674,113Other


118,999

87,468TOTAL


4,054,577

3,547,983Commitments and ContingenciesMEMBERS' EQUITYPreferred membership interests without sinking fund


10,000

10,000Members' equity


1,328,501

1,312,701Accumulated other comprehensive loss


(22,302)

(22,934)TOTAL


1,316,199

1,299,767TOTAL LIABILITIES AND MEMBERS' EQUITY


$6,159,282

$6,072,691See Notes to Financial Statements.


77



ENTERGY GULF STATES LOUISIANA, L.L.C.STATEMENTS OF MEMBERS' EQUITY AND COMPREHENSIVE INCOMEFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended2008

2007(In Thousands)MEMBERS' EQUITYMembers' Equity - Beginning of period



$1,312,933



$2,218,500Add: Net Income



23,187

$23,187

31,960

$31,960Deduct:Dividends/distributions declared on common equity



7,400



11,900Preferred membership interests



207

207

929

929Other



12



-7,619



12,829Members' Equity - End of period



$1,328,501



$2,237,631ACCUMULATED OTHER COMPREHENSIVELOSS (Net of Taxes):Balance at beginning of period:Pension and other postretirement liabilities



($22,605)



($19,580)Pension and other postretirement liabilities (net of tax expense of $452 and $326)



303

303

335

335Balance at end of period:Pension and other postretirement liabilities



($22,302)



($19,245)Comprehensive Income





$23,283



$31,366Six Months Ended2008

2007(In Thousands)MEMBERS' EQUITYMembers' Equity - Beginning of period



$1,312,701



$2,225,465Add:  Net Income



54,013

$54,013

59,557

$59,557Deduct:Dividends/distributions declared on common equity



37,800



45,500Preferred membership interests



413

413

1,891

1,89138,213



47,391Members' Equity - End of period



$1,328,501



$2,237,631ACCUMULATED OTHER COMPREHENSIVELOSS (Net of Taxes):Balance at beginning of period:Pension and other postretirement liabilities



($22,934)



($19,914)Pension and other postretirement liabilities (net of tax expense of $880 and $652)



632

632

669

669Balance at end of period:Pension and other postretirement liabilities



($22,302)



($19,245)Comprehensive Income





$54,232



$58,335See Notes to Financial Statements.


78



ENTERGY GULF STATES LOUISIANA, L.L.C.SELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$131

$238

($107)

(45)Commercial

131

208

(77)

(37)Industrial

179

284

(105)

(37)Governmental

6

12

(6)

(50)Total retail

447

742

(295)

(40)Sales for resaleAssociated companies

162

39

123

315Non-associated companies

48

52

(4)

(8)Other

24

32

(8)

(25)Total

$681

$865

($184)

(21)Billed Electric EnergySales (GWh):Residential

1,133

2,210

(1,077)

(49)Commercial

1,213

2,160

(947)

(44)Industrial

2,161

3,918

(1,757)

(45)Governmental

53

109

(56)

(51)Total retail

4,560

8,397

(3,837)

(46)Sales for resaleAssociated companies

1,932

481

1,451

302Non-associated companies

671

693

(22)

(3)Total

7,163

9,571

(2,408)

(25)Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$246

$480

($234)

(49)Commercial

242

402

(160)

(40)Industrial

332

539

(207)

(38)Governmental

12

23

(11)

(48)Total retail

832

1,444

(612)

(42)Sales for resaleAssociated companies

248

66

182

276Non-associated companies

93

102

(9)

(9)Other

29

48

(19)

(40)Total

$1,202

$1,660

($458)

(28)Billed Electric EnergySales (GWh):Residential

2,224

4,532

(2,308)

(51)Commercial

2,348

4,184

(1,836)

(44)Industrial

4,298

7,502

(3,204)

(43)Governmental

106

221

(115)

(52)Total retail

8,976

16,439

(7,463)

(45)Sales for resaleAssociated companies

2,678

1,234

1,444

117Non-associated companies

1,335

1,544

(209)

(14)Total

12,989

19,217

(6,228)

(32)(1) Amounts for the three and six months ended June 30, 2008 reflect the effects of the separation of the Texas business.  Amounts for the three and six months ended June 30, 2007 include the operations of Entergy Texas.


79



ENTERGY LOUISIANA, LLC

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

Net Income

Second Quarter 2008 Compared to Second Quarter 2007

Net income increased $5.7 million primarily due to higher net revenue and higher other income, partially offset by higher other operation and maintenance expenses.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net income increased slightly, by $1.6 million, primarily due to higher net revenue, lower depreciation and amortization expenses, higher other income, and lower interest charges, substantially offset by higher other operation and maintenance expenses and a higher effective income tax rate.

Net Revenue

Second Quarter 2008 Compared to Second Quarter 2007









|                 |  | Amount       
|---------------- |  | -------------
|                 |  | (In Millions)
|                 |  |              
|2007 net revenue |  | $246.4       
|Volume/weather   |  | 12.9         
|Other            |  | (1.1)        
|2008 net revenue |  | $258.2       

The volume/weather variance is primarily due to increased electricity usage, including the effect of more favorable weather compared to the same period in 2007.  Billed retail electricity usage increased a total of 355 GWh in all sectors.

Gross operating revenues and fuel and purchased power expenses



Gross operating revenues increased primarily due to an increase of $75.9 million in fuel cost recovery revenues due to higher fuel rates and usage and an increase of $12.9 million related to volume/weather, as discussed above.

Fuel and purchased power expenses increased primarily due to increases in the average market prices of natural gas and purchased power, offset by a decrease in the recovery from customers of deferred fuel costs.

80



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007







|                 |  | Amount       
|---------------- |  | -------------
|                 |  | (In Millions)
|                 |  |              
|2007 net revenue |  | $460.8       
|Volume/weather   |  | 13.4         
|Other            |  | 3.3          
|2008 net revenue |  | $477.5       

The volume/weather variance is primarily due to increased electricity usage, including the effect of more favorable weather compared to the same period in 2007.  Billed retail electricity usage increased a total of 385 GWh in all sectors.



Gross operating revenues and fuel and purchased power expenses

Gross operating revenues increased primarily due to an increase of $27.4 million in fuel cost recovery revenues due to higher fuel rates and usage and an increase of $13.4 million related to volume/weather, as discussed above.

Fuel and purchased power expenses increased primarily due to increases in the average market prices of natural gas and purchased power, offset by a decrease in the recovery from customers of deferred fuel costs.

Other Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007

Other operation and maintenance expenses increased primarily due to:



Other income increased primarily due to interest earned on the deferred fuel balance and carrying charges on storm restoration costs approved by the LPSC.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Other operation and maintenance expenses increased primarily due to:



81



Depreciation and amortization expenses decreased primarily because Entergy Louisiana stopped recording depreciation on storm cost-related assets in the third quarter 2007.  Recovery of the cost of those assets will now be through the securitization of storm costs as approved by the LPSC in the third quarter 2007.  See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Rita and Hurricane Katrina" in the Form 10-K for a discussion of the securitization approval.

Other income increased primarily due to interest earned on the deferred fuel balance and carrying charges on storm restoration costs approved by the LPSC.

Interest charges decreased primarily due to lower interest expense on money pool borrowings and a decrease in long-term debt outstanding as a result of the repurchase of $60 million Auction Rate governmental bonds in April 2008.  These bonds are being held for remarketing at a later date.

Income Taxes

The effective income tax rate was 39.7% for the second quarters of 2008 and 2007.  The effective income tax rates for the six months ended June 30, 2008 and 2007 were 41.5% and 38%, respectively.  The difference in the effective income tax rate for the second quarters of 2008 and 2007 and the six months ended June 30, 2008 and 2007 versus the federal statutory rate of 35.0% are primarily due to book and tax differences related to utility plant items and state income taxes, partially offset by book and tax differences related to the allowance for equity funds used during construction and the amortization of investment tax credits.

Liquidity and Capital Resources

Cash Flow



Cash flows for the six months ended June 30, 2008 and 2007 were as follows:





|                                                     |                      | 2008           |           | 2007  
|---------------------------------------------------- | -------------------- | -------------- | --------- | ------
|                                                     |                      | (In Thousands)
|                                                     |                      |                |           |       
|Cash and cash equivalents at beginning of period     |                      | $300           |           | $2,743
|                                                     |                      |                |           |       
|Cash flow provided by (used in):                     |                      |                |           |       
|                                                     | Operating activities |                | 14,596    |       
|                                                     | Investing activities |                | (201,257) |       
|                                                     | Financing activities |                | 186,731   |       
|Net increase (decrease) in cash and cash equivalents |                      | 70             |           | (1)   
|                                                     |                      |                |           |       
|Cash and cash equivalents at end of period           |                      | $370           |           | $2,742

Operating Activities

Cash flow provided by operating activities decreased $126.6 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to decreased recovery of deferred fuel costs, partially offset by the timing of collections from customers, the timing of payments to vendors, and a decrease of $28.5 million in income tax payments.Fuel prices have been increasing, and due to the time lag before the fuel adjustment rate increases in response, Entergy Louisiana has under-recovered fuel costs thus far in 2008.

82



Investing Activities



Net cash flow used in investing activities increased $70.6 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to:

Financing Activities

Financing activities provided cash of $186.7 million for the six months ended June 30, 2008 compared to using cash of $10.5 million for the six months ended June 30, 2007 primarily due to borrowings of $200 million on Entergy Louisiana's credit facility and money pool activity, partially offset by the repurchase, prior to maturity, of $60 million of Auction Rate governmental bonds, which are being held for remarketing at a later date.  Increases in Entergy Louisiana's payable to the money pool are a source of cash flow, and Entergy Louisiana's payable to the money pool increased by $49.6 million for the six months ended June 30, 2008 compared to decreasing by $7.1 million for the six months ended June 30, 2007.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.



Capital Structure



Entergy Louisiana's capitalization is balanced between equity and debt, as shown in the following table.  The increase in the debt to capital ratio for Entergy Louisiana as of June 30, 2008 is primarily due to borrowings of $200 million on Entergy Louisiana's credit facility, partially offset by the repurchase, prior to maturity, of $60 million of Auction Rate governmental bonds.





|                                     |  | June 30,
2008 |  | December 31,
2007
|------------------------------------ |  | ------------- |  | -----------------
|                                     |  |               |  |                  
|Net debt to net capital              |  | 46.3%         |  | 43.4%            
|Effect of subtracting cash from debt |  | -             |  | -                
|Debt to capital                      |  | 46.3%         |  | 43.4%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and members' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Louisiana uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana's financial condition.



Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy Louisiana's uses and sources of capital.  Following are updates to the discussion in the Form 10-K.



83



Entergy Louisiana's payables to the money pool were as follows:





|June 30, 
2008 |  | December 31, 
2007 |  | June 30, 
2007 |  | December 31,
2006
|-------------- |  | ------------------ |  | -------------- |  | -----------------
|(In Thousands)
|               |  |                    |  |                |  |                  
|($52,419)      |  | ($2,791)           |  | ($46,968)      |  | ($54,041)        



See Note 4 to the financial statements in the Form 10-K for a description of the money pool.



As discussed in the Form 10-K, Entergy Louisiana has a credit facility in the amount of $200 million scheduled to expire in August 2012.  As of June 30, 2008, $200 million was outstanding on the credit facility.

Hurricane Rita and Hurricane Katrina

See the Form 10-K for a discussion of the effects of Hurricane Katrina and Hurricane Rita and Entergy's initiatives to recover storm restoration and business continuity costs and incremental losses, which includes obtaining reimbursement of certain costs covered by insurance and pursuing recovery through existing or new rate mechanisms regulated by the FERC and local regulatory bodies, in combination with securitization.  In August and September 2005, Hurricane Katrina and Hurricane Rita, along with extensive flooding that resulted from levee breaks in and around Entergy Louisiana's service territory, caused catastrophic damage.



Insurance Claims



Entergy has settled its lawsuit against one of its excess insurers on the Hurricane Katrina claim, and in July 2008 received $71.5 million in proceeds on the claim.  The July 2008 proceeds were allocated as follows: $2.0 million to Entergy Arkansas, $3.7 million to Entergy Gulf States Louisiana, $12.4 million to Entergy Louisiana, $1.8 million to Entergy Mississippi, and $48.4 million to Entergy New Orleans, with the remainder allocated in smaller amounts to other Entergy subsidiaries.

Act 55 Storm Cost Financings



In March 2008, Entergy Gulf States Louisiana, Entergy Louisiana, and the Louisiana Utilities Restoration Corporation (LURC), an instrumentality of the State of Louisiana, filed at the LPSC an application requesting that the LPSC grant financing orders authorizing the financing of Entergy Gulf States Louisiana and Entergy Louisiana storm costs, storm reserves, and issuance costs pursuant to Act 55 of the Louisiana Legislature (Act 55 financings).  The Act 55 financings are expected to produce additional customer benefits as compared to Act 64 traditional securitization.  Entergy Gulf States Louisiana and Entergy Louisiana also filed an application requesting LPSC approval for ancillary issues including the mechanism to flow charges and savings to customers via a Storm Cost Offset rider.  On April 3, 2008, the Louisiana State Bond Commission granted preliminary approval for the Act 55 financings.  On April 8, 2008, the Louisiana Public Facilities Authority (LPFA), which is the issuer of the bonds pursuant to the Act 55 financings, approved requests for the Act 55 financings.  On April 10, 2008, Entergy Gulf States Louisiana and Entergy Louisiana and the LPSC Staff filed with the LPSC an uncontested stipulated settlement that includes Entergy Gulf States Louisiana and Entergy Louisiana's proposals under the Act 55 financings,
which includes a commitment to pass on to customers a minimum of $10 million and
$30 million of customer benefits, respectively.  On April 16, 2008, the LPSC
approved the settlement and issued two financing orders and one ratemaking order
intended to facilitate implementation of the Act 55 financings.  On May 6, 2008,
the State Bond Commission voted to approve the Act 55 financings.

On
July 29, 2008, the LPFA issued $679 million in bonds under the aforementioned
Act 55.  From the bond proceeds received by Entergy Louisiana from the
LURC, Entergy Louisiana invested $527 million in affiliate securities.  The LURC
deposited $152 million in a restricted escrow account as a storm damage reserve
for Entergy Louisiana.  As approved by the April 16, 2008 LPSC orders, Entergy
Louisiana withdrew $17.8 million from the restricted escrow account and also
invested this amount in affiliate securities.

84



Little Gypsy Repowering Project

The preconstruction and operating air permits for the Little Gypsy repowering project were issued by the Louisiana Department of Environmental Quality (LDEQ) in November 2007 under then-effective federal and state air regulations, including the EPA's Clean Air Mercury Rule that had been issued in 2005 (CAMR 2005).  As discussed in more detail in part I, Item 1, "Environmental Regulation, Clean Air Act and Subsequent Amendments, Hazardous Air Pollutants" in the Form 10-K, in February 2008 the U.S. Court of Appeals for the D.C. Circuit struck down CAMR 2005.  The D.C. Circuit decision requires utilities that have not yet begun construction of the facility in question to undergo a case-by-case Maximum Achievable Control Technology (MACT) analysis for construction or reconstruction of emission units pursuant to the Clean Air Act before beginning construction.  The Little Gypsy project as currently configured is expected to meet MACT standards.  Little Gypsy received its construction permit before a formal MACT analysis was required, however, and Entergy Louisiana has sought a MACT determination from the LDEQ.  The filing was made in June 2008, and the LDEQ has certified that the filing is complete.  A decision on the MACT determination is expected by first quarter 2009.  Entergy Louisiana also is awaiting permit determinations from several additional agencies.  These permits are unrelated to CAMR 2005 and always have been part of the construction process.  Onsite construction of the project was scheduled to begin in July 2008, but obtaining the MACT determination will cause a delay in the start of construction, which Entergy Louisiana now expects to begin in mid-year 2009.  This delays the expected commercial operation date of the project to mid-2013.  The LPSC approved the temporary suspension of Phase II of the Little Gypsy proceedings because Entergy Louisiana must update its estimated project cost and schedule in order to support the request to recover cash earnings on its construction work in progress costs.  Entergy Louisiana plans to refile the Phase II case in September 2008, and a decision is expected in the first quarter 2009.  The LPSC Phase I order has been appealed to the state district court in Baton Rouge, Louisiana by a group led by the Sierra Club and represented by the Tulane Environmental Law Clinic.  A procedural schedule for the appeal has not been set.



Entergy Louisiana expects a net reduction of committed capital expenditures for 2008-2010 of approximately $210 million from the estimates disclosed in the Form 10-K as a result of delayed construction of the Little Gypsy repowering project.  The delay is expected to increase the total project cost, however, from approximately $1.55 billion to $1.76 billion, primarily due to price escalation on non-contracted equipment and material and increased carrying cost due to the extended construction period.



Waterford 3 Steam Generator Replacement Project



As discussed in more detail in the Form 10-K, Entergy Louisiana plans to replace the Waterford 3 steam generators, along with the reactor vessel closure head and control element drive mechanisms, in 2011.  In June 2008, Entergy Louisiana filed with the LPSC for approval of the project, including full cost recovery.  Entergy Louisiana estimates in the filing that it will spend approximately $511 million on this project.  The petition seeks relief in two phases.  Phase I seeks certification within 120 days that the public convenience and necessity would be served by undertaking this project.  Among other relief requested, Entergy Louisiana is also seeking approval for a procedure to synchronize permanent base rate recovery when the project is placed in service, either by a formula rate plan or base rate filing.  In Phase II, Entergy Louisiana will seek cash earnings on construction work in progress.  A status conference was held on July 31, 2008, and a procedural schedule for Phase I was adopted providing for hearings in October 2008 and LPSC consideration in December 2008.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for a discussion of state and local rate regulation, federal regulation, the Energy Policy Act of 2005, utility restructuring, nuclear matters, and environmental risks.  Following are updates to the information provided in the Form 10-K.

85



Retail Rates

In May 2008, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2007 test year, seeking an $18.4 million rate increase, comprised of $12.6 million of recovery of incremental and deferred capacity costs and $5.8 million related to lost contribution to fixed costs associated with the loss of customers due to Hurricane Katrina.  The filing includes two alternative versions of the calculated revenue requirement, one that reflects Entergy Louisiana's full request for recovery of the loss of fixed cost contribution and the other that reflects the anticipated rate implementation in September 2008, subject to refund, of only a portion of the full request, with the remainder deferred, until the lost fixed cost contribution issue is resolved.  Under the first alternative, Entergy Louisiana's earned return on common equity was 9.44%, whereas under the other alternative, its earned return on common equity was 9.04%.  The LPSC staff and intervenors issued their reports on Entergy Louisiana's filing on July 31, 2008 and, with minor exceptions, primarily raised proposed disallowance issues that were previously raised with regard to Entergy Louisiana's May 2007 filing and remain at issue in that proceeding.  Entergy Louisiana disagrees with the majority of the proposed adjustments.



In May 2007, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2006 test year, indicating a 7.6% earned return on common equity.  That filing included Entergy Louisiana's request to recover $39.8 million in unrecovered fixed costs associated with the loss of customers that resulted from Hurricane Katrina, a request that was recently reduced to $31.7 million.  In September 2007, Entergy Louisiana modified its formula rate plan filing to reflect its implementation of certain adjustments proposed by the LPSC Staff in its review of Entergy Louisiana's original filing with which Entergy Louisiana agreed, and to reflect its implementation of an $18.4 million annual formula rate plan increase comprised of (1) a $23.8 million increase representing 60% of Entergy Louisiana revenue deficiency, and (2) a $5.4 million decrease for reduced incremental and deferred capacity costs.  The LPSC authorized Entergy Louisiana to defer for accounting purposes the difference between its $39.8 million claim, now at $31.7 million, for unrecovered fixed cost and 60% of the revenue deficiency to preserve Entergy Louisiana's right to pursue that claim in full during the formula rate plan proceeding.  In October 2007, Entergy Louisiana implemented a $7.1 million formula rate plan decrease that was due primarily to the reclassification of certain franchise fees from base rates to collection via a line item on customer bills pursuant to an LPSC Order.  The LPSC staff and intervenors have recommended disallowance of certain costs included in Entergy Louisiana's filing.  Entergy Louisiana disagrees with the majority of the proposed disallowances and a hearing on the disputed issues is set to begin in late September 2008.



In May 2006, Entergy Louisiana made its formula rate plan filing with the LPSC for the 2005 test year.  Entergy Louisiana modified the filing in August 2006 to reflect a 9.45% return on equity which is within the allowed bandwidth.  The modified filing includes an increase of $24.2 million for interim recovery of storm costs from Hurricanes Katrina and Rita and a $119.2 million rate increase to recover LPSC-approved incremental deferred and ongoing capacity costs.  The filing requested recovery of approximately $50 million for the amortization of capacity deferrals over a three-year period, including carrying charges, and approximately $70 million for ongoing capacity costs.  The increase was implemented, subject to refund, with the first billing cycle of September 2006.  Entergy Louisiana subsequently updated its formula rate plan rider to reflect adjustments proposed by the LPSC Staff with which it agrees.  The adjusted return on equity of 9.56% remains within the allowed bandwidth.  Ongoing and deferred incremental capacity costs were reduced to $118.7 million.  The updated formula rate plan rider was implemented, subject to refund, with the first billing cycle of October 2006.  An uncontested stipulated settlement was filed in February 2008 that will leave the current base rates in place, and the LPSC approved the settlement in March 2008.  In the settlement Entergy Louisiana agreed to credit customers $7.2 million, plus $0.7 million of interest, for customer contributions to the Central States Compact in Nebraska that was never completed and agreed to a one-time $2.6 million deduction from the deferred capacity cost balance. The credit, for which Entergy Louisiana had previously recorded a provision, was made in May 2008.



Federal Regulation



See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Significant Factors and Known Trends" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

86



Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Louisiana's accounting for nuclear decommissioning costs, unbilled revenue, and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

87



ENTERGY LOUISIANA, LLCINCOME STATEMENTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$753,778

$656,299

$1,318,522

$1,273,778OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

142,279

172,762

255,274

366,718Purchased power

342,322

226,165

564,849

423,928Nuclear refueling outage expenses

4,222

4,418

8,725

8,615Other operation and maintenance

111,537

104,694

212,409

196,161Decommissioning

4,931

4,591

9,775

9,099Taxes other than income taxes

16,507

14,962

31,248

28,776Depreciation and amortization

47,909

49,214

94,970

98,192Other regulatory charges - net

10,944

10,949

20,927

22,292TOTAL

680,651

587,755

1,198,177

1,153,781OPERATING INCOME

73,127

68,544

120,345

119,997OTHER INCOMEAllowance for equity funds used during construction

3,765

2,309

7,022

6,257Interest and dividend income

3,956

1,861

8,705

5,455Miscellaneous - net

(727)

(456)

(1,939)

(1,688)TOTAL

6,994

3,714

13,788

10,024INTEREST AND OTHER CHARGESInterest on long-term debt

18,777

20,350

38,332

40,583Other interest - net

3,031

2,359

4,186

5,719Allowance for borrowed funds used during construction

(2,308)

(1,554)

(4,304)

(4,300)TOTAL

19,500

21,155

38,214

42,002INCOME BEFORE INCOME TAXES

60,621

51,103

95,919

88,019Income taxes

24,077

20,305

39,780

33,453NET INCOME

36,544

30,798

56,139

54,566Preferred distribution requirements and other

1,738

1,737

3,475

3,475EARNINGS APPLICABLE TOCOMMON EQUITY

$34,806

$29,061

$52,664

$51,091See Notes to Financial Statements.


88



ENTERGY LOUISIANA, LLCSTATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income

$56,139

$54,566Adjustments to reconcile net income to net cash flow provided by operating activities:Reserve for regulatory adjustments

-

(179)Other regulatory charges - net

20,927

22,292Depreciation, amortization, and decommissioning

104,745

107,291Deferred income taxes, investment tax credits, and non-current taxes accrued

55,975

5,252Changes in working capital:Receivables

(49,797)

(108,934)Accounts payable

134,714

(51,003)Taxes accrued

19,130

48,577Interest accrued

(7,248)

(23)Deferred fuel costs

(260,114)

24,968Other working capital accounts

(106,877)

62,853Provision for estimated losses and reserves

2,630

(3,299)Changes in other regulatory assets

12,824

2,466Other

31,548

(23,671)Net cash flow provided by operating activities

14,596

141,156INVESTING ACTIVITIESConstruction expenditures

(203,859)

(153,715)Allowance for equity funds used during construction

7,022

6,257Insurance proceeds

612

10,065Nuclear fuel purchases

(70,626)

(3,103)Proceeds from the sale/leaseback of nuclear fuel

70,216

14,279Changes in other investments - net

(500)

-Proceeds from nuclear decommissioning trust fund sales

9,293

6,423Investment in nuclear decommissioning trust funds

(13,415)

(10,815)Net cash flow used in investing activities

(201,257)

(130,609)FINANCING ACTIVITIESAdditional equity from parent

-

1,119Retirement of long-term debt

(60,000)

-Changes in credit borrowing - net

200,000

-Change in money pool payable - net

49,628

(7,073)Distributions paid:Preferred membership interests

(2,897)

(4,594)Net cash flow provided by (used in) financing activities

186,731

(10,548)Net increase (decrease) in cash and cash equivalents

70

(1)Cash and cash equivalents at beginning of period

300

2,743Cash and cash equivalents at end of period

$370

$2,742SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$48,039

$44,328Income taxes

$1,250

$29,736See Notes to Financial Statements.


89



ENTERGY LOUISIANA, LLCBALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents

$370

$300Accounts receivable:Customer

138,458

96,679Allowance for doubtful accounts

(1,329)

(1,988)Associated companies

90,769

91,873Other

9,878

14,186Accrued unbilled revenues

88,631

75,860Total accounts receivable

326,407

276,610Deferred fuel costs

211,330

-Accumulated deferred income taxes

-

15,229Materials and supplies - at average cost

112,428

108,959Deferred nuclear refueling outage costs

26,072

7,080Gas hedge contracts

52,789

-Prepayments and other

15,251

7,820TOTAL

744,647

415,998OTHER PROPERTY AND INVESTMENTSDecommissioning trust funds

209,562

221,971Non-utility property - at cost (less accumulated depreciation)

1,397

1,488Note receivable - Entergy New Orleans

9,353

9,353Other

504

4TOTAL

220,816

232,816UTILITY PLANTElectric

6,671,733

6,550,597Property under capital lease

253,387

253,387Construction work in progress

321,695

276,974Nuclear fuel under capital lease

98,511

44,532TOTAL UTILITY PLANT

7,345,326

7,125,490Less - accumulated depreciation and amortization

3,168,205

3,095,473UTILITY PLANT - NET

4,177,121

4,030,017DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net

116,388

117,322Other regulatory assets

820,116

832,449Deferred fuel costs

67,998

67,998Long-term receivables

1,772

2,982Other

25,948

23,539TOTAL

1,032,222

1,044,290TOTAL ASSETS

$6,174,806

$5,723,121See Notes to Financial Statements.


90



ENTERGY LOUISIANA, LLCBALANCE SHEETSLIABILITIES AND MEMBERS' EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESAccounts payable:Associated companies

$174,405

$65,930Other

224,518

148,651Customer deposits

78,505

79,013Taxes accrued

26,886

7,756Accumulated deferred income taxes

73,567

-Interest accrued

22,491

29,739Deferred fuel costs

-

48,784Obligations under capital leases

42,714

42,714Pension and other postretirement liabilities

8,936

8,772System agreement cost equalization

30,090

46,000Other

11,020

18,961TOTAL

693,132

496,320NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued

1,763,322

1,803,430Accumulated deferred investment tax credits

84,446

86,045Obligations under capital leases

55,797

1,818Other regulatory liabilities

156,220

127,836Decommissioning

266,841

257,066Accumulated provisions

21,035

18,405Pension and other postretirement liabilities

149,475

145,786Long-term debt

1,287,666

1,147,660Other

89,703

85,214TOTAL

3,874,505

3,673,260Commitments and ContingenciesMEMBERS' EQUITYPreferred membership interests without sinking fund

100,000

100,000Members' equity

1,534,173

1,481,509Accumulated other comprehensive loss

(27,004)

(27,968)TOTAL

1,607,169

1,553,541TOTAL LIABILITIES AND MEMBERS' EQUITY

$6,174,806

$5,723,121See Notes to Financial Statements.


91



ENTERGY LOUISIANA, LLCSTATEMENTS OF MEMBERS' EQUITY AND COMPREHENSIVE INCOMEFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended2008

2007(In Thousands)MEMBERS' EQUITYMembers' Equity - Beginning of period

$1,499,367



$1,367,152Add:Net income

36,544

$36,544

30,798

$30,798Deduct:Distributions declared:Preferred membership interests

1,738

1,738

1,737

1,7371,738



1,737Members' Equity - End of period

$1,534,173



$1,396,213ACCUMULATED OTHER COMPREHENSIVEINCOME  (Net of Taxes):Balance at beginning of period:Pension and other postretirement liabilities

($27,486)



($25,184)Pension and other postretirement liabilities (net of tax expense of $409 and $466)

482

482

511

511Balance at end of period:Pension and other postretirement liabilities

($27,004)



($24,673)Comprehensive Income



$35,288



$29,572Six Months Ended2008

2007(In Thousands)MEMBERS' EQUITYMembers' Equity - Beginning of period

$1,481,509



$1,344,003Add:Net income

56,139

$56,139

54,566

$54,566Additional equity from parent

-



1,11956,139



55,685Deduct:Distributions declared:Preferred membership interests

3,475

3,475

3,475

3,4753,475



3,475Members' Equity - End of period

$1,534,173



$1,396,213ACCUMULATED OTHER COMPREHENSIVEINCOME  (Net of Taxes):Balance at beginning of period:Pension and other postretirement liabilities

($27,968)



($25,695)Pension and other postretirement liabilities (net of tax expense of $818 and $932)

964

964

1,022

1,022Balance at end of period:Pension and other postretirement liabilities

($27,004)



($24,673)Comprehensive Income



$53,628



$52,113See Notes to Financial Statements.


92



ENTERGY LOUISIANA, LLCSELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$215

$185

$30

16Commercial

155

137

18

13Industrial

259

217

42

19Governmental

11

11

-

-Total retail

640

550

90

16Sales for resaleAssociated companies

66

70

(4)

(6)Non-associated companies

3

2

1

50Other

45

34

11

32Total

$754

$656

$98

15Billed Electric EnergySales (GWh):Residential

1,976

1,854

122

7Commercial

1,435

1,375

60

4Industrial

3,437

3,268

169

5Governmental

113

109

4

4Total retail

6,961

6,606

355

5Sales for resaleAssociated companies

630

610

20

3Non-associated companies

30

26

4

15Total

7,621

7,242

379

5Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$397

$381

$16

4Commercial

283

273

10

4Industrial

464

442

22

5Governmental

22

22

-

-Total retail

1,166

1,118

48

4Sales for resaleAssociated companies

97

107

(10)

(9)Non-associated companies

5

4

1

25Other

51

45

6

13Total

$1,319

$1,274

$45

4Billed Electric EnergySales (GWh):Residential

3,946

3,807

139

4Commercial

2,743

2,674

69

3Industrial

6,667

6,496

171

3Governmental

230

224

6

3Total retail

13,586

13,201

385

3Sales for resaleAssociated companies

1,110

952

158

17Non-associated companies

53

58

(5)

(9)Total

14,749

14,211

538

4


93



ENTERGY MISSISSIPPI, INC.



MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations



Net Income

Second Quarter 2008 Compared to Second Quarter 2007

Net income increased slightly by $0.8 million primarily due to higher net revenue substantially offset by higher other operation and maintenance expenses and a higher effective income tax rate in 2008.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007



Net income increased slightly by $1.1 million primarily due to higher net revenue substantially offset by higher other operation and maintenance expenses, lower other income, and a higher effective income tax rate in 2008.



Net Revenue

Second Quarter 2008 Compared to Second Quarter 2007



Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing the second quarter 2008 to the second quarter 2007.



|                                         |  | Amount       
|---------------------------------------- |  | -------------
|                                         |  | (In Millions)
|                                         |  |              
|2007 net revenue                         |  | $126.0       
|Base revenue                             |  | 2.7          
|Attala costs                             |  | 2.2          
|Price applied to unbilled electric sales |  | 1.9          
|Volume/weather                           |  | 1.9          
|Rider revenue                            |  | 1.8          
|Other                                    |  | (1.1)        
|2008 net revenue                         |  | $135.4       



The base revenue variance is primarily due to a formula rate plan increase effective July 2007.  The formula rate plan is discussed in Note 2 to the financial statements in the Form 10-K.



The Attala costs variance is primarily due to an increase in the Attala power plant costs that are recovered through the power management rider.  The net income effect of this recovery is limited to a portion representing an allowed return on equity with the remainder offset by Attala power plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes.  The recovery of Attala power plant costs is discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Use of Capital" in the Form 10-K.



The price applied to unbilled electric sales variance is primarily due to higher base rates included in the unbilled calculation. See Note 1 to the financial statements in the Form 10-K for further discussion of the accounting for unbilled revenues.

94



The volume/weather variance is primarily due to increased electricity usage in the residential and commercial sectors, including the effect of more favorable weather on billed electric sales compared to the same period in 2007.  Billed retail electricity usage increased a total of 34 GWh in the residential and commercial sectors.



The rider revenue variance is the result of a storm damage rider that became effective in October 2007.  The establishment of this rider results in an increase in rider revenue and a corresponding increase in other operation and maintenance expense for the storm reserve with no impact on net income.

Fuel and purchased power expenses and other regulatory charges



Fuel and purchased power expenses decreased primarily due to decreased recovery from customers of deferred fuel costs partially offset by increases in the average market prices of natural gas and purchased power.



Other regulatory charges increased primarily due to increased recovery through the Grand Gulf Rider of Grand Gulf capacity costs due to higher rates and increased usage and increased recovery of costs associated with the power management recovery rider.  There is no material effect on net income due to quarterly adjustments to the power management recovery rider.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the change in net revenue comparing the six months ended June 30, 2008 to the six months ended June 30, 2007.



|                                         |  | Amount       
|---------------------------------------- |  | -------------
|                                         |  | (In Millions)
|                                         |  |              
|2007 net revenue                         |  | $220.0       
|Attala costs                             |  | 5.6          
|Base revenue                             |  | 5.4          
|Volume/weather                           |  | 4.1          
|Rider revenue                            |  | 3.7          
|Price applied to unbilled electric sales |  | 2.0          
|Other                                    |  | 0.1          
|2008 net revenue                         |  | $240.9       



The Attala costs variance is primarily due to an increase in the Attala power plant costs that are recovered through the power management rider.  The net income effect of this recovery is limited to a portion representing an allowed return on equity with the remainder offset by Attala power plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes.  The recovery of Attala power plant costs is discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Use of Capital" in the Form 10-K.



The base revenue variance is primarily due to a formula rate plan increase effective July 2007.  The formula rate plan is discussed in Note 2 to the financial statements in the Form 10-K.



The volume/weather variance is primarily due to increased electricity usage in the residential and commercial sectors, including the effect of more favorable weather on billed electric sales compared to the same period in 2007.  Billed retail electricity usage increased a total of 99 GWh in the residential and commercial sectors.



The rider revenue variance is the result of a storm damage rider that became effective in October 2007.  The establishment of this rider results in an increase in rider revenue and a corresponding increase in other operation and maintenance expense for the storm reserve with no impact on net income.

95



The price applied to unbilled electric sales variance is primarily due to higher base rates included in the unbilled calculation.  See Note 1 to the financial statements in the Form 10-K for further discussion of the accounting for unbilled revenues.

Gross operating revenues and other regulatory charges

Gross operating revenues increased primarily due to:



Other regulatory charges increased primarily due to increased recovery through the Grand Gulf Rider of Grand Gulf capacity costs due to higher rates and increased usage and increased recovery of costs associated with the power management recovery rider.  There is no material effect on net income due to quarterly adjustments to the power management recovery rider.

Other Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007



Other operation and maintenance expenses increased primarily due to:

an increase of $2.8 million in loss reserves for storm damages;

an increase of $1.4 million due to higher fossil plant maintenance costs; and

an increase of $1.3 million due to increased commercial property insurance premiums.



Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Other operation and maintenance expenses increased primarily due to:

an increase of $5.1 million in loss reserves for storm damages;

an increase of $3.7 million in fossil expenses due to higher plant maintenance costs and Attala equipment service agreement expenses; and

an increase of $1.3 million due to increased commercial property insurance premiums.



Other income decreased primarily due to the gain recorded in 2007 on the sale of non-utility property.

Income Taxes

The effective income tax rate was 37.2% for the second quarter 2008 and 36% for the six months ended June 30, 2008.  The difference in the effective income tax rate for the second quarter of 2008 versus the federal statutory rate of 35% is primarily due to state income taxes.



The effective income tax rate was 29.1% for the second quarter 2007 and 30.6% for the six months ended June 30, 2007.  The difference in the effective income tax rates for the second quarter 2007 and the six months ended June 30, 2007 versus the federal statutory rate of 35% is primarily due to the amortization of investment tax credits and excess deferred income taxes and a federal tax reserve adjustment, partially offset by state income taxes and book and tax differences related to utility plant items.  The decrease for the six months ended June 30, 2007 is also due to book and tax differences related to the allowance for equity funds used during construction.

96



Liquidity and Capital Resources

Cash Flow

Cash flows for the six months ended June 30, 2008 and 2007 were as follows:





|                                                 |                      | 2008           |          | 2007    
|------------------------------------------------ | -------------------- | -------------- | -------- | --------
|                                                 |                      | (In Thousands)
|                                                 |                      |                |          |         
|Cash and cash equivalents at beginning of period |                      | $40,582        |          | $73,417 
|                                                 |                      |                |          |         
|Cash flow provided by (used in):                 |                      |                |          |         
|                                                 | Operating activities |                | 12,372   |         
|                                                 | Investing activities |                | (77,357) |         
|                                                 | Financing activities |                | 37,519   |         
|Net decrease in cash and cash equivalents        |                      | (27,466)       |          | (26,259)
|                                                 |                      |                |          |         
|Cash and cash equivalents at end of period       |                      | $13,116        |          | $47,158 

Operating Activities

Cash flow provided by operating activities decreased $52.6 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to the decreased recovery of deferred fuel costs and securitization proceeds of $48 million received in 2007, partially offset by the timing of payments to vendors.  Fuel prices have been increasing, and due to the time lag before the fuel recovery rate increases in response, Entergy Mississippi has under-recovered fuel costs thus far in 2008.

Investing Activities

Entergy Mississippi's investing activities used $77.4 million in cash flow for the six months ended June 30, 2008 compared to providing $16.6 million for the six months ended June 30, 2007 primarily due to the receipt of proceeds in 2007 from funds held in trust in 2006 that were used for the redemption in January 2007, prior to maturity, of its $100 million, 4.35% Series First Mortgage Bonds and money pool activity, partially offset by the transfer in 2007 of $30 million to a storm damage reserve escrow account.



Increases in Entergy Mississippi's receivable from the money pool are a use of cash flow, and Entergy Mississippi's receivable from the money pool increased by $7.4 million for the six months ended June 30, 2008 compared to decreasing by $13.9 million for the six months ended June 30, 2007.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Financing Activities

Entergy Mississippi's financing activities provided $37.5 million in cash flow for the six months ended June 30, 2008 compared to using $107.8 million in cash flow for the six months ended June 30, 2007 primarily due to the redemption, prior to maturity, of $100 million of 4.35% Series First Mortgage Bonds in January 2007 and borrowings of $50 million in 2008 on Entergy Mississippi's credit facility.

97



Capital Structure

Entergy Mississippi's capitalization is balanced between equity and debt, as shown in the following table.



|                                     |  | June 30,
2008 |  | December 31,
2007
|------------------------------------ |  | ------------- |  | -----------------
|                                     |  |               |  |                  
|Net debt to net capital              |  | 50.6%         |  | 48.4%            
|Effect of subtracting cash from debt |  | 0.5%          |  | 1.5%             
|Debt to capital                      |  | 51.1%         |  | 49.9%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and shareholders' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi's financial condition.



Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources"in the Form 10-K for a discussion of Entergy Mississippi's uses and sources of capital.  Following are updates to the information presented in the Form 10-K.



Entergy Mississippi's receivables from the money pool were as follows:



|June 30, 
2008 |  | December 31,
2007 |  | June 30,
2007 |  | December 31,
2006
|-------------- |  | ----------------- |  | ------------- |  | -----------------
|(In Thousands)
|               |  |                   |  |               |  |                  
|$28,398        |  | $20,997           |  | $19,057       |  | $39,573          



In May 2007, $6.6 million of Entergy Mississippi's receivable from the money pool was replaced by a note receivable from Entergy New Orleans.  See Note 4 to the financial statements in the Form 10-K for a description of the money pool.



As discussed in the Form 10-K, Entergy Mississippi has two separate credit facilities in the aggregate amount of $50 million and renewed both facilities through May 2009.  Borrowings under the credit facilities may be secured by a security interest in Entergy Mississippi's accounts receivable.  As of June 30, 2008, $50 million was outstanding on the credit facilities.



In April 2008, Entergy Mississippi repurchased its $30 million series of Independence County Pollution Control Revenue Bonds due July 2022.  At the time of repurchase, the bonds were converted from an Auction Rate mode to a Daily Mode.  In June 2008, Entergy Mississippi remarketed the series and converted the bonds to a Multi Annual Mode and fixed the rate to maturity at 4.90%.  Entergy Mississippi used the proceeds from the remarketing to repay short-term borrowings that were drawn on its credit facilities to repurchase the bonds in April 2008.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for a discussion of state and local rate regulation, federal regulation, the Energy Policy Act of 2005, and utility restructuring.  Following is an update to that discussion.

98



State and Local Rate Regulation

Fuel and purchased power cost recovery

In May 2008, Entergy Mississippi filed its quarterly fuel adjustment factor for the third quarter 2008, effective beginning with July 2008 bills.  The third quarter 2008 factor is $0.038861/kWh, which is an increase from the $0.010878/kWh factor for the second quarter 2008.  The increase is due to a significant increase in fuel prices, and Entergy Mississippi has gone from an over-recovery to an under-recovery position during 2008.  In July 2008, the MPSC began a proceeding to investigate the fuel procurement practices and fuel adjustment schedules of the Mississippi utility companies, including Entergy Mississippi.  A two-day public hearing was held in July 2008, and after a recess as the MPSC reviewed information, the hearing resumed on August 5, 2008 for additional testimony by an expert witness retained by the MPSC.  The expert witness presented testimony regarding a review of the utilities' fuel adjustment clauses.  The MPSC stated that the goal of the proceeding is fact-finding so that the MPSC may decide whether to amend the current fuel cost recovery process.

Formula rate plan filing

In March 2008, Entergy Mississippi made its annual scheduled formula rate plan filing for the 2007 test year with the MPSC.  The filing showed that a $10.1 million increase in annual electric revenues is warranted.  In June 2008, Entergy Mississippi reached a settlement with the Mississippi Public Utilities Staff that results in a $3.8 million rate increase.  An MPSC decision on the settlement is pending.

Federal Regulation



See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Significant Factors and Known Trends" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.



Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Mississippi's accounting for unbilled revenue and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

99



ENTERGY MISSISSIPPI, INC.INCOME STATEMENTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$351,982

$345,916

$646,832

$616,441OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

70,428

101,101

149,192

172,075Purchased power

120,269

109,286

216,368

205,121Other operation and maintenance

59,240

52,593

110,346

97,708Taxes other than income taxes

15,163

16,875

29,974

31,890Depreciation and amortization

20,860

19,942

41,274

40,211Other regulatory charges - net

25,915

9,489

40,400

19,284TOTAL

311,875

309,286

587,554

566,289OPERATING INCOME

40,107

36,630

59,278

50,152OTHER INCOMEAllowance for equity funds used during construction

838

717

1,614

2,393Interest and dividend income

564

1,193

774

2,641Miscellaneous - net

1,606

(60)

944

2,192TOTAL

3,008

1,850

3,332

7,226INTEREST AND OTHER CHARGESInterest on long-term debt

10,195

10,437

20,745

20,819Other interest - net

1,309

1,247

2,445

2,482Allowance for borrowed funds used during construction

(468)

(461)

(902)

(1,580)TOTAL

11,036

11,223

22,288

21,721INCOME BEFORE INCOME TAXES

32,079

27,257

40,322

35,657Income taxes

11,949

7,926

14,513

10,917NET INCOME

20,130

19,331

25,809

24,740Preferred dividend requirements and other

707

707

1,414

1,414EARNINGS APPLICABLE TOCOMMON STOCK

$19,423

$18,624

$24,395

$23,326See Notes to Financial Statements.


100



ENTERGY MISSISSIPPI, INC.STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income

$25,809

$24,740Adjustments to reconcile net income to net cash flow provided by operating activities:Other regulatory charges - net

40,400

19,284Depreciation and amortization

41,274

40,211Deferred income taxes, investment tax credits, and non-current taxes accrued

(899)

(9,601)Changes in working capital:Receivables

(44,248)

(51,782)Fuel inventory

817

(796)Accounts payable

78,455

25,687Taxes accrued

(4,678)

3,390Interest accrued

1,026

1,166Deferred fuel costs

(121,576)

(49,507)Other working capital accounts

(27,681)

25,726Provision for estimated losses and reserves

(7,320)

39,016Changes in other regulatory assets

6,250

19,764Other

24,743

(22,362)Net cash flow provided by operating activities

12,372

64,936INVESTING ACTIVITIESConstruction expenditures

(70,992)

(72,305)Allowance for equity funds used during construction

1,614

2,393Changes in other temporary investments - net

-

100,000Change in money pool receivable - net

(7,401)

13,915Proceeds from sale of assets

-

2,616Payment to storm reserve escrow account

(578)

(30,000)Net cash flow provided by (used in) investing activities

(77,357)

16,619FINANCING ACTIVITIESProceeds from the issuance of long-term debt

29,533

-Retirement of long-term debt

(30,000)

(100,000)Change in credit borrowings - net

50,000

-Dividends paid:Common stock

(10,600)

(6,400)Preferred stock

(1,414)

(1,414)Net cash flow provided by (used in) financing activities

37,519

(107,814)Net decrease in cash and cash equivalents

(27,466)

(26,259)Cash and cash equivalents at beginning of period

40,582

73,417Cash and cash equivalents at end of period

$13,116

$47,158SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$21,120

$21,050Income taxes

$4,209

$7,160See Notes to Financial Statements.


101



ENTERGY MISSISSIPPI, INC.BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents:Cash

$1,010

$117Temporary cash investments - at cost,which approximates market

12,106

40,465Total cash and cash equivalents

13,116

40,582Accounts receivable:Customer

71,092

62,052Allowance for doubtful accounts

(763)

(615)Associated companies

55,301

23,534Other

7,410

8,234Accrued unbilled revenues

45,349

33,535Total accounts receivable

178,389

126,740Deferred fuel costs

44,994

-Accumulated deferred income taxes

-

7,686Fuel inventory - at average cost

9,549

10,366Materials and supplies - at average cost

30,067

30,167Gas hedge contracts

44,760

-Prepayments and other

10,868

13,701TOTAL

331,743

229,242OTHER PROPERTY AND INVESTMENTSInvestment in affiliates - at equity

5,531

5,531Non-utility property - at cost (less accumulated depreciation)

5,071

5,140Storm reserve escrow account

31,326

30,748Note receivable - Entergy New Orleans

7,610

7,610TOTAL

49,538

49,029UTILITY PLANTElectric

2,886,354

2,829,065Property under capital lease

8,470

9,116Construction work in progress

76,697

72,753TOTAL UTILITY PLANT

2,971,521

2,910,934Less - accumulated depreciation and amortization

1,028,160

995,902UTILITY PLANT - NET

1,943,361

1,915,032DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net

38,330

29,868Other regulatory assets

128,872

141,717Other

22,459

21,381TOTAL

189,661

192,966TOTAL ASSETS

$2,514,303

$2,386,269See Notes to Financial Statements.


102



ENTERGY MISSISSIPPI, INC.BALANCE SHEETSLIABILITIES AND SHAREHOLDERS' EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESNotes payable

$50,000

$-Accounts payable:Associated companies

45,443

46,424Other

115,540

36,104Customer deposits

56,603

55,719Taxes accrued

31,360

36,038Accumulated deferred income taxes

5,846

-Interest accrued

16,220

15,194Deferred fuel costs

-

76,582System agreement cost equalization

17,511

-Other

4,656

8,905TOTAL

343,179

274,966NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued

525,786

535,469Accumulated deferred investment tax credits

9,177

9,748Obligations under capital lease

7,122

7,806Other regulatory liabilities

69,793

-Asset retirement cost liabilities

4,646

4,505Accumulated provisions

42,944

50,264Pension and other postretirement liabilities

54,050

56,946Long-term debt

695,298

695,266Other

41,457

44,243TOTAL

1,450,273

1,404,247Commitments and ContingenciesSHAREHOLDERS' EQUITYPreferred stock without sinking fund

50,381

50,381Common stock, no par value, authorized 15,000,000shares; issued and outstanding 8,666,357 shares in 2008 and 2007

199,326

199,326Capital stock expense and other

(690)

(690)Retained earnings

471,834

458,039TOTAL

720,851

707,056TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$2,514,303

$2,386,269See Notes to Financial Statements.


103



ENTERGY MISSISSIPPI, INC.SELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$ 116

$ 113

$ 3

3Commercial

108

105

3

3Industrial

44

48

(4)

(8)Governmental

10

10

-

-Total retail

278

276

2

1Sales for resaleAssociated companies

36

36

-

-Non-associated companies

9

9

-

-Other

29

25

4

16Total

$ 352

$ 346

$ 6

2Billed Electric EnergySales (GWh):Residential

1,157

1,141

16

1Commercial

1,162

1,144

18

2Industrial

621

695

(74)

(11)Governmental

101

101

-

-Total retail

3,041

3,081

(40)

(1)Sales for resaleAssociated companies

217

303

(86)

(28)Non-associated companies

113

119

(6)

(5)Total

3,371

3,503

(132)

(4)Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$ 227

$ 214

$ 13

6Commercial

207

195

12

6Industrial

86

89

(3)

(3)Governmental

20

19

1

5Total retail

540

517

23

4Sales for resaleAssociated companies

56

52

4

8Non-associated companies

15

15

-

-Other

36

32

4

13Total

$ 647

$ 616

31

5Billed Electric EnergySales (GWh):Residential

2,446

2,393

53

2Commercial

2,259

2,213

46

2Industrial

1,243

1,348

(105)

(8)Governmental

196

195

1

1Total retail

6,144

6,149

(5)

-Sales for resaleAssociated companies

398

449

(51)

(11)Non-associated companies

149

203

(54)

(27)Total

6,691

6,801

(110)

(2)


104



ENTERGY NEW ORLEANS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Hurricane Katrina

See the Form 10-K for a discussion of the effects of Hurricane Katrina, which in August 2005 caused catastrophic damage to Entergy New Orleans' service territory, including the effect of extensive flooding that resulted from levee breaks in and around the New Orleans area, and Entergy's initiatives to recover storm restoration and business continuity costs.

Bankruptcy Proceedings

See the Form 10-K for a discussion of the significant terms in Entergy New Orleans' plan of reorganization that became effective in May 2007.



Insurance Claim



In April 2008, Entergy received from its primary insurer $53.6 million of additional insurance proceeds on its Hurricane Katrina claim, and almost all of the April 2008 proceeds were allocated to Entergy New Orleans.



Entergy has settled its lawsuit against one of its excess insurers on the Hurricane Katrina claim, and in July 2008 received $71.5 million in proceeds on the claim.  The July 2008 proceeds were allocated as follows: $2.0 million to Entergy Arkansas, $3.7 million to Entergy Gulf States Louisiana, $12.4 million to Entergy Louisiana, $1.8 million to Entergy Mississippi, and $48.4 million to Entergy New Orleans, with the remainder allocated in smaller amounts to other Entergy subsidiaries.

Results of Operations



Net Income

Second Quarter 2008 Compared to Second Quarter 2007



Net income remained relatively unchanged, decreasing $0.4 million.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007



Net income increased $4.4 million primarily due to higher net revenue partially offset by higher other operation and maintenance expenses and lower other income.



Net Revenue

Second Quarter 2008 Compared to Second Quarter 2007

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the changes in net revenue comparing the second quarter 2008 to the second quarter 2007.

105



|                                         |  | Amount       
|---------------------------------------- |  | -------------
|                                         |  | (In Millions)
|                                         |  |              
|2007 net revenue                         |  | $62.1        
|Volume/weather                           |  | 7.7          
|Price applied to unbilled electric sales |  | (3.6)        
|Other                                    |  | 0.4          
|2008 net revenue                         |  | $66.6        



The volume/weather variance is due to an increase in electricity usage, including the effect of more favorable weather in 2008 compared to the same period in 2007.  Billed retail electricity usage increased a total of 119 GWh, an increase of 12%.







Gross operating revenues and fuel and purchased power expenses



Gross operating revenues increased primarily due to:



Fuel and purchased power increased primarily due to an increase in the average market price of natural gas and an increase in demand.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges.  Following is an analysis of the changes in net revenue comparing the six months ended June 30, 2008 to the six months ended June 30, 2007.





|                 |  | Amount       
|---------------- |  | -------------
|                 |  | (In Millions)
|                 |  |              
|2007 net revenue |  | $112.1       
|Volume/weather   |  | 11.2         
|Net gas revenue  |  | 4.6          
|Other            |  | 1.1          
|2008 net revenue |  | $129.0       



The volume/weather variance is due to an increase in electricity usage, including the effect of more favorable weather in 2008 compared to the same period in 2007.  Billed retail electricity usage increased a total of 211 GWh, an increase of 11%.



The net gas revenue variance is primarily due to an increase in base rates and increased usage.  Refer to Note 2 to the financial statements in the Form 10-K for a discussion of the base rate increase.

106



Gross operating revenues and fuel and purchased power expenses



Gross operating revenues increased primarily due to:

Fuel and purchased power increased primarily due to increases in the average market prices of natural gas and purchased power in addition to an increase in demand.



Other Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007



Other operation and maintenance expenses increased primarily due to:



Other income decreased primarily due to a reduction in the allowance for equity funds used during construction related to a decrease in storm-related construction and lower carrying costs related to the Hurricane Katrina storm costs regulatory asset.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Other operation and maintenance expenses increased primarily due to:



Other income decreased primarily due to a reduction in the allowance for equity funds used during construction related to a decrease in storm-related construction and a reduction in the carrying costs related to the Hurricane Katrina storm costs regulatory asset.

Income Taxes

The effective income tax rate was 35.1% for the second quarter 2008 and 41.4% for the six months ended June 30, 2008.  The effective tax rate for the second quarter 2008 was reduced by a $1.1 million adjustment to income tax expense that related to expense for the first quarter 2008.  The effective income tax rate for the six months ended June 30, 2008 was higher than the federal statutory rate of 35% primarily due to state income taxes and book and tax differences related to utility plant items.



The effective income tax rate was 42.0% for the second
quarter 2007 and 40.3% for the six months ended June 30, 2007. The effective
income tax rate for the second quarter 2007 was higher than the federal
statutory rate of 35% primarily due to state income taxes and book and tax
differences related to utility plant items. The effective income tax rate for
the six months ended June 30, 2007 was higher than the federal statutory rate of
35%

107



primarily due to state income taxes and book and tax
differences related to utility plant items, partially offset by the amortization
of deferred income taxes and book and tax differences related to the allowance
for equity funds used during construction.

Liquidity and Capital Resources

Cash Flow



Cash flows for the six months ended June 30, 2008 and 2007 were as follows:





|                                                     |                      | 2008           |          | 2007    
|---------------------------------------------------- | -------------------- | -------------- | -------- | --------
|                                                     |                      | (In Thousands)
|                                                     |                      |                |          |         
|Cash and cash equivalents at beginning of period     |                      | $92,010        |          | $17,093 
|                                                     |                      |                |          |         
|Cash flow provided by (used in):                     |                      |                |          |         
|                                                     | Operating activities |                | 42,262   |         
|                                                     | Investing activities |                | (80,221) |         
|                                                     | Financing activities |                | (482)    |         
|Net increase (decrease) in cash and cash equivalents |                      | (38,441)       |          | 108,936 
|                                                     |                      |                |          |         
|Cash and cash equivalents at end of period           |                      | $53,569        |          | $126,029

Operating Activities

Net cash provided by operating activities decreased $89.2 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to the receipt of CDBG funds of $176.8 million in 2007 and the timing of collections of receivables from customers, partially offset by the timing of payments to vendors and an increase of $28.5 million in pension contributions.

Investing Activities

Investing activities used $80.2 million of cash for the six months ended June 30, 2008 compared to providing $30.8 million of cash for the six months ended June 30, 2007 primarily due to money pool activity, additional work performed on the gas distribution rebuild project, and proceeds of $10 million received in 2007 related to the sale in the first quarter 2007 of a power plant that had been out of service since 1984.  Increases in Entergy New Orleans' receivable from the money pool are a use of cash flow, and Entergy New Orleans' receivable from the money pool increased by $77.1 million for the six months ended June 30, 2008.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Financing Activities

Net cash used in financing activities decreased $52.9 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to a repayment of Entergy New Orleans' borrowings under the debtor in possession credit facility in 2007.



Capital Structure



Entergy New Orleans' capitalization is shown in the following table. The increase in the net debt to net capital ratio is primarily due to the decrease in cash and cash equivalents as a result of an increase in Entergy New Orleans' money pool receivable.

108



|                                     |  | June 30,
 2008 |  | December 31,
2007
|------------------------------------ |  | -------------- |  | -----------------
|                                     |  |                |  |                  
|Net debt to net capital              |  | 53.6%          |  | 51.8%            
|Effect of subtracting cash from debt |  | 4.8%           |  | 8.8%             
|Debt to capital                      |  | 58.4%          |  | 60.6%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable and long-term debt, including the currently maturing portion.  Capital consists of debt and shareholders' equity.  Net capital consists of capital less cash and cash equivalents.  Entergy New Orleans uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans' financial condition.



Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources"in the Form 10-K for a discussion of Entergy New Orleans' uses and sources of capital.  The following are updates to the Form 10-K.



Entergy New Orleans' receivables from or (payables to) the money pool were as follows:



|June 30,
2008  |  | December 31,
2007 |  | June 30,
2007 |  | December 31,
2006
|-------------- |  | ----------------- |  | ------------- |  | -----------------
|(In Thousands)
|               |  |                   |  |               |  |                  
|$124,796       |  | $47,705           |  | $-            |  | ($37,166)        

See Note 4 to the financial statements in the Form 10-K for a description of the money pool.  As discussed in the Form 10-K, in May 2007, Entergy New Orleans issued notes in satisfaction of its affiliate prepetition accounts payable, including its indebtedness to the Entergy System money pool.



On August 1, 2008, Entergy New Orleans paid, at maturity, its $30 million of 3.875% Series first mortgage bonds.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for a discussion of state and local rate regulation, federal regulation, the Energy Policy Act of 2005, and environmental risks.  The following are updates to the Form 10-K.



State and Local Rate Regulation



Retail Rates



In January 2008, Entergy New Orleans voluntarily implemented a 6.15% base rate credit (the recovery credit) for electric customers, which Entergy New Orleans estimates will return approximately $10.6 million to electric customers in 2008.  Entergy New Orleans was able to implement this credit because during 2007 the recovery of New Orleans after Hurricane Katrina was occurring faster than expected in 2006 projections.  In addition, Entergy New Orleans committed to set aside $2.5 million for an energy efficiency program focused on community education and outreach and weatherization of homes.



On July 31, 2008, Entergy New Orleans filed an electric and
gas base rate case with the City Council. The filing requests an 11.75% return
on common equity. The filing calls for a $23.0 million decrease in electric base
rates, which includes keeping the recovery credit in effect, as well as



109



realigning approximately $12.3 million of capacity costs from
recovery through the fuel adjustment clause to electric base rates. The filing
also calls for a $9.1 million increase in gas base rates to fund on-going
operations. This request is unrelated to the on-going rebuild of Entergy New
Orleans' natural gas system. The procedural schedule calls for a hearing on the
filing to commence on January 5, 2009, with certification of the evidentiary
record by a hearing officer on or before February 28, 2009.

Fuel Adjustment Clause Litigation

See the Form 10-K for a discussion of the complaint filed in April 1999 by a group of ratepayers against Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in state court in Orleans Parish purportedly on behalf of all Entergy New Orleans ratepayers and a corresponding complaint filed with the City Council.  In February 2004, the City Council approved a resolution that resulted in a refund to customers of $11.3 million, including interest, during the months of June through September 2004.  In May 2005 the Civil District Court for the Parish of Orleans affirmed the City Council resolution, finding no support for the plaintiffs' claim that the refund amount should be higher.  In June 2005, the plaintiffs appealed the Civil District Court decision to the Louisiana Fourth Circuit Court of Appeal.  On February 25, 2008, the Fourth Circuit Court of Appeal issued a decision affirming in part, and reversing in part, the Civil District Court's decision.  Although the Fourth Circuit Court of Appeal did not reverse any of the substantive findings and conclusions of the City Council or the Civil District Court, the Fourth Circuit found that the amount of the refund was arbitrary and capricious and increased the amount of the refund to $34.3 million.  Entergy New Orleans believes that the increase in the refund ordered by the Fourth Circuit is not justified.  Entergy New Orleans, the City Council, and the plaintiffs requested rehearing, and in April 2008, the Fourth Circuit granted the plaintiffs' request for rehearing.  In addition to changing the basis for the court's decision in the manner requested by the plaintiffs, the court also granted the plaintiffs' request that it provide for interest on the refund amount.  The court denied the motions for rehearing filed by the City Council and Entergy New Orleans.  In May 2008, Entergy New Orleans and the City Council filed with the Louisiana Supreme Court applications for a writ of certiorari seeking, among other things, reversal of the Fourth Circuit decision.



Federal Regulation



See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Significant Factors and Known Trends" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for updates to the discussion in the Form 10-K.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy New Orleans' accounting for unbilled revenue and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

110



ENTERGY NEW ORLEANS, INC.INCOME STATEMENTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$194,567

$137,668

$334,795

$259,287Natural gas

32,941

25,820

84,067

72,843TOTAL

227,508

163,488

418,862

332,130OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

101,058

54,162

180,957

131,593Purchased power

58,795

46,196

106,806

86,355Other operation and maintenance

27,413

22,247

52,233

46,795Taxes other than income taxes

10,099

9,028

20,233

18,802Depreciation and amortization

8,209

7,987

16,303

16,110Other regulatory charges - net

1,029

1,032

2,059

2,065TOTAL

206,603

140,652

378,591

301,720OPERATING INCOME

20,905

22,836

40,271

30,410OTHER INCOMEAllowance for equity funds used during construction

57

268

135

1,459Interest and dividend income

2,492

3,292

4,846

6,025Miscellaneous - net

(255)

(188)

(1,016)

(367)TOTAL

2,294

3,372

3,965

7,117INTEREST AND OTHER CHARGESInterest on long-term debt

3,239

3,245

6,480

6,490Other interest - net

2,076

2,426

4,408

6,735Allowance for borrowed funds used during construction

(37)

(199)

(87)

(1,097)TOTAL

5,278

5,472

10,801

12,128INCOME BEFORE INCOME TAXES

17,921

20,736

33,435

25,399Income taxes

6,290

8,718

13,857

10,231NET INCOME

11,631

12,018

19,578

15,168Preferred dividend requirements and other

241

241

482

482EARNINGS APPLICABLE TOCOMMON STOCK

$11,390

$11,777

$19,096

$14,686See Notes to Financial Statements.




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112





ENTERGY NEW ORLEANS, INC.STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income

$19,578

$15,168Adjustments to reconcile net income to net cash flow provided by operating activities:Other regulatory charges - net

2,059

2,065Depreciation and amortization

16,303

16,110Deferred income taxes, investment tax credits, and non-current taxes accrued

16,878

4,240Changes in working capital:Receivables

(17,115)

5,310Fuel inventory

1,206

856Accounts payable

18,311

(27,401)Taxes accrued

(2,285)

3,856Interest accrued

(334)

(13,205)Deferred fuel costs

(16,153)

(9,864)Other working capital accounts

(6,929)

(7,017)Provision for estimated losses and reserves

3,330

2,455Changes in other regulatory assets

11,516

179,753Other

(4,103)

(40,849)Net cash flow provided by operating activities

42,262

131,477INVESTING ACTIVITIESConstruction expenditures

(50,770)

(34,837)Allowance for equity funds used during construction

135

1,459Insurance proceeds

50,953

55,406Proceeds from the sale of assets

-

10,046Change in money pool receivable - net

(77,092)

-Change in other investments - net

(3,447)

(1,270)Net cash flow provided by (used in) investing activities

(80,221)

30,804FINANCING ACTIVITIESRepayment of DIP credit facility

-

(51,934)Dividends paid:Preferred stock

(482)

(1,411)Net cash flow used in financing activities

(482)

(53,345)Net increase (decrease) in cash and cash equivalents

(38,441)

108,936Cash and cash equivalents at beginning of period

92,010

17,093Cash and cash equivalents at end of period

$53,569

$126,029SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$10,848

$10,684Income taxes

$1,270

$92See Notes to Financial Statements.


113



ENTERGY NEW ORLEANS, INC.BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalentsCash

$370

$119Temporary cash investments - at costwhich approximates market

53,199

91,891Total cash and cash equivalents

53,569

92,010Accounts receivable:Customer

56,623

45,478Allowance for doubtful accounts

(718)

(4,639)Associated companies

139,649

58,952Other

2,623

9,928Accrued unbilled revenues

30,591

24,842Total accounts receivable

228,768

134,561Deferred fuel costs

33,434

17,281Fuel inventory - at average cost

3,294

4,500Materials and supplies - at average cost

9,710

9,007Prepayments and other

9,177

2,539TOTAL

337,952

259,898OTHER PROPERTY AND INVESTMENTSInvestment in affiliates - at equity

3,259

3,259Non-utility property at cost (less accumulated depreciation)

1,016

1,016Other property and investments

8,719

5,272TOTAL

12,994

9,547UTILITY PLANTElectric

758,453

745,426Natural gas

194,746

201,870Construction work in progress

7,804

14,144TOTAL UTILITY PLANT

961,003

961,440Less - accumulated depreciation and amortization

514,633

507,537UTILITY PLANT - NET

446,370

453,903DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:Other regulatory assets

144,546

143,726Long term receivables

-

126Other

9,087

8,995TOTAL

153,633

152,847TOTAL ASSETS

$950,949

$876,195See Notes to Financial Statements.


114



ENTERGY NEW ORLEANS, INC.BALANCE SHEETSLIABILITIES AND SHAREHOLDERS' EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESCurrently maturing long-term debt

$30,000

$30,000Accounts payable:Associated companies

25,561

27,138Other

43,254

23,366Customer deposits

18,767

17,803Taxes accrued

2,696

4,981Accumulated deferred income taxes

9,301

1,754Interest accrued

4,883

5,217Other

9,392

9,944TOTAL CURRENT LIABILITIES

143,854

120,203NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued

122,332

114,729Accumulated deferred investment tax credits

2,637

2,809SFAS 109 regulatory liability - net

73,500

73,613Other regulatory liabilities

9,856

9,522Retirement cost liability

2,867

2,772Accumulated provisions

17,659

14,329Pension and other postretirement liabilities

11,886

15,484Long-term debt

273,379

273,912Gas system rebuild insurance proceeds

61,697

36,958Other

14,962

14,640TOTAL NON-CURRENT LIABILITIES

590,775

558,768Commitments and ContingenciesSHAREHOLDERS' EQUITYPreferred stock without sinking fund

19,780

19,780Common stock, $4 par value, authorized 10,000,000shares; issued and outstanding 8,435,900 shares in 2008and 2007

33,744

33,744Paid-in capital

36,294

36,294Retained earnings

126,502

107,406TOTAL

216,320

197,224TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$950,949

$876,195See Notes to Financial Statements.


115



ENTERGY NEW ORLEANS, INC.SELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$38

$30

$8

27Commercial

47

43

4

9Industrial

12

11

1

9Governmental

19

17

2

12Total retail

116

101

15

15Sales for resaleAssociated companies

67

26

41

158Non-associated companies

2

-

2

-Other

10

11

(1)

(9)Total

$195

$138

$57

41Billed Electric EnergySales (GWh):Residential

322

257

65

25Commercial

452

419

33

8Industrial

139

134

5

4Governmental

192

176

16

9Total retail

1,105

986

119

12Sales for resaleAssociated companies

478

225

253

112Non-associated companies

7

4

3

75Total

1,590

1,215

375

31Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$71

$55

$16

29Commercial

87

81

6

7Industrial

22

21

1

5Governmental

35

32

3

9Total retail

215

189

26

14Sales for resaleAssociated companies

103

59

44

75Non-associated companies

2

-

2

-Other

15

11

4

36Total

$335

$259

$76

29Billed Electric EnergySales (GWh):Residential

628

491

137

28Commercial

860

815

45

6Industrial

270

271

(1)

-Governmental

370

340

30

9Total retail

2,128

1,917

211

11Sales for resaleAssociated companies

804

575

229

40Non-associated companies

10

6

4

67Total

2,942

2,498

444

18


116



ENTERGY TEXAS, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Jurisdictional Separation of Entergy Gulf States, Inc. into Entergy Gulf States Louisiana and Entergy Texas

See the Entergy Texas Form 10 for a discussion of the jurisdictional separation of Entergy Gulf States, Inc. into two vertically integrated utility companies, one operating under the sole retail jurisdiction of the PUCT, Entergy Texas, and the other operating under the sole retail jurisdiction of the LPSC, Entergy Gulf States Louisiana.



Because the jurisdictional separation was a transaction involving entities under common control, Entergy Texas recognized the assets and liabilities allocated to it at their carrying amounts in the accounts of Entergy Gulf States, Inc. at the time of the jurisdictional separation.  Entergy Texas' financial statements contained herein report results of operations for 2007 as though the jurisdictional separation had occurred at the beginning of 2007.

Results of Operations

Net Income

Second Quarter 2008 Compared to Second Quarter 2007

Net income increased by $21.6 million primarily due to higher net revenue and a lower effective income tax rate.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007



Net income increased by $32.7 million primarily due to higher net revenue and a lower effective income tax rate.



Net Revenue

Second Quarter 2008 Compared to Second Quarter 2007







|                                 |  | Amount       
|-------------------------------- |  | -------------
|                                 |  | (In Millions)
|                                 |  |              
|2007 net revenue                 |  | $90.6        
|Volume/weather                   |  | 11.0         
|Securitization transition charge |  | 4.7          
|Other                            |  | 14.1         
|2008 net revenue                 |  | $120.4       



The volume/weather variance is primarily due to increased electricity usage, including electricity sales during the unbilled sales period and more favorable weather compared to the same period in 2007.  Billed retail electricity usage increased a total of 284 GWh in all sectors.  See Note 1 to the financial statements in the Entergy Texas Form 10 for a discussion of the accounting for unbilled revenues.

117



The securitization transition charge variance is primarily due to the issuance of securitization bonds.  In June 2007, Entergy Gulf States Reconstruction Funding I, LLC (EGSRF I), a company wholly-owned and consolidated by Entergy Texas, issued securitization bonds and with the proceeds purchased from Entergy Texas the transition property, which is the right to recover from customers through a transition charge amounts sufficient to service the securitization bonds.  See Note 5 to the financial statements in the Entergy Texas Form 10 for additional information regarding the securitization bonds.



The Other variance is primarily caused by various operational effects of the jurisdictional separation on revenues and fuel and purchased power expenses.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges

Gross operating revenues increased $114.4 million primarily due to:

an increase of $47.6 million in affiliated wholesale revenue primarily due to increases in the cost of energy;

an increase of $44.2 million in fuel cost recovery revenues due to higher fuel rates;

an increase of $11 million related to volume/weather as discussed above; and

an increase of $9.2 million in transition charge amounts collected from customers to service the securitization bonds.  See Note 5 to the financial statements in the Entergy Texas Form 10 for additional information regarding the securitization bonds.



Fuel and purchased power expenses increased primarily due to an increase in gas generation and power purchases as a result of the purchased power agreements between Entergy Gulf States Louisiana and Entergy Texas and an increase in the average market prices of natural gas and purchased power, substantially offset by a decrease in deferred fuel expense as the result of decreased recovery from customers of fuel costs.



Other regulatory charges increased primarily due to the recovery of $4.4 million of bond expenses related to the securitization bonds.  The recovery became effective July 2007.  See Note 5 to the financial statements in the Entergy Texas Form 10 for additional information regarding the securitization bonds.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007







|                                 |  | Amount       
|-------------------------------- |  | -------------
|                                 |  | (In Millions)
|                                 |  |              
|2007 net revenue                 |  | $166.2       
|Fuel recovery                    |  | 12.9         
|Volume/weather                   |  | 12.2         
|Securitization transition charge |  | 9.6          
|Other                            |  | 17.0         
|2008 net revenue                 |  | $217.9       

The fuel recovery variance is primarily due to a reserve for potential rate refunds made in the first quarter 2007 as a result of a PUCT ruling related to the application of past PUCT rulings addressing transition to competition in Texas.



The volume/weather variance is primarily due to increased electricity usage which increased a total of 452 GWh in all sectors.  See Note 1 to the financial statements in the Entergy Texas Form 10 for a discussion of the accounting for unbilled revenues.

118



The securitization transition charge variance is primarily due to the issuance of securitization bonds.  In June 2007, EGSRF I, a company wholly-owned and consolidated by Entergy Texas, issued securitization bonds and with the proceeds purchased from Entergy Texas the transition property, which is the right to recover from customers through a transition charge amounts sufficient to service the securitization bonds.  See Note 5 to the financial statements in the Entergy Texas Form 10 for additional information regarding the securitization bonds.



The Other variance is primarily caused by various operational effects of the jurisdictional separation on revenues and fuel and purchased power expenses.

Gross operating revenues, fuel and purchased power expenses, and other regulatory charges

Gross operating revenues increased $92.1 million primarily due to the following reasons:



The increase was partially offset by a decrease of $19.3 million in fuel cost recovery revenues primarily due to interim fuel refunds to customers for fuel cost recovery over-collections through November 2007.  The refund was distributed over a two-month period beginning February 2008.  The interim refund and the PUCT approval is discussed in Note 2 to the financial statements in the Entergy Texas Form 10.



Fuel and purchased power expenses increased primarily due to an increase in gas generation and power purchases as a result of the purchased power agreements between Entergy Gulf States Louisiana and Entergy Texas and an increase in the average market prices of natural gas and purchased power, substantially offset by a decrease in deferred fuel expense as the result of decreased recovery from customers of fuel costs.

Other regulatory charges increased primarily due to the recovery of $8.3 million of bond expenses related to the securitization bonds.  The recovery became effective July 2007.  See Note 5 to the financial statements in the Entergy Texas Form 10 for additional information regarding the securitization bonds.

Other Income Statement Variances

Second Quarter 2008 Compared to Second Quarter 2007

The other income variance includes an increase in taxes collected on advances for transmission projects, substantially offset by the absence of carrying charges on storm restoration costs that were approved by the PUCT in the first quarter 2007.  In June 2007, EGSRF I issued securitization bonds and the carrying charges ended.  The PUCT approval of carrying charges, the securitization filing and the approval for the recovery of reconstruction costs are discussed in Note 2 to the financial statements in the Entergy Texas Form 10.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Other operation and maintenance expenses decreased primarily due to a decrease of $2.9 million in customer service support costs, including a decrease in customer write-offs and a decrease of $2.2 million in transmission spending due to lower transmission equalization expenses.  The decrease was partially offset by an increase of $1.3 million in payroll-related costs.

119



Other income decreased primarily due to the absence of carrying charges on storm restoration costs that were approved by the PUCT in the first quarter 2007.  In June 2007, EGSRF I issued securitization bonds and the carrying charges ended.  The PUCT approval of carrying charges, the securitization filing and the approval for the recovery of reconstruction costs are discussed in Note 2 to the financial statements in the Entergy Texas Form 10.  The decrease was partially offset by an increase in taxes collected on advances for transmission projects.



Interest and other charges increased primarily due to the increase in long-term debt outstanding as a result of the issuance of securitization bonds during the second quarter 2007, substantially offset by interest recorded in the first quarter 2007 on advances from independent power producers per a FERC order.  See Note 5 to the financial statements in the Entergy Texas Form 10 for additional information regarding the securitization bonds.

Income Taxes

The effective income tax rate was 37.5% for the second quarter 2008 and 37.3% for the six months ended June 30, 2008.  The differences in the effective income tax rate for the second quarter 2008 and for the six months ended June 30, 2008 versus the federal statutory rate of 35% were primarily due to state income taxes, partially offset by an adjustment of the federal income tax reserve for prior tax years.



Income tax expense for the second quarter 2007 was primarily due to state income taxes and adjustments related to FIN 48.  Income tax expense for the six months ended June 30, 2007 was primarily due to state income taxes and adjustments related to FIN 48, partially offset by the amortization of investment tax credits.

Liquidity and Capital Resources

Cash Flow



Cash flows for the six months ended June 30, 2008 and 2007 were as follows:



|                                                     |                      | 2008           |           | 2007    
|---------------------------------------------------- | -------------------- | -------------- | --------- | --------
|                                                     |                      | (In Thousands)
|                                                     |                      |                |           |         
|Cash and cash equivalents at beginning of period     |                      | $297,082       |           | $77,115 
|                                                     |                      |                |           |         
|Cash flow provided by (used in):                     |                      |                |           |         
|                                                     | Operating activities |                | (13,513)  |         
|                                                     | Investing activities |                | 60,412    |         
|                                                     | Financing activities |                | (321,232) |         
|Net increase (decrease) in cash and cash equivalents |                      | (274,333)      |           | 247,677 
|                                                     |                      |                |           |         
|Cash and cash equivalents at end of period           |                      | $22,749        |           | $324,792

Operating Activities

Operating activities used cash of $13.5 million for the six months ended June 30, 2008 compared to providing cash of $212.2 million for the six months ended June 30, 2007 primarily due to decreased recovery of deferred fuel costs, substantially offset by the timing of payments to vendors and the collection of receivables from customers.  The decreased fuel recovery was primarily caused by the $71 million fuel cost over-recovery refund that is discussed in Note 2 to the financial statements, in addition to the over-recovery of fuel costs for the six months ended June 30, 2007 compared to under-recovering for the six months ended June 30, 2008.  Fuel prices have been increasing, and due to the time lag before the fuel recovery rate increases in response, Entergy Texas has under-recovered fuel costs thus far in 2008.

120



Investing Activities

Investing activities provided cash of $60.4 million for the six months ended June 30, 2008 compared to using cash of $266.9 million for the six months ended June 30, 2007 primarily due to money pool activity.  Decreases in Entergy Texas' receivable from the money pool are a source of cash flow, and Entergy Texas' receivable from the money pool decreased by $104.3 million for the six months ended June 30, 2008 compared to increasing by $203.2 million for the six months ended June 30, 2007.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Financing Activities

Financing activities used cash of $321.2 million for the six months ended June 30, 2008 compared to providing cash of $302.3 million for the six months ended June 30, 2007 primarily due to the issuance of $329.5 million of securitization bonds in June 2007, the retirement of $159.2 million of long-term debt in June 2008, and $150 million of capital returned to Entergy Corporation in February 2008.  After the effects of Hurricane Katrina and Hurricane Rita, Entergy Corporation made a $300 million capital contribution to Entergy Gulf States, Inc. in 2005, which was part of Entergy's financing plan that provided liquidity and capital resources to Entergy and its subsidiaries while storm restoration cost recovery was pursued.  See Note 5 in the Entergy Texas Form 10 for additional information regarding the securitization bonds.



Capital Structure



Entergy Texas' capitalization is balanced between equity and debt, as shown in the following table.





|                                     |  | June 30,
 2008 |  | December 31,
2007
|------------------------------------ |  | -------------- |  | -----------------
|                                     |  |                |  |                  
|Net debt to net capital              |  | 58.5%          |  | 52.6%            
|Effect of subtracting cash from debt |  | 0.5%           |  | 5.9%             
|Debt to capital                      |  | 59.0%          |  | 58.5%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable and long-term debt, including the currently maturing portion and also including the debt assumption liability.  Capital consists of debt and shareholder's equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Texas uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas' financial condition.



On June 2, 2008, under the terms of the debt assumption agreement between Entergy Texas and Entergy Gulf States Louisiana that is discussed in Note 5 to the financial statements in the Entergy Texas Form 10, Entergy Texas paid at maturity $148.8 million of Entergy Gulf States Louisiana first mortgage bonds, which results in a corresponding decrease in Entergy Texas' debt assumption liability.



Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Entergy Texas Form 10 for a discussion of Entergy Texas' uses and sources of capital.  Following are updates to the information provided in the Entergy Texas Form 10.

121



Entergy Texas' receivables from the money pool were as follows:





|June 30,
2008  |  | December 31,
2007 |  | June 30,
2007 |  | December 31,
2006
|-------------- |  | ----------------- |  | ------------- |  | -----------------
|(In Thousands)
|               |  |                   |  |               |  |                  
|$49,920        |  | $154,176          |  | 300,458       |  | $97,277          



See Note 4 to the financial statements in the Entergy Texas Form 10 for a description of the money pool.



As discussed in the Entergy Texas Form 10, Entergy Texas has a credit facility in the amount of $100 million that will expire in August 2012.  The facility became available to Entergy Texas on May 30, 2008, after the fulfillment of certain closing conditions, and no borrowings were outstanding under the facility as of June 30, 2008.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Entergy Texas Form 10 for a discussion of transition to retail competition in Texas; state and local rate regulation; federal regulation; the Energy Policy Act of 2005; industrial and commercial customers; market and credit risk sensitive instruments; and environmental risks.  Following are updates to the information disclosed in the Entergy Texas Form 10.



State and Local Rate Regulation

Filings with the PUCT

Entergy Texas made a rate filing in September 2007 with the PUCT requesting an annual rate increase totaling $107.5 million, including a base rate increase of $64.3 million and riders totaling $43.2 million.  The base rate increase includes a $12.2 million annual increase for the storm damage reserve.  Entergy Texas requested an 11% return on common equity.  In December 2007 the PUCT issued an order setting September 26, 2008 as the effective date for the rate change from the rate filing.  In May 2008, Entergy Texas and certain parties in the rate case filed a non-unanimous settlement that provides for a $42.5 million base rate increase beginning in October 2008 and an additional $17 million base rate increase beginning in October 2009.  The non-unanimous settlement also provides that $25 million of System Agreement rough production cost equalization payments will offset the effect on customers of the rate increase.  The non-unanimous settlement further provides that an additional $17 million on an annual basis of System Agreement rough production cost equalization payments will be retained by Entergy Texas from January 2009 through September 2009.  The non-unanimous settlement also resolves the fuel reconciliation portion of the proceeding with a $4.5 million disallowance.  The PUCT staff, the Texas Industrial Energy Consumers (TIEC), and the state of Texas did not join in the settlement and filed a separate agreement among them that provides for a rate decrease, later revised to a slight increase, and a $4.7 million fuel cost disallowance.  In May 2008 the ALJs issued an order stating that the proceeding will continue with Entergy Texas having the burden of proof to show that the non-unanimous settlement results in reasonable rates.  The hearing on the merits of the non-unanimous settlement was held from June 23 through July 2, 2008, and post-hearing briefing by the parties is ongoing.



In January 2008, Entergy Texas made a compliance filing with the PUCT describing how its 2007 Rough Production Cost Equalization receipts under the System Agreement were allocated between Entergy Gulf States, Inc.'s Texas and Louisiana jurisdictions.  Several parties have intervened in the proceeding.  A hearing was held at the end of July 2008, and a decision is pending.



In October 2007, Entergy Texas filed a request with the PUCT to refund $45.6 million, including interest, of fuel cost recovery over-collections through September 2007.  In January 2008, Entergy Texas filed with the PUCT a stipulation and settlement agreement among the parties that updated the over-collection balance through November 2007 and establishes a refund amount, including interest, of $71 million.  The PUCT
approved the

122



agreement in February 2008. The refund was made over a
two-month period beginning February 2008, but was reduced by $10.3 million of
under-recovered incremental purchased capacity costs. Amounts refunded through
the interim fuel refund are subject to final reconciliation in a future fuel
reconciliation proceeding.



Federal Regulation



See "System Agreement Proceedings" and "Independent Coordinator of Transmission" in the "Significant Factors and Known Trends" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis herein for updates to the discussion in the Entergy Texas Form 10.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Entergy Texas Form 10 for a discussion of the estimates and judgments necessary in Entergy Texas' accounting for the application of SFAS 71, unbilled revenue, and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

123



ENTERGY TEXAS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$565,349

$450,905

$962,391

$870,293OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

158,288

143,243

227,182

310,484Purchased power

280,189

215,397

505,593

390,407Other operation and maintenance

46,254

47,239

84,675

89,190Decommissioning

46

42

91

84Taxes other than income taxes

12,944

12,871

26,544

26,004Depreciation and amortization

18,872

17,346

37,237

34,480Other regulatory charges - net

6,518

1,620

11,697

3,183TOTAL

523,111

437,758

893,019

853,832OPERATING INCOME

42,238

13,147

69,372

16,461OTHER INCOMEAllowance for equity funds used during construction

402

550

978

1,770Interest and dividend income

1,346

9,983

5,553

19,789Miscellaneous - net

9,276

(350)

11,086

(350)TOTAL

11,024

10,183

17,617

21,209INTEREST AND OTHER CHARGESInterest on long-term debt

18,545

16,129

38,507

32,246Other interest - net

698

2,426

2,575

7,114Allowance for borrowed funds used during construction

(230)

(354)

(557)

(1,150)TOTAL

19,013

18,201

40,525

38,210INCOME (LOSS) BEFORE INCOME TAXES

34,249

5,129

46,464

(540)Income taxes

12,833

5,291

17,336

3,018NET INCOME (LOSS)

$21,416

($162)

$29,128

($3,558)See Notes to Financial Statements.


124



ENTERGY TEXAS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income (loss)

$29,128

($3,558)Adjustments to reconcile net income to net cash flow provided by operating activities:Reserve for regulatory adjustments

188

179Other regulatory charges - net

11,697

3,183Depreciation, amortization, and decommissioning

37,328

34,564Deferred income taxes, investment tax credits, and non-current taxes accrued

(1,695)

90,342Changes in working capital:Receivables

(22,625)

(93,959)Fuel inventory

(2,385)

6,549Accounts payable

168,607

4,727Taxes accrued

10,907

17,669Interest accrued

(5,735)

(37)Deferred fuel costs

(130,734)

53,650Other working capital accounts

(25,115)

58,923Provision for estimated losses and reserves

1,208

481Changes in other regulatory assets

17,342

(30,704)Other

(101,629)

70,218Net cash flow provided by (used in) operating activities

(13,513)

212,227INVESTING ACTIVITIESConstruction expenditures

(53,993)

(69,858)Allowance for equity funds used during construction

978

1,770Insurance proceeds

-

4,415Change in money pool receivable - net

104,256

(203,181)Changes in transition charge account

9,171

-Net cash flow provided by (used in) investing activities

60,412

(266,854)FINANCING ACTIVITIESProceeds from the issuance of long-term debt

-

322,032Return of capital to parent

(150,000)

-Retirement of long-term debt

(159,232)

-Dividends paid:Common stock

(12,000)

(19,728)Net cash flow provided by (used in) financing activities

(321,232)

302,304Net increase (decrease) in cash and cash equivalents

(274,333)

247,677Cash and cash equivalents at beginning of period

297,082

77,115Cash and cash equivalents at end of period

$22,749

$324,792SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$44,855

$37,234Income taxes

$6,493

$3,239See Notes to Financial Statements.


125



ENTERGY TEXAS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents:Cash


$1,420

$10Temporary cash investments - at cost,which approximates market


21,329

297,072Total cash and cash equivalents


22,749

297,082Securitization recovery trust account


10,102

19,273Accounts receivable:Customer


90,000

61,108Allowance for doubtful accounts


(738)

(918)Associated companies


285,181

377,478Other


10,728

35,048Accrued unbilled revenues


36,888

30,974Total accounts receivable


422,059

503,690Deferred fuel costs


63,464

-Accumulated deferred income taxes


2,587

24,507Fuel inventory - at average cost


58,163

55,778Materials and supplies - at average cost


30,249

31,454Prepayments and other


7,767

14,756TOTAL


617,140

946,540OTHER PROPERTY AND INVESTMENTSInvestments in affiliates at equity


876

863Non-utility property - at cost (less accumulated depreciation)


1,883

2,030Other


18,939

16,514TOTAL


21,698

19,407UTILITY PLANTElectric


2,870,465

2,817,681Construction work in progress


58,527

71,519TOTAL UTILITY PLANT


2,928,992

2,889,200Less - accumulated depreciation and amortization


1,064,370

1,043,183UTILITY PLANT - NET


1,864,622

1,846,017DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net


86,536

87,531Other regulatory assets


628,167

645,941Long-term receivables


789

1,284Other


118,068

60,032TOTAL


833,560

794,788TOTAL ASSETS


$3,337,020

$3,606,752See Notes to Financial Statements.126ENTERGY TEXAS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSLIABILITIES AND SHAREHOLDER'S EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESCurrently maturing portion of debt assumption liability

$160,286

$309,123Accounts payable:Associated companies


107,381

40,120Other


182,263

80,917Customer deposits


39,478

37,962Taxes accrued


26,660

15,753Interest accrued


22,314

28,049Deferred fuel costs


-

67,270Pension and other postretirement liabilities


1,236

1,236System agreement cost equalization


56,126

92,225Other


6,589

5,316TOTAL


602,333

677,971NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued


669,267

697,693Accumulated deferred investment tax credits


24,926

25,724Other regulatory liabilities


6,253

4,881Asset retirement cost liabilities


3,156

3,066Accumulated provisions


10,071

8,863Pension and other postretirement liabilities


4,638

14,418Long-term debt - assumption liability


769,971

769,971Other long-term debt


322,851

333,892Other


52,172

66,019TOTAL


1,863,305

1,924,527Commitments and ContingenciesSHAREHOLDER'S EQUITYCommon stock, no par value, authorized 200,000,000 shares;issued and outstanding 46,525,000 shares in 2008 and 2007


49,452

49,452Paid-in capital


481,994

631,994Retained earnings


339,936

322,808TOTAL


871,382

1,004,254TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY


$3,337,020

$3,606,752See Notes to Financial Statements.


127



ENTERGY TEXAS, INC. AND SUBSIDIAIRESCONSOLIDATED STATEMENTS OF RETAINED EARNINGS AND PAID-IN CAPITALFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended2008

2007(In Thousands)RETAINED EARNINGSRetained Earnings - Beginning of period


$330,520

$287,918Add:Net Income (Loss)


21,416

(162)Other additions


-

75621,416

594Deduct:Dividends declared on common stock


12,000

5,160Retained Earnings - End of period


$339,936

$283,352PAID-IN CAPITALPaid-in Capital - Beginning of period


$481,994

$632,222Deduct:Return of capital to parent


-

-Paid-in capital - End of period


$481,994

$632,222Six Months Ended2008

2007(In Thousands)RETAINED EARNINGSRetained Earnings - Beginning of period


$322,808

$306,266Add:Net Income (Loss)


29,128

(3,558)Other additions


-

37229,128

(3,186)Deduct:Dividends declared on common stock


12,000

19,728Retained Earnings - End of period


$339,936

$283,352PAID-IN CAPITALPaid-in Capital - Beginning of period


$631,994

$632,222Deduct:Return of capital to parent


(150,000)

-Paid-in capital - End of period


$481,994

$632,222See Notes to Financial Statements.


128



ENTERGY TEXAS, INC. AND SUBSIDIARIESSELECTED OPERATING RESULTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$149

$125

$24

19Commercial

110

95

15

16Industrial

135

113

22

19Governmental

8

6

2

33Total retail

402

339

63

19Sales for resaleAssociated companies

143

97

46

47Non-associated companies

3

1

2

200Other

17

14

3

21Total

$565

$451

$114

25Billed Electric EnergySales (GWh):Residential

1,232

1,131

101

9Commercial

1,042

985

57

6Industrial

1,607

1,483

124

8Governmental

62

60

2

3Total retail

3,943

3,659

284

8Sales for resaleAssociated companies

1,079

1,083

(4)

-Non-associated companies

29

13

16

123Total

5,051

4,755

296

6Six Months Ended

Increase/Description

2008

2007

(Decrease)

%(Dollars In Millions)Electric Operating Revenues:Residential

$260

$258

$2

1Commercial

187

186

1

1Industrial

239

221

18

8Governmental

13

12

1

8Total retail

699

677

22

3Sales for resaleAssociated companies

239

172

67

39Non-associated companies

5

3

2

67Other

19

18

1

6Total

$962

$870

$92

11Billed Electric EnergySales (GWh):Residential

2,444

2,367

77

3Commercial

1,985

1,897

88

5Industrial

3,151

2,867

284

10Governmental

123

120

3

3Total retail

7,703

7,251

452

6Sales for resaleAssociated companies

1,976

1,995

(19)

(1)Non-associated companies

51

47

4

9Total

9,730

9,293

437

5


129



SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

System Energy's principal asset consists of a 90% ownership and leasehold interest in Grand Gulf.  The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.  System Energy's operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement.  Payments under the Unit Power Sales Agreement are System Energy's only source of operating revenues.



Net income decreased by $4.9 million for the second quarter of 2008 compared to the second quarter of 2007 primarily due to a decrease in rate base in the second quarter of 2008 resulting in lower operating income.  Lower interest income earned on money pool investments also contributed to the decrease in net income.



Net income decreased by $10.6 million for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 primarily due to a decrease in rate base in 2008 resulting in lower operating income.  Lower interest income earned on money pool investments also contributed to the decrease in net income.

Liquidity and Capital Resources

Cash Flow



Cash flows for the six months ended June 30, 2008 and 2007 were as follows:





|                                                 |                      | 2008           |          | 2007    
|------------------------------------------------ | -------------------- | -------------- | -------- | --------
|                                                 |                      | (In Thousands)
|                                                 |                      |                |          |         
|Cash and cash equivalents at beginning of period |                      | $105,005       |          | $135,012
|                                                 |                      |                |          |         
|Cash flow provided by (used in):                 |                      |                |          |         
|                                                 | Operating activities |                | 97,865   |         
|                                                 | Investing activities |                | (84,274) |         
|                                                 | Financing activities |                | (71,901) |         
|Net decrease in cash and cash equivalents        |                      | (58,310)       |          | (14,142)
|                                                 |                      |                |          |         
|Cash and cash equivalents at end of period       |                      | $46,695        |          | $120,870

Operating Activities

The increase of $10.8 million in net cash provided by operating activities for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 is primarily due to a decrease of $9.6 million in income tax payments.

130



Investing Activities

The increase of $57.3 million in net cash used by investing activities for the six months ended June 30, 2008 compared to the six months ended June 30, 2007 is primarily due to money pool activity.  Increases in System Energy's receivable from the money pool are a use of cash flow, and System Energy's receivable from the money pool increased by $47.9 million for the six months ended June 30, 2008 compared to decreasing by $14.8 million for the six months ended June 30, 2007.  The money pool is an inter-company borrowing arrangement designed to reduce Entergy's subsidiaries' need for external short-term borrowings.

Capital Structure

System Energy's capitalization is balanced between equity and debt, as shown in the following table.



|                                     |  | June 30,
 2008 |  | December 31,
2007
|------------------------------------ |  | -------------- |  | -----------------
|                                     |  |                |  |                  
|Net debt to net capital              |  | 47.9%          |  | 47.4%            
|Effect of subtracting cash from debt |  | 1.4%           |  | 3.2%             
|Debt to capital                      |  | 49.3%          |  | 50.6%            



Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable, capital lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and common shareholder's equity.  Net capital consists of capital less cash and cash equivalents.  System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy's financial condition.

Uses and Sources of Capital



See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources"in the Form 10-K for a discussion of System Energy's uses and sources of capital.  The following is an update to the Form 10-K.



System Energy's receivables from the money pool were as follows:



|June 30,
2008  |  | December 31,
2007 |  | June 30,
2007 |  | December 31,
2006
|-------------- |  | ----------------- |  | ------------- |  | -----------------
|(In Thousands)
|               |  |                   |  |               |  |                  
|$101,497       |  | $53,620           |  | $50,865       |  | $88,231          



In May 2007, $22.5 million of System Energy's receivable from the money pool was replaced by a note receivable from Entergy New Orleans.  See Note 4 to the financial statements in the Form 10-K for a description of the money pool.

Significant Factors and Known Trends

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Significant Factors and Known Trends" in the Form 10-K for a discussion of the Energy Policy Act of 2005, nuclear matters, and environmental risks.  The following is an update to the Form 10-K.

System Energy Rate Proceeding



In March 2008, the LPSC filed a complaint at the FERC under Federal Power Act section 206 against System Energy and Entergy Services.  The complaint requests that the FERC set System Energy's rate of return on common equity at no more than 9.75%.  The LPSC's complaint further

131



requests that System Energy base its decommissioning and depreciation expenses on a 60-year useful life for Grand Gulf as opposed to the 40-year life specified in the existing NRC operating license.  The APSC, the City of New Orleans, the MPSC, and other parties have intervened in the proceeding.  System Energy filed its answer to the complaint in April 2008, in which it denies the allegations of the LPSC and requests that the FERC dismiss the complaint without a hearing.  On July 1, 2008, the FERC issued an order denying the relief requested by the LPSC.

Critical Accounting Estimates

See "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in System Energy's accounting for nuclear decommissioning costs and qualified pension and other postretirement benefits.

New Accounting Pronouncements

See "New Accounting Pronouncements" section of Entergy Corporation and Subsidiaries Management's Financial Discussion and Analysis for a discussion of new accounting pronouncements.

132



SYSTEM ENERGY RESOURCES, INC.INCOME STATEMENTSFor the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)Three Months Ended

Six Months Ended2008

2007

2008

2007(In Thousands)

(In Thousands)OPERATING REVENUESElectric

$128,366

$129,471

$242,738

$255,628OPERATING EXPENSESOperation and Maintenance:Fuel, fuel-related expenses, andgas purchased for resale

12,688

10,333

23,304

18,721Nuclear refueling outage expenses

4,209

3,691

8,413

8,226Other operation and maintenance

32,008

28,304

56,997

52,541Decommissioning

6,847

6,369

13,571

12,624Taxes other than income taxes

6,101

4,594

4,029

13,005Depreciation and amortization

24,522

24,026

51,077

49,988Other regulatory credits - net

(2,571)

(2,650)

(4,557)

(4,610)TOTAL

83,804

74,667

152,834

150,495OPERATING INCOME

44,562

54,804

89,904

105,133OTHER INCOMEAllowance for equity funds used during construction

1,237

364

2,366

780Interest and dividend income

3,665

4,770

6,212

10,585Miscellaneous - net

(121)

657

(288)

578TOTAL

4,781

5,791

8,290

11,943INTEREST AND OTHER CHARGESInterest on long-term debt

11,321

11,336

23,283

23,689Other interest - net

37

36

80

52Allowance for borrowed funds used during construction

(415)

(120)

(793)

(255)TOTAL

10,943

11,252

22,570

23,486INCOME BEFORE INCOME TAXES

38,400

49,343

75,624

93,590Income taxes

16,309

22,379

31,932

39,329NET INCOME

$22,091

$26,964

$43,692

$54,261See Notes to Financial Statements.


133





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134



SYSTEM ENERGY RESOURCES, INC.STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2008 and 2007(Unaudited)2008

2007(In Thousands)OPERATING ACTIVITIESNet income

$43,692

$54,261Adjustments to reconcile net income to net cash flow provided by operating activities:Other regulatory credits - net

(4,557)

(4,610)Depreciation, amortization, and decommissioning

64,648

62,612Deferred income taxes, investment tax credits, and non-current taxes accrued

(3,659)

37,139Changes in working capital:Receivables

16,909

6,305Accounts payable

(11,747)

(4,089)Taxes accrued

-

(43,461)Interest accrued

(34,959)

(33,345)Other working capital accounts

1,713

(21,355)Provision for estimated losses and reserves

(488)

(22)Changes in other regulatory assets

(5,679)

(1,400)Other

31,992

35,018Net cash flow provided by operating activities

97,865

87,053INVESTING ACTIVITIESConstruction expenditures

(23,966)

(29,101)Allowance for equity funds used during construction

2,366

780Nuclear fuel purchases

-

(56,155)Proceeds from the sale/leaseback of nuclear fuel

-

56,475Proceeds from nuclear decommissioning trust fund sales

176,470

41,964Investment in nuclear decommissioning trust funds

(191,266)

(55,761)Changes in money pool receivable - net

(47,878)

14,838Net cash flow used in investing activities

(84,274)

(26,960)FINANCING ACTIVITIESRetirement of long-term debt

(26,701)

(23,335)Dividends paid:Common stock

(45,200)

(50,900)Net cash flow used in financing activities

(71,901)

(74,235)Net decrease in cash and cash equivalents

(58,310)

(14,142)Cash and cash equivalents at beginning of period

105,005

135,012Cash and cash equivalents at end of period

$46,695

$120,870SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest - net of amount capitalized

$55,753

$54,241Income taxes

$16,072

$25,667See Notes to Financial Statements.


135



SYSTEM ENERGY RESOURCES, INC.BALANCE SHEETSASSETSJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT ASSETSCash and cash equivalents:Cash



$872

$406Temporary cash investments - at cost,which approximates market



45,823

104,599Total cash and cash equivalents



46,695

105,005Accounts receivable:Associated companies



144,490

112,598Other



2,998

3,921Total accounts receivable



147,488

116,519Materials and supplies - at average cost



74,250

68,613Deferred nuclear refueling outage costs



5,687

13,640Prepayments and other



9,828

9,225TOTAL



283,948

313,002OTHER PROPERTY AND INVESTMENTSDecommissioning trust funds



304,672

315,654Note receivable - Entergy New Orleans



25,560

25,560TOTAL



330,232

341,214UTILITY PLANTElectric



3,285,637

3,273,390Property under capital lease



475,157

475,157Construction work in progress



99,110

88,296Nuclear fuel under capital lease



64,385

81,616Nuclear fuel



5,913

7,656TOTAL UTILITY PLANT



3,930,202

3,926,115Less - accumulated depreciation and amortization



2,156,637

2,101,484UTILITY PLANT - NET



1,773,565

1,824,631DEFERRED DEBITS AND OTHER ASSETSRegulatory assets:SFAS 109 regulatory asset - net



90,014

93,083Other regulatory assets



281,394

274,202Other



11,905

12,628TOTAL



383,313

379,913TOTAL ASSETS



$2,771,058

$2,858,760See Notes to Financial Statements.


136



SYSTEM ENERGY RESOURCES, INC.BALANCE SHEETSLIABILITIES AND SHAREHOLDER'S EQUITYJune 30, 2008 and December 31, 2007(Unaudited)2008

2007(In Thousands)CURRENT LIABILITIESCurrently maturing long-term debt



$28,440

$26,701Accounts payable:Associated companies



3,989

8,902Other



22,348

29,182Accumulated deferred income taxes



1,388

4,494Interest accrued



12,444

47,403Obligations under capital leases



30,058

30,058TOTAL



98,667

146,740NON-CURRENT LIABILITIESAccumulated deferred income taxes and taxes accrued



308,020

314,991Accumulated deferred investment tax credits



63,446

65,184Obligations under capital leases



34,326

51,558Other regulatory liabilities



245,702

243,450Decommissioning



382,131

368,559Accumulated provisions



1,981

2,469Pension and other postretirement liabilities



31,063

30,031Long-term debt



744,863

773,266Other



-

145TOTAL



1,811,532

1,849,653Commitments and ContingenciesSHAREHOLDER'S EQUITYCommon stock, no par value, authorized 1,000,000 shares;issued and outstanding 789,350 shares in 2008 and 2007



789,350

789,350Retained earnings



71,509

73,017TOTAL



860,859

862,367TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY



$2,771,058

$2,858,760See Notes to Financial Statements.


137



ENTERGY CORPORATION AND SUBSIDIARIES

PART II. OTHER INFORMATION



Item 1.  Legal Proceedings



See "PART I, Item 1, Litigation" in the Form 10-K for a discussion of legal, administrative, and other regulatory proceedings affecting Entergy.



Item 1A.  Risk Factors



There have been no material changes to the risk factors discussed in "PART I, Item 1A, Risk Factors" in the Form 10-K.



Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities (1)



|Period              |  | Total Number of
Shares Purchased |  | Average Price Paid
per Share |  | Total Number of
Shares Purchased
as Part of a 
Publicly 
Announced Plan |  | Maximum $ 
Amount 
of Shares that May
Yet be Purchased 
Under a Plan (2)
|------------------- |  | -------------------------------- |  | ---------------------------- |  | ----------------------------------------------------------------------- |  | ------------------------------------------------------------------------
|                    |  |                                  |  |                              |  |                                                                         |  |                                                                         
|4/01/2008-4/30/2008 |  | 484,586                          |  | $111.29                      |  | 484,586                                                                 |  | $823,171,647                                                            
|5/01/2008-5/31/2008 |  | 543,970                          |  | $119.55                      |  | 543,970                                                                 |  | $787,829,847                                                            
|6/01/2008-6/30/2008 |  | 770,543                          |  | $120.01                      |  | 770,543                                                                 |  | $707,627,695                                                            
|Total               |  | 1,799,099                        |  | $117.52                      |  | 1,799,099                                                               |  |                                                                         



|(1) | In accordance with Entergy's stock-based compensation plans, Entergy periodically grants stock options to key employees that may be exercised to obtain shares of Entergy's common stock.  According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market.  Entergy's management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans.  In addition to this authority, in January 2007 the Board approved a repurchase program under which Entergy is authorized to repurchase up to $1.5 billion of its common stock.  The program does not have an expiration date, but Entergy expects to complete it in 2008.  In January 2008, the Board authorized an incremental $500 million share repurchase program to enable Entergy to consider opportunistic purchases in response to equity market conditions.  See Note 12 to the financial statements in the Form 10-K for additional discussion of the stock-based compensation plans.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Maximum amount of shares that may yet be repurchased relates only to the $1.5 billion and $500 million plans and does not include an estimate of the amount of shares that may be purchased to fund the exercise of grants under the stock-based compensation plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



The amount of share repurchases may vary as a result of material changes in business results or capital spending or new investment opportunities.

138



Item 4.  Submission of Matters to a Vote of Security Holders

Election of Board of Directors

Entergy Corporation

The annual meeting of stockholders of Entergy Corporation was held on May 2, 2008.  The following matters were voted on and received the specified number of votes for, abstentions, votes withheld (against), and broker non-votes:



1. Election of Directors:





|Name of Nominee      |  | Votes For   |  | Votes Against |  | Abstentions
|-------------------- |  | ----------- |  | ------------- |  | -----------
|                     |  |             |  |               |  |            
|Maureen S. Bateman   |  | 162,483,179 |  | 1,379,978     |  | 1,847,924  
|W. Frank Blount      |  | 159,924,086 |  | 3,980,608     |  | 1,806,387  
|Simon D. deBree      |  | 162,305,111 |  | 1,588,237     |  | 1,817,733  
|Gary W. Edwards      |  | 162,621,250 |  | 1,266,209     |  | 1,823,622  
|Alexis M. Herman     |  | 160,259,935 |  | 3,642,024     |  | 1,809,122  
|Donald C. Hintz      |  | 162,643,443 |  | 1,303,103     |  | 1,764,535  
|J. Wayne Leonard     |  | 162,777,353 |  | 1,146,413     |  | 1,787,315  
|Stuart L. Levenick   |  | 162,622,546 |  | 1,309,222     |  | 1,779,313  
|James R. Nichols     |  | 162,461,831 |  | 1,452,170     |  | 1,797,080  
|William A. Percy, II |  | 162,366,184 |  | 1,550,470     |  | 1,794,427  
|W. J. "Billy" Tauzin |  | 162,160,349 |  | 1,761,156     |  | 1,789,576  
|Steven V. Wilkinson  |  | 162,467,535 |  | 1,474,131     |  | 1,769,415  



1. Ratify the appointment of independent public accountants, Deloitte & Touche LLP for the year 2008:  163,354,763 votes for; 849,674 votes against; and 1,506,644 abstentions.

Shareholder proposal relating to advisory vote on executive compensation:  57,885,138 votes for; 81,014,139 votes against; 13,435,872 abstentions; and 13,375,932 broker non-votes.

Shareholder proposal relating to limitations on management compensation:  8,781,863 votes for; 141,336,617 votes against; 2,201,540 abstentions; and 13,391,061 broker non-votes.

Shareholder proposal relating to corporate political contribution:  34,163,658 votes for; 86,778,857 votes against; 31,369,607 abstentions; and 13,398,959 broker non-votes.

Shareholder proposal relating to special shareholder meetings:  83,618,800 votes for; 66,298,271 votes against; 2,395,188 abstentions; and 13,398,822 broker non-votes.



Entergy Arkansas



A consent in lieu of a meeting of common stockholders was executed on June 9, 2008.  The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Arkansas:  Hugh T. McDonald, Chairman, Leo P. Denault, Mark T. Savoff, and Gary J. Taylor.



Entergy Gulf States Louisiana



A consent in lieu of a meeting of common stockholders was executed on June 27, 2008.  The consent was signed on behalf of EGS Holdings, Inc., the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Gulf States Louisiana:  E. Renae Conley, Chair, Leo P. Denault, Mark T. Savoff, and Gary J. Taylor.

139



Entergy Louisiana



A consent in lieu of a meeting of members was executed on June 27, 2008.  The consent was signed on behalf of Entergy Louisiana Holdings, Inc., the holder of all issued and outstanding common membership interests.  The holder of the common membership interests, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Louisiana:  E. Renae Conley, Chair, Leo P. Denault, Mark T. Savoff, and Gary J. Taylor.



Entergy Mississippi



A consent in lieu of a meeting of common stockholders was executed on June 9, 2008.  The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Mississippi: Carolyn C. Shanks, Chair, Leo P. Denault, Mark T. Savoff, Gary J. Taylor, and Haley R. Fisackerly.  Effective July 13, 2008, Carolyn C. Shanks resigned as a director, chair of the board, and chief executive officer of Entergy Mississippi.



A consent in lieu of a meeting of common stockholders was executed on July 14, 2008.  The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Mississippi: Haley R. Fisackerly, Chairman, Leo P. Denault, Mark T. Savoff, and Gary J. Taylor.



Entergy New Orleans



A consent in lieu of a meeting of common stockholders was executed on June 9, 2008.  The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy New Orleans: Roderick K. West, Chairman, Gary J. Taylor, Tracie L. Boutte, and William J. Burroughs.



Entergy Texas



A consent in lieu of a meeting of common stockholders was executed on June 9, 2008.  The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of Entergy Texas:  Joseph F. Domino, Chairman, Leo P. Denault, Mark T. Savoff, and Gary J. Taylor.



System Energy



A consent in lieu of a meeting of common stockholders was executed on June 27, 2008.  The consent was signed on behalf of Entergy Corporation, the holder of all issued and outstanding shares of common stock.  The common stockholder, by such consent, elected the following individuals to serve as directors constituting the Board of Directors of System Energy: Michael R. Kansler, Chairman, Steven C. McNeal, and Leo P. Denault.



Item 5.  Other Information

Affiliate Purchased Power Agreements

See Part I, Item 1 of the Form 10-K for a discussion of the FERC proceeding involving the purchased power agreements entered by Entergy Louisiana and Entergy New Orleans to procure electric power from affiliates, the FERC's decision in the proceeding, and the LPSC's appeal of that decision.  On April 10, 2008, the LPSC filed its initial brief with the D.C. Circuit.  In its initial brief, the LPSC argues the FERC erred: (1) in concluding that Entergy Arkansas' short term sale of capacity and energy to third parties did not trigger the obligation to offer a right of first refusal

140



with respect to this capacity to the other Utility operating companies pursuant to the provisions of the System Agreement; and (2) by approving an allocation of baseload generating resources that unduly preferred Entergy New Orleans and unduly discriminated against Entergy Gulf States Louisiana.  The FERC's brief and the joint brief of the Utility operating companies, the APSC, the MPSC, and the City Council were filed in June 2008, and the LPSC filed its reply brief in July 2008.

Franchises and Certificates

As discussed in the Entergy Texas Form 10, on December 28, 2007, the Texas Industrial Energy Consumers (TIEC) filed a petition asking the PUCT to declare that Entergy Gulf States, Inc. was required to obtain prior PUCT approval in connection with Entergy Texas' acquisition of its certificate of convenience and necessity as part of the jurisdictional separation of Entergy Gulf States, Inc. into Entergy Texas and Entergy Gulf States Louisiana.  The TIEC further requested that the PUCT declare Entergy Texas' acquisition of the certificate of convenience and necessity null and void if it occurred without prior PUCT approval.



To resolve expeditiously any outstanding related issues, on March 31, 2008, Entergy Texas filed a request with the PUCT for approval of the allocation to Entergy Texas of the certificate of convenience and necessity to the extent the PUCT finds such an approval is necessary.  On May 8, 2008, the ALJ issued an order consolidating the TIEC proceeding discussed above with this proceeding because the filings share threshold issues.  On May 16, 2008, the ALJ certified two issues for the PUCT to consider that relate to whether Entergy Gulf States, Inc. needed to obtain PUCT approval with regard to allocating its certificate of convenience and necessity to Entergy Texas.  In June 2008 the PUCT determined that the legislation authorizing the completion of the jurisdictional separation of Entergy Gulf States, Inc. into two separate companies contemplated Entergy Texas' succession to Entergy Gulf States, Inc.'s rights under the certificate of convenience and necessity without further regulatory approval.  The PUCT, however, has not issued a final order in this proceeding.

Environmental Regulation

Ozone Non-attainment



Entergy Texas and Entergy Gulf States Louisiana each operate fossil-fueled generating units in geographic areas that are not in attainment of the currently-enforced national ambient air quality standards for ozone.  Texas non-attainment areas that affect Entergy are the Houston-Galveston and the Beaumont-Port Arthur areas.  In Louisiana, Entergy is affected by the non-attainment status of the Baton Rouge area.  Areas in non-attainment are classified as "marginal", "moderate," "serious," or "severe."  When an area fails to meet the ambient air standard, the EPA requires state regulatory authorities to prepare state implementation plans meant to cause progress toward bringing the area into attainment with applicable standards.



In April 2004, the EPA issued a final rule, effective June 2005, revoking the 1-hour ozone standard, including designations and classifications.  In a separate action over the same period, the EPA enacted 8-hour ozone non-attainment classifications and stated that areas designated as non-attainment under a new 8-hour ozone standard shall have one year to adjust to the new requirements with submittal of a new attainment plan.  For Louisiana, the Baton Rouge area is currently classified as a ''marginal" (rather than "severe") non-attainment area under the new standard with an attainment date of June 15, 2007.  On March 21, 2008 the EPA published a notice that the Baton Rouge area had failed to meet the standard by the attainment date and was proceeding with a "bump-up" of the area to the next higher non-attainment level.  The Baton Rouge area is now classified as "moderate" non-attainment under the new standard with an attainment date of June 15, 2010.



For Texas, the Beaumont-Port Arthur area is currently classified as a "marginal" (rather than "serious") non-attainment area under the new standard with an attainment date of June 15, 2007.  On March 18, 2008 the EPA published a notice that the Beaumont-Port Arthur area had failed to meet the standard by the attainment date based on the area's 2004-2006 monitoring data and was proceeding with a "bump-up" of the area to the next higher non-attainment level.  The 2005-2007 monitoring data showed the area to be in attainment, however, and the TCEQ is considering a draft request to EPA for redesignation
of the area from non-attainment to attainment under the 8-hour ozone standard.
The Houston-Galveston area is now classified

141



as "moderate" non-attainment under the new standard with
an attainment date of June 15, 2010. On June 15, 2007, the Texas governor
petitioned the EPA to reclassify the Houston-Galveston area from "moderate" to
"severe" with an attainment date of June 15, 2019. EPA consideration of the
petition is still pending.



In December 2006, the EPA's revocation of the 1-hour ozone standard was rejected by the courts.  As a result, numerous requirements can return for areas that fail to meet 1-hour ozone levels by dates set by the law.  These requirements include the potential to increase fees significantly for plants operating in these areas.  In addition, it is possible that new emission controls may be required.  Specific costs of compliance cannot be estimated at this time, but Entergy is monitoring development of the respective state implementation plans and will develop specific compliance strategies as the plans move through the adoption process.



On March 12, 2008 the EPA reduced the National Ambient Air Quality Standard for ozone, which will in turn place additional counties and parishes in which Entergy operates in nonattainment status.  States will develop State Implementation Plans that outline control requirements to enable these counties and parishes to reach attainment status.  Entergy facilities in these areas will be subject to installation of NOx controls, but the degree of control will not be known until the State Implementation Plans are developed.  Entergy will monitor and be involved in the State Implementation Plans development process in states where Entergy has facilities.



Interstate Air Transport



In March 2005, the EPA finalized the Clean Air Interstate Rule, which would have reduced SO2 and NOx emissions from electric generation plants in order to address transport issues and improve air quality in 29 eastern states.  The Clean Air Interstate Rule was vacated by the



Regional Haze



In June 2005, the EPA issued final Best Available Retrofit Control Technology (BART) regulations, which could potentially result in a requirement to install SO2 pollution control technology on certain of Entergy's coal and oil generation units.  The rule leaves certain BART determinations to the states.  The Arkansas Department of Environmental Quality (ADEQ) has completed its State Implementation Plan for Arkansas facilities to implement its obligations under the Clean Air Visibility Rule.  The ADEQ has determined that Entergy Arkansas' White Bluff power plant affects Class I Area visibility and will be subject to the EPA's presumptive BART requirements to install scrubbers and low NOx burners by 2013.Under current regulations, the scrubbers must be operational by September 2013.  The project remains in the planning stages and has not been fully designed, but the latest conceptual cost estimate has gone up significantly from previous estimates due to increases in equipment, commodity, and labor costs. These estimates indicate that Entergy Arkansas' share of the project could cost approximately $630 million compared to the $375 million reported in the Form 10-K.  Entergy continues to review potential environmental spending needs and financing alternatives for any such spending, and future spending estimates could change based on the results of this continuing analysis.



316(b) Cooling Water Intake Structures



In March 2008, the NYDEC issued a draft water quality certification and a draft discharge permit for FitzPatrick, opening a 30-day public comment period on these documents.  The certification, or a waiver or exemption of the same, is required by section 401 of the federal Clean Water Act as a supporting document to the NRC's license renewal decision.  The discharge permit action is not related to the license renewal decision.  The NYDEC received comments on the draft documents from Entergy and from the public, and New York law requires that a hearing now be held on these public comments prior to the issuance of a final discharge permit or water quality certification.  In response, the NYDEC issued a draft denial without prejudice of the certification.  FitzPatrick, having filed a timely and complete application for permit renewal, has continued to operate under its

142



administratively continued discharge permit.  On July 16, 2008, negotiations with the state concerning issuance of these authorizations resulted in an agreement, memorialized in a stipulation executed by the state and Entergy on July 17, 2008.  The agreement includes a voluntary commitment by Entergy to install ristroph screens and an initial fish return system during the next five-year permit cycle.  Additionally, Entergy has agreed to conduct further studies regarding the feasibility and effectiveness of relocating the facility's offshore intake structure and of additional fish return technologies.  The permit to be issued under the agreement requires that NYDEC initiate a permit modification (triggering Entergy's right to challenge) if the state decides to require the installation and operation of additional fish return technology.  The NYDEC issued the water permit as described above and issued the water quality certification.  Additionally, the New York Department of State has issued the Coastal Zone Management consistency determination, also required for the NRC to complete the licensing process.



Vermont Yankee Thermal Discharge Permit



Opposition groups appealed a final permit issued to Vermont Yankee pursuant to the National Pollutant Discharge Elimination System in which the Vermont Agency of Natural Resources (VANR) allowed a small increase in the amount of heat the facility can discharge to the Connecticut River from June 16 to October 14 each year.  The VANR permit increases operational flexibility for the required usage rate of the existing cooling towers and for the generation rate of the facility that is especially helpful in conditions of high ambient temperatures or low river flow conditions.  The trial of this matter took place in the Vermont Environmental Court during the summer of 2007.  On May 22, 2008, the Court ruled that Vermont Yankee may operate with the increased thermal discharge from July 8 to October 14 of each year, and may operate with the increased thermal discharge from June 16 to July 7 as long as the discharge does not raise the water temperature above 76.7 degrees Fahrenheit at a certain location downstream.  Vermont Yankee and VANR are working to develop specific permit conditions that reflect the court's order.  Opposition groups have announced that they will appeal the decision to the Vermont Supreme Court.



Indian Point 2 Hazardous Waste Remediation

As part of the effort to terminate the current Indian Point 2 mixed waste storage permit, Entergy was required to perform groundwater and soil sampling for metals, PCB's and other non-radiological contaminants on plant property, regardless of whether these contaminants stem from onsite activities or were related to the waste stored on-site pursuant to the permit.  Entergy believes this permit is no longer necessary for the facility due to an exemption for mixed wastes (hazardous waste that is also radioactive) recently promulgated as part of EPA's hazardous waste regulations.  This exemption allows mixed waste to be regulated through the NRC license instead of through a separate EPA or state hazardous waste permit.  In February 2008, Entergy submitted its report on this sampling effort to the NYDEC.  The report indicated the presence of various metals in soils at levels above the NYDEC cleanup objectives.  It does not appear that these metals are connected to operation of the nuclear facility.  NYDEC is now requiring that Entergy submit a plan by August 9, 2008 for a study that will identify the sources of the metals, define the vertical and lateral extent of the contamination on-site, and evaluate the potential for migration off-site.  The NYDEC plans to use the results of this investigation to determine whether the permit can be terminated and the metals left in place until plant decommissioning or if further investigation or remediation is required.  Entergy is unable to determine what the extent or cost of required remediation, if any, will be at this time.

Executive Stock Ownership Guidelines

In July 2008, the Personnel Committee of the Board adopted Stock Ownership Guidelines, including an equity retention policy, for officers of Entergy Corporation and its subsidiaries.  The guidelines are intended to more closely align key executives' interests with the interests of Entergy Corporation's shareholders.  To comply with these guidelines, officers must satisfy one of the two following conditions:

143



Stock Ownership Guidelines



|Officer's Management Level |  | Multiple of Base Salary
|-------------------------- |  | -----------------------
|                           |  |                        
|Level 1                    |  | 5                      
|Level 2                    |  | 4                      
|Level 3                    |  | 2.5                    
|Level 4                    |  | 1.5                    

> ; or

Equity Retention Policy



Shares of Entergy Corporation common stock held by the officer directly, restricted stock and restricted stock units, and shares held by the officer in employee savings plans are counted toward satisfaction of the requirements.

The Personnel Committee will review compliance with the policy annually.

Earnings Ratios (Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)



The Registrant Subsidiaries have calculated ratios of earnings to fixed charges and ratios of earnings to combined fixed charges and preferred dividends/distributions pursuant to Item 503 of Regulation S-K of the SEC as follows:



|                              | Ratios of Earnings to Fixed Charges
|----------------------------- | -----------------------------------
|                              | Twelve Months Ended                
|                              | December 31,                       
|                              | 2003                               
|                              |                                    
|Entergy Arkansas              | 3.17                               
|Entergy Gulf States Louisiana | 1.51                               
|Entergy Louisiana             | 3.93                               
|Entergy Mississippi           | 3.06                               
|Entergy New Orleans           | 1.73                               
|Entergy Texas                 | 1.21                               
|System Energy                 | 3.66                               

144



|                              | Ratios of Earnings to Combined Fixed Charges
and Preferred Dividends/Distributions
|----------------------------- | ----------------------------------------------------------------------------------
|                              | Twelve Months Ended                                                               
|                              | December 31,                                                                      
|                              | 2003                                                                              
|                              |                                                                                   
|Entergy Arkansas              | 2.79                                                                              
|Entergy Gulf States Louisiana | 1.45                                                                              
|Entergy Louisiana             | -                                                                                 
|Entergy Mississippi           | 2.77                                                                              
|Entergy New Orleans           | 1.59                                                                              

Item 6.  Exhibits *



|4(a) -  | Seventy-sixth Supplemental Indenture, dated as of May 1, 2008, to Entergy Gulf States Louisiana's Indenture of Mortgage, dated as of September 1, 1926.                                                                   
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                           
|4(b) -  | Sixty-seventh Supplemental Indenture, dated as of July 1, 2008, to Entergy Arkansas's Mortgage and Deed of Trust, dated as of October 1, 1944.                                                                            
|        |                                                                                                                                                                                                                           
|10(a) - | Entergy Corporation Service Recognition Program For Non-Employee Outside Directors (As Amended and Restated Effective January 1, 2009).                                                                                   
|        |                                                                                                                                                                                                                           
|10(b) - | Entergy Corporation Outside Director Stock Program Established under the 2007 Equity Ownership and Long Term Cash Incentive Plan of Entergy Corporation and Subsidiaries (Amended and Restated Effective January 1, 2009).
|        |                                                                                                                                                                                                                           
|12(a) - | Entergy Arkansas' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.                                                                       
|        |                                                                                                                                                                                                                           
|12(b) - | Entergy Gulf States Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Distributions, as defined.                                                     
|        |                                                                                                                                                                                                                           
|12(c) - | Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Distributions, as defined.                                                                 
|        |                                                                                                                                                                                                                           
|12(d) - | Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.                                                                   
|        |                                                                                                                                                                                                                           
|12(e) - | Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Dividends, as defined.                                                                    
|        |                                                                                                                                                                                                                           
|12(f) - | Entergy Texas' Computation of Ratios of Earnings to Fixed Charges, as defined.                                                                                                                                            
|        |                                                                                                                                                                                                                           
|12(g) - | System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined.                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(a) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(b) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(c) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.                                                                                                                                                              
|        |                                                                                                                                                                                                                           
|31(d) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.145                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(e) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States Louisiana.                                                                                                                                                 
|        |                                                                                                                                                                                                                           
|31(f) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Gulf States Louisiana.                                                                                                                                                 
|        |                                                                                                                                                                                                                           
|31(g) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|31(h) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|31(i) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(j) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(k) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(l) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.                                                                                                                                                           
|        |                                                                                                                                                                                                                           
|31(m) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.                                                                                                                                                                 
|        |                                                                                                                                                                                                                           
|31(n) - | Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.                                                                                                                                                                 
|        |                                                                                                                                                                                                                           
|31(o) - | Rule 13a-14(a)/15d-14(a) Certification for System Energy.                                                                                                                                                                 
|        |                                                                                                                                                                                                                           
|31(p) - | Rule 13a-14(a)/15d-14(a) Certification for System Energy.                                                                                                                                                                 
|        |                                                                                                                                                                                                                           
|32(a) - | Section 1350 Certification for Entergy Corporation.                                                                                                                                                                       
|        |                                                                                                                                                                                                                           
|32(b) - | Section 1350 Certification for Entergy Corporation.                                                                                                                                                                       
|        |                                                                                                                                                                                                                           
|32(c) - | Section 1350 Certification for Entergy Arkansas.                                                                                                                                                                          
|        |                                                                                                                                                                                                                           
|32(d) - | Section 1350 Certification for Entergy Arkansas.                                                                                                                                                                          
|        |                                                                                                                                                                                                                           
|32(e) - | Section 1350 Certification for Entergy Gulf States Louisiana.                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|32(f) - | Section 1350 Certification for Entergy Gulf States Louisiana.                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|32(g) - | Section 1350 Certification for Entergy Louisiana.                                                                                                                                                                         
|        |                                                                                                                                                                                                                           
|32(h) - | Section 1350 Certification for Entergy Louisiana.                                                                                                                                                                         
|        |                                                                                                                                                                                                                           
|32(i) - | Section 1350 Certification for Entergy Mississippi.                                                                                                                                                                       
|        |                                                                                                                                                                                                                           
|32(j) - | Section 1350 Certification for Entergy Mississippi.                                                                                                                                                                       
|        |                                                                                                                                                                                                                           
|32(k) - | Section 1350 Certification for Entergy New Orleans.                                                                                                                                                                       
|        |                                                                                                                                                                                                                           
|32(l) - | Section 1350 Certification for Entergy New Orleans.                                                                                                                                                                       
|        |                                                                                                                                                                                                                           
|32(m) - | Section 1350 Certification for Entergy Texas.                                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|32(n) - | Section 1350 Certification for Entergy Texas.                                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|32(o) - | Section 1350 Certification for System Energy.                                                                                                                                                                             
|        |                                                                                                                                                                                                                           
|32(p) - | Section 1350 Certification for System Energy.                                                                                                                                                                             



___________________________

146



Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of the total assets of Entergy Corporation and its subsidiaries on a consolidated basis.



|*  | Reference is made to a duplicate list of exhibits being filed as a part of this report on Form 10-Q for the quarter ended June 30, 2008, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being filed with this report on Form 10-Q for the quarter ended June 30, 2008.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                         
|** | Incorporated herein by reference as indicated.                                                                                                                                                                                                                                                                                          

147



SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.



|ENTERGY CORPORATION
ENTERGY ARKANSAS, INC.
ENTERGY GULF STATES LOUISIANA, L.L.C.
ENTERGY LOUISIANA, LLC
ENTERGY MISSISSIPPI, INC.
ENTERGY NEW ORLEANS, INC.
ENTERGY TEXAS, INC.
SYSTEM ENERGY RESOURCES, INC.
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|                                                                                                                                                                                                             
|/s/ Theodore H. Bunting, Jr.                          	   					Theodore H. Bunting, Jr.
Senior Vice President and Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)



Date:	August 7, 2008

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