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 NEW ORLEANS and BEAUMONT, Texas -- An administrative law judge at the Federal Energy Regulatory Commission has recommended approval of the Entergy(NYSE: ETR)/Gulf States Utilities(NYSE: GSU) proposed merger after determining that it provides benefits for both companies and their customers.
 Judge Jacob Leventhal, in his Sept. 9 decision, said the merger is consistent with the public interest and should therefore be approved, subject to certain conditions. He considered the merger benefits and costs and found the evidence "convincing" that the merger will result in "overall significant benefits to the combined entities."
 Judge Leventhal also found that, although GSU will obtain the greater share of the merger benefits, with the addition of certain safeguards there is reasonable assurance that each Entergy Operating Company will be advantaged by approval of the merger.
 The basic safeguards are several conditions which were supported by Entergy and GSU. These include conditions regarding (1) a tracking mechanism to protect operating companies from certain unexpected increases in fuel costs, and (2) the distribution of profits from power sales under contracts entered into prior to the merger.
 The FERC judge's order directly addresses the major points raised by the state utility regulatory agencies from the Entergy service area. Judge Leventhal stated that these and other intervenors had made "vigorous presentations" to ensure fairness in the distribution of merger benefits and that their pleadings had received "sympathetic consideration."
 A key example of the judge's attentiveness to state regulatory concerns is his recommendations that the FERC adopt a fuel cost tracking mechanism suggested by the Louisiana Public Service Commission (LPSC). The LPSC had previously issued a conditional order approving the merger subject to FERC adoption of its cost tracking proposal.
 Judge Leventhal specifically rejected numerous conditions to amend the Entergy System Agreement or to reallocate the merger benefits. He stated that "the merger will not have an adverse effect on the operating costs and rate levels of the individual Operating Companies and their ratepayers. With the adoption of the conditions detailed in this decision, the existing (Entergy Operating Companies) will share in the benefits resulting from the merger and they will be protected from added costs without placing an unjustifiable burden on GSU."
 Earlier this year, FERC ruled the merger would not adversely affect competition or impair effective state or federal regulation, and therefore, did not include those topics in the hearing.
 The judge's recommendation next goes before the commissioners at FERC. The commissioners are expected to rule sometime this fall on the merger.
 In July, the merger received unanimous interim approval from the Public Utility Commission of Texas, which described the merger as a transaction that is in the public interest and beneficial to customers and other major public groups. Similarly, the merger received unanimous conditional approval in April from the Louisiana Public Service Commission. The LPSC found the merger to be in the public interest and to offer significant savings for GSU's and Entergy's customers.
 Other proceedings to secure approval are pending before the Securities and Exchange Commission and the Nuclear Regulatory Commission. The FERC administrative law judge's ruling, following extensive evidentiary hearings, comprehensively addresses all issues relating to merger benefits and costs, including the allocation of benefits among GSU and Entergy's operating subsidiaries. Entergy and GSU believe that the ruling may help facilitate the review process at the SEC since all the participants in the SEC proceeding are also involved in the FERC case, although the SEC has not yet determined how it will proceed. Entergy and GSU are continuing their efforts to secure all necessary regulatory approvals by 1993 year-end.
 Under the terms of the merger plan, Entergy and GSU will form a new holding company which will acquire all of the common stock of Entergy and GSU. The new holding company, which will be renamed "Entergy," will own all of the stock of GSU and Entergy's operating subsidiaries.
 GSU provides electric service to about 586,000 electric customers throughout a 28,000-square-mile area of southeast Texas and south Louisiana. Revenues in 1992 amounted to about $1.77 billion.
 Entergy is one of the larger investor-owned public utility holding companies in the United States, and the leading electricity supplier in the middle South region. Headquartered in New Orleans, Entergy serves more than 1.7 million retail customers through its operating companies in Arkansas, Louisiana and Mississippi. Entergy had 1992 sales amounting to $4.1 billion.
 -0- 9/10/93
 /CONTACT: Media: Harry Wadsworth, 504-569-4177; Investors: Stuart Ball, 504-569-4817, both of Entergy, or Susan Gilley of Gulf States, 409-839-2846/

CO: Entergy Corp.; Gulf States Utilities ST: Louisiana IN: UTI SU: TNM

RA-MM -- AT005 -- 0811 09/10/93 14:39 EDT
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Publication:PR Newswire
Date:Sep 10, 1993

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