Exhibit 10(a)12
Amendment To
Service Agreement
The parties hereto do hereby stipulate and agree to that the
SERVICE AGREEMENT entered into by and between them under date of
April 1, 1963, and as heretofore amended on January 1, 1972,
April 27, 1984, August 1, 1988, January 28, 1991, January 1,
1992, January 1, 1996, January 1, 1998 and January 1, 1999 be
and the same hereby is further amended by substituting for
Exhibit II and the Supplement to Exhibit II to the SERVICE
AGREEMENT, the attached revised Exhibit II and revised
Supplement to Exhibit II. This Amendment is made and entered
into as of January 1, 2000.
ENTERGY SERVICES, INC.
By /s/ Xxxxxx X. Xxxxxxxx
Vice President and Chief Accounting Officer
ENTERGY CORPORATION
By /s/ Xxxxxx Xxxxx
President
Exhibit B
Exhibit II
METHODS OF ALLOCATING COSTS AMONG CLIENT COMPANIES RECEIVING
SERVICE UNDER THIS AND SIMILAR SERVICE AGREEMENTS WITH
ENTERGY SERVICES, INC. (SERVICES)
1. The costs of rendering service by Services will include
all costs of doing business including interest on debt but
excluding a return for the use of Services' initial equity
capital amounting to $20,000.
2. (a) Services will maintain a separate record of the
expenses of each department. The expenses of each
department will include:
(i) those expenses that are directly attributable to such
department,
(ii) an appropriate portion of those office and housekeeping
expenses that are not directly attributable to a department
but which are necessary to the operation of such department,
and
(iii) an appropriate portion of those expenses of other
Services' departments necessary to support the operation of
the department.
(b) Expenses of the department will include salaries and
wages of employees, including social security taxes,
vacations, paid absences, sickness, employee disability
expenses, and other employee welfare expenses, rent and
utilities, desktops, telephones, materials and supplies, and
all other expenses attributable to the department.
(c) Departmental expense will be categorized into one of
three classes:
(i) those expenses which are directly attributable to
specific services rendered to a Client Company or group of
Client Companies (Departmental Direct Costs),
(ii) those expenses which are attributable to the overall
operation of the department and not to a specific service
provided to Client Companies (Departmental Indirect Costs)
(these expenses include not only the salaries and wages of
employees, but also other related employment costs described
in Section 2 (b) above), and
(iii) those expenses which are attributable to the
operation of other departments of Services as well as to a
specific service provided to the Client Companies
(Departmental Support Service Costs).
(d) The indirect expenses of the department will not
include:
(i) those incremental out-of-pocket expenses that are
incurred for the direct benefit and convenience of a Client
Company or a group of Client Companies and are to be
directly charged to such Client Company or group of Client
Companies; and
(ii) Services' overhead expenses that are attributable to
maintaining the corporate existence of Services, franchise
and other general taxes, and all other incidental overhead
expenses including those auditing fees and accounting
department expenses attributable to Services (Indirect
Corporate Costs).
(e) Services will establish annual budgets for controlling
the expenses of each service department and those expenses
outlined above in Section 2 (d), which are not department
specific.
3. Employees in each department will maintain a record of
the time they are employed in rendering service to each
Client Company or group of Client Companies. The hourly
rate for each employee will be determined each pay period.
4. (a) The charge to a Client Company or a group of
Client Companies for a particular service will be the sum of
the figures derived by multiplying the hours reported by
each employee in rendering such service by the hourly rate
applicable to such employee and other direct allocated
expenses.
(b) Departmental Indirect Costs as defined in 2(c) (ii)
will be loaded onto project codes in proportion to the
direct salaries and wages charged to all project codes.
(c) Departmental Support Service Costs as defined in
2(c)(iii) will be allocated to other internal Services
departments and the Client Companies using consumption-based
billing methods, with these costs then distributed by
function. Any costs that remain at Services after this
initial billing will be loaded onto project codes in
proportion to the direct salaries and wages charged to all
project codes.
5. Those expenses of Services that are not included in the
expenses of a department under Section 2 above will be
charged to Client Companies receiving service as follows:
(a) Incremental out-of-pocket costs incurred for the direct
benefit and convenience of a Client Company or a group of
Client Companies will be charged directly to such company or
group of companies.
(b) The Indirect Corporate Costs of Services referred to
above in Section 2(d)(ii) will be allocated among the Client
Companies in the same proportion as the charges to the
Client Companies, excluding Indirect Corporate Costs.
(c) If the method of allocation of Departmental Indirect
Costs (Section 4(b)), Departmental Support Service Costs
(Section 4(c)), or Indirect Corporate Costs (Section 5(b)),
would result in an inequity because of a change in
operations or organization of the Client Companies, then
Services may adjust the basis to effect an equitable
distribution. Any such change in allocation shall be made
only after first giving the Commission written notice of
such proposed change not less than 60 days prior to the
proposed effectiveness of any such change.
6. On the basis of the foregoing, monthly bills will be
rendered to Client Company. Billing procedures and amounts
will be open to audit by Client Company and by any
regulatory authority having jurisdiction in respect of the
Client Company.
7. When services are rendered to a group of Client
Companies, costs of such service shall be allocated
equitably among the Companies based on the nature and scope
of the service rendered according to the formulae outlined
in Exhibit II, Supplement.
Exhibit C
ALLOCATION FORMULAE FOR
GROUPS OF CLIENT COMPANIES
Exhibit II, Supplement
Note: Each allocation formula will be based on data
relevant to participating Client Companies to whom the
services are provided and the department providing the
service.
ENERGY SALES
Based on total kilowatt-hours of energy sold to consumers.
Used primarily for the allocation of costs associated with
the financial analyses of sales and related items.
CUSTOMERS
Based on a twelve-month average of residential, commercial,
industrial, government, and municipal general business
electric and gas customers.
Used primarily for the allocation of costs associated with
the support of customer based services. Would include
customer service and support, marketing, economic forecasts,
environmental services, financial and regulatory analyses
and customer information systems.
EMPLOYEES
Based on the number of full and part time employees at
period end.
Used primarily for the allocation of costs associated with
the support of employee-based services. Would include
administration of employee benefits programs, employee
communications, employee training, and various facilities-
based benefits.
RESPONSIBILITY RATIO
Based on the ratio of the company's load at time of system
peak load. The peak load is the average of the twelve
monthly highest clock-hour demands in kilowatts of the
interconnected system occurring each month coincident with
the system peak load.
Used primarily for the allocation of costs incurred in
fossil plant support and integrated planning.
TRANSMISSION LINE MILES
Based on the number of miles of transmission lines, weighted
for design voltage (Voltage < 400kv = 1; Voltage >=400kv
=2).
Used primarily for the allocation of costs associated with
project design, maintenance and installation of Entergy
transmission lines.
SUBSTATIONS
Based on the number of high voltage substations weighted for
Voltage (Voltage < 500kv = 1; Voltage >= 500kv = 2).
Used primarily for the allocation of related engineering and
technical support for transmission and distribution
substation operations and maintenance as well as for
engineering and project management associated with
substation construction.
COMPOSITE - TRANSMISSION LINES/SUBSTATIONS
Based on two components: Transmission Line Miles (30%
weighting) and the Number of High Voltage Substations (70%
weighting).
Used primarily for the allocation of the costs associated
with the support of the transmission and distribution
function that have both a transmission line component as
well as a substation or load component.
GAS CONSUMPTION
Based on the volume of natural gas consumed annually by all
gas fired generating units within the Entergy System.
Used for the allocation of costs associated with services in
support of gas purchased for gas fired generation units.
TAX INCOME AND DEDUCTION RATIO
Based on the prior years' Federal Income Tax return, total
Income and Deductions.
Used for the allocation of costs associated with the
preparation of consolidated Federal income tax returns and
research of Federal tax issues.
LEVEL OF ESI SERVICE
Based on ESI total xxxxxxxx to each System Company,
excluding ESI corporate overhead.
Used for the allocation of costs associated with support of
ESI as a legal entity.
SYSTEM CAPACITY (NON-NUCLEAR)
Based on the power level, in kilowatts, that could be
achieved if all non-nuclear generating units were operating
at maximum capability simultaneously.
Used primarily for the allocation of costs associated with
the support of the fossil operations of the System. This
would include services provided by plant support,
environmental and purchasing.
LABOR DOLLARS BILLED
Based on total labor dollars billed to each System Company.
Used primarily to allocate certain employee-related costs
and the costs associated with depreciation.
DISTRIBUTION LINE MILES
Based on the number of miles of distribution lines of 34.5kv
or less.
Used primarily for the allocation of costs associated with
project design, maintenance and installation of Entergy
distribution lines.
COAL CONSUMPTION
Based on the quantity of tons of coal delivered for a twelve-
month period to each coal plant within the Entergy System.
Used for the allocation of costs associated with services in
support of coal purchased for coal generating units
ACCOUNTS PAYABLE TRANSACTIONS
Based on the number of accounts payable transactions
processed annually for each Entergy System Company.
Used for the allocation of costs associated with the support
of the accounts payable function.
INSURANCE PREMIUMS (NON-NUCLEAR)
Based on non-nuclear insurance premiums.
Used for the allocation of costs associated with risk
management.
ASSET RECORDS
Based on the number of asset records at period end.
Used for the allocation of costs associated with the fixed
asset accounting function.
AVERAGE OUTSTANDING CAPITAL EXPENDITURE AUTHORIZATIONS
(CEA'S)
Based on a twelve-month average of outstanding CEA's.
Used for the allocation of costs associated with the capital
project costing accounting function.
TOTAL ASSETS
Based on total assets at period end.
Used primarily to allocate costs associated with the
oversight and safeguarding of corporate assets. This would
include services provided by financial management and
certain finance functions, among others. Also used when the
services provided are driven by the relative size and
complexity of the System Companies and there is no
functional relationship between the services and any other
available allocation formula.
BANK ACCOUNTS AND QPC'S
Based on the number of bank accounts and quick payment
centers (QPC's) at period end.
Used for the allocation of costs associated with daily cash
management activities.
COMPUTER USAGE COMPOSITE
Based on three components: Customers (52% weighting),
General Ledger Transactions (29% weighting) and Employees
(19% weighting), with weighting based on historical usage.
Used primarily for the allocation of costs associated with
the mainframe computer and related database administration.
GENERAL LEDGER TRANSACTIONS
Based on the number of general ledger transactions for the
period.
Used primarily for the allocation of costs associated with
general ledger activities, including related information
systems, and for general accounting activities.
FIBER
Based on capacity and use of the Entergy System's fiber
optic network.
Used primarily for the allocation of fiber optic operation
and maintenance expenses.
NUCLEAR UNITS
Based on the number of nuclear units managed and operated by
each Entergy System Company.
Used primarily to allocate nuclear fuel-related services.
NUCLEAR SITES
Based on the number of nuclear sites managed and operated by
each Entergy System Company.
Used to allocate miscellaneous nuclear-related services.
TWO-WAY RADIOS
Based on the number of two-way radios within each Legal
Entity.
Used for the allocation of costs associated with the support
and maintenance provided by the Information Technology
department for the two way radio system.
NUMBER OF PC's
Based on the number of PC's within each Legal Entity at
period end.
Used primarily for the allocation of costs associated with
the maintenance and support of desktop PC's.
PAYCHECKS ISSUED
Based on the number of paychecks issued to each Legal
Entity.
Used for the allocation of costs associated with the
processing of payroll.
REMOTE ACCESS SERVICE (RAS) ID'S
Based on the number of RAS ID's within each Legal Entity at
period end.
Used for the allocation of costs associated with providing
Remote Access Service to Entergy employees and contractors.
SQUARE FOOTAGE
Based on square footage occupied by all Legal Entities
(XXXX) and the regulated companies (SREG).
Used primarily to allocate the costs associated with
facilities supervision and support.
TRANSITION TO COMPETITION
Based on a twelve-month average of residential, commercial,
industrial, government, and municipal general business of
gas and/or electric customers.
Used primarily for the allocation of costs associated with
the management support of the Entergy System's strategy for
and transition to competition.
TELEPHONES
Based on the number of telephones within each Legal Entity
at period end.
Used for the allocation of costs associated with maintenance
and support of telephones.
CALL CENTERS
Based on the number of customer calls for each Legal Entity
at period end.
Used for the allocation of costs associated with customer
service support centers.
SUPPLY CHAIN - Inventory Management T & D Transfers
Based on the number of transfer transactions for
transmission and distribution (T & D) for each Legal
Entity at period end.
Used for the allocation of costs associated with management
and operation of inventories, excluding Fossil and Nuclear.
SUPPLY CHAIN - Investment Recovery Total Revenue
Based on the dollar amount of investment recovery revenue
generated within each Legal Entity at period end.
Used for the allocation of costs associated with the
management and operations of investment recovery.
SUPPLY CHAIN - Procurement Total Spending
Based on the dollar amount of procurement spending within
each Legal Entity at period end.
Used for the allocation of costs associated with procurement
activities for the Entergy System.
