050308petc3998

DIRECT DIAL 202-371-7333 DIRECT FAX 202-66 I -906 SKADDEN. ARPS, SLATE. MEAGHER &. FLOM LLP 1440 NEW YORK AVENUE, NW, WASHINGTON, DC 20005. 2111 TEL: (202) 371-7000 FAX: (202) 393-5760 www.skadden. com EMAIL ADDRESS JOLYONS&SKADDEN COM March 3 , 2005 BY HAND Donald S. Clark, Secretary Secretary Offce of the Secretar Federal Trade Commission 601 Pennsylvania Avenue, N. Washington, DC 20580 RE: In the Matter of Entergy Corporation, and Entergy- Koch, LP, Decision and Order, Docket No. C-3998 Dear Mr. Clark: I""F"f"IL.I""TE Of"F"ICES BOSTON CHICAGO HOUSTON LOS ANGELES NEWARK NEW YORK PALO ALTO SAN f"RANCfSCO WASHINGTON. WIL.MINGTON BEI..ING BRUSSELS FRANKFURT HONG KONG LONOON MOSCOW PARIS SINGAPORE SYDNEY TOKYO TORONTO VIENNA Please accept for filing the enclosed original and 12 copies of the Petition to Reopen and Set Aside Order of Entergy Corporation and Entergy-Koch LP ("EKLP") in connection with the above-referenced docket. Pursuant to 16 C.F. 9 4.2( c )(3), an electronic copy of this fiing is being submitted to you today by e- mail. If you have questions concerning this matter, please calJ the undersigned at (202) 371-7333. incerL. John H. Lyo"" Enclosures cc: Ane R. Schenof, Esq. Federal Trade Commission UNITED STATES OF AMERICA BEFORE THE FEDERAL TRAE COMMISSION - - --x In the Matter of Entergy-Koch, LP A limited partnership. - - - - - - - x Entergy Corporation a corporation Docket No. C-3998 and Public Version PETITION OF ENTERGY AND EKLP TO REOPEN AND SET ASIDE ORDER Pursuant to Section 5(b) of the Federal Trade Commission Act, 15 D. 9 45(b), and Section 2.51 of the Federal Trade Commission Rules of Practice, 16 C.F. 92. , Entergy Corporation ("Entergy ) and Entergy-Koch, LP ("EKLP"), by and through undersigned counsel, hereby move the Commission for an Order to reopen and set aside the Decision and Order dated January 31 , 2001 ("Order ), attached hereto as Exhibit A, in the above-captioned matter. The Order was accompanied by an Agreement Containing Consent Order ("Consent Agreement"), attached hereto as Exhibit B; a Complaint, attached hereto as Exhibit C; and an Analysis to Aid Public Comment ("Analysis ), attached hereto as Exhibit D. The Order establishes procedures for Entergy and EKLP to folJow in connection with Entergy s procurement of natural gas transportation services ("Relevant Product") to carry natural gas to any -electric power generating facility or local natural gas distribution facility that uses, distributes, stores, or transports natural gas, and is owned (partialJy or wholJy, directly or indirectly), operated, or controlJed by an Entergy subsidiar that is subject to a State Regulator s rules governing the recovery of the cost of buying the Relevant Product ("Covered Facility ). See Exhibit A, Order '1 II. Paragraph II of the Order was intended to "create a competitive, transparent process to make it easier for regulators to detect whether Entergy purchased gas supplies. . . at inflated prices or a level of service that is above that necessary for effective operation, in the wake of ajoint venture that gave Entergy a 50% interest in Gulf South. See Exhibit , Analysis at 5. Gulf South was and is a major supplier of natural gas transportation in Louisiana and Mississippi. See Exhibit C, Complaint '119. Entergy and EKLP have fulJy complied with alJ provisions of the Order. EKLP sold Gulf South to TGT Pipeline, LLC ("TGT"), a subsidiary of Loews Corporation, on December 29 2004, eliminating Entergy s indirect 50% ownership interest in Gulf South. See Affidavit of Jack Adams, dated Feb. 23 2005 Adams Aff.") '19, attached hereto as Exhibit E. Because Entergy no longer has any ownership interest in or control over Gulf South, Entergy no longer has any arguable incentive to pay inflated natural gas transportation prices to Gulf South. Consequently, there is no longer a basis for the remedy contained in the Order. Moreover, there is no longer any justification for continuing to require Entergy and EKLP to bear the costs and administrative burdens of complying with the Order. Therefore, Entergy hereby petitions the Commission to reopen and set aside the Order. BACKGROUND In paragraphs 7 through 15 below, Entergy and EKLP repeat a number of the jurisdictional facts set forth in the Complaint in order to provide context for their legal argument to reopen and set aside the Order. The repetition of such jurisdictional facts does not constitute an admission by Entergy and EKLP that the law was violated as alJeged in the Complaint. See Exhibit B, Consent Agreement '1 4. EKLP Transaction On May 26 2000, affiliates of Entergy and Koch entered into an agreement to form EKLP and contribute certain assets to EKLP. Pursuant to the agreement, EKLP acquired Entergy Power Marketing Corporation ITom Entergy, and Gulf South, related storage assets , and Koch Energy Trading ITom Koch. See Exhibit C Complaint '1 12. At the time ofthe agreement Entergy had the exclusive right to selJ retail electricity in approximately 67 towns and communities in Louisiana and the exclusive right to distribute natural gas in Baton Rouge, Louisiana through Entergy Gulf States Inc. Through Entergy Louisiana, Inc., Entergy had the exclusive right to selJ retail electricity to approximately 140 towns and communities in Louisiana. Through Entergy New Orleans, Inc., Entergy had the exclusive right to selJ retail electrcity and distribute natural gas in New Orleans, Louisiana. Through Entergy Mississippi, Inc. Entergy had the exclusive right to selJ retail electricity in approximately 74 towns and communities in western Mississippi. See id. Complainql13- 16. AlJ of Entergy s above mentioned utilities in Paragraph 7 were regulated by the Louisiana Public Service Commission, the Mississippi Public Service Commission, or the Council of the City of New Orleans. See id. Complaint '1 13- 16. 10. At the time of the agreement, Entergy purchased substantial quantities of natural gas transportation on behalf of Entergy Louisiana, Inc., Entergy Gulf States, Inc. Entergy New Orleans, Inc., and Entergy Mississippi , Inc. See id. Complaint '1 17. 11. At the time ofEKLP' s establishment, Gulf South was a major supplier of natural gas transportation in Louisiana and Mississippi, capable of supplying alJ of Entergy s regulated utilities in those states. See id. Complaint '1 19. 12. At the time of the agreement, Louisiana Public Service Commission, the Mississippi Public Service Commission, and the Council ofthe City of New Orleans alJ permitted the Entergy utilities previously mentioned in Paragraph 7 to recover 100 percent of the cost of natural gas and natural gas transportation bypassing those costs directly to customers. See id. Complaint '1 18. In January 2001 , the Commission furnished Entergy and EKLP with a copy of a draft complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would have charged Entergy and EKLP with violation of Section 5 ofthe Federal Trade Commission Act, as amended, 15 US.c. 945, and Section 7 of the Clayton Act, as amended, 15 US. c. 9 18. The Complaint alJeged that the formation ofEKLP would likely lead to increases in prices of retail electricity in Louisiana and Mississippi, and to increases in prices of retail natural gas in New Orleans and Baton Rouge , Louisiana. See Exhibit C Complaint '1'129 and 35. 14. Due to Entergy s indirect 50% ownership interest in Gulf South, the Commission was concerned that Entergy would "have the incentive and ability... to pay EKLP prices for natural gas transportation above prevailing market prices and to purchase a level of service above what was necessary for effective operation of Entergy facilities. See id. Complaint '1 21. The Commission was also concerned that " (p Jrices of retail electricity are likely to rise as a result of Entergy passing on inflated costs for natural gas transportation to consumers and the difficulties that regulators wilJ have in reviewing and chalJenging Entergy s purchase of natural gas transportation. See id. Complaint '1 29. The Commission also alJeged that prices for natural gas in New Orleans and Baton Rouge would increase as a result of Entergy passing along inflated costs for natural gas transportation to consumers. See id. Complaint '1 35. The Order 15. To address concerns that the EKLP joint venture would unjustly increase retail electricity and natural gas prices, Entergy agreed to adhere to a comprehensive process when entering into any agreement to buy any Relevant Product. 16. For Long-Term Purchases, at least thirty (30) days before buying any Relevant Product under a contract whose term is one (I) year or longer or at least fourteen (14) days before buying any Relevant Product under a contract whose term is more than three (3) months, but less than one (I) year, Entergy agreed: (I) to post a Request for Proposal ("RFP") on the Entergy- Website; and (2) to provide a copy of every RFP to every natural gas pipeline connected to any Covered Facility included in the RFP and request that each such pipeline post alJ RFPs on that pipeline s electronic bulJetin board ("EBB" ) and website. See Exhibit A, Order '1 II. b. and c. AdditionalJy, EKLP agreed to ensure that Gulf South posted on its EBB each RFP within twenty-four (24) hours of receiving any such RFP ITom Entergy and before submitting any proposal to Entergy. See id. Order '1 II.Cl.d. FinalJy, for Long-Term Purchases, Entergy agreed to consider alJ proposals received for Relevant Product ITom any potential supplier. See id. Order '1 II. 17. For Short-Term Purchases, Entergy agreed to request proposals to supply Relevant Product by publishing on the Entergy- Website an announcement of its intention to buy Relevant Product at various receipt and delivery points and the Relevant Product Specifications that would enable potential suppliers to determine whether they could satisfy Entergy s requirements for Relevant Product. See id. Order '1 II.C2.a. Entergy agreed to publish announcements to buy Relevant Product for a term of at least one (I) month at least seventy-two (72) hours before considering any proposal. See id. Prior to considering any proposal, Entergy also agreed to supply a copy of every anouncement to every natural gas pipeline connected to any Covered Facility included in the request and request that each such pipeline post each announcement on that pipeline s EBB and website. See id. Order '1 ILC2. b. EKLP agreed to ensure that Gulf South posts each announcement on its EBB before submitting any proposal to Entergy. See id. Order '1 II.C.2.d. Entergy also agreed to consider alJ proposals received for Relevant Product ITom any potential supplier and to create a wrtten or electronic log that documents the date, time, selJer, and terms of alJ offers received and indicates the selected proposal(s). See id. Order '1 ILC2. e. and f. 18. For Daily Purchases, Entergy agreed to request proposals to supply Relevant Product by publishing on the Entergy- Website an announcement of its intention to buy Relevant Product at various receipt and delivery points. See id. Order '1 ILC.3. Entergy also agreed, upon request, to provide to any potential supplier the specific terms and conditions for supplying Relevant Product. See id. Order'l ILC3. b. FinalJy, with regard to Daily Purchases, Entergy also agreed to consider alJ proposals received for Relevant Product from any potential supplier and to create a written or electronic log that documents the date, time, selJer, and terms of alJ offers received, and indicates the selected proposal(s). See id. Order'l II. C.3.c. and d. 19. On January 31 , 2001 , the Commission issued the Order in accordance with the procedures described in the Commission s Rules of Practice 2. , 16 C. R. 92.34. 20. Entergy and EKLP have fulJy complied with the procedures for buying any Relevant Product as described within the Order. ARGUMENT THE COMMISSION SHOULD REOPEN AND SET ASIDE THE ORDER Standard of Review 21. Section 5(b) of the Federal Trade Commission Act, 15 D. C. 9 45(b), and Section 2.51(b) ofthe Commission s Rules of Practice, 16 C. R. 9 2.51(b) provide that the Commission shalJ reopen an order to consider whether it should be modified if the paries seeking to have orders reopened and modified established "a satisfactory showing that changed conditions of law or fact require the rule or order to be altered, modified, or set aside... or that the public interest so requires. " 16 C.F.R. 92.51(b). 22. The Commission has previously stated that" a satisfactory showing sufficient to require reopening is made when a request to reopen identifies significant changes in circumstances and shows that the changes eliminate the need for the order. . .. In re Eli Lily and Company, (Docket No. 3594), Order Reopening and Setting Aside Order at 2 (May 13, 1999). 23. As discussed below, the Commission should reopen and set aside the Order because the fundamental factual premise of the Order - Entergy s indirect 50% ownership interest in Gulf South - is no longer present. Indeed, because Entergy no longer has any interest in Gulf South, Entergy no longer has an incentive to pay Gulf South above-market rates for natual gas transportation services. Consequently, there is no longer any justification for requiring Entergy and EKLP to bear the costs and administrative burdens of complying with the Order. Changed Conditions Warrant Reopening and Setting Aside of the Order 24. In issuing the Order, the Commission s stated concern centered on Entergy s incentive to accept inflated prices for natural gas transportation due to Entergy interest in Gulf South. See Exhibit C, Complaint '121. The Commission s goal was to neutralize the incentive created by Entergy s ownership interest in Gulf South by making Entergy s procurement processes more transparent and thus helping Entergy s state regulators detect whether Entergy paid above-market prices for natural gas supplies and transportation. See Exhibit D, Analysis at 5. 25. EKLP sold Gulf South to TGT on December 29 2004. See Exhibit E Adams Aff. '19. Consequently, Entergy no longer has any ownership or financial interest in or control over Gulf South see id. and Entergy no longer has an incentive to accept inflated prices in the natural gas transportation market. Therefore, there is no longer any factual basis for the Commission s concerns as expressed in the Complaint and addressed by the Order. 26. Moreover, with the sale of Gulf South to TGT, EKLP is no longer able to ensure that Gulf South posts on its EBB and website the announcements concerning Entergy s procurement intentions. See Exhibit A, Order '1'1 II.Cl.d. & ILC2. Significantly, the obligations in the Order run to Entergy and EKLP; the Order did not impose any obligations on Gulf South. Indeed, the Order contemplated that if EKLP sold Gulf South, the acquiring person would not be required to fulfilJ EKLP' s obligations under the Order: EKLP shalJ not include any Person who acquires any share capital, equity or other ownership interest in Gulf South Pipeline or in any particular segment of the Gulf South Pipeline if: (a) that Person has no share capital, equity or other ownership interest, direct or indirect, in Entergy; and (b) Entergy has no share capital, equity or other ownership interest, direct or indirect" in that Person. See Exhibit A, Order '1 LC (definition of "EKLP"). This definition is further evidence that the Commission s concems stemmed ITom Entergy indirect 50% ownership interest in Gulf South, and that the elimination of Entergy s ownership interest in Gulf South constitutes a substantial change in conditions that justifies reopening and setting aside the Order. Setting Aside the Order is in the Public Interest Due at least in part to the Order, Entergy s procurement of natural gas transportation and supplies have become extraordinarly transparent during the last four years. See Exhibit E, Adams Aff. '1'110- 12. Paricipants in the natural gas marketplace have received an abundance of information concerning Entergy s natural gas requirements and consumption patterns. There are unlikely to be dramatic changes in those requirements and consumption patterns going forward. Thus, the marketplace has already received whatever transparency benefits were provided by the Order. See id. Adams Aff. '111. 28. At the same time, transparency has carred with it a level of risk that paricipants in the marketplace could use the information about Entergy s procurement intentions to engage in anticompetitive behavior that could disadvantage Entergy as a purchaser of natural gas transportation and supplies, and, consequently, Entergy customers. See id. Adams Aff. '112. Now that Entergy no longer has an ownership or financial interest in Gulf South, there is no longer any reason for Entergy or its customers to be exposed to the anticompetitive risks associated with the procurement transparency required by the Order. Therefore, the public interest in protecting Entergy and Entergy customers ITom the anticompetitive risks of transparency warants setting aside the Order. 29. In addition, given that the fundamental factual basis for the Order no longer exists, there is no justification for continuing to require Entergy and EKLP to bear the ongoing costs and administrative burdens of complying with the Order. Because it is in the public interest to eliminate unnecessar regulatory burdens, it is therefore in the public interest to reopen and set aside the Order. CONCLUSION 30. For the foregoing reasons, the Commission should grant Entergy's Petition to Reopen and Set Aside the Order. A (Proposed) Order to Reopen and Set Aside Order is attached hereto as Exhibit F for the Commission s convenience. Dated: March 3 2005 RespectfulJy submitted ary A. MacDo I John H. Lyons Skadden, Arps, Slate Meagher & Flom LLP 1440 New York Avenue, N. Washington, DC 20005 (202) 371-7000 Attorneys for Entergy Corporation and Entergy-Koch, LP Exhibit A 001 0172 UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION COMMISSIONERS: Robert Pitofsky, Chairman Sheila F. Anthony Mozelle W. Thompson Orson Swindle Thomas B. Leary In the Matter of 3998 Entergy Corporation a corporation and Entergy-Koch, LP a limted partnership. DECISION AND ORDER The Federal Trade Commission ("Commssion ) having initiated an investigation of the fonnation of Respondent Entergy-Koch, LP, by Respondent Entergy Corporation and Koch Industries, Inc. ("Koch"), and Respondents having been furnshed thereafter with a draft Complaint that the Bureau of Competition proposed to present to the Commssion for its consideration and which, if issued, would charge Koch and Respondents with violations of Section 5 of the Federal Trade Commssion Act, as amended, 15 U. c. , and Section 7 of the Clayton Act, as amended, 15 U. c. 9 18; and Respondents, their attorneys, and counsel for the Commssion having thereafter executed an Agreement Containing Consent Order ("Consent Agreement"), containg an admssion Respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signig of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondents that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the Commssion s Rules; and DECISION AND ORDER Page 2 of 14 The Commission having thereafter considered the matter and having determed that it had reason to believe that the Contribution Agreemcnt for Entergy-Koch, LP, dated as of May 26 2000, as amended and restated effective January 31 2001 , between Koch Energy, Inc. , Koch Industries International Limited, Entergy Power International Holdings Corporation, EK Holding , LLC, EK Holding II, LLC, and Entergy Trading & Marketing, Limited, if consummated, would violate Section 5 of the Federal Trade Commssion Act, as amended, 15 U. c. 9 45, and Section 7 ofthe Clayton Act, as amended, 15 U. c. 9 18 , and that a Complaint should issue stating its charges in that respect, and having thereupon issued its Complaint and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thiy (30) days for the receipt and consideration of public comments, now in further confonnty with the procedure described in Commssion Rule 2. , 16 C.F.R. 9 2. , the Commssion hereby makes the following jurisdictional fiding and issues the following Decision and Order ("Order Respondent Entergy is a corporation organied, existing and doing business under and by virue of the laws of Delaware, with its offce and pricipal place of business located at 639 Loyola Avenue, New Orleans, Louisiana 70113. Koch is a privately held corporation organied, existing and doing business under and by virue ofthe laws of Kansas, with its offce and principal place of business located at 4111 East 37th Street North, Wichita, Kansas 67220. Respondent EKLP is a lited partnership, existing and doing business under and by virue ofthe laws of Delaware, with its offce and principal place of business located at 20 East Greenway Plaza, Houston, Texas 77046. The Federal Trade Commission has jurisdiction ofthe subject matter of this proceeding and of Respondents and the proceeding is in the public interest. ORDER IT IS ORDERED that, as used in this Order, the following defitions shall apply: Entergy" means Entergy Corporation, its directors, offcers, employees, agents and representatives, predecessors, successors, and assign; its joint ventures, subsidiaries divisions, groups and affliates controlled by Entergy Corporation, and the respective directors, offcers, employees, agents, representatives, successors, and assigns of each. DECISION AND ORDER Page 3 of 14 Koch" means Koch Industries, Inc., its directors, offcers, employees, agents and representatives, predecessors, successors, and assigns; its joint ventures, subsidiaries divisions, groups and affliates controlled by Koch Industries, Inc. , and the respective directors, offcers, employees, agents, representatives, successors, and assigns of each. EKLP" means the limted partnership, currently known as Entergy-Koch, LP, that is to be formed pursuant to the Contribution Agreement for Entergy- Koch, LP, dated as of May 26, 2000, as amended and restated effective January 31 , 200 I , between Koch Energy, Inc., Koch Industries International Limted, Entergy Power International Holdings Corporation, EK Holding I, LLC, EK Holding II, LLC, and Entergy Trading & Marketing, Limited, and was the subject of a June 21 , 2000, application before FERC Docket No. ECOO- 106-000. EKLP shall include directors, offcers, employees, agents and representatives, predecessors, successors, and assigns of EKLP; its joint ventures subsidiaries, divisions, groups and affliates controlled by EKLP (including Gulf South or any of its joint ventures, subsidiaries, divisions, groups and affliates controlled by Gulf South), and the respective directors, offcers, employees, agents, representatives successors, and assigns of each. EKLP shall not include any Person who acquires any share capital, equity or other ownership interest in Gulf South Pipeline or in any particular segment of the Gulf South Pipelie if: (a) that Person has no share capital, equity or other ownership interest, direct or indirect, in Entergy; and (b) Entergy has no share capital equity or other ownership interest, direct or indirect, in that Person. Commssion" means Federal Trade Commssion. Covered Facility" means any electric power generating facility (or any portion thereof) or local natural gas distribution facility that: uses, distributes, stores, or transports natural gas; and is owned (parially or wholly, directly or indirectly), operated, or controlled by an Entergy subsidiar that is subject to a State Regulator s rules governg the recovery of the cost of buyig the Relevant Product. Covered Facility shall also include any facility (or any portion thereof) at which an Entergy subsidiary subject to regulation by any State Regulator has a contractual right to store natural gas. Daily Purchases" means any contract to purchase the Relevant Product having an intial term of: twenty-four (24) hours; or DECISION AND ORDER Page 4 of 14 forty-eight (48) hours if the purchase is for a holiday and the following business day; or seventy-two hours (72) if the purchase is for Saturday, Sunday, and Monday; or for a holiday that precedes and/or follows a weekend. EBB" means electronic bulletin board. Entergy-Website" means an address on the worldwide web owned, operated or controlled by Entergy, currently located at www.entergv.com FERC" means the Federal Energy Regulatory Commssion. Force Majeure Event" means an event or occurrence or circumstance beyond the reasonable control of, and without the fault or negligence of, Entergy, which may include acts of God, labor disputes (including strikes), floods, earthquakes, storm, fies, lightning, epidemics, wars, riots, civil disturbances, sabotage, acts of public enemy, explosions curtailments, orders, regulations or restrictions imposed by governental, mitary, or lawfully established civilian authorities, or any other event or cause which is beyond Entergy s reasonable control. A Force Majeure Event does not include an act of negligence or intentional wrongdoing. Gulf South" means the Gulf South Pipelie Company, LP (formerly known as Koch Gateway Pipelie Company), which currently owns Gulf South Pipelie. Gulf South Pipelie" means the pipelie that was formerly known as the Koch Gateway pipeline. Gulf South Pipelie is an interstate natural gas pipelie runng through parts of the states of Texas, Louisiana, Mississippi, Alabama and Florida and is being contributed to EKLP. Implementation Trustee" means any Person appointed by the Commssion pursuant to Paragraph II. ofthis Order. Long-Term Purchases" means any contract to purchase the Relevant Product having an intial term longer than three (3) months. Person" means any natural person, corporate entity, partnership, association, joint venture, governent entity, or trust. Relevant Product" means natural gas delivered to a Covered Facilty or Transportation to a Covered Facility. DECISION AND ORDER Page 5 of 14 Relevant Product Specifications" means the term included in an agreement to buy Relevant Product, which may include, but are not limted to, average daily and maximum daily volumes required; the duration of requirement; delivery pressure; type of service (types of services are often referred to in the industry as " no-notice " or interrptible ); the priority of gas supply or transportation in the event of a disruption; the right to vary the volume taken during any day; the location(s) ofthe receipt and delivery points, including the need to take natural gas at multiple delivery points; and the procedures that determe the time at which a shipper must identifY the amount of gas that is to be delivered and received at particular points (sometimes referred to as nomiation procedures) . Respondents" means Entergy and EKLP, individually and collectively. RFP" means a written request for proposal to sell Relevant Product, which shall, for the purpose of complyig with the term ofthis Order, include at least the following inormation: the criteria that suppliers of Relevant Product must satisfY to be eligible for consideration; and the Relevant Product Specifications, as reviewed by the Implementation Trustee. Short-Term Purchases" means any contract to purchase the Relevant Product having an intial term longer than Daily Purchases and less than or equal to three (3) months. State Regulators" means the Mississippi Public Service Commssion, the Louisiana Public Service Commssion, and the Council of the City of New Orleans. Transaction Date" means the date upon which Entergy obtains any interest, direct or indirect, in Gulf South Pipelie. Transportation" means the movement of natural gas by pipelie and includes storage exchange, backhaul and displacement. DECISION AND ORDER Page 6 of II. IT IS j.' URTHER ORDERED that: Entergy and EKLP shall: comply with Paragraph H.C. of this Order withi fifteen (15) business days of the later of the Transaction Date or the date on which the Commssion accepts the Consent Agreement, excluding Paragraphs II.C.2.f. and II.C.3.d. of this Order; comply with Paragraphs II.C.2.f. and H.C.3.d. of this Order withi forty-five (45) business days ofthe later of the Transaction Date or the date on which the Commission accepts the Consent Agreement; begin to implement all other term of Paragraph II. of this Order upon the later of the Transaction Date or the date on which the Commssion accepts the Consent Agreement; provide a copy of this Order to the offcers and directors of Entergy and EKLP, to the employees of Entergy responsible for the purchase of Relevant Product, and to the employees ofEKLP responsible for direct marketing to Covered Facilities within ten (10) days ofthe later of the Transaction Date or the date on which the Commission accepts the Consent Agreement; and unless otherwise specified in this Order, comply fully with all other term Paragraph II. of this Order within one hundred and twenty (120) days of the later of the Transaction Date or the date on which the Commssion accepts the Consent Agreement. Entergy shall prepare a written plan for all Long- Term Purchases before issuing an RFP and for all Short-Term Purchases before requesting proposals as required in Paragraph II.C.2.a. of this Order (individually or collectively "portfolio supply plan ). Each such portfolio supply plan shall include, but not be lited to: a statement of the goals for Long-Term Purchases and Short-Term Purchases, as applicable, and an analysis setting forth the reasons for selecting the volume requirement and degree of reliability and flexibility requirements for Relevant Product (all such analyses shall include or list all calculations, workpapers and databases relied upon to develop the portfolio supply plan); DECISION AND ORDER Page 7 of Relevant Product Specifications, as reviewed by the Implementation Trustee, and the reasons for selecting the Relevant Product Specifications; storage injection and withdrawal requirements; and estimated location-specific transportation charges and natural gas price differentials from an established trading area (e. g., Henr Hub) to each Covered Facility for which a Relevant Product is being solicited. Entergy shall enter into any agreement to buy any Relevant Product in the following manner: For Long- Term Purchases: Entergy shall request proposals to supply Relevant Product using an RFP; at least thiry (30) days before buyig any Relevant Product under a contract whose term is one (I) year or longer, Entergy shall: (I) post each RFP on the Entergy-Website; and (2) provide a copy of every RFP to every natural gas pipelie connected to any Covered Facility included in the RFP and request that each such pipelie post all RFPs on that pipeline s EBB and website; at least fourteen (14) days before buyig any Relevant Product under a contract whose term is more than three (3) months but less than one (I) year, Entergy shall: (I) post each RFP on the Entergy- Website; and (2) provide a copy of every RFP to every natural gas pipeline connected to any Covered Facility included in the RFP and request that each such pipeline post all RFPs on that pipeline s EBB and website; EKLP shall ensure that Gulf South posts on its EBB each RFP withi twenty-four (24) hours of receiving any such RFP from Entergy and before submitting any proposal to Entergy; DECISION AND ORDER Page 8 of Entergy shall provide an RFP to any potential supplier who requests one; and Entergy shall consider all proposals received for Relevant Product from any potential supplier. For Short-Term Purchases: Entergy shall request proposals to supply Relevant Product by publishig on the Entergy-Website an announcement of its intention to buy Relevant Product at various receipt and delivery points and the Relevant Product Specifications that would enable potential suppliers to determe whether they could satisfy Entergy s requirements for Relevant Product; provided however that Entergy shall publish announcements to buy Relevant Product for a term of at least one (I) month at least seventy-two (72) hours before considerig any proposal; prior to considering any proposal, Entergy shall provide a copy of every such announcement to every natural gas pipelie connected to any Covered Facility included in the request and shall request that each such pipelie post each announcement on that pipelie s EBB and website; upon request, Entergy shall provide to any potential supplier the specific term and conditions for supplyig Relevant Product, including the Relevant Product Specifications; EKLP shall ensure that Gulf South posts each announcement on its EBB before submitting any proposal to Entergy; Entergy shall consider all proposals received for Relevant Product from any potential supplier; Entergy shall create a written or electronic log that documents the date time, seller, and term of all offers received (where such offers include price, delivery dates, delivery location, and delivery specifications), and indicates the selected proposal( s); and notwithstanding any ofthe provisions of Paragraph II.A. of this Order Entergy shall not enter into any agreement with EKLP for Short-Term Purchases of Relevant Product whose term is automatically renewable uness that agreement is entered into pursuant to the terms of Paragraph II.C.2. of this Order. DECISION AND ORDER Page 9 of For Daily Purchases: Entergy shall request proposals to supply Relevant Product by publishig on the Entergy-Website an announcement of its intention to buy Relevant Product at various receipt and delivery points; upon request, Entergy shall provide to any potential supplier the specific term and conditions for supplying Relevant Product; Entergy shall consider all proposals received for Relevant Product ITom any potential supplier; and Entergy shall create a written or electronic log that documents the date time, seller, and term of all offers received (where such offers include price, delivery dates, delivery location, and delivery specifications), and indicates the selected proposal(s). For purposes of Paragraph H.C. ofthis Order, the initial term of any agreement to purchase Relevant Product shall be determed without reference to whether the contract can be renewed automatically without notice so long as the price term or price formula cannot change upon such automatic renewal. Provided, however that Entergy may suspend complyig with the requirements of Paragraphs II.B. (Short-Term Purchases only), II.C.2, and II.C.3 if: (I)(a) there was a Force Majeure Event preventing Entergy ITom complyig with the term ofthis Order; (b) there was an unexpected loss of an Entergy owned, operated or controlled electric generation unt not fueled by natural gas that resulted in Entergy buyig an unexpected amount of Relevant Product; or (c) there was an unexpected disruption in a power purchase commtment that resulted in Entergy buyig an unexpected amount of Relevant Product; and (2) Entergy is exerting reasonable best efforts to expeditiously retur to full compliance with its obligations under Paragraphs ILB. (Short-Term Purchases only), II.C.2, and II.C.3. Entergy shall bear the burden of proof with regard to demonstrating that its non- compliance was caused by any of the events identified above and that it was exerting DECISION AND ORDER Page 10 of 14 reasonable best efforts to expeditiously return to full compliance with its obligations under Paragraphs II.B. (Short-Term Purchases only), II. , and II.C.3. For any Long-Term Purchases or Short-Term Purchases, Entergy shall, upon request by a State Regulator, withi thiy (30) days of such request, prepare a written analysis for the time period requested by any State Regulator explaing how any wiIg proposal by EKLP satisfies the goals set forth in the applicable portfolio supply plan when measured against other comparable proposals. Entergy shall submit a copy of this Order to each State Regulator within ten (10) days of the later of the Transaction Date or the date on which the Commssion accepts the Consent Agreement. Entergy shall notifY (in writing or electronic mail, with return receipt request) each of the suppliers of Relevant Product with which Entergy regularly does business of the posting requirements ofthis Order withi ten (10) days of the later of the Transaction Date or the date on which the Commssion accepts the Consent Agreement. Entergy and EKLP shall retain, for a period of five (5) years from the date of its creation or use, all plans, analyses, materials referenced in or supporting any plan or analysis, RFPs announcements, logs, requests, notifications to suppliers of Relevant Product and return receipts, responses, proposals or any other documents, materials or other information called for, required by or relied upon to comply with Paragraph II. of this Order. Entergy shall, withi thiy (30) days, comply with any request by any State Regulator for documents, materials or other informtion required to be retained by Paragraph II. of this Order where such request is related to the recovery of the costs of purchasing Relevant Product. The purpose of this Order is to establish a competitive and transparent process to prevent Entergy from having the ability to evade rate regulation by the State Regulators as alleged in the Commssion s Complaint in this matter. Nothig in this Order is intended to preempt otherwise applicable state law, or alter the provisions governg the public disclosure of Entergy confidential inormtion submitted to any State Regulator pursuant to state law contained in any agreement between Entergy and any State Regulator. DECISION AND ORDER Page 11 of 14 II. IT IS FURTHER ORDERED that Stephen P. Reynolds shall serve as Implementation Trustee to monitor Respondents' implementation of Paragraphs II. B. and II.C. of this Order, which Implementation Trustee shall have the rights, duties, and responsibilities as described below: Within ten (10) business days of signig the Consent Agreement, Respondents shall execute a trust agreement that, subject to the prior approval of the Commssion, confers on the Implementation Trustee all the power and authority necessary to pennt the Implementation Trustee to monitor Respondents' implementation of Paragraphs II. B. and II. C. of this Order, in a manner consistent with the purposes of this Order. The Implementation Trustee shall have the power and authority to monitor Respondents implementation of Paragraphs II.B. and H.C. of this Order, and shall exercise such power and authority and carr out the duties and responsibilities ofthe Implementation Trustee in a manner consistent with the purposes of this Order in consultation with the Commssion. The Implementation Trustee shall have full and complete access to all personnel, books records, documents, and facilities of Respondents related to Respondents' implementation of Paragraphs II.B. and II. C. ofthis Order or to any other relevant information, as the Implementation Trustee may reasonably request, including but not limted to all documents and records kept in the normal course of business that relate to Respondents obligations under Paragraphs n.B. and n.c. of this Order. Respondents shall provide such fiancial or other infonntion as such Implementation Trustee may reasonably request and shall cooperate with the Implementation Trustee. Respondents shall take no action to interfere with or impede the Implementation Trustee s abilty to perform his responsibilties or to monitor Respondents' implementation of Paragraphs ILB. and n. of this Order. Respondents may require the Implementation Trustee to sign a confidentiality agreement prohibiting the disclosure of any inonntion gained as a result of his role as Implementation Trustee to anyone other than the Commssion. The Implementation Trustee shall serve, without bond or other security, at the cost and expense of EKLP, on reasonable and customary term commensurate with the Implementation Trustee s experience and responsibilities. Respondents shall indemnty the Implementation Trustee and hold the Implementation Trustee harmess against any losses claim, damages, liabilties, or expenses arising out of, or in connection with, the performance of the Implementation Trustee s duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim whether or not resulting in any liability, except to the extent that such liabilties DECISION AND ORDER Page 12 of 14 losses, damages, claims, or expenses result ITom misfeasance, gross negligence, willful or wanton acts, or bad faith by the Implementation Trustee. The Implementation Trustee shall have no responsibility or obligation for the operation of, or the right to operate, Respondents' businesses. The teTI ofthe Implementation Trustee shall end one year ITom the later ofthe Transaction Date or the date on which the Commssion accepts the Consent Agreement or earlier if the Implementation Trustee certifies to the Commission that Respondents have put in place adequate procedures in accordance with Paragraphs II.B. and H.C. of this Order and the Commssion accepts such certification. If the Commssion determes that the Implementation Trustee has ceased to act or failed to act dilgently or is otherwise unable to perform his or her duties, the Commssion may appoint a substitute Implementation Trustee who shall have all the rights, duties, powers authorities, and responsibilties described in Paragraph II. of this Order. If Respondents have not opposed, in writing, including the reasons for opposing, the selection of any proposed substitute Implementation Trustee withi five (5) business days after notice by the staff of the Commssion to Respondents of the identity of any proposed substitute Implementation Trustee, Respondents shall be deemed to have consented to the selection ofthe proposed substitute Implementation Trustee. Withi five (5) business days after the appointment of the substitute Implementation Trustee, Respondents shall execute a trust agreement that, subject to the prior approval of the Commssion, confers on the substitute Implementation Trustee all the power and authority necessary to pennt the substitute Implementation Trustee to monitor Respondents' implementation of Paragraphs II.B. and C. of this Order, in a manner consistent with the purposes of the Order. The Commssion may on its own intiative or at the request of the Implementation Trustee issue such additional orders or directions as may be necessary or appropriate to assure Respondents' compliance with the requirements ofthis Order , in a manner consistent with the puroses of this Order. The Implementation Trustee shall report in writing to the Commssion concerning Respondents' compliance with the Order thiy (30) days after execution of the trustee agreement and every niety (90) days thereafter until the Implementation Trustee s term explfes. DECISION AND ORDER Page 13 of 14 IV. IT IS FURTHER ORDERED that each Respondent shall notifY the Commssion at least thirty (30) days prior to any proposed change in such Respondent such as dissolution, assignment sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that may affect compliance obligations arising out of the Order. IT IS FURTHER ORDERED that: Withi thiy (30) days after the date Entergy and EKLP execute the Consent Agreement within ninety (90) days thereafter, and annually thereafter until termation of this Order Entergy and EKLP shall submit to the Commssion a verified written report setting forth in detail the manner and form in which they intend to comply, are complyig and have complied with this Order. Entergy and EKLP shall include in their compliance reports a full description of the efforts being made to comply with this Order, including, but not limted to, the efforts being made to assure that anyone responsible for implementing or supervising the compliance with any requirement of Paragraph II. of this Order understands that requirement and understands the purpose of this Order. Respondents shall describe in detail and provide supporting documentation for all events implicating the proviso of Paragraph H.C. in the next compliance report required to be filed with the Commission pursuant to Paragraph V. of this Order or withi thiry (30) days of a Commssion request. VI. IT IS FURTHER ORDERED that, for the purpose of determg or securing compliance with this Order, and subject to any legally recogned privilege, and upon written request with reasonable notice to Entergy and EKLP, Entergy and EKLP shall pennt any duly authorized representative of the Commssion: Access, during offce hours and in the presence of counsel, to all facilities and access to inpect and copy all non-privileged books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Entergy and EKLP relating to any matter contained in this Order; and DECISION AND ORDER Page 14 of 14 Upon five (5) business days' notice to Entergy and EKLP and without restraint or interference from them, to interview offcers, directors, or employees of Entergy and EKLP, who may have counsel present, regarding any such matters. VII. IT IS FURTHER ORDERED that this Order shall termate on January 31 2007. By the Commssion, Commssioner Anthony recused. Donald S. Clark Secretary SEAL ISSUED: January 31 2001 Exhibit B UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION In the Matter of File No. 001-0172 Entergy Corporation a corporation and Entergy-Koch, LP a liited partership. AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commssion ("Commssion ), having initiated an investigation of the fonnation of Entergy-Koch, LP ("EKLP"), by Entergy Corporation ("Entergy ) and Koch Industries, Inc. (" Koch" ), and it now appearing that Entergy and EKLP, hereinafter sometimes referred to as "Proposed Respondents " are willg to enter into this Agreement Containing Consent Order ("Consent Agreement") to implement certain safeguards to ensure a competitive process for the procurement of natual gas and transportation of natural gas ("Procurement Policy ) and provide for other relief: IT IS HEREBY AGREED by and between Proposed Respondents, by their duly authorized officers and attomeys, and counsel for the Commission that: Proposed Respondent Entergy is a corporation organized, existing and doing business under and by vie of the laws of Delaware, with its office and pricipal place of business located at 639 Loyola Avenue, New Orleans, Louisiana 70113. Koch is a privately held corporation organized, existing and doing business under and by vire of the laws of Kansas, with its office and pricipal place of business located at 4111 East 37th Street North, Wichita, Kansas 67220. Proposed Respondent EKLP is a liited partership, existing and doing business under and by vire of the laws of Delaware, with its offce and pricipal place of business located at 20 East Greenway Plaza, Houston, Texas 77046. Proposed Respondents admit all the jurisdictional facts set forth in the draft of Complaint here attached. AgreemeotOl. 16a AGREEMENT CONTAINING CONSENT ORDER Page 2 of 4 Proposed Respondents waive: any further procedural steps; the requirement that the Commission s Decision and Order, attached hereto and made a part hereof, contain a statement of findings of fact and conclusions oflaw; all rights to seek judicial review or othcrwise to challenge or contest the validity of the Decision and Order entered pursuant to this Consent Agreement; and any claim under the Equal Access to Justice Act. Entergy and EKLP shall submit a report within thirt (30) days of the date they execute this Consent Agreement and every thir (30) days thereafter until the Decision and Order becomes fmal, pursuant to Section 2.33 of the Conuission s Rules, 16 C.F.R. 9 2. signed by Entergy and EKLP, setting forth in detail the maner in which Entergy and EKLP have complied with, have prepared to comply with, and will comply with the Decision and Order. Such reports wil not become part of the public record unless and until the accompanying Consent Agreement and Decision and Order are accepted by the Commssion for public conuent. This Consent Agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Conuission. If this Consent Agreement is accepted by the Commission, it, together with the Complaint contemplated hereby, will be placed on the public record for a period ofthir (30) days and information in respect thereto publicly released. The Conuission thereafter may either withdraw its acceptance of this Consent Agreement and so notify Entergy and EKLP, in which event it wil take such action as it may consider appropriate, or issue or amend its Complaint (as the circumstances may require) and issue its Decision and Order, in disposition of the proceeding. This Consent Agreement is for settlement purposes only and does not constitute an admission by Entergy and EKLP that the law has been violated as alleged in the draft Complaint here attched, or that the facts as alleged in the draft Complaint, other than jurisdictional facts, are tre. The Conuission retains the discretion, at the time it accepts this Consent Agreement for public conuent, to issue and serve its Complaint corresponding in form and substance with the draft of Complaint, and a Final Decision and Order incorporating the attched Decision and Order. AgreementOJ. 16a AGREEMENT CONTAINING CONSENT ORDER Page 3 of 4 10. This Consent Agreement contemplates that, if it is accepted by the Commission, the Commission may (1) imediately issue and serve its Complaint corresponding in form and substance with the draft of Complaint here attached, (2) issue and serve the attached Decision and Order, and (3) make information public with respect thereto. If the Commission has not immediately issued and served its Complaint and Decision and Order and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Commssion Rule 2. 16 C.F.R. 92. , the Commission may, without further notice to Entergy and EKLP, thereupon issue the Complaint and the Decision and Order containing an order to implement the Procurement Policy in disposition of the proceeding. When fmal, the Decision and Order shall have the same force and effect and may be altered, modified or set aside in the same manner and within the same time provided by statute for other orders. The Decision and Order shall become fmal upon service. Delivery of the Complaint and Decision and Order to Entergy and EKLP by any means specified in Commission Rule 4.4(a), 16 C.F. R. 9 4.4(a), shaH constitute service. Entergy and EKLP waive any right they may have to any other manner of service. The Complaint may be used in construing the terms of the Decision and Order, and no agreement, understanding, representation, or interpretation not contained in the Decision and Order or the Consent Agreement may be used to vary or contradict the terms of the Decision and Order. 11. By signing this Consent Agreement, Entergy and EKLP represent and warrant that they can comply with the provisions of the attached Decision and Order, and that all parents of Entergy and all subsidiaries, affilates, and successors of Entergy and EKLP necessary to effectuate the full relief contemplated by this Consent Agreement are parties to the Consent Agreement and are bound thereby as if they had signed this Consent Agreement and were made parties to this proceeding and the Decision and Order. 12. Entergy and EKLP have read the draft Complaint and Decision and Order contemplated hereby. Entergy and EKLP understad that once the Decision and Order have been issued, they wil be required to fIe one or more compliance reports showing that they have fuHy complied with the order. Entergy and EKLP agree to comply with the proposed Decision and Order from the date they execute this Consent Agreement in accordance with the time frames set fort in the Decision and Order. Entergy and EKLP understand that they may be liable for civil penalties in the amount provided by law for each violation of the Decision and Order after it becomes fmal. AgreerentOI. J6a AGREEMENT CONTAINING CONSENT ORDER Page 4 of 4 Signed this day of January, 2001 ENTERGY CORPORA nON: FEDERAL TRADE COMMISSION: By: By: Leo P. Denault Authorized Signatory Enter6'Y Corporation Frank Lipson Attorney Bureau of Competition Approved: Michael G. Thompson, Esq. Senior V ice President & General Counsel Entergy Corporation Wilam R. Vigdor Deputy Assistant Director Bureau of Competition C. Benjamin Crisman, Jr, Esq. Gary A. MacDonald, Esq. John H. Lyons, Esq. Kimberly A. Webb, Esq. Skadden, Ars, Slate, Meagher & Flom LLP Counsel for Entergy Corporation Philip L. Broyles Assistant Director Bureau of Competition Michael E. Antalics Acting Deputy Director Bureau of Competition ENTERGY-KOCH, LP: By: Chrtopher J. Bernard, Esq. General Counsel Entergy-Koch, LP Molly S. Boast Acting Director Bureau of Competition AgrmentOI. 16a Exhibit C 001 0172 UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION In the Matter of No. C-3998 Entergy Corporation a corporation and Entergy-Koch, LP a limted partnership. COMPLAINT Pursuant to the provisions of the Federal Trade Commssion Act and the Clayton Act, and by virue of the authority vested in it by said Acts, the Federal Trade Commssion ("Commssion ), having reason to believe that respondent Entergy Corporation ("Entergy ) and Koch Industries, Inc. , have fonned a limted partnership, Entergy-Koch, LP ("EKLP"), subject to the jurisdiction of the Commssion, and have entered into an agreement whereby EKLP wil acquire, among other thigs the Gulf South Pipelie Company, LP, and Koch Energy Trading, and, ifthe term of such agreement were to be consummted, would violate of Section 7 of the Clayton Act, as amended, 15 U. c. , and Section 5 of the Federal Trade Commssion Act, as amended, 15 U. c. , and it appearig to the Commssion that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows: Respondent Enter!!v Corporation Entergy Corporation ("Entergy ) is a corporation organied, existing, and doing business under and by virue of the laws of the State of Delaware, with its principal place of business located at 639 Loyola Avenue, New Orleans, Louisiana 70113. Entergy had revenues of approxitely $8. 77 bilon in 1999. Entergy is, and at all times relevant herein has been, engaged in the generation transmission, and distribution of electricity. Entergy provides retail electric service to customers in portions of Arkansas, Louisiana, Mississippi, and Texas. Entergyalso owns the local natural gas distribution utilty in New Orleans and Baton Rouge, Louisiana. Respondent Entergy is, and at all times relevant herein has been, engaged in commerce as commerce" is defied in Section I of the Clayton Act, as amended, 15 U. c. 9 12, and is a corporation whose business is in or is affecting commerce as "commerce" is defied in Section 4 of the Federal Trade Commssion Act, as amended, 15 U. c. 944. II. Koch Industries, Inc. Koch Industries, Inc. , ( Koch" ) is a corporation with offces and its principal place of business located at 4111 East 37'h Street North, Wichita, Kansas 67220. Koch, through subsidiaries and affliates, markets natural gas, natural gas transportation chemicals, petroleum products, minerals, and fiancial services. Koch conducts its natural gas business through wholly owned subsidiaries, including Gulf South (formerly Koch Gateway Pipelie Company) and Koch Energy Trading. Gulf South is an interstate natural gas transmission company regulated by the Federal Energy Regulatory Commssion ("FERC"). Gulf South owns and operates the Gulf South pipeline. The Gulf South pipeline (fonnerly known as the Koch Gateway pipeline) is an interstate natural gas pipeline runng through parts of the states of Texas, Louisiana Mississippi, Alabama and Florida. Koch Energy Trading markets natural gas, natural gas pipeline transportation, electric power, and weather derivatives. Koch is, and at all times relevant herein has been, engaged in commerce as "commerce" is defied in Section I of the Clayton Act, as amended, 15 U. c. 9 12, and is a corporation whose business is in or is affecting commerce as "commerce" is defied in Section 4 of the Federal Trade Commssion Act, as amended, 15 U. c. 944. II. Enter!!v-Koch, LP Respondent EKLP is a limted partnership, existing and doing business under and by virue of the laws of Delaware, with its offce and pricipal place of business located at 20 East Greenway Plaza, Houston, Texas 77046. 10. Entergy and Koch each own approximately 50 percent ofEKLP and wil share equally in the profits ofEKLP. Upon consummtion ofthe proposed transaction discussed in Paragraph IV. herein, EKLP wil acquire Gulf South, Koch Energy Trading and other assets. 18. II. EKLP is, and at all times relevant herein has been, engaged in commerce as "commerce" is defied in Section 1 ofthe Clayton Act, as amended, 15 U. c. 9 12, and is a corporation whose business is in or is affecting commerce as "commerce" is defied in Section 4 of the Federal Trade Commssion Act, as amendcd, 15 U. c. 944. IV. The Proposed Transaction 12. On or about May 26, 2000, Entergy and Koch entered into an agreement to form EKLP and contribute certain assets. Pursuant to that agreement, EKLP wil acquire, among other thigs, Entergy Power Marketing Corporation (Entergy s subsidiary that markets electricity and gas in the United States) from Entergy, and Gulf South, related storage assets, and Koch Energy Trading from Koch ("Proposed Transaction Trade and Commerce 13. Entergy owns Entergy Louisiana, Inc. , an electric utility regulated by the Louisiana Public Service Commssion. Through Entergy Louisiana, Inc. , Entergy has the exclusive right to sell retail electricity in approximately 140 towns and communities in Louisiana. 14. Entergy owns Entergy Gulf States, Inc., an electric and natural gas utilty regulated by the Louisiana Public Service Commssion. Through Entergy Gulf States, Inc. , Entergy has the exclusive right to sell retail electricity in approximately 67 towns and communities in Louisiana and the exclusive right to distribute natural gas in Baton Rouge, Louisiana. 15. Entergy owns Entergy New Orleans, Inc., an electric and natural gas utility regulated by the Council ofthe City of New Orleans. Through Entergy New Orleans, Inc. , Entergy has the exclusive right to sell retail electricity and distribute natural gas in New Orleans Louisiana. 16. Entergy owns Entergy Mississippi, Inc. , an electric utilty regulated by the Mississippi Public Service Commssion. Through Entergy Mississippi, Inc. , Entergy has the exclusive right to sell retail electricity in approxitely 74 towns and communties in westem Mississippi. 17. Entergy purchases substantial quantities of natural gas transportation on behalf of Entergy Louisiana, Inc., Entergy Gulf States, Inc., Entergy New Orleans, Inc. , and Entergy Mississippi, Inc. The Louisiana Public Service Commssion, the Mississippi Public Service Commssion, and the Council of the City of New Orleans permt, subject to review, the Entergy utilties referred to above to recover 100 percent of the cost of natural gas and natural gas transportation by passing those costs directly to consumers. 19. Gulf South is a major supplier of natural gas transportation in Louisiana and Mississippi and can supply all ofEntergy s regulated utilities in those states. 20. Gulf South sales of natural gas transportation are subject to regulation by FERC, which approves the maximum rate that a pipelie can charge to a customer. 21. After closing the Proposed Transaction, Entergy will own approximately 50 perccnt of Gulf South and earn about 50 percent of Gulf South' s profits. For that reason, Entergy wil have the incentive and ability, and is therefore likely, to pay EKLP prices for natural gas transportation above prevailing market prices and to purchase a level of service above what is necessary for effective operation ofEntergy s facilities. Entergy will also have the incentive and abilty, and is therefore liely, to accept prices from thid parties above prevailing market prices to prevent regulators from detecting that Entergy paid artificially inflated prices to EKLP. 22. After closing the Proposed Transaction, it would be more diffcult for the Louisiana Public Service Commssion, the Council of the City of New Orleans, or the Mississippi Public Service Commssion to detenne whether Entergy improperly incurred inflated costs of natural gas transportation for several reasons: the decision regarding the purchase of natural gas transportation involves the consideration of multiple factors; the process by which Entergy purchases gas transportation is not transparent; and existing market benchmks are inadequate to assist regulators in determg whether the cost was prudently incurred. 23. FERC regulations would not prevent Entergy from payig inflated costs because Gulf South' s current rates are below the FERC maximum tariff 24. It is diffcult to enter into the business of selling retail electricity or distributing natural gas to customers in areas in which Entergy is curently the exclusive supplier. Entry by another utilty requires approval from the State legislature or regulatory agencies in the jurisdictions involved. Count Increased Prices For Retail Electricitv 25. Paragraphs I - 24 are incorporated by reference as if fully set forth herein. 31. 32. 33. 34. 35. 26. A relevant lie of commerce in which to analyze the effects of the proposed transaction is the retail sale of electricity to consumers. There is no economic alternative to electricity for consumers in Louisiana and Mississippi. 27. Relevant sections of the country in which to analyze the effects ofthe proposed transaction are the areas in Louisiana and Mississippi served by: Entergy Louisiana, Inc. Entergy Gulf States, Inc. Entergy New Orleans, Inc. ; and Entergy Mississippi, Inc. 28. Entergy is the monopoly supplier of retail electricity in each relevant section of the country. 29. Prices of retail electricity are likely to rise as a result of Entergy passing on inated costs for natural gas transportation to consumers and the difficulties that regulators will have in reviewing and challenging Entergy s purchase of natural gas transportation. 30. It is diffcult to enter into the business of selling retail electricity to consumers in the relevant sections of the country. Entry into the relevant sections of the country will not therefore be timely, likely or sufficient to prevent a price increase. Count Increased Prices For Natural Gas Distribution Paragraphs I - 24 are incorporated by reference as if fully set forth herein. A relevant lie of commerce in which to analyze the effects of the proposed transaction is the distribution of natural gas to consumers. There is no economic alternative to the distribution of natural gas to consumers in New Orleans and Baton Rouge, Louisiana. Relevant sections of the country in which to analyze the effects of the proposed transaction are New Orleans and Baton Rouge, Louisiana. Entergy is the monopoly distributor of natural gas in New Orleans and Baton Rouge Louisiana. Prices of natural gas are likely to rise as a result of Entergy passing on inated costs for natural gas transportation to consumers and the difficulties that regulators wil have in reviewing and challenging Entergy s purchase of natural gas transportation. 36. It is diffcult to enter into the business of distributing natural gas to consumers in New Orleans and Baton Rouge. Entry into New Orleans and Baton Rouge wi1 not therefore be timely, likely or sufficient to prevent a price increase. VI. VIOLATIONS CHARGED 37. The Proposed Transaction, if consummated, would violate Section 7 of the Clayton Act as amended, 15 u.se. 9 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U. e. 45. IN WITNESS WHEREOF the Federal Trade Commssion, having caused this Complaint to be signed by the Secretary and its offcial seal affed, at Washigton, D. , this thiy-fIrst day of January, 2001 , issues its complaint against respondent. By the Commssion, Commssioner Anthony recused. SEAL Donald S. Clark Secretary Exhibit D Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page I of7 ANALYSIS OF THE COMPLAINT AND CONSENT ORDER TO AID PUBLIC COMMENT I. Introduction The Federal Trade Commission has accepted for public comment an Agreement Containing Consent Order ("Consent Agreement" with Entergy Corporation and Entergy-Koch LP EKLP"), a limited partnership owned equally by Entergy and Koch Industries, Inc. , and has issued a Complaint and the Decision and Order ("Order ) contained in the Consent Agreement. The Order seeks to remedy the anti competitive effects ofEKLP' s acquisition from Koch of the Gulf South Pipeline Company, LP (formerly the Koch Gateway Pipeline Company and referred to herein as "Gulf South"). As a result of this acquisition, Entergy wil own 50 percent of the Gulf South pipeline, a major natural gas pipeline serving Entergy s regulated utilities in Louisiana and Mississippi. The Order requires Entergy to adopt an open-solicitation process for its purchase of natural gas and gas transportation. Adoption of these measures will avoid affiliate bias in Entergy s purchase of gas supplies and the resulting higher energy prices. II. Description of the Parties and the Proposed Joint Venture Entergy, a Delaware corporation, is engaged in the generation transmission, and distribution of electricity. Entergy provides retail electric service to customers in portions of Arkansas, Louisiana Mississippi, and Texas. Entergy also owns the local natural gas distribution utility in New Orleans and Baton Rouge, Louisiana. In 1999, Entergy had revenues of approximately $8. 77 bilion and net income of approximately $595 million. Koch is a privately held corporation headquartered in Wichita Kansas. Through its subsidiaries and affiliates, Koch markets natural gas, natural gas transportation, chemicals, petroleum products, minerals, and financial services. Koch conducts its http://ww.ftc. gov/os/200 1/0 I lentergycorpana. htm 2/15/2005 Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page 2 of7 natural gas business through Koch Energy Trading and Gulf South. Koch Energy Trading markets natural gas, electric power and weather derivatives. Gulf South owns and operates the Gulf South pipeline (formerly known as the Koch Gateway pipeline). The Gulf South pipeline consists of about 10 000 miles of natural gas pipeline serving parts of the states of Texas, Louisiana Mississippi, Alabama and Florida. On May 26, 2000, Entergy and Koch entered into an agreement to form EKLP. Pursuant to that agreement, EKLP will acquire among other things, Entergy Power Marketing Corporation (Entergy s subsidiary that markets electricity and gas in the United States) and Gulf South and Koch Energy Trading from Koch. As a result of the joint venture agreement, Entergy will own 50 percent of Gulf South and Koch Energy Trading. III. The Complaint The Complaint alleges that consummation of the joint venture agreement would violate Section 5 of the Federal Trade Commission Act, as amended, 15 U. C. 945, and Section 7 of the Clayton Act, as amended, 15 U. c. 9 18. The Complaint alleges two markets in which the proposed joint venture is likely to lessen competitive discipline on prices substantially: the sale of electricity to consumers in areas of Louisiana and western Mississippi where Entergy subsidiaries are the regulated electric utilities (Count I); and the distribution of natural gas to consumers in New Orleans and Baton Rouge, where Entergy subsidiaries are the regulated natural gas distribution utilities (Count II). The Complaint alleges that prices in these relevant markets are "likely to rise as a result of Entergy passing on inflated costs for natural gas transportation to consumers and the difficulties that regulators will have in reviewing and challenging Entergy s purchase of natural gas transportation. According to the Complaint, Entergy, through its regulated subsidiaries, has the exclusive right to sell retail electrcity in parts of Louisiana and Mississippi. Entergy subsidiaries also have the exclusive right to distribute natural gas in New Orleans and Baton htt://www.ftc.gov/os/2001/0l/entergycorpana.htm 2/15/2005 Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page 3 of7 Rouge, Louisiana. Entergy purchases substantial quantities of natural gas transportation for its regulated subsidiaries. Under the current regulatory framework of the States of Louisiana and Mississippi and the City of New Orleans, Entergy is permitted subject to review, to recover 100 percent of the cost of natural gas transportation purchased for its natural gas and electric utilities by passing on this cost directly to consumers. The Complaint alleges that, once Entergy shares in the profits of Gulf South, it wil have the incentive and ability, and is therefore likely, to pay higher prices for the transportation on Gulf South, and purchase a level of transportation service from Gulf South above what is necessary for effective operation of Entergy s utilities. The Complaint alleges that after EKLP acquires the Gulf South pipeline it would be diffcult for state and local regulators to determine whether Entergy improperly incurred inflated costs of natural gas transportation than before the transaction. Entergy natural gas transportation purchasing decisions involve the consideration of multiple factors; the process by which Entergy purchases gas transportation is not transparent; and existing market benchmarks are inadequate to assist regulators in determining whether the cost was prudentJy incurred. Entergy s ownership of EKLP and the Gulf South pipeline increases Entergy s incentive to evade regulation and therefore, it is more likely that regulators wil need to address such evasion. IV. Terms ofthe Order The Order issued by the Commission remedies the alleged anticompetitive effects of the proposed joint venture by establishing a transparent process that wil increase the potential for competition and provide a benchmark that will make it easier for regulators to detect possible rate evasion. The Order affects how Entergy purchases its gas supply, whether it purchases pipeline transportation to deliver natural gas to facilities operated by its regulated utilities or it purchases delivered natural gas. The Order recognizes Entergy s requirement to purchase a flexible http://www.ftc.gov/os/2001/01/entergycorpana.htm 2/15/2005 Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page 4 of7 reliable, and economical gas supply. For this reason, the Order provisions are tailored to reflect the duration ofEntergy contracts. Paragraph II. B. of the Order applies to long-term (over three months) and short-term purchases (longer than one day but less than or equal to three months) and requires Entergy to prepare a written plan before requesting proposals for gas supply. This pJan must include, among other things, a statement eXplaining the goals Entergy is attempting to achieve (e. , reliable supply of gas at certain plants). These planning documents will allow state and local regulators to compare actual purchases with Entergy forecasted gas supply requirements. The Order also requires Entergy to post information about its gas supply requirements on its website. The information posted and the timing of the post are based on the duration of the contract terms and the pace of the market activity. For long-term purchases (Paragraph II.C.l.), Entergy must post a request for proposal RFP") where each RFP must contain, among other things, the criteria that suppliers must satisfy to be eligible for consideration and the types of services, the amount of gas, and the duration of the contract. Entergy must post this RFP at least 30 days before any purchase under a contract whose term is one year or more, and at least 14 days in advance of any purchase under a contract whose term is between three months and one year. These time uames provide suppliers with adequate time to prepare their bids, without causing unnecessary delay. Further, the Order requires Entergy to provide requests for proposals to any potential supplier upon its request, and to consider any proposal uom any potential supplier. The process is similar for short-term purchases (Paragraph II.C.2. Entergy must post this information at least 72 hours before considering any proposal for a term of at least one month. As with long-term purchases, the Order requires EKLP to ensure that Gulf South posts each announcement on its electronic bulletin board before submitting a proposal to Entergy, and requires Entergy to consider all proposals from any potential supplier. The Order requires Entergy to create a log for all short-term purchases documenting the date, time, seller, and terms of all offers received http://ww.ftc.gov/os/2001/01/entergycorpana.htm 2/15/2005 Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page 5 of7 and indicating the selected proposal(s). For daily purchases, (Paragraph II.C.3.), the Order requires Entergy to publish on its website its intention to purchase gas supplies at various receipt and delivery points. The information contained in this notice is more limited than the requests that Entergy must publish for short-term and long-term purchases. The Order requires Entergy to provide potential suppliers, upon request, with the specific terms and conditions for which it seeks to purchase gas supplies. Entergy must maintain a log containing the same information that is required for short-term purchases. The Order does not require Entergy to develop a planning document for its daily purchases, which is required for the other types of purchases. These procedures will create a competitive, transparent process that wil make it easier for regulators to detect whether Entergy purchased gas supplies at inflated costs. The planning documents will provide regulators with Entergy s operational requirements for gas and gas transportation. The open-solicitation process will create competition to supply Entergy and establish a market price for gas supplies. Regulators wil then be able to compare Entergy operational requirements, Entergy s purchases and the market prices to identifY whether Entergy purchased gas supplies from EKLP at inflated prices or a level of service that is above that necessary for effective operation. The Order also designates Stephen P. Reynolds as Implementation Trustee. Mr. Reynolds has the expertise to determine the precise information that should be included in an RFP or other solicitation package, or information to be contained in a gas purchasing planning document. EKLP must bear all of the trustee s costs and expenses. The Implementation Trustee will serve until the earlier of one year or the date on which he certifies to the Commission that the parties have put in place adequate procedures in accordance with the Order and the Commission accepts such certification. V. Effective Date of Order and Opportunity for Public http://ww.ftc.gov/os/2001/01/entergycorpana.htm 2115/2005 Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page 6 of7 Comment The Commission issued the Complaint and the Decision and Order, and served them upon the respondents; at the same time it accepted the Consent Agreement for public comment. As a result of this action, the Order has already become effective. The Commission, in August 1999, adopted procedures to allow for immediate effectiveness of an Order prior to a public comment period. The Commission announced that it "contemplates doing so only in exceptional cases where, for example, it believes that the allegedly unlawful conduct to be prohibited threatens substantial and imminent public hann. " 64 Fed. Reg. 46267 (1999). This case is an appropriate one in which to issue a final order before receiving public comment because it preserves an effective remedy for the Commission by subjecting the respondents to civil penalties for failing to comply with the Order. This ensures that the safeguards embodied in the Order will be implemented on schedule. The Order has also been placed on the public record for 30 days for receipt of comments by interested persons, and comments received during this period wil become part of the public record. Thereafter, the Commission will review the Order, and may detennine, on the basis of the comments or otherwise, that the Order should be modified. The Commission anticipates that the Order, as issued, will resolve the competitive problems alleged in the Complaint. The purpose of this analysis is to invite public comment on the Order to aid the Commission in detennining whether to modify the Order in any respect. This analysis is not intended to constitute an official interpretation of the Order, nor is it intended to modify the tenns ofthe Order in any way. Endnotes 1. If the respondents do not agree to such modifications, the Commission may (1) initiate a proceeding to reopen and modify the Order in accordance with Rule 3. 72(b), 16 CFR 72(b), or (2) commence a new administrative http://ww.ftc.gov/os/2001/01/entergycorpana.htm 2/15/2005 Entergy Corporation and Entergy-Koch, LP ("EKLP") - Ana Page 7 of7 proceeding by issuing an administrative complaint in accordance with Rule 16 CFR 93. 11. See 16 CFR 9 2.34(e)(2). http://ww.ftc.gov/os/200 I/O l/entergycorpana. htm 2/15/2005 Exhibit E UNITED STATES OF AMRICA BEFORE THE FEDERA TRAE COMMISSION ---------- --x In the Matter of Entergy-Koch, LP A limted parership. ----- ---- --------- -----x Entergy Corporation, a corporation Docket No. C-3998 and AFFIDAVIT IN SUPPORT OF PETITION OF ENTERGY ENTERGY-KOCH, LP TO REOPEN AN SET ASIDE ORDER John M. Adams, Jr., pursuat to 28 D. C. 9 1746, declares: 1. I am Associate General Counsel ofEntergy Services, Inc., a subsidiar of Entergy Corporation ("Entergy ), and have been employed in that capacity since Januar 2001. 2. I have read and am familiar with the Decision and Order dated Januar 31 2001, issued by the Federal Traded Commssion (the "Commission ) in the above- captioned matter (the "Order 3. I am familiar with the efforts of Entergy and Entergy-Koch, LP ("EKLP" to comply with the Order. I have coordinated the preparation of the compliance filings Entergy and EKLP have submitted to the Commission pursuant to the Order. 4. I am also familiar with the transaction pursuant to which EKLP sold the Gulf South Pipeline Company, LP ("Gulf South") to TGT Pipeline LLC TGT" 5. The information in this affidavit is based on my personal knowledge and on information conveyed to me by management employees of Entergy and EKLP. F:\secshare\ETR\Affdavits\Affdavit in Support of Petition ofETR and EKLP to Reopen and Set Aside Orer.doc 6. I affrm that to the best of my knowledge and belief, the facts and statements contained in Entergy s and EKLP' s Petition to Reopen and Set Aside Order are true and correct. 7. On November 22 2004, Entergy announced that EKLP entered into a definitive agreement to sell Gulf South to TGT (the "Transaction 8. On November 23 2004, Entergy and others fied their premerger notifications in accordance with the Hart-Scott-Rodino Act ("HSR Act") concerning the Transaction. Also on that date, Entergy, through counsel, notified the Commission of the Transaction pursuant to Paragraph IV ofthe Order. 9. On December 23 2004, the HSR Act's waiting period expired. On December 29, 2004 , the Transaction was consummated. See Loews Corporation News Release entitled , Loews Corporation Completes Acquisition of Gulf South Pipeline, LP" and dated December 29 2004, attached hereto at Tab I. Since then, neither Entergy nor EKLP has owned any interest in Gulf South. 10. During the four years since the Commission issued the Order, Entergy and EKLP have expended considerable resources and changed their ordinar business practices to comply, and remain in compliance, with the terms of the Order. Accordingly, Entergy and EKLP have filed six compliance reports with the Commission most recently on Januar 21 2005. 11. Specifically, Entergy and EKLP hired at their expense a Commission- approved Implementation Trustee, who reviewed, and later certified, their efforts to establish and implement systems and procedures for making Entergy s procurement of natural gas supplies and transportation more transparent to market paricipants, and for creating and maintaining auditable records of its procurement activities. Among other things, Entergy instituted more formal record-keeping protocols for its natural gas procurement planing activities, developed requests for proposals ("RFPs ) for procuring natural gas and transportation, and undertook affrmatively to identify and disseminate its RFPs to all potential suppliers of natural gas and transportation. In addition, both Entergy and EKLP established mechanisms by which Entergy s natural gas-related procurement needs were published on each company s website or electronic bulletin board. Neither Entergy nor EKLP would have incured the initial and ongoing administrative costs of these systems and procedures but for the Order. 12. In addition, Entergy remains concerned that by mandating the widespread publication of its natural gas and transportation needs, the Order may actually weaken Entergy s bargaining position with suppliers and, consequently, may prevent Entergy from negotiating prices and other contract terms as favorable as it might absent the Order. Moreover, although Entergy does not believe and does not have evidence to suggest that supplier collusion has occurred in connection with its procurements of natural gas and transportation, Entergy remains concerned that the transparency mandated by the Order could facilitate collusive activity among potential suppliers. Pursuant to 28 U. c. 9 1746, I declare under penalty ofpetjur under the laws of the United States of America that the foregoing is tre and correct. Executed on Februar 2005 CITY OF NEW ORLEANS) STATE OF LOUISIANA Sworn to and subscribed before me Notar Public , this -7 ::(/. day of Februar, 2005, at New Orleans, Louisiana. . Notar Publ , State of LouISana My Commission expires at death. CHRSTOPHER T. SCREN NOTARY PUBLIC 11887) For th Stae of Lou1s1an Commission Issued For Life F:\secshare\ETR\Affdavits\Affdavit in Support of Petition ofETR and EKLP to Reopen and Set Aside Order.doc Attachment Contact: Peter W. Keegan Senior Vice President (212) 521-2950 LOEWS CORPORATION NEWS RELESE Candace Leeds V. P. of Public Affairs (212) 521-2416 Joshua E. Kahn Investor Relations (212) 521-2788 FOR IMMEDIATE RELEASE LOEWS CORPORATION COMPLETES ACOUISITION OF GULF SOUTH PIPELINE, LP NEW YORK, December Ii, 2004 - Loews Corporation (NSE:L TR) today announced that its wholly owned subsidiary, TGT Pipeline, LLC has completed its previously announced acquisition of Gulf South Pipeline, LP from Entergy-Koch, LP, a ventue between Entergy Corporation (NSE: ETR) and Koch Energy, Inc., a subsidiary of privately-owned Koch Industres, Inc. TGT Pipeline, LLC funded the $1.36 bilion purchase price with $575 milion of proceeds from an interim loan and the remaining approximately $561 milion from cash provided by Loews. Gulf South Pipeline owns and operates an 8 000-mile interstate natual gas pipeline, gathering and storage system located in the U.S. Gulf Coast. Gulf South is headquartered in Houston with field offces located in Texas, Louisiana, Mississippi, Alabama and Florida. The Gulf South pipeline system is comprised of approximately 6 800 miles of interstate transmission pipeline 200 miles of gathering pipeline and 68.5 bilion cubic feet of working gas storage capacity. Loews Corporation, a holding company, is one of the largest diversified financial corporations in the United States. Its principal subsidiaries are CNA Financial Corporation, Lorillard, Inc. Diamond Offshore Drillng, Inc., Texas Gas Transmission, LLC, Loews Hotels, Bulova Corporation and Gulf South Pipeline, LP. ### Exhibit F UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION -- x In the Matter of Entergy-Koch, LP A limited partnership. -- - - - - - -- -- x Entergy Corporation a corporation Docket No. C-3998 and PROPOSED ORDER TO REOPEN AND SET ASIDE ORDER On March 2, 2005, Entergy Corporation ("Entergy ) and Entergy-Koch LP ("EKLP") (together, the "Petitioners ) filed a Petition to Reopen and Set Aside Order Petition ), pursuant to Section 5(b) of the Federal Trade Commission Act (the "FTC Act"), 15 US.C. 9 45(b), and Section 2.51 of the Commission s Rules of Practice and Procedure, 16 C. R. 92.51. In its Petition, Entergy requests that the Commission reopen and set aside its Januar 31 , 2001 Decision and Order in Docket No. C-3998 ("Order ), thus relieving Entergy and EKLP of all ongoing compliance obligations under the Order. The Petition was placed on the public record for thirty days pursuant to Section 2.5l(c) ofthe Commission s Rules of Practice and Procedure. For the reasons stated below, the Commission has determined to grant the Petition. The initial Complaint filed with the Order ("Complaint") stated that, due to Entergy's indirect 50% ownership interest in Gulf South Pipeline Company, LP (" Gulf South"), the Commission was concerned that Entergy would "have the incentive and ability.. .to pay EKLP prices for natural gas transportation above prevailing market prices and to purchase a level of service above what was necessary for effective operation of Entergy s facilities. l Gulf South was and is a major supplier of natural gas transportation in Louisiana and Mississippi. The Commission was also concerned that " (p Jrices ofretail electricity are likely to rise as a result of Entergy passing on inflated costs for natural gas transportation to consumers and the difficulties that regulators will have in reviewing and challenging Entergy s purchase of natural gas transportation. ,,2 The Commission also alleged that prices for natural gas in New Orleans and Baton Rouge would likely increase as a result of Entergy passing along inflated costs for natural gas transportation to consumers. To address these concerns, Paragraph II of the Order established procedures for Entergy and EKLP to follow in connection with Entergy s procurement of natural gas transportation services ("Relevant Product") to carry natural gas to any electric power generating facility or local natural gas distrbution facility that uses distributes, stores, or transports natural gas, and is owned (partially or wholly, directly or indirectly), operated, or controlled by an Entergy subsidiary that is subject to a State Regulator s rules governing the recovery of the cost of buying the Relevant Product Covered Facility ). Paragraph II set forth separate, detailed procedures relating to Entergy s Long-Term Purchases, Short-Term Purchase and Daily Purchases of the Relevant Product. Entergy and EKLP state that but for the Order they would not have adopted the procedures required by Paragraph II of the Order. Complaint '1 21 Complaint '1 29 Complaint '1 35. Paragraph II of the Order was intended to "create a competitive transparent process that will make it easier for regulators to detect whether Entergy purchased gas supplies.. . at inflated prices or a level of service that is above that necessary for effective operation " in the wake of ajoint venture that gave Entergy an indirect 50% ownership interest in Gulf South The Order is scheduled to expire pursuant to Paragraph VII of the Order, on Januar 31 , 2007. The Petitioners make their request to reopen and set aside the Order under Section 5(b) of the FTC Act, 15 U. C 9 45(b), and Section 2.51(b) of the Commission Rules of Practice, 16 C. R. 92.51(b). The FTC Act and the Commission s Rules of Practice provide that the Commission shall reopen an order to consider whether it should be modified if the Petitioner makes "a satisfactory showing that changed conditions of law or fact require the rule or order to be altered, modified, or set aside... or that the public interest so requires. ,,5 With regard to changed conditions oflaw or fact, a satisfactory showing sufficient to require reopening is made when a request to reopen identifies significant changes in circumstances and shows that the changes eliminate the need for the order or make continued application of it inequitable or harmful to competition. ,,6 To obtain a modification based on the public interest standard, the Commission has stated: (AJ "satisfactory showing" requires, with respect to "public interest" requests, that the requester make a prima facie showing of a legitimate Complaint '1 19 16 CF.R 92.51(b). In re Eli Lilly and Company, Docket No. C-3594, Order Reopening and Setting Aside Order (May 13, 1999), at 2 citing Rep. No. 96-500, 96 Cong. , 1 sl Sess. 9 (1979) and Louisiana-Pacifc Corp. Docket No. C-2956, Letter to John CHart (June 5, 1986), at 4 (unpublished). public interest" reason or reasons justifying relief.... (TJhis showing requires the requester to demonstrate, for example, that there is a more effective or effcient way of achieving the purpose of the order... 7 In addition, the Petitioners have the burden of establishing in detail why an order should be set aside. The Commission "may properly decline to reopen an order if a request is merely conclusory or otherwise fails to set forth specific facts demonstrating in detail the nature of the changed conditions and the reasons why these changed conditions require the requested modification of the order. s After determining that a petitioner has made the necessary showing, the Commission must reopen the order to consider whether modification is required. A petitioner s burden is not a light one in view of the public interest in repose and the finality of Commission orders. The Petitioners believe that both changed facts and the public interest justify reopening and setting aside the Order. According to the Petition, EKLP sold Gulf South to TGT Pipeline, LLC ("TGT"), a subsidiar of Loews Corporation, on December 2004. That sale eliminated Entergy s indirect 50% ownership interest in Gulf South. The Petitioners believe that with this ownership change, the obligations imposed on Entergy and EKLP are no longer justified and serve no useful purpose. The Petitioners also believe that because Entergy no longer has an ownership interest in Gulf South Entergy no longer has any incentive to pay inflated natural gas transportation prices to Gulf South and other pipelines. As a result, the Petitioners believe that there is no longer 65 Fed. Reg. 50637 (August 21 , 2000). S. Rep. No. 96-500, 96 Cong., 1st Sess. 9- 10 (1979); see also Rule 2.5l(b) (requiring affdavits in support of petitions to reopen and modify). See Federated Department Stores, Inc. v. Moitie 425 U.S. 394 (1981) (strong public interest considerations support repose and finality). any justification for continuing to require Entergy and EKLP to bear the costs and administrative burdens of complying with the Order. In addition, the Petitioners believe that the Order s transparency-enhancing procedures could enable participants in the marketplace to use the information about Entergy's procurement intentions to engage in anticompetitive behavior that could disadvantage Entergy and consequently harm Entergy s customers. The Petitioners argue that the competitive risks associated with greater transparency can no longer be justified by its presumed benefits now that Entergy no longer indirectly owns an interest in Gulf South and therefore no longer has any incentive to pay inflated prices to Gulf South and other pipelines. Upon consideration of the Petition and other information, the Commission finds, pursuant to Section 2.51 of the Commission s Rules of Practice and Procedure, that changed conditions of fact warrant reopening and setting aside the Order. The Commission finds that the Petitioners have shown that the fudamental factual premise of the Order - Entergy s indirect 50% ownership interest in Gulf South - is no longer present. The Commission finds that the Petitioners have presented sufficient evidence of the sale of Gulf South by EKLP to TGT and, consequently, that Entergy no longer has any ownership interest in or control over Gulf South. Given that the Order was meant to address competitive concerns arsing from Entergy s indirect 50% ownership in Gulf South, the Commission finds that as a result of the sale of Gulf South, Entergy no longer has an incentive to pay inflated natural gas transportation prices to Gulf South and other natural gas pipelines. Thus, the Commission finds that because ofthis substantial change in the basis of the Order, the Order should be set aside. In addition, the Commission finds that reopening and setting aside the Order is in the public interest. The Order was intended to protect competition in the natural gas transportation market, and it sought to achieve that objective by requiring Entergy and Gulf South to change certain of their business practices to make Entergy procurement of natural gas and transportation more transparent to participants in the marketplace and to regulators. The Commission finds that the anticompetitive risks associated with such transparency are no longer justified in the absence of an Entergy incentive to pay inflated prices for natural gas transportation to Gulf South and other pipelines. Moreover, the Commission finds that the elimination of unnecessary regulatory costs and burdens is an important public interest. Given that the fundamental factual premise of the Order is no longer present, the Commission finds that is in the public interest to relieve the Petitioners from the ongoing costs and administrative burdens of complying with the Order. Accordingly, IT IS ORDERED that this matter be, and it hereby is reopened and that the Commission s Order issued on Januar 31 2001 , be and it hereby , set aside as of the effective date of this Order. By the Commission Donald S. Clark Secretary ISSUED: