___________________________________________________________________________
                                     
                               UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                     
                                 FORM 10-K
(Mark One)
    X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934

          For the Fiscal Year Ended December 31, 1997

                    OR

          TRANSITION REPORT PURSUANT TO SECTION 13
          OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ____________ to ____________

Commission      Registrant, State of Incorporation,    IRS Employer
File Number     Address of Principal Executive         Identification No.
                Offices and Telephone Number           

1-11299         ENTERGY CORPORATION                    72-1229752
                (a Delaware corporation)               
                639 Loyola Avenue                      
                New Orleans, Louisiana 70113           
                Telephone (504) 529-5262               
                                                       
1-10764         ENTERGY ARKANSAS, INC.                 71-0005900
                (an Arkansas corporation)              
                425 West Capitol Avenue, 40th Floor    
                Little Rock, Arkansas 72201            
                Telephone (501) 377-4000               
                                                       
1-2703          ENTERGY GULF STATES, INC.              74-0662730
                (a Texas corporation)                  
                350 Pine Street                        
                Beaumont, Texas  77701                 
                Telephone (409) 838-6631               
                                                       
1-8474          ENTERGY LOUISIANA, INC.                72-0245590
                (a Louisiana corporation)              
                639 Loyola Avenue                      
                New Orleans, Louisiana 70113           
                Telephone (504) 529-5262               
                                                       
0-320           ENTERGY MISSISSIPPI, INC.              64-0205830
                (a Mississippi corporation)            
                308 East Pearl Street                  
                Jackson, Mississippi 39201             
                Telephone (601) 368-5000               
                                                       
0-5807          ENTERGY NEW ORLEANS, INC.              72-0273040
                (a Louisiana corporation)              
                639 Loyola Avenue                      
                New Orleans, Louisiana 70113           
                Telephone (504) 529-5262               
                                                       
1-9067          SYSTEM ENERGY RESOURCES, INC.          72-0752777
                (an Arkansas corporation)              
                Echelon One                            
                1340 Echelon Parkway                   
                Jackson, Mississippi 39213             
                Telephone (601) 368-5000               
                                                       
333-33331       ENTERGY LONDON INVESTMENTS PLC         N/A
                (England and Wales)                    
                Templar House                          
                81-87 High Holborn                     
                London WC1V 6NU England                
                Telephone 011-44-171-242-9050          
___________________________________________________________________________



<PAGE>

<TABLE>
<CAPTION>
Securities registered pursuant to Section 12(b) of the Act:

                                                                                 Name of Each Exchange
Registrant                     Title of Class                                    on Which Registered
<S>                            <C>                                               <C>
Entergy Corporation            Common Stock, $0.01 Par Value - 245,880,306       New York Stock Exchange, Inc.
                                 Shares outstanding at February 27, 1998         Chicago Stock Exchange Inc.
                                                                                 Pacific Exchange Inc.
                                                                                 
Entergy Arkansas Capital I     8-1/2% Cumulative Quarterly Income Preferred      New York Stock Exchange, Inc.
                                 Securities, Series A                            
                                                                                 
Entergy Gulf States, Inc.      Preferred Stock, Cumulative, $100 Par Value:
                                 $4.40 Dividend Series                           New York Stock Exchange, Inc.
                                 $4.52 Dividend Series                           New York Stock Exchange, Inc.
                                 $5.08 Dividend Series                           New York Stock Exchange, Inc.
                                 $8.80 Dividend Series                           New York Stock Exchange, Inc.
                                 Adjustable Rate Series B (Depository Receipts)  New York Stock Exchange, Inc.
                                                                                 
                               Preference Stock, Cumulative, without Par Value   New York Stock Exchange, Inc.
                                 $1.75 Dividend Series                           
                                                                                 
Entergy Gulf States Capital I  8.75% Cumulative Quarterly Income Preferred       New York Stock Exchange, Inc.
                                 Securities, Series A                            
                                                                                 
Entergy Louisiana Capital I    9% Cumulative Quarterly Income Preferred          New York Stock Exchange, Inc.
                                 Securities, Series A                            
                                                                                 
Entergy London Capital, L.P.   8-5/8% Cumulative Quarterly Income Preferred      New York Stock Exchange, Inc.
                                 Securities, Series A
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:

Registrant                     Title of Class
                               
Entergy Arkansas, Inc.         Preferred Stock, Cumulative, $100 Par Value
                               Preferred Stock, Cumulative, $25 Par Value
                               Preferred Stock, Cumulative, $0.01 Par Value
                               
Entergy Gulf States, Inc.      Preferred Stock, Cumulative, $100 Par Value
                               
Entergy Louisiana, Inc.        Preferred Stock, Cumulative, $100 Par Value
                               Preferred Stock, Cumulative, $25 Par Value
                               
Entergy Mississippi, Inc.      Preferred Stock, Cumulative, $100 Par Value
                               
Entergy New Orleans, Inc.      Preferred Stock, Cumulative, $100 Par Value


<PAGE>

      Indicate  by  check mark whether the registrants (1) have  filed  all
reports  required  to  be filed by Section 13 or 15(d)  of  the  Securities
Exchange  Act  of 1934 during the preceding 12 months (or for such  shorter
period  that the registrants were required to file such reports),  and  (2)
have been subject to such filing requirements for the past 90 days.  Yes  X
No ____

      Indicate by check mark if disclosure of delinquent filers pursuant to
Item  405  of  Regulation  S-K is not contained herein,  and  will  not  be
contained,  to the best of the registrants' knowledge, in definitive  proxy
or  information statements incorporated by reference in Part  III  of  this
Form 10-K or any amendment to this Form 10-K.  [  ]

      The aggregate market value of Entergy Corporation Common Stock, $0.01
Par Value, held by non-affiliates, was $7.1 billion based  on  the reported
last sale price of such stock on the New York Stock Exchange on February 27,
1998.  Entergy Corporation is directly or indirectly the sole holder of the
common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc.,  Entergy
Louisiana,  Inc., Entergy Mississippi,  Inc.,  Entergy  New Orleans,  Inc.,
System  Energy  Resources,  Inc.,  and  Entergy   London Investments plc.

                                     
                    DOCUMENTS INCORPORATED BY REFERENCE
                                     
      Portions of the Proxy Statement of Entergy Corporation to be filed in
connection  with  its Annual Meeting of Stockholders, to be  held  May  15,
1998, are incorporated by reference into Parts I and III hereof.


<PAGE>
                             TABLE OF CONTENTS

                                                                         Page
                                                                        Number

Definitions                                                                 i

Part I

     Item   1.  Business                                                    1

     Item   2.  Properties                                                 35

     Item   3.  Legal Proceedings                                          35

     Item   4.  Submission of Matters to a Vote of Security Holders        35
                Directors and Executive Officers of Entergy Corporation    36

Part II

     Item   5.  Market for Registrants' Common Equity and Related
                  Stockholder Matters                                      41

     Item   6.  Selected Financial Data                                    42

     Item   7.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                      43

     Item   7A. Quantitative and Qualitative Disclosures About Market Risk 43

     Item   8.  Financial Statements and Supplementary Data                44

     Item   9.  Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                     223

Part III

     Item 10.   Directors and Executive Officers of the Registrants       223

     Item 11.   Executive Compensation                                    227

     Item 12.   Security Ownership of Certain Beneficial Owners and
                  Management                                              234

     Item 13.   Certain Relationships and Related Transactions            238

Part IV

     Item 14.   Exhibits, Financial Statement Schedules, and Reports on
                  Form 8-K                                                239
Signatures                                                                240
Report of Independent Accountants on Financial Statement Schedules        249
Index to Financial Statement Schedules                                    S-1
Exhibit Index                                                             E-1

      This  combined Form 10-K is separately filed by Entergy  Corporation,
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc.,
Entergy  Mississippi,  Inc.,  Entergy  New  Orleans,  Inc.,  System  Energy
Resources, Inc., and Entergy London Investments plc.  Information contained
herein  relating to any individual company is filed by such company on  its
own behalf.  Each company makes representations only as to itself and makes
no other representations whatsoever as to any other company.

      This  report should be read in its entirety.  No one section  of  the
report deals with all aspects of the subject matter.

                              EXCHANGE RATES

       For   the  convenience  of  the  reader,  this  Form  10-K  contains
translations  of  certain British pounds sterling (BPS) amounts  into  U.S.
dollars  at specified rates, or, if not so specified, the noon buying  rate
in  New  York  City  for  cable transfers in BPS as certified  for  customs
purposes  by the Federal Reserve Bank of New York (the "Noon Buying  Rate")
on  December 31, 1997 of $1.6454 = BPS1.00.  No representation is made that
the  BPS amounts have been, could have been or could be converted into U.S.
dollars at the rates indicated or at any other rates.

      The  following  table  sets out, for the periods  indicated,  certain
information  concerning the exchange rates between  BPS  and  U.S.  dollars
based  on  the  Noon  Buying Rate in New York City for cable  transfers  in
pounds  sterling  as certified for customs purposes by the Federal  Reserve
Bank of New York.

    Fiscal Year Ending (1)  Period End  Average(2) High      Low
                                           ($ per BPS1.00)
March 31, 1994                  1.49     1.50      1.57      1.48
March 31, 1995                  1.62     1.57      1.64      1.51
March 31, 1996                  1.53     1.56      1.61      1.51
Period from April 1, 1996 to    1.60     1.58      1.71      1.49
  January 31, 1997
December 31, 1997               1.65     1.64      1.71      1.58

(1)  London  Electricity  plc, the predecessor company  of  Entergy  London
     Investments  plc (Entergy London), had a fiscal year ending  March  31
     and  Entergy  London, the successor company, has a fiscal year  ending
     December  31.   Effective  February 1, 1997, Entergy  London  acquired
     London Electricity plc.

(2)  The  average  of the Noon Buying Rates in effect on the last  business
     day of each month during the relevant period.

                        FORWARD LOOKING STATEMENTS
                                     
      Investors  are  cautioned that forward-looking  statements  contained
herein with respect to the revenues, earnings, competitive performance,  or
other  prospects for the business of Entergy Corporation, Entergy Arkansas,
Entergy  Gulf States, Entergy Louisiana, Entergy Mississippi,  Entergy  New
Orleans,  System Energy, Entergy London, or their affiliated companies  may
be influenced by factors that could cause actual outcomes and results to be
materially  different than projected.  Such factors include,  but  are  not
limited  to,  the effects of weather, the performance of generating  units,
fuel  prices  and  availability, regulatory decisions and  the  effects  of
changes   in   law,  capital  spending  requirements,  the   evolution   of
competition, changes in accounting standards, and other factors.


<PAGE>
                                DEFINITIONS
                                     
      Certain  abbreviations or acronyms used in the  text  and  notes  are
defined below:

Abbreviation or Acronym            Term

AFUDC               Allowance for Funds Used During Construction
Algiers             15th Ward of the City of New Orleans, Louisiana
ALJ                 Administrative Law Judge
ANO 1 and 2         Units  1  and 2 of Arkansas Nuclear One Steam  Electric
                    Generating Station (nuclear), owned by Entergy Arkansas
APB                 Accounting Principles Board
APSC                Arkansas Public Service Commission
Arkansas Cities and
Cooperatives        Cities  of  Benton,  North Little  Rock,  Prescott  and
                    Osceola;  the  Conway  Corporation,  the  West  Memphis
                    Utilities   Commission   and  the   Farmers'   Electric
                    Cooperative
Availability
 Agreement          Agreement, dated as of June 21, 1974, as amended, among
                    System Energy and Entergy Arkansas,  Entergy Louisiana,
                    Entergy Mississippi, and  Entergy New Orleans, and  the
                    assignments thereof
BPS                 British pounds sterling
Cajun               Cajun  Electric Power Cooperative, Inc.  (currently  in
                    chapter 11 bankruptcy reorganization)
Capital Funds
 Agreement          Agreement,  dated  as  of June 21,  1974,  as  amended,
                    between System Energy and Entergy Corporation, and  the
                    assignments thereof
CitiPower           CitiPower Pty.
Council             Council of the City of New Orleans, Louisiana
D.C. Circuit        United  States  Court of Appeals for  the  District  of
                    Columbia Circuit
DOE                 United States Department of Energy
domestic utility
 companies          Entergy   Arkansas,   Entergy  Gulf   States,   Entergy
                    Louisiana,   Entergy  Mississippi,  and   Entergy   New
                    Orleans, collectively
EMF                 Electromagnetic fields
EPA                 Environmental Protection Agency
EPAct               Energy Policy Act of 1992
EPDC                Entergy Power Development Corporation
EPMC                Entergy Power Marketing Corp.
ETC                 Exempt telecommunications company under PUHCA
ETHC                Entergy Technology Holding Company
EWG                 Exempt wholesale generator under PUHCA
Electricity Act     Electricity Act 1989
Electricity Pool    Wholesale electricity market in England and Wales
Entergy             Entergy Corporation and its various direct and indirect
                    subsidiaries
Entergy Arkansas    Entergy Arkansas, Inc., formerly Arkansas Power & Light
                    Company
Entergy Corporation Entergy  Corporation, a Delaware corporation, successor
                    to Entergy Corporation, a Florida corporation
Entergy Enterprises Entergy Enterprises, Inc.
Entergy Gulf States Entergy   Gulf  States,  Inc.,  formerly  Gulf   States
                    Utilities  Company (including wholly owned subsidiaries
                    -  Varibus Corporation, GSG&T, Inc., Prudential  Oil  &
                    Gas, Inc., and Southern Gulf Railway Company)
Entergy London      Entergy London Investments plc, formerly Entergy  Power
                    UK  plc  (including its wholly owned subsidiary, London
                    Electricity plc)
Entergy Louisiana   Entergy  Louisiana, Inc., formerly  Louisiana  Power  &
                    Light Company


<PAGE>
                          DEFINITIONS (Continued)
                                     

Abbreviation or Acronym      Term

Entergy Mississippi Entergy Mississippi, Inc., formerly Mississippi Power &
                    Light Company
Entergy New Orleans Entergy New Orleans, Inc., formerly New Orleans  Public
                    Service Inc.
Entergy Operations  Entergy Operations, Inc.
Entergy Power       Entergy Power, Inc.
Entergy Services    Entergy Services, Inc.
FASB                Financial Accounting Standards Board
FERC                Federal Energy Regulatory Commission
FUCO                an exempt foreign utility company under PUHCA
G&R Mortgage Bonds  General and Refunding Mortgage Bonds
Grand Gulf 1 and 2  Units  1  and 2 of Grand Gulf Steam Electric Generating
                    Station (nuclear), 90% owned by System Energy
GWH                 one million kilowatt-hours
Independence        Independence Steam Electric Station (coal),  owned  16%
                    by  Entergy  Arkansas, 25% by Entergy Mississippi,  and
                    11% by Entergy Power
IRS                 Internal Revenue Service
KPL                 Kingsnorth Power Ltd.
KV                  kilovolt
KW                  kilowatt
KWH                 kilowatt-hour(s)
London Electricity  London  Electricity plc - a regional  electric  company
                    serving  London, England, which was acquired by Entergy
                    London Investments plc effective February 1, 1997
LDEQ                Louisiana Department of Environmental Quality
LPSC                Louisiana Public Service Commission
MCF                 1,000 cubic feet of gas
Merger              The    combination    transaction,    consummated    on
                    December 31, 1993, by which Entergy Gulf States  became
                    a   subsidiary  of  Entergy  Corporation  and   Entergy
                    Corporation became a Delaware corporation
MGP                 Manufactured gas plant
MCEQ                Mississippi Commission on Environmental Quality
MMC                 UK Monopolies and Mergers Commission
MPSC                Mississippi Public Service Commission
MW                  Megawatt(s)
N/A                 Not applicable
Nelson Unit 6       Unit   No.  6  (coal)  of  the  Nelson  Steam  Electric
                    Generating Station, owned 70% by Entergy Gulf States
NISCO               Nelson Industrial Steam Company
1991 NOPSI
 Settlement         Agreement,  retroactive  to  October  4,  1991,   among
                    Entergy New Orleans, the Council, and the Alliance  for
                    Affordable   Energy,  Inc.  (local  consumer   advocate
                    group),  which  settled certain Grand Gulf  1  prudence
                    issues and certain litigation related to the resolution
                    adopted by the Council on February 4, 1988, disallowing
                    Entergy  New  Orleans'  recovery  of  $135  million  of
                    previously deferred Grand Gulf 1-related costs
1994 NOPSI
 Settlement         Settlement  effective January 1, 1995, between  Entergy
                    New  Orleans  and  the  Council in  which  Entergy  New
                    Orleans  agreed to implement a permanent  reduction  in
                    electric  and gas rates and resolve disputes  with  the
                    Council  in  the  interpretation  of  the  1991   NOPSI
                    Settlement


<PAGE>
                          DEFINITIONS (Concluded)
                                     

Abbreviation or Acronym      Term

NPL                 Superfund National Priorities List
NRC                 Nuclear Regulatory Commission
PES License         Public Electricity Supply License in the UK
PRP                 Potentially Responsible Party (a person or entity  that
                    may  be  responsible for remediation  of  environmental
                    contamination)
PUCT                Public Utility Commission of Texas
PUHCA               Public Utility Holding Company Act of 1935, as amended
PURPA               Public Utility Regulatory Policies Act of 1978
Rate Cap            The  level of Entergy Gulf States' retail electric base
                    rates in effect at December 31, 1993, for the Louisiana
                    retail  jurisdiction, and the level of  such  rates  in
                    effect prior to the settlement agreement with the  PUCT
                    on  July  21,  1994, for the Texas retail jurisdiction,
                    which may not be exceeded before December 31, 1998
Reallocation
 Agreement          1981  Agreement, superseded in part by a June 13,  1985
                    decision  of  FERC,  among  Entergy  Arkansas,  Entergy
                    Louisiana,  Entergy Mississippi, Entergy  New  Orleans,
                    and  System Energy relating to the sale of capacity and
                    energy from Grand Gulf
REC                 Regional Electricity Company - UK
Regulator           Director General of Electricity Supply for the UK
Ritchie 2           Unit  2  of the R. E. Ritchie Steam Electric Generating
                    Station (gas/oil)
River Bend          River Bend Steam Electric Generating Station (nuclear)
RUS                 Rural    Utility   Services   (formerly    the    Rural
                    Electrification Administration or "REA")
SCC                 Saltend Cogeneration Company
SEC                 Securities and Exchange Commission
SFAS                Statement    of    Financial   Accounting    Standards,
                    promulgated by the Financial Accounting Standards Board
SMEPA               South Mississippi Electric Power Agency
System Agreement    Agreement,  effective  January 1,  1983,  as  modified,
                    among  the domestic utility companies relating  to  the
                    sharing   of   generating  capacity  and  other   power
                    resources
System Energy       System Energy Resources, Inc.
System Fuels        System Fuels, Inc.
UK                  The  United  Kingdom  of  Great  Britain  and  Northern
                    Ireland
Unit Power Sales
 Agreement          Agreement,  dated as of June 10, 1982, as  amended  and
                    approved  by  FERC,  among  Entergy  Arkansas,  Entergy
                    Louisiana,  Entergy Mississippi, Entergy  New  Orleans,
                    and System Energy, relating to the sale of capacity and
                    energy from System Energy's share of Grand Gulf 1
Waterford 3         Unit  No.  3 (nuclear) of the Waterford Steam  Electric
                    Generating  Station, owned 90.7% by Entergy  Louisiana.
                    The  remaining  9.3% undivided interest  is  leased  by
                    Entergy Louisiana.
White Bluff         White Bluff Steam Electric Generating Station 57% owned
                    by Entergy Arkansas
                                     
                                     
                                     
                                     

<PAGE>
                                     

                                  PART I

Item 1.  Business
                            BUSINESS OF ENTERGY
                                     
General

      Entergy  Corporation  is a Delaware corporation  which,  through  its
direct  and  indirect  subsidiaries, engages in the  domestic  and  foreign
electric  utility  business,  other  domestic  and  foreign  energy-related
enterprises,   and   telecommunications-based  businesses.    It   has   no
significant  assets  other  than the stock of  its  subsidiaries.   Entergy
Corporation is registered as a public utility holding company under  PUHCA.
As   such,   Entergy  Corporation  and  its  various  direct  and  indirect
subsidiaries  (with the exception of its EWG, FUCO, and  ETC  subsidiaries)
are   subject   to  the  broad  regulatory  provisions  of  PUHCA.    PUHCA
historically  limited the operations of registered holding companies  to  a
single,   integrated   public  utility  system  and  functionally   related
activities.   However, more recently, PUHCA has been amended or interpreted
to permit limited entry by registered public utility holding companies into
domestic   and  foreign  electric  generation  ventures,  foreign   utility
ownership, telecommunications and information service businesses, and other
domestic energy related businesses.

Domestic Operations and Investments

      Entergy  Corporation has five wholly-owned domestic  retail  electric
utility  subsidiaries:   Entergy Arkansas,  Entergy  Gulf  States,  Entergy
Louisiana,  Entergy Mississippi, and Entergy New Orleans.  As  of  December
31,  1997,  these  utility companies provided retail  electric  service  to
approximately 2.5 million customers primarily in portions of the states  of
Arkansas,  Louisiana,  Mississippi, and Texas.  In addition,  Entergy  Gulf
States  furnishes  natural gas utility service in and around  Baton  Rouge,
Louisiana, and Entergy New Orleans furnishes natural gas utility service in
New Orleans, Louisiana.  The business of the domestic utility companies  is
subject  to  seasonal  fluctuations, with the peak sales  period  occurring
during  the third quarter of each year.  During 1997, the domestic  utility
companies' combined retail electric sales as a percentage of total electric
sales  were:  residential  - 26.5%; commercial - 20.3%;  and  industrial  -
41.8%.   Retail  electric revenues from these sectors as  a  percentage  of
total electric revenues were:  residential - 35.1%; commercial - 24.4%; and
industrial  -  31.2%.  Sales to governmental and municipal sectors  and  to
nonaffiliated  utilities accounted for the balance of  energy  sales.   The
major  industrial customers of the domestic utility companies  are  in  the
chemical  processing, petroleum refining, paper products, and food products
industries.   The  retail rates and services of Entergy's  domestic  retail
utility  subsidiaries  are  regulated  by  state  and/or  local  regulatory
authorities.

      Entergy Corporation owns all of the common stock of Entergy Power,  a
Delaware corporation and domestic power producer that owns 725 MW of fossil-
fueled  generating  assets  located in  Arkansas.   Entergy  Power  markets
electric  capacity and energy in the wholesale market.  Entergy Corporation
also  owns  100%  of  the  voting  stock  of  System  Energy,  an  Arkansas
corporation  that  owns and leases an aggregate 90% undivided  interest  in
Grand  Gulf.  System Energy sells the capacity and energy from its interest
in  Grand  Gulf  1  at wholesale to its only customers,  Entergy  Arkansas,
Entergy  Louisiana,  Entergy  Mississippi, and  Entergy  New  Orleans  (see
"CAPITAL  REQUIREMENTS AND FUTURE FINANCING - Certain System Financial  and
Support  Agreements  - Unit Power Sales Agreement," below).   Both  Entergy
Power's  and  System  Energy's wholesale power sales  are  subject  to  the
jurisdiction of FERC.

     Entergy Services, Inc., a Delaware corporation wholly-owned by Entergy
Corporation,   provides   general  executive,   advisory,   administrative,
accounting,  legal,  engineering,  and  other  services  primarily  to  the
domestic  utility subsidiaries of Entergy Corporation, but also to  Entergy
Enterprises.   Entergy Operations, a Delaware corporation, is also  wholly-
owned  by  Entergy Corporation and provides nuclear management,  operations
and  maintenance services under contract for ANO, River Bend, Waterford  3,
and  Grand  Gulf  1,  subject to the owner oversight of  Entergy  Arkansas,
Entergy  Gulf  States, Entergy Louisiana, and System Energy,  respectively.
Entergy  Services  and  Entergy Operations provide their  services  to  the
domestic  utility  companies, on an "at cost" basis,  pursuant  to  service
agreements approved by the SEC under PUHCA.

      Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New  Orleans own 35%, 33%, 19%, and 13%, respectively, of the common  stock
of  System  Fuels,  a  Louisiana corporation that  implements  and  manages
certain  programs  to procure, deliver, and store fuel supplies  for  those
companies.

      Entergy  Gulf States has wholly-owned subsidiaries that  (i)  operate
intrastate gas pipelines in Louisiana used primarily to transport  fuel  to
two  of Entergy Gulf States' generating stations; (ii) own the Lewis  Creek
Station,  a gas-fired generating plant, which is leased to and operated  by
Entergy  Gulf  States;  and  (iii)  own several  miles  of  railroad  track
constructed in Louisiana primarily for the purpose of transporting coal for
use  as  boiler  fuel  at  Entergy Gulf States' Nelson  Unit  6  generating
facility.

      Entergy Enterprises, a wholly-owned nonutility subsidiary of  Entergy
Corporation  incorporated  under Louisiana law,  invests  in  and  develops
energy-related projects and businesses.  Entergy Enterprises,  directly  or
through  subsidiaries,  markets  energy-related  expertise,  products,  and
services  to  third parties and provides a variety of services  to  certain
nonutility  companies owned by Entergy.  Services provided to third-parties
include  (i) energy management; (ii) management, operations and maintenance
services  for  fossil  and  nuclear generating  plants;  and  (iii)  energy
efficient lighting, heating, and cooling systems.

      EPMC, a Delaware corporation, is a wholly-owned subsidiary of Entergy
Corporation  that is in the business of marketing electricity,  gas,  other
generating  fuels,  and  financial instruments to third  parties.   It  has
received  authority  from  the  SEC to deal  in  a  wide  range  of  energy
commodities and related financial products.

      ETHC, a wholly-owned subsidiary of Entergy Corporation, engages in  a
variety  of telecommunications and information based enterprises  that  are
exempt  from regulation under PUHCA.  ETHC has acquired security monitoring
firms  operating  primarily in North and South Carolina, Alabama,  Florida,
Georgia,  Mississippi,  Louisiana,  and  Texas.   ETHC  participates   with
Hyperion  Telecommunications  in  a  joint  venture  that  operates   three
Competitive  Local  Exchange Carriers (CLECs)  in  Little  Rock,  Arkansas;
Jackson, Mississippi; and Baton Rouge, Louisiana.  These CLECs provide long
distance  carrier access and local exchange services.  ETHC also  currently
operates   1,500  miles  of  fiber  optic  cable  in  Arkansas,  Louisiana,
Mississippi,  and  Texas  that  provide  long  haul  telecommunications  to
wholesale  telecommunication carriers.  ETHC has made a limited  investment
in  a personal communication services company which will be located in  the
southeastern United States.

Foreign Operations and Investments

      Since  1993, Entergy Corporation has directly or indirectly  acquired
interests  in a number of foreign utility businesses.  Entergy  Corporation
owns  indirectly all of the outstanding shares of Entergy London which  was
incorporated  as  a public limited company under the laws  of  England  and
Wales in October 1996.  Entergy Corporation, through Entergy London, gained
effective   control  of  London  Electricity  in  February  1997.    London
Electricity  is  Entergy  London's sole asset.   London  Electricity  is  a
regional  electric company that is principally engaged in the  distribution
and  supply  of  electricity to approximately 2 million  customers  in  and
around London, England.  London Electricity's retail service area currently
covers   approximately  257  square  miles  in  the  central   portion   of
metropolitan  London and includes commercial, residential,  and  industrial
customers.   London Electricity also engages in other business  activities,
including  ownership of an interest in a 1,000 MW gas-fired combined  cycle
generating  station  and  several  private electric  distribution  systems.
Entergy   Corporation's   indirect  wholly-owned   Australian   subsidiary,
CitiPower, was acquired in 1996.  CitiPower is principally engaged  in  the
electric  distribution business in Melbourne, Australia,  where  it  serves
approximately 242,000 customers.  Entergy Corporation also indirectly  owns
a  5%  interest in Edesur, S.A., which is the retail electric  distribution
company  for  about 1.9 million customers in the southern  part  of  Buenos
Aires, Argentina.

      EPDC,  a  wholly-owned  subsidiary of Entergy  Corporation,  owns  an
interest in the following foreign electric generation assets:

               Investment                    Percent Ownership   Status

     Argentina - Costanera, 1,260 MW              6%        operational
     Argentina - Costanera expansion, 220 MW      10%       operational
     Chile - San Isidro, 370 MW                   25%       under construction
     Pakistan - Hub River, 1,292 MW               5%        operational
     Peru - Edegel - 793 MW                       21%       operational
     United Kingdom - Saltend, 1,200 MW           100%      under construction
     United Kingdom - Damhead Creek, 770 MW       100%      in development

      In  addition, Entergy  Corporation,   through   another  wholly-owned 
subsidiary,  owns 92%  of  Nantong  Entergy Heat & Power, which has  a 24MW
facility under construction.

      As of December 31, 1997, Entergy Corporation had a net investment  of
$1.3  billion  in  equity  capital in businesses other  than  the  domestic
utility businesses.  Entergy Corporation continues to seek opportunities to
expand  its  domestic  and foreign businesses that  are  not  regulated  by
domestic   state   and  local  utility  regulatory  authorities.    Entergy
Corporation's  continued acquisition of and investments in certain  foreign
and  domestic businesses is subject to regulation (including the effect  of
exemptive  provisions)  under  PUHCA.   Rule  53  under  PUHCA  limits  the
aggregate investment by a registered public utility holding company in EWGs
and FUCOs without SEC approval to 50% of the holding company's consolidated
retained  earnings averaged over a running four quarter period.   Entergy's
aggregate investment in EWGs and FUCOs is such that no further EWG or  FUCO
investments  can  be  made with funds provided from  securities  issued  by
Entergy  unless SEC approval is obtained or Entergy's consolidated retained
earnings increase.

     International  operations  are  subject  to  the  risks  inherent   in
conducting   business   abroad,  including  possible   nationalization   or
expropriation, price and currency exchange controls, limitations on foreign
participation  in local energy-related enterprises, and other restrictions.
Changes  in the relative value of currencies occur from time to  time,  and
may   favorably  or  unfavorably  affect  the  results  of  operations  and
statements  of cash flows of Entergy's non-U.S. businesses.   In  addition,
there  are  exchange control restrictions in certain countries relating  to
the repatriation of earnings.

Selected Data

      Selected  customer  and sales data for 1997  are  summarized  in  the
following tables:

<TABLE>
<CAPTION>

                                                                                 Customers as of
                                                                                December 31, 1997
                    Area Served                                                Electric        Gas
                                                                                 (In thousands)
<S>                 <C>                                                            <C>         <C>       
Entergy Arkansas    Portions of Arkansas and Tennessee                             620          -
Entergy Gulf States Portions of Texas and Louisiana                                641         88
Entergy Louisiana   Portions of Louisiana                                          623          -
Entergy Mississippi Portions of Mississippi                                        382          -
Entergy New Orleans City of New Orleans, except Algiers, which                                   
                      is provided electric service by Entergy Louisiana            189        151
                                                                                 -----        ---
     Total domestic                                                              2,455        239
          customers
CitiPower           Melbourne, Australia and surrounding suburbs                   242          -
London Electricity  Primarily the majority of metropolitan                                       
                      London, England                                            1,995          -
                                                                                 -----        ---
   Total customers                                                               4,692        239
                                                                                 =====        ===

</TABLE>
     
     
                1997 - Selected Electric Energy Sales Data


<TABLE>
<CAPTION>
                          Entergy     Entergy     Entergy     Entergy       Entergy    System
                          Arkansas  Gulf States  Louisiana  Mississippi    New Orleans Energy   Total (a)
<S>                         <C>          <C>        <C>          <C>           <C>       <C>        <C>
DOMESTIC                                                (GWH)
  Electric Department:                                                                                    
    Sales to retail                                                                              
     customers              17,319       33,272     29,582       11,418        5,521         -      97,113
    Sales for resale:                                                                                     
       - Affiliates          9,557          414        104        1,918          316     9,735           -
       - Others              6,828        1,503        805          412          160         -       9,707
                            ------------------------------------------------------------------------------
          Total             33,704       35,189     30,491       13,748        5,997     9,735     106,820
  Steam Department:                                                                                       
     - Sales to steam                                                                             
        products customer        -        1,626          -            -            -         -       1,626
                            ------------------------------------------------------------------------------
          TOTAL             33,704       36,815     30,491       13,748        5,997     9,735     108,446
                            ==============================================================================
Average use per                                                                                           
  residential customer                                                                            
  (KWH)                     11,313       14,615     14,311       13,314       11,618         -      13,279
                            ==============================================================================
 </TABLE>


(a)  Includes the effect of intercompany eliminations.

FOREIGN

      In  1997, Entergy London had 19,546 GWH of sales to its distribution
customers and 18,023 GWH of sales to its supply customers.

                  1997 - Selected Natural Gas Sales Data

      Entergy  New  Orleans  and Entergy Gulf States  sold  16,754,253  and
6,944,026  MCF, respectively, of natural gas to retail customers  in  1997.
Revenues  from natural gas operations for each of the three  years  in  the
period  ended December 31, 1997, were not material for Entergy Gulf States.
See  "INDUSTRY  SEGMENTS" below for a description of Entergy  New  Orleans'
business segments.

      See "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED FINANCIAL DATA -
FIVE-YEAR  COMPARISON," and "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
OF  ENTERGY  ARKANSAS,  ENTERGY  GULF STATES,  ENTERGY  LOUISIANA,  ENTERGY
MISSISSIPPI, ENTERGY NEW ORLEANS, SYSTEM ENERGY, and ENTERGY LONDON"  which
follow  each  company's financial statements in this  report,  for  further
information with respect to operating statistics.

Employees

     As of January 31, 1998, Entergy had 17,288 employees as follows:

                  Full-time:
                    Entergy Corporation                 -
                    Entergy Arkansas                1,416
                    Entergy Gulf States             1,456
                    Entergy Louisiana                 721
                    Entergy Mississippi               700
                    Entergy New Orleans               301
                    System Energy                       -
                    Entergy London                  3,759
                    Entergy Operations              3,662
                    Entergy Services                3,131
                    Other subsidiaries              1,962
                                                   ------
                         Total Full-time           17,108
                    Part-time                         180
                                                   ------
                         Total Entergy             17,288
                                                   ======

Competition

      Refer  to  Note  2  herein for a detailed discussion  of  competitive
challenges Entergy faces in the utility industry, including the filings  of
the  domestic  utility  companies with their  respective  state  and  local
regulatory authorities addressing transition to competition.


                 CAPITAL REQUIREMENTS AND FUTURE FINANCING

      Construction expenditures for the domestic utility companies,  System
Energy, and Entergy London, including environmental expenditures (which are
immaterial) and AFUDC, but excluding nuclear fuel, for the period 1998-2000
are estimated as follows:

                            1998       1999       2000      Total
                                        (In Millions)
                                                                 
Entergy Arkansas            $201       $156       $204       $561
Entergy Gulf States          150        145        147        442
Entergy Louisiana            107         90         86        283
Entergy Mississippi           70         48         49        167
Entergy New Orleans           21         16         15         52
System Energy                 24         26         21         71
Entergy London               161        163        158        482


      With  the  exception of Entergy Arkansas, no significant construction
costs  are  expected  in  connection with the domestic  utility  companies'
generating  facilities.   Projected  construction  expenditures   for   the
replacement  of ANO 2's steam generators are included in Entergy  Arkansas'
estimated  figures  above.  See Note 9 for additional information.   Actual
construction costs may vary from these estimates for a number  of  reasons,
including  changes  in  load  growth estimates,  changes  in  environmental
regulations,   modifications   to  nuclear   units   to   meet   regulatory
requirements, increasing costs of labor, equipment and materials, and  cost
of  capital.  In addition to construction expenditure requirements, Entergy
must  meet scheduled long-term debt and preferred stock maturities and cash
sinking  fund  requirements.  See Notes 4, 5, 6, and 7 for further  capital
requirements and financing information.

     London Electricity's capital expenditures are primarily related to its
distribution business and include expenditures for load-related,  non-load-
related   and   non-operational  capital  assets.    Load-related   capital
expenditures  are  largely  required  by  new  business  growth.   Customer
contributions are normally received when capital expenditures are  made  to
extend  or  upgrade service to customers (except to the  extent  that  such
capital  expenditures are made to enhance London Electricity's distribution
network  generally).  Non-load-related capital expenditures  include  asset
replacement  which is expected to continue until at least the next  decade.
Other  non-load-related  expenditures  include  system  upgrade  work  that
provides  for  load  growth  and has the additional  benefit  of  improving
network security and reliability.  Non-operational capital expenditures are
for  assets such as fixtures and equipment. London Electricity is  required
to  file  five-year projections with the Regulator for capital expenditures
related  to its regulated distribution network and annual updates  of  such
projections.  The most recent projection was for the five-year period ended
March  31, 2000, and was filed in July 1997.  This filing reflected  London
Electricity's   current   projection   of   approximately   $793    million
(approximately  BPS482 million) for the five-year period, and  expenditures
have thus far been substantially in accordance with the projection.

      London Electricity is a member of the City of Greenwich Lewisham Rail
Link  plc  which  will  require expenditures of approximately  $10  million
(approximately  BPS6  million) in the next two years.   London  Electricity
maintains  the  distribution networks at Heathrow,  Gatwick,  and  Stansted
airports   for  the  British  Airport  Authority  and  expects   to   spend
approximately  $59 million (approximately BPS36 million) on these  networks
over the next six years.

     In December 1997, SCC, a wholly-owned subsidiary of EPDC, entered into
a  BPS646 million (approximately $1.07 billion) nonrecourse credit facility
with  an  international bank group for the construction of a 1,200 MW  gas-
fired  power plant in Hull, England.  The power plant will sell power  into
the UK power pool at prices established by the market.  SCC entered into  a
lump-sum contract with a major international contractor to build the  power
plant.  SCC has also entered into a series of contracts, including a  long-
term ground lease for the site; a long-term gas supply agreement with take-
or-pay  obligations, and a long-term steam and power supply agreement  with
the  industrial  host.   The  total  cost  of  this  project   currently is 
estimated to be approximately  $875  million  and  the project is  expected
to be operational by January 2000.

      In  September 1997, EPDC acquired KPL for $67 million.  KPL owns land
in  Southeast  England and certain rights to build a  power  station.   The
acquisition  of KPL was financed by borrowings under a BPS50  million  ($82
million)  credit  facility  with  an international bank.  In December 1997,
EPDC amended this credit  facility and increased the amount of the revolver
to BPS100 million ($165 million).   In early October 1997,  EPDC  announced
construction of a 770 MW combined cycle gas  turbine merchant  power  plant  
to be known as Damhead Creek on  the  KPL  site.  Construction is scheduled
to begin in late 1998, at an estimated cost  of $625  million.  The  target 
date for  commercial operation  is  the  second quarter of 2000.  Financing 
and  other  project  requirements  are  currently  in  the  final stages of 
development.

      Entergy  Corporation's  primary capital requirements  are  to  invest
periodically  in, or make loans to, its subsidiaries and to invest  in  new
enterprises.   See  "MANAGEMENT'S  FINANCIAL  DISCUSSION  AND  ANALYSIS   -
LIQUIDITY  AND CAPITAL RESOURCES," and "BUSINESS OF ENTERGY" for additional
discussion  of Entergy Corporation's current and future planned investments
in  its  subsidiaries  and  financial sources for  such  investments.   The
principal   sources   of  funds  for  Entergy  Corporation   are   dividend
distributions from its subsidiaries, funds available under its bank  credit
facilities,  and  funds received from its dividend reinvestment  and  stock
purchase plan.  Certain events, such as the River Bend issues discussed  in
Notes  2 and 9, could limit the amount of these distributions.  Substantial
write-offs  or charges resulting from adverse rulings in this matter  could
adversely affect Entergy Gulf States' ability to pay dividends.

Certain System Financial and Support Agreements

Unit  Power Sales Agreement  (Entergy Arkansas, Entergy Louisiana,  Entergy
Mississippi,  Entergy New Orleans, and System Energy)

      The  Unit  Power Sales Agreement allocates capacity and  energy  from
System Energy's 90% ownership and leasehold interests in Grand Gulf 1  (and
the  related  costs)  to Entergy Arkansas (36%), Entergy  Louisiana  (14%),
Entergy   Mississippi  (33%),  and  Entergy  New  Orleans  (17%).   Entergy
Arkansas,  Entergy Louisiana, Entergy Mississippi, and Entergy New  Orleans
make  payments  to  System  Energy  for their  respective  entitlements  of
capacity  and  energy  on a full cost-of-service basis  regardless  of  the
quantity of energy delivered, so long as Grand Gulf 1 remains in commercial
operation.   Payments  under  the Unit Power  Sales  Agreement  are  System
Energy's  only  source of operating revenues.  The financial  condition  of
System Energy depends upon the continued commercial operation of Grand Gulf
1  and  the  receipt of payments from Entergy Arkansas, Entergy  Louisiana,
Entergy  Mississippi, and Entergy New Orleans.  Payments  made  by  Entergy
Arkansas,  Entergy Louisiana, Entergy Mississippi, and Entergy New  Orleans
under the Unit Power Sales Agreement are generally recovered through rates.
In  the  case of Entergy Arkansas and Entergy Louisiana, payments are  also
recovered  through  sales  of electricity from  their  respective  retained
shares  of  Grand  Gulf  1.  See Note 2 for further  information  regarding
retained shares.

Availability  Agreement  (Entergy  Arkansas,  Entergy  Louisiana,   Entergy
Mississippi, Entergy New Orleans, and System Energy)

      The  Availability Agreement among System Energy and Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was entered
into  in  1974 in connection with the financing by System Energy  of  Grand
Gulf.  The Availability Agreement provided that System Energy would join in
the System Agreement on or before the date on which Grand Gulf 1 was placed
in  commercial  operation  and would make available  to  Entergy  Arkansas,
Entergy  Louisiana,  Entergy  Mississippi,  and  Entergy  New  Orleans  all
capacity and energy available from System Energy's share of Grand Gulf.

      Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New  Orleans  also agreed severally to pay System Energy  monthly  for  the
right  to receive capacity and energy available from Grand Gulf in  amounts
that  (when added to any amounts received by System Energy under  the  Unit
Power  Sales Agreement, or otherwise) would at least equal System  Energy's
total  operating  expenses  for  Grand Gulf (including  depreciation  at  a
specified  rate)  and interest charges.  Under the Availability  Agreement,
the  sale of capacity and energy generated by Grand Gulf is governed by the
Unit  Power  Sales  Agreement.   The September  1989  write-off  of  System
Energy's  investment  in  Grand  Gulf 2, amounting  to  approximately  $900
million,  is  being amortized for Availability Agreement purposes  over  27
years  rather  than  in  the month the write-off was recognized  on  System
Energy's   books.   The  allocation  percentages  under  the   Availability
Agreement are fixed as follows: Entergy Arkansas - 17.1%; Entergy Louisiana
- - 26.9%; Entergy Mississippi - 31.3%; and Entergy New Orleans - 24.7%.

      The allocation percentages under the Availability Agreement remain in
effect and would govern payments made under such agreement in the event  of
a  shortfall  of  funds  available to System  Energy  from  other  sources,
including   payments  by  Entergy  Arkansas,  Entergy  Louisiana,   Entergy
Mississippi, and Entergy New Orleans to System Energy under the Unit  Power
Sales Agreement.

      System  Energy has assigned its rights to payments and advances  from
Entergy  Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy  New
Orleans under the Availability Agreement as security for its first mortgage
bonds  and reimbursement obligations to certain banks providing the letters
of  credit  in connection with the equity funding of the sale and leaseback
transactions described in Note 10 under "Sale and Leaseback Transactions  -
Grand  Gulf 1 Lease Obligations."  In these assignments, Entergy  Arkansas,
Entergy  Louisiana,  Entergy Mississippi, and Entergy New  Orleans  further
agreed that, in the event they were prohibited by governmental action  from
making  payments  under the Availability Agreement (if, for  example,  FERC
reduced or disallowed such payments as constituting excessive rates),  they
would  then make subordinated advances to System Energy in the same amounts
and  at the same times as the prohibited payments.  System Energy would not
be  allowed to repay these subordinated advances so long as it remained  in
default under the related indebtedness or in other similar circumstances.

      Each  of  the  assignment  agreements relating  to  the  Availability
Agreement  provides  that  Entergy  Arkansas,  Entergy  Louisiana,  Entergy
Mississippi, and Entergy New Orleans shall make payments directly to System
Energy.   However,  if  there  is an event of  default,  Entergy  Arkansas,
Entergy  Louisiana, Entergy Mississippi, and Entergy New Orleans must  make
those  payments  directly  to  the holders of  indebtedness  that  are  the
beneficiaries of such assignment agreements.  The payments must be made pro
rata according to the amount of the respective obligations secured.

      The  obligations  of  Entergy Arkansas,  Entergy  Louisiana,  Entergy
Mississippi,   and  Entergy  New  Orleans  to  make  payments   under   the
Availability   Agreement  are  subject  to  the   receipt   and   continued
effectiveness of all necessary regulatory approvals.  Sales of capacity and
energy under the Availability Agreement would require that the Availability
Agreement  be submitted to FERC for approval with respect to the  terms  of
such  sale.   No  such  filing with FERC has been  made  because  sales  of
capacity  and energy from Grand Gulf are being made pursuant  to  the  Unit
Power  Sales  Agreement.   Other  aspects of  the  Availability  Agreement,
including  the obligations of Entergy Arkansas, Entergy Louisiana,  Entergy
Mississippi,  and  Entergy New Orleans to make subordinated  advances,  are
subject  to  the  PUHCA jurisdiction of the SEC, whose  approval  has  been
obtained.  If, for any reason, sales of capacity and energy are made in the
future  pursuant to the Availability Agreement, the jurisdictional portions
of the Availability Agreement would be submitted to FERC for approval.

      Since commercial operation of Grand Gulf 1 began, payments under  the
Unit  Power  Sales  Agreement to System Energy have  exceeded  the  amounts
payable  under  the  Availability Agreement,  and  no  payments  under  the
Availability Agreement have ever been required.  In the event such payments
were  required, the ability of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi,  and  Entergy  New  Orleans to recover  from  their  customers
amounts  paid  under the Availability Agreement, or under  the  assignments
thereof, would depend upon the outcome of rate proceedings before state and
local regulatory authorities.  In view of the controversies that arose over
the  allocation  of capacity and energy from Grand Gulf 1 pursuant  to  the
Unit Power Sales Agreement, opposition to full recovery would be likely and
the outcome of such proceedings, should they occur, is not predictable.

      The Availability Agreement may be terminated, amended, or modified by
mutual  agreement of the parties thereto, upon obtaining  the  consent,  if
required, of those holders of System Energy's indebtedness then outstanding
who are the beneficiaries of the assignments of the Availability Agreement.

Capital Funds Agreement (Entergy Corporation and System Energy)

      System  Energy and Entergy Corporation have entered into the  Capital
Funds  Agreement  whereby Entergy Corporation has agreed to  supply  System
Energy  with  sufficient  capital to (i) maintain  System  Energy's  equity
capital  at an amount equal to a minimum of 35% of its total capitalization
(excluding  short-term  debt)  and  (ii) permit  the  continued  commercial
operation  of  Grand Gulf 1 and pay in full all indebtedness  for  borrowed
money of System Energy when due.

      Entergy  Corporation  has  entered into various  supplements  to  the
Capital  Funds Agreement, and System Energy has assigned its  rights  under
such  supplements  as  security  for  its  first  mortgage  bonds  and  for
reimbursement obligations to certain banks providing letters of  credit  in
connection  with the equity funding of the sale and leaseback  transactions
described in Note 10 under "Sale and Leaseback Transactions - Grand Gulf  1
Lease   Obligations."   Each  such  supplement  provides   that   permitted
indebtedness  for  borrowed money incurred by System Energy  in  connection
with  the financing of Grand Gulf may be secured by System Energy's  rights
under  the  Capital  Funds Agreement on a pro rata basis  (except  for  the
Specific  Payments, as defined below).  In addition, in the supplements  to
the  Capital  Funds  Agreement relating to the specific indebtedness  being
secured,  Entergy Corporation has agreed to make cash capital contributions
directly  to  System  Energy sufficient to enable  System  Energy  to  make
payments  when due on such indebtedness (Specific Payments).   However,  if
there  is an event of default, Entergy Corporation must make those payments
directly  to  the holders of indebtedness benefiting from the  supplemental
agreements.  The payments (other than the Specific Payments) must  be  made
pro  rata  according to the amount of the respective obligations benefiting
from the supplemental agreements.

     The Capital Funds Agreement may be terminated, amended, or modified by
mutual  agreement of the parties thereto, upon obtaining  the  consent,  if
required, of those holders of System Energy's indebtedness then outstanding
who have received the assignments of the Capital Funds Agreement.
                                     
                                     
                        RATE MATTERS AND REGULATION

Rate Matters

      The  domestic utility companies' retail rates are regulated by  state
and/or  local  regulatory authorities, as described below.  FERC  regulates
their  wholesale rates (including intrasystem sales pursuant to the  System
Agreement) and interstate transmission of electricity, as well as rates for
System  Energy's sales of capacity and energy from Grand Gulf 1 to  Entergy
Arkansas,  Entergy Louisiana, Entergy Mississippi, and Entergy New  Orleans
pursuant to the Unit Power Sales Agreement.

Wholesale Rate Matters

System Energy

      As described above under "CAPITAL REQUIREMENTS AND FUTURE FINANCING -
Certain  System Financial and Support Agreements,"  System Energy  recovers
costs  related  to  its interest in Grand Gulf 1 through rates  charged  to
Entergy  Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy  New
Orleans for capacity and energy under the Unit Power Sales Agreement.

      On  December 12, 1995, System Energy implemented a $65.5 million rate
increase, subject to refund.  Refer to Note 2 for a discussion of the  rate
increase request filed by System Energy with FERC.

System  Agreement  (Energy  Corporation,  Entergy  Arkansas,  Entergy  Gulf
States,  Entergy Louisiana, Entergy Mississippi, Entergy New  Orleans,  and
System Energy)

      The  domestic  utility companies engage in the coordinated  planning,
construction,  and  operation  of generation  and  transmission  facilities
pursuant  to the terms of the System Agreement as described under "PROPERTY
- - Generating Stations," below.

      In  connection with the Merger, FERC approved certain  rate  schedule
changes  to  integrate  Entergy  Gulf States  into  the  System  Agreement.
Certain  commitments  were also adopted to assure that  the  ratepayers  of
Entergy  Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy  New
Orleans  will  not  be allocated higher costs.  Such commitments  included:
(i) a tracking mechanism to protect these companies from certain unexpected
increases in fuel costs; (ii) the exclusion of Entergy Gulf States from the
distribution  of profits from power sales contracts entered into  prior  to
the  Merger; (iii) a methodology to estimate the cost of capital in  future
FERC  proceedings; and (iv) a stipulation that these companies be insulated
from  certain direct effects on capacity equalization payments  if  Entergy
Gulf  States  were  to acquire Cajun's 30% share in River  Bend,  which  it
acquired  on  December  23, 1997.  See "Regulation - Other  Regulation  and
Litigation"  for information on appeals of FERC Merger orders  and  related
pending rate schedule changes and "Cajun-River Bend Litigation" in  Note  9
herein for a discussion of the transfer of Cajun's 30% share in River  Bend
to Entergy Gulf States.

      In  approving  the  Merger, FERC also initiated a new  proceeding  to
consider  whether  the  System  Agreement  permits  certain  out-of-service
generating units to be included in reserve equalization calculations  under
Service  Schedule MSS-1 of that agreement.  The LPSC and the MPSC submitted
testimony  in  this  proceeding  seeking retroactive  refunds  for  Entergy
Louisiana  and  Entergy Mississippi (estimated at $22.6 million  and  $13.2
million,  respectively).  The FERC staff subsequently  submitted  testimony
concluding  that Entergy's treatment was reasonable.  However,  because  it
concluded  that  Entergy's treatment violated the tariff,  the  FERC  staff
maintained  that refunds of approximately $7.2 million should  be  ordered.
On March 3, 1995, a FERC ALJ issued an opinion holding that the practice of
including the out-of-service units in the reserve equalization calculations
during  the period 1987 through 1993 was not permitted by Service  Schedule
MSS-1  and,  therefore,  constituted a violation of the  System  Agreement.
However,  the  ALJ  found that the violation was  in  good  faith  and  had
benefited  the  customers  of  Entergy as a whole.   Accordingly,  the  ALJ
recommended  that no retroactive refunds should be ordered.  The  ALJ  also
held  that  the  System Agreement should be amended to allow out-of-service
units  to  be included in reserve equalization as proposed in an  offer  of
settlement filed by Entergy on February 16, 1994.  On August 5,  1997,  the
FERC issued an Opinion and Order affirming the initial decision of the ALJ.
On  September 3, 1997, the LPSC and the MPSC filed a request for  rehearing
of  FERC's  August 5, 1997 decision.  On February 3, 1998, FERC denied  the
request for rehearing.

      On March 14, 1995, the LPSC filed a complaint with FERC alleging that
the System Agreement results in unjust and unreasonable rates and requested
FERC  to  modify the System Agreement to exclude curtailable load from  the
cost  allocation  determination and to permit  Entergy's  domestic  utility
companies  that  engage  in real-time pricing at the  retail  level  to  be
assessed only the marginal cost for energy sold among the domestic  utility
companies. In May 1995, the LPSC amended its original complaint to  request
an  additional System Agreement modification to allocate costs on the basis
of  a  four-month  coincident peak methodology.  On August  5,  1996,  FERC
dismissed  the LPSC's complaint and amended complaint, finding  the  LPSC's
claim  that  the System Agreement is unjust and unreasonable to be  without
merit.     The  FERC confirmed this finding in a September 12,  1997  order
denying  the  LPSC's request for rehearing.  The LPSC has  appealed  FERC's
dismissal of its complaint to the D. C. Circuit.

Open  Access  Transmission (Entergy Corporation, Entergy Arkansas,  Entergy
Gulf  States,  Entergy  Louisiana, Entergy  Mississippi,  and  Entergy  New
Orleans)

      On  August 2, 1991, Entergy Services, as agent for Entergy  Arkansas,
Entergy  Louisiana, Entergy Mississippi, Entergy New Orleans,  and  Entergy
Power,  submitted  to FERC (i) proposed tariffs that,  subject  to  certain
conditions, would provide to electric utilities "open access" to  Entergy's
integrated transmission system, and (ii) rate schedules providing for sales
of  wholesale  power at market-based rates.  FERC approved  the  filing  in
August 1992, and various parties filed appeals with the D.C. Circuit.   The
case was remanded to FERC in July 1994 for further proceedings.  On October
31,  1994,  Entergy Services, as agent for Entergy Arkansas,  Entergy  Gulf
States,  Entergy Louisiana, Entergy Mississippi, and Entergy  New  Orleans,
filed  revised  transmission tariffs.  On January 6, 1995,  FERC  made  the
transmission  tariffs  effective,  subject  to  refund,  and   ordered   an
investigation  of Entergy Power's market pricing authority, thereby  making
Entergy Power's market price rate schedules subject to refund.  An order in
the  market  price  rate investigation is expected  in  1998,  but  Entergy
expects that no refunds will be required.

      On  March  29,  1995, FERC issued a supplemental notice  of  proposed
rulemaking (Mega-NOPR) which would require public utilities to provide non-
discriminatory open access transmission service to wholesale customers  and
which  would also provide guidance on the recovery of wholesale and  retail
stranded costs.  Under the proposal, public utilities would be required  to
file  transmission  tariffs for both point-to-point  and  network  service.
Model  transmission  tariffs were included in the proposal.   In  September
1995  and January 1996, Entergy Services filed offers of partial settlement
accepting certain provisions of the transmission tariffs contained  in  the
Mega-NOPR and resolving certain rate issues.  Hearings relating to  Entergy
Services'  open  access  tariffs concluded on February  22,  1996,  and  an
initial  decision  was  issued by the ALJ on May  21,  1996.   The  initial
decision  and  offers  of partial settlement are now  pending  before  FERC
awaiting a final decision.

      In  August  1995,  EPMC filed an application for permission  to  make
market-based  sales.  On December 13, 1995, Entergy Services filed  revised
transmission  tariffs  in  a  separate  proceeding  proposing   terms   and
conditions  for  open  access transmission service that  are  substantially
identical   to  the  terms  and  conditions  contained  in  the   Mega-NOPR
transmission tariffs with rates to be the same as those determined  in  the
pending  proceeding.  On February 14, 1996, FERC accepted  for  filing  the
revised  transmission  tariffs  subject  to  the  outcome  of  the  pending
proceeding  and conditionally accepted EPMC's application for  market-based
sales.  Subsequently, FERC accepted EPMC's application without condition.

      In  April  1996 FERC issued its final rule (Order No.  888)  on  open
access, nondiscriminatory transmission, and stranded costs, and a companion
final  rule (Order No. 889) relating to codes of conduct and the  mechanism
by  which  the open access transactions were to be made.  In July 1996,  in
response  to  this  FERC order, Entergy Services filed, on  behalf  of  the
domestic utility companies, its open access pro forma tariff.  This tariff,
which  supersedes the tariffs previously filed, is currently pending before
FERC  with  respect to the rates for transmission service.  The  rates  set
forth in the July 1996 tariff are subject to the outcome of FERC action  on
the May 21, 1996 initial decision and the offers of partial settlement.  On
January  29, 1997, FERC accepted the non-rate terms and conditions  of  the
July 1996 tariff, subject to limited modifications.

      In  a  March  1997  order  (Order No. 888-A),  FERC  directed  public
utilities  to  file  revised  tariffs to  reflect  changes  resulting  from
rehearing of Order No. 888.  On July 14, 1997, Entergy Services filed  with
the  FERC its wholesale transmission access compliance tariff incorporating
the  requirements of FERC Order No. 888-A.  The filing supersedes the  July
1996  tariff and the rates remain subject to the outcome of FERC action  on
the May 21, 1996 initial decision and the offers of partial settlement.

Retail Rate Matters

General  (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)

      Certain  costs related to Grand Gulf 1, Waterford 3, and  River  Bend
were phased into retail rates over a period of years in order to avoid  the
"rate shock" associated with increasing rates to reflect all such costs  at
once.   The  deferral period in which costs are incurred but not  currently
recovered  has  expired  for all of these programs, and  Entergy  Arkansas,
Entergy  Gulf States, Entergy Mississippi, and Entergy New Orleans are  now
recovering  those  costs that were previously deferred.  Entergy  Louisiana
has  fully  recovered the deferred Waterford 3 costs.  Entergy Gulf  States
has  pending  several  rate  proceedings and  some  rate  relief  has  been
received.  Rate  proceedings  and appeals  relating  to  these  issues  are
discussed in "Entergy Gulf States" below.

      The  retail  regulatory philosophy is shifting in some  jurisdictions
from  traditional cost-of-service regulation to incentive-rate  regulation.
Management  believes incentive and performance-based rate  plans  encourage
efficiencies  and  productivity  while  permitting  utilities   and   their
customers to share in the resulting benefits.  As a means of minimizing the
need for retail rate increases, Entergy is committed to containing costs to
the greatest degree practicable.  Entergy Mississippi and Entergy Louisiana
have  implemented incentive rate plans.  Recognizing that  many  industrial
customers  have energy alternatives, Entergy continues to work  with  these
customers to address their needs.  In certain cases, competitive prices are
negotiated using variable-rate designs.

      The  domestic utility companies have initiated proceedings with state
and  local regulators regarding an orderly transition to a more competitive
market  for  electricity.   See  "MANAGEMENT'S  FINANCIAL  DISCUSSION   AND
ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS," for a discussion  of  the
transition to competition filings made by Entergy Mississippi, Entergy Gulf
States,  Entergy Louisiana, Entergy New Orleans and Entergy  Arkansas  with
their state and local regulators.

Entergy Arkansas

Rate Freeze

      In  connection with the settlement of various issues related  to  the
Merger,  Entergy Arkansas agreed that it would not, except in  response  to
certain  circumstances  that are largely out of its  control,  request  any
general  retail rate increase to take effect before November 3, 1998.   See
Note 2 for a discussion of the rate freeze as well as other aspects of  the
settlement agreement between Entergy Arkansas and the APSC.

Recovery of Grand Gulf 1 Costs

      Under the settlement agreement entered into with the APSC in 1985 and
amended in 1988, Entergy Arkansas agreed to forego recovery of a portion of
its  Grand Gulf l-related costs, recover a portion of such costs currently,
and  defer  a  portion of such costs for future recovery.  In  the  future,
Entergy  Arkansas will recover 78% of its allocated share of Grand  Gulf  1
costs,  but will not recover the remaining 22%.  Deferrals ceased in  l990,
and  Entergy  Arkansas is recovering a portion of the  previously  deferred
costs  each  year through l998.  As of December 31, l997,  the  balance  of
deferred  costs was $75 million.  Entergy Arkansas is permitted to  recover
on  a  current  basis  the incremental costs of financing  the  unrecovered
deferrals.

      Entergy  Arkansas has the right to sell capacity and energy from  its
retained share of Grand Gulf 1 to third parties and to sell such energy  to
its  retail customers at a price equal to Entergy Arkansas' avoided  energy
cost.   Proceeds  of  sales to third parties of Entergy Arkansas'  retained
share  of Grand Gulf l capacity and energy accrue to the benefit of Entergy
Corporation, as Entergy Arkansas' sole stockholder.

Fuel Adjustment Clause

      In  its  October  1996  rate  filing, Entergy  Arkansas  proposed  an
alternative  fuel adjustment clause, the Energy Cost Recovery Rider  Energy
Cost  Rate (ECR Rider ), which was approved by the APSC.  Entergy Arkansas'
ECR  Rider utilizes projected energy costs (i.e., fuel and purchased  power
costs)  for the coming calendar year to develop an Energy Cost  Rate.   The
Energy  Cost  Rate  is revised annually and includes a  true-up  adjustment
reflecting the over-recovery or under-recovery of the energy cost  for  the
prior  year.   Under  the  ECR Rider, the nuclear  refueling  reserve  fund
provision,  which was no longer necessary due to the annual  revision,  was
eliminated.   In addition, the nuclear incentive provision associated  with
ANO was eliminated.

Entergy Gulf States

Rate Cap and Other Merger-Related Rate Agreements

     In 1993, the LPSC and the PUCT approved separate regulatory proposals,
which  included the implementation of a five-year Rate Cap on Entergy  Gulf
States' retail electric base rates in the respective states, and provisions
for fuel and nonfuel savings created by the Merger to accrue to the benefit
of  ratepayers.   See Note 2 for a discussion of the Rate Cap  as  well  as
other  aspects of the settlement agreement between Entergy Gulf States  and
the LPSC and the PUCT.

Recovery of River Bend Costs

      Entergy Gulf States deferred approximately $369 million of River Bend
operating  and  purchased power costs, depreciation, and  accrued  carrying
charges,  pursuant  to  a 1986 PUCT accounting order.   Approximately  $182
million  of these costs are being amortized over a 20-year period, and  the
remaining  $187  million was written off in the first quarter  of  1996  in
accordance  with  SFAS  121.   Also, in accordance  with  a  phase-in  plan
approved  by  the LPSC, Entergy Gulf States deferred $294  million  of  its
River Bend costs related to the period February 1988 through February 1991.
See  "River Bend Cost Deferrals" in Note 2 herein for a discussion  of  the
unamortized balances of these deferrals as of December 31, 1997.

Texas Jurisdiction - River Bend

      In 1988 the PUCT granted Entergy Gulf States a permanent increase
in  annual  revenues of $59.9 million resulting from the  inclusion  in
rate  base  of  approximately $1.6 billion of company-wide  River  Bend
plant investment and approximately $182 million of related Texas retail
jurisdiction  deferred River Bend costs (Allowed  Deferrals).   At  the
same  time, the PUCT disallowed as imprudent $63.5 million of  company-
wide River Bend plant costs and placed in abeyance, with no finding  as
to  prudence,  approximately $1.4 billion of  company-wide  River  Bend
plant  investment  and  approximately  $157  million  of  Texas  retail
jurisdiction  deferred River Bend operating and carrying costs  (Abeyed
Deferrals).  As a result of the application of the company's long-lived
asset impairment policy, Entergy Gulf States wrote off Abeyed Deferrals
of $169 million, net of tax, effective January 1, 1996.

      The  PUCT's  order  has  been the subject  of  several  appellate
proceedings,  culminating  in an appeal  to  the  Texas  Supreme  Court
(Supreme  Court).   On January 31, 1997, the Supreme  Court  issued  an
opinion  reversing the PUCT's order and remanding the case to the  PUCT
for further proceedings.

     On January 14, 1998, the commissioners of the PUCT voted by a 2 to
1  majority to disallow recovery of $1.4 billion of company-wide abeyed
plant costs.  The Texas share of these costs, which is not currently in
rates,  is  approximately $624 million, based on  1988  costs  and  the
jurisdictional  allocation  included in  current  rates.  The  PUCT  is
expected  to enter an order pursuant to its vote, but has not yet  done
so.  As of December 31, 1997, the River Bend plant costs disallowed for
retail ratemaking purposes in Texas and the River Bend plant costs held
in  abeyance totaled (net of taxes and depreciation) approximately  $12
million  and  $252 million, respectively.  See Note 2  for  information
related  to  additional  rulings by the  PUCT  and  other  retail  rate
proceedings as well as the proposed agreement in principle between  the
parties to the Entergy Gulf States rate proceedings in Texas.

NISCO Unrecovered Costs

     In 1986, the PUCT ordered that the purchased power costs from NISCO in
excess  of  Entergy  Gulf States' avoided costs be  disallowed.   The  PUCT
disallowance  resulted  in  approximately $12 million  to  $15  million  of
unrecovered  purchased power costs on an annual basis, which  Entergy  Gulf
States continued to expense as the costs were incurred.  In April 1991, the
Texas Supreme Court, on the appeal of such order, ordered the PUCT to allow
Entergy  Gulf States to recover purchased power payments in excess  of  its
avoided  cost  in future proceedings if Entergy Gulf States established  to
the  PUCT's  satisfaction that the payments were reasonable  and  necessary
expenses.

      In  January 1992, Entergy Gulf States applied to the PUCT for  a  new
fixed  fuel  factor  and  requested  a final  reconciliation  of  fuel  and
purchased  power costs incurred between December 1, 1986 and September  30,
1991.   Entergy  Gulf  States proposed to recover net under-recoveries  and
interest  (including under-recoveries related to NISCO) over a twelve-month
period.  In June 1993, the PUCT concluded that the purchased power payments
made  to  NISCO  in excess of Entergy Gulf States' avoided  cost  were  not
reasonably  incurred.  In October 1993, Entergy Gulf  States  appealed  the
PUCT's order to the Travis County District Court where the matter is  still
pending.   As  of December 31, 1997, Entergy Gulf States had expensed  $182
million  of unrecovered purchased power costs and deferred revenue  pending
the  appeal  to the District Court.  No assurance can be given  as  to  the
timing or outcome of the appeal.

Retail Rate Proceedings

      In  addition to the January 14, 1998 ruling discussed above in "Texas
Jurisdiction  -  River Bend," the PUCT upheld an ALJ's  ruling  disallowing
recovery of approximately $40 million of Entergy Services' affiliate  costs
allocated to Entergy Gulf States in Texas.  Entergy Services is responsible
for managing Entergy Gulf States' fossil generating plants and transmission
and distribution systems, as well as providing human resources, accounting,
and   other   necessary  services  to  Entergy  Gulf  States  and   Entergy
Corporation's other electric utility subsidiaries.  In another matter,  the
PUCT  also issued an order establishing service quality standards and  rate
of  return adjustments for Entergy Gulf States and its Texas retail service
territory.  A portion of the adjustments will be retroactive and a  portion
will  be  prospective.  The PUCT will evaluate Entergy Gulf States'  future
performance based on several criteria including feeder reliability, billing
error   rates,  customer  call  center  performance,  service  installation
performance, line extension performance and street light replacements.

     In March 1998, the parties to the Entergy Gulf States rate proceedings
in Texas reached an agreement in principle, subject to approval by the PUCT
and  certain cities  served by Entergy Gulf States, which would resolve all 
of  the  pending rate issues.   The  proposed  agreement in principle would 
include a base rate reduction of $40 million on an annual basis, with a refund
retroactive  to  June 1, 1996;   additionally   it   would  provide  for  a
recovery of $25 million of deferred fuel costs; the base rates would remain
at  the  same  level for the next four years after the reduction;  a  total
service  quality  credit of $9 million retroactive to June  1996;  and  the
recovery of a portion of the abeyed portion of River Bend such that at  the
end  of  the  four year rate freeze there will remain $125 million  of  net
plant  related to that abeyed portion. Entergy Gulf States has  established
reserves  for the probable effects of this agreement in principle based  on
management's   estimates  of  the  terms  thereof.    These   reserves   of
approximately $381 million (or $227 million net of taxes) were recorded  in
the  fourth  quarter of 1997.  The results of operations  of  Entergy  Gulf
States  for the year ended December 31, 1997, reflect corresponding charges
to operating revenues and other income (deductions) of $70 million and $311
million,  respectively.  The parties are working to finalize  a  definitive
agreement.   Entergy Gulf States has agreed to implement  the  refunds  and
rate  reductions, subject to final approval of the agreement in  principle.
Final  approval  of  the agreement in principle would resolve  all  pending
regulatory issues.  Refer to Note 2 for a discussion of other Entergy  Gulf
States  retail  rate proceedings that were resolved during  the  past  year
and/or are currently pending.

Fuel Recovery

      Entergy Gulf States' Texas rate schedules include a fixed fuel factor
to recover fuel and purchased power costs not recovered in base rates.  The
fixed  factor may be revised every six months in accordance with a schedule
set  by  the PUCT.  To the extent actual costs vary from the fixed  factor,
refunds  or  surcharges are required or permitted.   Fuel  costs  are  also
subject  to  reconciliation proceedings every three  years.   Entergy  Gulf
States' Louisiana electric rate schedules include a fuel adjustment  clause
designed to recover the cost of fuel and purchased power costs, adjusted by
a  surcharge (or credit) for deferred fuel expense arising from the monthly
reconciliation  of actual fuel cost incurred with fuel revenues  billed  to
customers.  See Note 2 for a discussion of the LPSC fuel cost reviews.

      Entergy  Gulf  States' Louisiana gas rates include  a  purchased  gas
adjustment to recover the cost of purchased gas.

Steam Customer Contract

      In  August 1996, Entergy Gulf States entered into agreements with its
only  steam  customer  whereby a generating facility  was  leased  to  such
customer  beginning  in August 1997, the expiration date  of  the  previous
contract.   As a result of these arrangements, Entergy Gulf States'  annual
revenues are expected to decrease by approximately $33 million, and its net
income  is  expected to be reduced by approximately $15  million  annually.
See  "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT  FACTORS
AND KNOWN TRENDS," for a further discussion.

Entergy Louisiana

Recovery of Grand Gulf 1 Costs

      In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Waterford 3 and Entergy Louisiana's share of capacity
and  energy  from  Grand Gulf l, subject to certain terms  and  conditions.
With  respect  to  Waterford 3, Entergy Louisiana was granted  an  increase
aggregating $170.9 million over the period 1985-1988, and Entergy Louisiana
agreed to permanently absorb, and not recover from retail ratepayers,  $284
million  of  its  investment in the unit and to defer $266 million  of  its
costs  related  to  the  years 1985-1988 to be recovered  from  April  1988
through June 1997.

      With respect to Grand Gulf 1, Entergy Louisiana agreed to retain, and
not  recover  from retail ratepayers, approximately 2.52% of the  costs  of
Grand  Gulf  1's  capacity and energy.  Non-fuel operation and  maintenance
costs  for  Grand  Gulf  1 are recovered through Entergy  Louisiana's  base
rates.  Additionally, Entergy Louisiana is allowed to recover, through  the
fuel  adjustment clause, 4.6 cents per KWH for the energy  related  to  its
retained portion of these costs.  Alternatively, Entergy Louisiana may sell
such  energy  to nonaffiliated parties at prices above the fuel  adjustment
clause recovery amount, subject to the LPSC's approval.

Performance-Based Formula Rate Plan

      In  June  1995,  in  conjunction  with  the  LPSC's  rate  review,  a
performance-based  formula  rate  plan  previously  proposed   by   Entergy
Louisiana  was  approved  with certain modifications.  See  Note  2  for  a
discussion of Entergy Louisiana's performance-based formula rate plan.

Fuel Adjustment Clause

     Entergy Louisiana's rate schedules include a fuel adjustment clause to
recover  the  cost of fuel and purchased power.  The fuel  adjustment  also
includes a surcharge (or credit) for deferred fuel expense arising from the
monthly  reconciliation  of actual fuel cost incurred  with  fuel  revenues
billed to customers.

Entergy Mississippi

Retail Rate Proceedings

      Refer to Note 2 for a discussion of Entergy Mississippi's retail rate
proceedings  that were resolved during the past year and/or  are  currently
pending.

Rate Freeze

      In  connection with the settlement of various issues related  to  the
Merger, Entergy Mississippi agreed that it will not, except in response  to
certain  circumstances  that are largely beyond its  control,  request  any
general  retail rate increase to take effect before November 3, 1998.   See
Note  2  for  a  discussion of the rate freeze and  other  aspects  of  the
settlement agreement between Entergy Mississippi and the MPSC.

Recovery of Grand Gulf 1 Costs

     In September 1985, the MPSC granted Entergy Mississippi an annual base
rate  increase  of  approximately $326.5 million  in  connection  with  its
allocated  share  of Grand Gulf 1 costs.  The MPSC also  provided  for  the
deferral  of  a portion of such costs that were incurred each year  through
1992, and recovery of these deferrals over a period of six years ending  in
1998.   As  of  December  31,  1997,  the uncollected  balance  of  Entergy
Mississippi's  deferred  costs  was approximately  $127  million.   Entergy
Mississippi  is permitted to recover the carrying charges on  all  deferred
amounts on a current basis.

Formula Rate Plan

      Under  a  formulary incentive-rate plan (Formula Rate Plan) effective
March  25,  1994, Entergy Mississippi's earned rate of return is calculated
automatically  every  12  months and compared to  and  adjusted  against  a
benchmark  rate of return (calculated under a separate formula  within  the
Formula  Rate  Plan).   The  Formula Rate Plan allows  for  periodic  small
adjustments  in  rates based on a comparison of actual  earned  returns  to
benchmark  returns and upon certain performance factors.  Refer to  Note  2
for  a  discussion of the formula rate plan filing for the 1996 test  year.
The  formula rate plan filing for the 1997 test year will be filed in March
1998.

Fuel Adjustment Clause

      In  March 1997, Entergy Mississippi proposed an alternative fuel cost
recovery  mechanism,  the  ECR  Rider, which  became  effective  May  1997.
Entergy Mississippi's ECR Rider utilizes projected energy costs (i.e., fuel
and  purchased  energy costs) for the coming calendar year  to  develop  an
Energy Cost Rate.  The Energy Cost Rate is revised annually and includes  a
true-up  adjustment reflecting the over-recovery or under-recovery  of  the
energy cost for the prior year.

Entergy New Orleans

Earnings Analysis Filings

      Refer  to Note 2 for a discussion of the Entergy New Orleans earnings
analysis  filings that have been resolved during the past year  and/or  are
currently outstanding.

Recovery of Grand Gulf 1 Costs

      Under  Entergy New Orleans' various rate settlements with the Council
in  1986,  1988,  and 1991, Entergy New Orleans agreed to  absorb  and  not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.
Entergy  New  Orleans was permitted to implement annual rate  increases  in
decreasing amounts each year through 1995, and to defer certain  costs  and
related  carrying  charges for recovery on a schedule extending  from  1991
through  2001.  As of December 31, 1997, the uncollected balance of Entergy
New Orleans' deferred costs was $99 million.

Fuel Adjustment Clause

     Entergy New Orleans' electric rate schedules include a fuel adjustment
clause  designed  to  recover the cost of fuel in the second  prior  month,
adjusted by a surcharge (or credit) for deferred fuel expense arising  from
the  monthly reconciliation of actual fuel incurred with fuel cost revenues
billed  to customers.  The adjustment also includes the difference  between
nonfuel Grand Gulf 1 costs paid by Entergy New Orleans and the estimate  of
such  costs provided in Entergy New Orleans' Grand Gulf 1 rate settlements.
Entergy  New Orleans' gas rate schedules include an adjustment  to  reflect
gas  costs  in  excess  of those collected in base  rates,  adjusted  by  a
surcharge  (or  credit)  similar  to that included  in  the  electric  fuel
adjustment clause.

Regulation

Federal  Regulation  (Entergy Corporation, Entergy Arkansas,  Entergy  Gulf
States,  Entergy Louisiana, Entergy Mississippi, Entergy New  Orleans,  and
System Energy)

PUHCA

      Entergy  Corporation and its various direct and indirect subsidiaries
(with the exception of its EWG, FUCO, and ETHC subsidiaries) are subject to
the  broad  regulatory  provisions  of  PUHCA.   Except  with  respect   to
investments  in  certain domestic power projects, foreign  utility  company
projects, and telecommunication projects, PUHCA limits the operations of  a
registered  holding company system to a single, integrated  public  utility
system,  plus certain additional systems and businesses, regulates  certain
transactions  among  affiliates  within  a  holding  company  system,   and
regulates  the acquisition and sale of securities and assets by  registered
holding companies and their subsidiaries.

      Entergy Corporation and other electric utility holding companies have
supported  legislation in the United States Congress to  repeal  PUHCA  and
transfer  certain  aspects  of  the oversight  of  public  utility  holding
companies  from the SEC to FERC.  Entergy believes that PUHCA inhibits  its
ability  to compete in the evolving electric energy marketplace and largely
duplicates the oversight activities already performed by FERC and state and
local regulators.  In June 1995, the SEC adopted a report proposing options
for  the  repeal or significant modification of PUHCA.  In  1997,  the  SEC
issued  Rule 58 under PUHCA, which allows registered public utility holding
companies to enter a range of energy related businesses.

Federal Power Act

     The domestic utility companies, System Energy, Entergy Power, and EPMC
are  subject to the Federal Power Act as administered by FERC and the  DOE.
The  Federal  Power  Act  provides  for regulatory  jurisdiction  over  the
licensing of certain hydroelectric projects, the transmission and wholesale
sale   of  electric  energy  in  interstate  commerce,  and  certain  other
activities,  including accounting policies and practices.  Such  regulation
includes  jurisdiction over the rates charged by System Energy for capacity
and  energy  provided  to  Entergy  Arkansas,  Entergy  Louisiana,  Entergy
Mississippi, and Entergy New Orleans from Grand Gulf 1.

      Entergy  Arkansas holds a FERC license for two hydroelectric projects
(70 MW), which was renewed on July 2, 1980 and expires in February 2003.

Regulation  of  the  Nuclear Power Industry (Entergy  Corporation,  Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)

Regulation of Nuclear Power

      Under the Atomic Energy Act of 1954 and the Energy Reorganization Act
of  1974, the operation of nuclear plants is heavily regulated by the  NRC,
which  has broad power to impose licensing and safety-related requirements.
In  the event of non-compliance, the NRC has the authority to impose  fines
or shut down a unit, or both, depending upon its assessment of the severity
of  the situation, until compliance is achieved.  Entergy Arkansas, Entergy
Gulf  States,  Entergy Louisiana, and System Energy, as owners  of  all  or
portions  of  ANO, River Bend, Waterford 3, and Grand Gulf 1, respectively,
and  Entergy Operations, as the licensee and operator of these  units,  are
subject  to  the  jurisdiction  of the NRC.   Revised  safety  requirements
promulgated by the NRC have, in the past, necessitated substantial  capital
expenditures  at  these  nuclear plants, and additional  such  expenditures
could  be  required in the future.  See "MANAGEMENT'S FINANCIAL  DISCUSSION
AND  ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS," for a discussion  of
Waterford  3's  Systematic Assessment of License Performance (SALP)  report
issued by the NRC on January 6,1997.

      The  nuclear power industry faces uncertainties with respect  to  the
cost and long-term availability of sites for disposal of spent nuclear fuel
and  other  radioactive waste, nuclear plant operations, the  technological
and  financial  aspects  of decommissioning plants  at  the  end  of  their
licensed  lives,  and  requirements relating to nuclear  insurance.   These
matters are briefly discussed below.

Regulation of Spent Fuel and Other High-Level Radioactive Waste

     Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a
specified fee, to construct storage facilities for, and to dispose of,  all
spent  nuclear  fuel  and other high-level radioactive waste  generated  by
domestic nuclear power reactors.  However, the DOE has not yet identified a
permanent storage repository and, as a result, future expenditures  may  be
required  to  increase spent fuel storage capacity at nuclear plant  sites.
For  further information concerning spent fuel disposal contracts with  the
DOE, schedules for initial shipments of spent nuclear fuel, current on-site
storage  capacity, and costs of providing additional on-site  storage,  see
Note 9.

Regulation of Low-Level Radioactive Waste

      The  availability  and  cost  of disposal  facilities  for  low-level
radioactive  waste  resulting  from normal  nuclear  plant  operations  are
subject  to  a  number  of uncertainties.  Under the Low-Level  Radioactive
Waste  Policy  Act  of  1980, as amended, each  state  is  responsible  for
disposal of waste originating in that state, and states may participate  in
regional compacts to fulfill their responsibilities jointly.  The States of
Arkansas  and  Louisiana participate in the Central  Interstate  Low  Level
Radioactive  Waste  Compact  (Central States Compact),  and  the  State  of
Mississippi  participates  in  the Southeast Low  Level  Radioactive  Waste
Compact (Southeast Compact).  Two disposal sites are currently operating in
the  United  States,  but  only one site, the  Barnwell  Disposal  Facility
(Barnwell) located in South Carolina and operated by the Southeast Compact,
is open to out-of-region generators.  The availability of Barnwell provides
only temporary relief for low-level radioactive waste storage and does  not
alleviate the need to develop new disposal capacity.

      Both the Central States Compact and the Southeast Compact are working
to  establish additional disposal sites.  Entergy, along with  other  waste
generators,  funds the development costs for new disposal  facilities.   To
date, Entergy's expenditures for the development of new disposal facilities
total  approximately  $50  million.  During the  fourth  quarter  of  1997,
Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States expensed $17.4
million,  $12.3  million,  and  $13.8  million,  respectively,  related  to
previously deferred radioactive waste facility costs incurred in connection
with  the  Central  States  Compact.  Future  levels  of  expenditures  are
difficult  to  predict.  The current schedule for the site  development  in
both the Central States Compact and the Southeast Compact projects that the
new  facilities will not be operational before 2001.  Due to the  political
nature  of  siting low-level radioactive waste disposal facilities,  future
delays  can  be  anticipated.   Until  long-term  disposal  facilities  are
established, Entergy will seek continued access to existing facilities.  If
such  access  is  unavailable, Entergy will store low-level  waste  at  its
nuclear plant sites.

Regulation of Nuclear Plant Decommissioning

      Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and  System
Energy   are   recovering  from  ratepayers  portions  of   the   estimated
decommissioning costs for ANO, River Bend, Waterford 3, and Grand  Gulf  1,
respectively.   These amounts are deposited in trust funds  that,  together
with  the  related  earnings, can only be used for  future  decommissioning
costs.   Estimated  decommissioning costs  are  periodically  reviewed  and
updated  to  reflect inflation and changes in regulatory  requirements  and
technology,   and  applications  are  periodically  made   to   appropriate
regulatory authorities to reflect in rates any future changes in  projected
decommissioning  costs.   For  additional  information  with   respect   to
decommissioning costs for ANO, River Bend, Waterford 3, and Grand  Gulf  1,
see Note 9.

     The EPAct requires all electric utilities (including Entergy Arkansas,
Entergy  Gulf States, Entergy Louisiana, and System Energy) that  purchased
uranium  enrichment services from the DOE to contribute up to  a  total  of
$150  million annually over approximately 15 years (adjusted for inflation,
up  to a total of $2.25 billion) for decontamination and decommissioning of
enrichment  facilities.   In accordance with the  EPAct,  contributions  to
decontamination  and decommissioning funds are recovered through  rates  in
the  same manner as other fuel costs.  See Note 9 for the estimated  annual
contributions by Entergy for decontamination and decommissioning fees.

Nuclear Insurance

      The  Price-Anderson Act limits public liability for a single  nuclear
incident  to  approximately $8.92 billion.  Entergy Arkansas, Entergy  Gulf
States,  Entergy Louisiana, and System Energy have protection with  respect
to  this  liability  through  a combination of  private  insurance  and  an
industry  assessment  program, as well as insurance  for  property  damage,
costs  of replacement power, and other risks relating to nuclear generating
units.  For a discussion of insurance applicable to the nuclear programs of
Entergy  Arkansas,  Entergy  Gulf States,  Entergy  Louisiana,  and  System
Energy, see Note 9.

Nuclear Operations

General  (Entergy  Corporation,  Entergy  Arkansas,  Entergy  Gulf  States,
Entergy Louisiana, and System Energy)

      Entergy  Operations operates ANO, River Bend, Waterford 3, and  Grand
Gulf  1,  subject to the owner oversight of Entergy Arkansas, Entergy  Gulf
States,  Entergy  Louisiana,  and  System  Energy,  respectively.   Entergy
Arkansas,  Entergy Gulf States, Entergy Louisiana, System Energy,  and  the
Grand  Gulf  1 co-owner, have retained their ownership interests  in  their
respective  nuclear  generating  units.   Entergy  Arkansas,  Entergy  Gulf
States,  Entergy  Louisiana, and System Energy  have  also  retained  their
associated capacity and energy entitlements, and pay directly or  reimburse
Entergy Operations at cost for its operation of the units.

ANO Matters (Entergy Corporation and Entergy Arkansas)

     See "ANO Matters" in Note 9 herein for a discussion of the replacement
of steam generators at ANO 2.

River Bend (Entergy Corporation and Entergy Gulf States)

      In  connection  with  the  Merger,  Entergy  Gulf  States  filed  two
applications with the NRC in January 1993 to amend the River Bend operating
license.  The applications sought the NRC's consent to the Merger and to  a
change in the licensed operator of the facility from Entergy Gulf States to
Entergy  Operations.  The NRC Staff issued the two license  amendments  for
River  Bend,  which  were effective immediately upon  consummation  of  the
Merger.   On February 14, 1994, Cajun filed with the D.C. Circuit petitions
for  review  of the two license amendments for River Bend.  In March  1995,
the  D.C. Circuit ordered that the NRC order and license amendments be  set
aside,  and  remanded  the  case  to the  NRC  for  further  consideration.
Subsequently, the NRC affirmed its original findings and reissued  the  two
license  amendments.  Cajun and the Arkansas Cities and Cooperatives  filed
petitions for review of those NRC orders with the D. C. Circuit.  On May 8,
1997,  the  D.C.  Circuit  granted Cajun's motion to  dismiss  its  appeal.
Arkansas  Cities  and  Cooperatives' appeal has been  briefed  and  remains
pending.   The  two  license amendments are currently  in  full  force  and
effect.

State Regulation (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans)

General

      Entergy Arkansas is subject to regulation by the APSC, which includes
the  authority  to  set rates, determine reasonable and  adequate  service,
require proper accounting, control leasing, control the acquisition or sale
of  any public utility plant or property constituting an operating unit  or
system,  set  rates of depreciation, issue certificates of convenience  and
necessity and certificates of environmental compatibility and public  need,
and regulate the issuance and sale of certain securities.

      Entergy  Gulf States is subject to the jurisdiction of the  municipal
authorities of incorporated cities in Texas as to retail rates and  service
within  their  boundaries, with appellate jurisdiction  over  such  matters
residing in the PUCT.  Entergy Gulf States is also subject to regulation by
the  PUCT  as to retail rates and service in rural areas, certification  of
new  generating plants, and extensions of service into new areas.   Entergy
Gulf  States  is subject to regulation by the LPSC as to electric  and  gas
service,  rates  and  charges, certification of generating  facilities  and
power  or capacity purchase contracts, depreciation, accounting, and  other
matters.

      Entergy Louisiana is subject to regulation by the LPSC as to electric
service,  rates  and  charges, certification of generating  facilities  and
power  or capacity purchase contracts, depreciation, accounting, and  other
matters.   Entergy  Louisiana is also subject to the  jurisdiction  of  the
Council with respect to such matters within Algiers.

      Entergy  Mississippi is subject to regulation as to service,  service
areas,  facilities, and retail rates by the MPSC.  Entergy  Mississippi  is
also  subject  to  regulation  by  the  APSC  as  to  the  certificate   of
environmental compatibility and public need for the Independence Station.

      Entergy  New  Orleans is subject to regulation by the Council  as  to
electric  and  gas  service,  rates  and  charges,  standards  of  service,
depreciation,  accounting,  issuance  of  certain  securities,  and   other
matters.

Franchises

      Entergy  Arkansas  holds  exclusive franchises  to  provide  electric
service  in  approximately 300 incorporated cities and towns  in  Arkansas.
These  franchises are unlimited in duration and continue until such a  time
when  the  municipalities  purchase the  utility  property.   In  Arkansas,
franchises  are  considered to be contracts and, therefore, are  terminable
upon breach of the contract.

      Entergy  Gulf  States  holds non-exclusive  franchises,  permits,  or
certificates  of  convenience and necessity to  provide  electric  and  gas
service  in  approximately 55 incorporated municipalities in Louisiana  and
approximately 63 incorporated municipalities in Texas.  Entergy Gulf States
typically is granted 50-year franchises in Texas and 60-year franchises  in
Louisiana.   Entergy Gulf States' current electric franchises  will  expire
during  2007  -  2036 in Texas and during 2015 - 2046  in  Louisiana.   The
natural  gas franchise in the City of Baton Rouge will expire in 2015.   In
addition,  Entergy Gulf States has received from the PUCT a certificate  of
convenience  and necessity to provide electric service to areas  within  21
counties in eastern Texas.

      Entergy  Louisiana holds non-exclusive franchises to provide electric
service  in approximately 116 incorporated municipalities.  Most  of  these
franchises  have  25-year terms, although six municipalities  have  granted
Entergy  Louisiana  60-year franchises.  Entergy  Louisiana  also  supplies
electric  service in approximately 353 unincorporated communities,  all  of
which  are  located  in  parishes in which  Entergy  Louisiana  holds  non-
exclusive franchises.

      Entergy Mississippi has received from the MPSC certificates of public
convenience  and necessity to provide electric service to areas  within  45
counties,  including  a number of municipalities, in  western  Mississippi.
Under  Mississippi statutory law, such certificates are exclusive.  Entergy
Mississippi may continue to serve in such municipalities upon payment of  a
statutory  franchise  fee,  regardless of  whether  an  original  municipal
franchise is still in existence.

      Entergy New Orleans provides electric and gas service in the City  of
New  Orleans pursuant to city ordinances, which state, among other  things,
that  the  City  has a continuing option to purchase Entergy  New  Orleans'
electric and gas utility properties.

      The business of System Energy is limited to wholesale power sales and
has no distribution franchises.

Regulation under the Electricity Act (Entergy London)

The Regulator

      The  principal legislation governing the structure and regulation  of
the  electricity  industry  in Great Britain is the  Electricity  Act.  The
Electricity  Act established the industry structure to enable privatization
of  the UK electric system. The Electricity Act also created the office  of
the  Regulator, who is appointed by the Secretary of State  for  Trade  and
Industry.  The  present  Regulator,  Professor  Stephen  Littlechild,   was
appointed for a five year term ending on August 31, 1999.

      The  Regulator's  functions  include, among  other  things,  granting
licenses to generate, transmit, distribute or supply electricity; proposing
modifications to licenses and making license modification references to the
MMC;  enforcing compliance with license conditions; advising the  Secretary
of State for Trade and Industry relating to the approval of each non-fossil
fuel source; calculating the Fossil Fuel Levy rate and collecting the levy;
resolving certain disputes between electricity licensees and customers; and
setting standards of performance for electricity licensees.

     The Regulator exercises concurrently with the Director General of Fair
Trading  certain functions relating to monopoly situations under  the  Fair
Trading Act 1973 and certain functions relating to activities that have, or
are  intended  or likely to have, the effect of restricting, distorting  or
preventing  competition  in  the  generation,  transmission  or  supply  of
electricity under the Competition Act 1980.

      The Electricity Act requires the Regulator and the Secretary of State
to  exercise  their  functions to ensure that all  reasonable  demands  for
electricity  are  satisfied; to assure that license  holders  are  able  to
finance  their  licensed  activities; and to  promote  competition  in  the
generation  and  supply  of  electricity.  Subject  to  these  duties,  the
Secretary  of  State  and  the  Regulator are required  to  exercise  their
functions  in a manner calculated to protect the interests of consumers  of
electricity in respect of price, continuity of supply, and the  quality  of
electricity supply services; to promote efficiency and economy on the  part
of  licensed  electricity suppliers and the efficient  use  of  electricity
supplied  to  consumers;  to promote research and  development  by  persons
authorized  to  generate, transmit or supply electricity;  to  protect  the
public from the dangers arising from the generation, transmission or supply
of  electricity, and to act for the protection of the health and safety  of
workers  in  the  electricity  industry. The Secretary  of  State  and  the
Regulator  also  have  a  duty  to consider  the  environmental  activities
connected  with  the generation, transmission, distribution  or  supply  of
electricity.   The  Secretary of State and the Regulator  have  a  duty  to
consider,  in  particular, the interests of consumers  in  rural  areas  in
respect of prices and other terms of supply. With regard to the quality  of
electricity  supply  services,  they  also  have  a  duty  to  consider  in
particular the interests of those who are disabled or of pensionable age.

PES License

      London  Electricity has a PES license for its franchise area  and  is
required  to supply electricity upon request to any premises in that  area,
except  in specified circumstances.  Like all PES license holders,  it  may
not  discriminate between its own supply business and other  users  of  its
distribution  system.  The  PES license also prohibits  cross-subsidization
among  the  various  regulated businesses.  PES license holders,  including
London  Electricity, are subject to separate price controls on the  amounts
they  may  charge  for  the  supply  of  electricity  to  Franchise  Supply
Customers.   A  PES  license  also requires a  licensee,  including  London
Electricity, to procure electricity at the best price reasonably obtainable
from all available sources, including London Electricity.

      In  England  and  Wales, each PES license limits the  extent  of  the
generation capacity in which the relevant REC may hold an interest  without
the  prior consent of the Regulator ("own-generation limits").  In the case
of  London Electricity, the own-generation limit is fixed at 700 MW.  After
taking  into account London Electricity's current ownership interest  in  a
generation  facility, the amount of additional generation investment  which
could  be  made by London Electricity is 565 MW.  Investments by affiliates
of Entergy in generating assets in the UK would be counted towards this own-
generation   limit   under  London  Electricity's  PES   license.    London
Electricity  has  applied  for and has been granted  by  the  Regulator  an
exception from the own-generation limit, subject to certain conditions, for
EPDC  investments  in  the SCC and KPL projects.  The most  significant  of
these  conditions,  to  which  London  Electricity  has  agreed,  is   that
generating  capacity  from these projects will not be  acquired  by  London
Electricity for purposes of its supply business.

Second Tier Supply Licenses

      Other than a PES license holder in its franchise area and subject  to
certain  other exceptions, a supplier of electricity to premises  in  Great
Britain  must  possess a second tier supply license.   Subject  to  certain
restrictions,  second  tier  licensees  may  compete  for  the  supply   of
electricity  with  one  another and with the  PES  license  holder  in  the
relevant  area.  There are currently 34 second tier supply license  holders
for England and Wales.

Modifications to Licenses

      Following  the  acquisition of London Electricity by Entergy  London,
London  Electricity's  PES  License was modified  during  October  1997  to
provide  that,  with  a few minor exceptions, the only business  activities
which  London Electricity is permitted to undertake directly are its  first
tier  and  second  tier  supply businesses and its  distribution  business.
These  modifications  by  the  Regulator are intended  to  place  financial
protections  around  the  licensed activities of London  Electricity  as  a
safeguard  against financial pressures which might affect  its  ability  to
continue  to  finance  its  statutory  and  licensed  functions,  including
necessary  investment in its distribution businesses.  Among other  things,
the  modifications restrict the businesses in which London Electricity  can
participate,  other  than the licensed businesses, and  regulates  dealings
between  London  Electricity and other companies  (particularly  affiliated
companies).   The modifications also require London Electricity  to  secure
that  it  has sufficient management and financial resources to conduct  its
licensed  businesses,  give  the Regulator an  annual  certificate  of  the
adequacy  of  its  financial resources, and maintain  an  investment  grade
rating for its debt as defined by Moody's and Standard & Poor's.

Term and Revocation of Licenses

      London  Electricity's PES license will continue in  effect  until  at
least  2025  unless revoked. Under ordinary circumstances, the license  may
not  be  revoked except on 25 years' prior notice, which notice may not  be
given  until  2000.  Otherwise, the Secretary of State  may  revoke  a  PES
license  by  not  less than 30 days' notice in writing to the  licensee  in
certain specified circumstances, including, among other things, the failure
to  comply  with  a final order of the Regulator or the insolvency  of  the
licensee.

Other Regulatory Matters ( Entergy London)

      On  June  30,  1997,  the UK government announced  a  review  of  the
regulatory framework governing the utilities, including electricity  supply
and distribution.  This review is currently being undertaken.

      In  October  1997,  the UK government asked the Regulator  to  review
electricity trading arrangements.  This review is focusing on the wholesale
electricity  market  in  England  and Wales  and  covers  existing  trading
arrangements within the Electricity Pool, trading arrangements outside  the
Electricity Pool, and price setting mechanisms.

Environmental Regulation

General

      In  the  areas  of  air  quality, water  quality,  control  of  toxic
substances and hazardous and solid wastes, and other environmental matters,
the  facilities  and  operations of Entergy are subject  to  regulation  by
various  governmental  authorities.  Entergy  believes  that  its  affected
subsidiaries  are in substantial compliance with environmental  regulations
currently   applicable  to  their  respective  facilities  and  operations.
Because  environmental regulations are subject to change, future compliance
costs   cannot  be  precisely  estimated.   However,  management  currently
estimates  that  future  capital expenditures for environmental  compliance
purposes,  including those discussed under "Clean Air Legislation,"  below,
will  not  be material for Entergy as a whole, or for any of its  reporting
subsidiaries.

Clean Air Legislation

      The  Clean  Air  Act  Amendments of 1990 (the  Act)  established  the
following   three  programs that affect Entergy's fossil-fueled  generation
now or may affect it in the future: (i) an acid rain program for control of
sulfur dioxide (SO2) and nitrogen oxides (NOx); (ii) an ozone nonattainment
area  program for control of NOx and volatile organic compounds; and  (iii)
an  operating permits program for administration and enforcement  of  these
and other Act programs.

      Under  the  acid  rain  program, no additional control  equipment  is
expected  to  be  required by Entergy to control  SO2.   The  Act  provides
"allowances" to most of the affected Entergy generating units for emissions
based  upon  past  emission  levels  and operating  characteristics.   Each
allowance  is  an entitlement to emit one ton of SO2 per year.   Under  the
Act,  utilities  are  or  will be required to possess  allowances  for  SO2
emissions  from  affected  generating  units.   All  Entergy  fossil-fueled
generating units are classified as "Phase II" units under the Act  and  are
subject to SO2 allowance requirements beginning in the year 2000.  Based on
operating history, the domestic utility companies have been allocated  more
allowances  than are currently necessary for normal operations.  Management
believes  that  it will be able to operate the domestic utility  companies'
generating  units  efficiently without installing scrubbers  or  purchasing
allowances  from  outside sources, and that one or  more  of  the  domestic
utility companies may have excess allowances.

      Control  equipment  may eventually be required  for  certain  of  the
domestic utility companies' generating units to achieve NOx reductions  due
to  the  ozone  nonattainment status of the areas served  by  Entergy  Gulf
States  in  and  around Beaumont and Houston, Texas.   Texas  environmental
authorities  are studying the causes of ozone pollution and  have  deferred
NOx  controls  on  power plants until at least 1999.  If Texas  decides  to
regulate NOx, the aggregate cost of such control equipment for the affected
Entergy Gulf States plants is estimated to be $1.5 million through the year
2000.  It is expected that Texas, in conjunction with the EPA, will publish
future  control  strategies  during  1998  and  1999.   Depending  on   the
strategies  developed by Texas, additional costs may  be  incurred  between
2000  and  2007, but these costs cannot be reasonably estimated  until  the
strategies have been published.

Other Environmental Matters

       The   provisions   of  the  Comprehensive  Environmental   Response,
Compensation, and Liability Act of 1980, as amended (CERCLA), authorize the
EPA  and,  indirectly,  the  states,  to  require  generators  and  certain
transporters of certain hazardous substances released from or  at  a  site,
and  the  owners  or  operators of any such site, to cleanup  the  site  or
reimburse such clean-up costs.  CERCLA has been interpreted to impose joint
and  several  liability on responsible parties. Entergy's domestic  utility
companies  have  sent waste materials to various disposal  sites  over  the
years.   Also,  certain  operating  procedures  and  maintenance  practices
employed  by Entergy's domestic utility companies, which historically  were
not  subject to regulation, now are regulated by environmental laws.   Some
of  these sites have been the subject of governmental action under  CERCLA,
as  a  result of which the domestic utility companies have become  involved
with site clean-up activities. They have participated to various degrees in
accordance with their respective potential liabilities in such site  clean-
ups  and  have  developed  experience with clean-up  costs.   The  domestic
utility  companies have established reserves for such environmental  clean-
up/restoration activities.  In the aggregate, the cost of such  remediation
is  not  considered  material  to  Entergy  or  to  any  of  its  reporting
subsidiaries.

Entergy Arkansas

      Entergy Arkansas has received notices from time to time from the EPA,
the Arkansas Department of Pollution Control & Ecology (ADPC&E), and others
alleging that Entergy Arkansas, along with others, may be a PRP for  clean-
up  costs  associated with various sites in Arkansas.  Most of these  sites
are neither owned nor operated by any Entergy company.  Contaminants at the
sites  include polychlorinated biphenyls (PCBs), lead, and other  hazardous
substances.

       At   the  EPA's  request,  Entergy  Arkansas  voluntarily  performed
stabilization  activities  at the Benton Salvage  site  in  Saline  County,
Arkansas.  While the EPA has not named PRPs for this site, Entergy Arkansas
has attempted to negotiate a settlement with the EPA.  Entergy Arkansas and
the  EPA  were  unable to reach an agreement satisfactory to both  parties.
EPA  initiated  its  own  clean-up of the site  in  October  1996.  Entergy
Arkansas  does  not  believe that its potential  liability,  if  any,  with
respect to this site will be material.
  
      In  May  1995, Entergy Arkansas was named as a defendant  in  a  suit
brought  by  Reynolds Metals Company (Reynolds) in the U.S. District  Court
for  the  Eastern District of Arkansas, seeking to recover a share  of  the
costs  associated  with  the clean-up of hazardous substances  at  Reynolds
former  Patterson plant site.  Reynolds alleged that it spent $11.2 million
to  clean  up  the site, and that the site was contaminated with  PCBs  for
which  Entergy Arkansas bore some responsibility.  In July 1997, the  Court
granted  Entergy  Arkansas'  Motion  for  Summary  Judgment  and  dismissed
Reynolds lawsuit.

      Entergy  Arkansas entered into a Consent Administrative Order,  dated
February 21, 1991, with the ADPC&E that named Entergy Arkansas as a PRP for
the  initial  stabilization associated with contamination at the  Utilities
Services,  Inc.  state Superfund site located near Rison,  Arkansas.   This
site  was found to have soil contaminated by PCBs and pentachlorophenol  (a
wood  preservative).  Containers and drums that contained  PCBs  and  other
hazardous  substances were found at the site.  Entergy Arkansas'  share  of
total  remediation costs is estimated not to exceed $5.0 million.   Entergy
Arkansas  is attempting to identify and notify other PRPs with  respect  to
this  site.  Entergy Arkansas has received assurances that the ADPC&E  will
use  its  enforcement  authority  to allocate  remediation  expenses  among
Entergy  Arkansas and any other PRPs that can be identified.  Approximately
20  PRPs have been identified to date.  Entergy Arkansas has performed  the
activities  necessary  to stabilize the site, at a  cost  of  approximately
$400,000.

Entergy Gulf States

      Entergy Gulf States has been designated by the EPA as a PRP  for  the
clean-up of certain hazardous waste disposal sites.  Entergy Gulf States is
currently  negotiating  with the EPA and state  authorities  regarding  the
clean-up  of these sites.  Several class action and other suits  have  been
filed  in state and federal courts seeking relief from Entergy Gulf  States
and  others for damages caused by the disposal of hazardous waste  and  for
asbestos-related disease allegedly resulting from exposure on Entergy  Gulf
States  premises  (see  "Other Regulation and Litigation"  below).   As  of
December 31, 1997, a remaining recorded liability of $23.8 million  existed
relating  to the clean-up of seven sites at which Entergy Gulf  States  has
been designated as a PRP.

      In  1971,  Entergy  Gulf States purchased property  near  its  Sabine
generating  station,  known as the Bailey site, for possible  expansion  of
cooling  water facilities.  Entergy Gulf States sold the property in  1984.
In  October  1984, an abandoned waste site on the property was included  on
the  NPL by the EPA.  Entergy Gulf States negotiated with the EPA and is  a
member  of a task force with other PRPs for the voluntary clean-up  of  the
waste site.  A consent decree has been signed by all PRPs for the voluntary
clean-up  of  the  Bailey site.  On-site remediation was  completed  during
1997.   Total  remediation costs are currently expected to be approximately
$33  million;  however,  federal and state  agencies  are  still  examining
potential  liabilities  associated with natural resource  damage.   Entergy
Gulf States is expected to be responsible for 2.26% of the estimated clean-
up  cost,  but  Entergy  Gulf  States does not expect  that  its  remaining
responsibility  with respect to this site will be material after  allowance
for its existing provision for clean-up in the amount of $300,000.

      Entergy  Gulf States is currently involved in a multi-phased remedial
investigation  of an abandoned MGP site, known as the Lake Charles  Service
Center,  located  in  Lake Charles, Louisiana, which  is  thought  to  have
operated as an MGP from approximately 1916 to 1931.  Coal tar, a by-product
of  the distillation process employed at MGPs, was apparently routed  to  a
portion of the property for disposal.  The same area has also been used  as
a landfill.  Under an order, which is currently stayed, issued by the LDEQ,
Entergy  Gulf  States was required to investigate and, if  necessary,  take
remedial  action  at the site.  Preliminary estimates of remediation  costs
are  approximately $20 million.  On February 13, 1995, the EPA published  a
proposed  rule adding the Lake Charles Service Center to the NPL.   Another
PRP  has  been  identified that may have had a role in  the  ownership  and
operation   of  the  MGP.   Negotiations  with  that  company   for   joint
participation  and  possible remedial action  are  ongoing.   Entergy  Gulf
States  has signed an Administrative Order on Consent negotiated  with  the
EPA.   Entergy  Gulf  States does not presently expect  that  its  ultimate
responsibility  for this site will materially exceed its existing  clean-up
provision of $20 million.

      Entergy Gulf States is currently involved in an initial investigation
of  an  MGP site, known as the Old Jennings Ice Plant, located in Jennings,
Louisiana.   The  MGP site is believed to have operated from  approximately
1909 to 1926, and is now occupied by an electrical substation and used  for
storage  of  transmission  and distribution equipment.   In  July  1996,  a
petroleum-like   substance  was  discovered  on  the  surface   soil,   and
notification was made to the LDEQ.  The LDEQ was aware of this  site  based
upon  a  survey  performed  by an environmental  consultant  for  the  EPA.
Entergy Gulf States obtained the services of an environmental consultant to
collect  core  samples  and to perform a search of  historical  records  to
determine  what  activities  occurred at Jennings.   Results  of  the  core
sampling,  which  found  limited  amounts of  contamination  on-site,  were
submitted to the LDEQ.  Entergy Gulf States is awaiting the LDEQ's  comment
on  the  submission,  and  does  not expect  that  its  ultimate  financial
responsibility with respect to this site will be material.  The  amount  of
its existing provision for clean-up is $500,000.

     Entergy Gulf States, along with Entergy Louisiana, has been named as a
PRP  for  an abandoned waste oil recycling plant site in Livingston Parish,
Louisiana,  known  as  Combustion, Inc., which  is  included  on  the  NPL.
Entergy  Gulf States has settled its alleged involvement in the  Combustion
Inc.  site  in a court approved settlement involving a payment of $161,000.
Entergy Gulf States has also agreed to pay a portion of any future clean-up
costs  related to residual ground water, but does not expect that any  such
costs will be incurred.

       Entergy  Gulf  States,  along  with  Entergy  Arkansas  and  Entergy
Louisiana, has been notified of its potential liability with respect to the
Benton  Salvage site located in Saline County, Arkansas.  Although  Entergy
Gulf  States and Entergy Louisiana have had minor involvement in the Benton
Salvage site, no remediation is expected to be required of these companies.
See "Entergy Arkansas" above for a discussion of the Benton Salvage site.

Entergy Louisiana, Entergy New Orleans, and System Energy

      Entergy  Louisiana,  Entergy  New Orleans,  and  System  Energy  have
received  notices  from  the  EPA  and/or  the  states  of  Louisiana   and
Mississippi  that  one  or  more of them may be a  PRP  for  the  following
disposal  sites  that  are  neither  owned  nor  operated  by  any  Entergy
subsidiary:
  
  -  Entergy  Louisiana, along with Entergy Arkansas  and  Entergy  Gulf
     States, was notified in 1990 of its potential liability relating to the
     Benton Salvage site located in Saline County, Arkansas.  Although Entergy
     Gulf States and Entergy Louisiana have been involved in the Benton Salvage
     site, their contributions are considered minor.  Therefore, no remediation
     action is required by these companies.  See "Entergy Arkansas" above for a
     discussion of the Benton Salvage site.
  
  -  The  MCEQ  issued  an  order on October 13, 1997  ordering  Entergy
     Louisiana to implement a remedial action work plan that had been prepared
     by a PRP committee for Disposal Systems, Inc. sites at Fifth Street (Clay
     Point)  and  Lee  Street in Biloxi, Mississippi,  and  at  Woolmarket,
     Mississippi.  Entergy Louisiana filed a petition with the MCEQ denying that
     it had sent any wastes to the Lee Street or Woolmarket sites and alleging
     that wastes that had been transported by its contractor to Clay Point are
     not  pollutants  within  the meaning of the  Mississippi  statutes  or
     regulations, that any wastes at that site had been cleaned up under  a
     consent decree between the EPA and the PRPs, approved by the U. S. District
     Court for the Southern District of Mississippi, Southern Division, and had
     been stored at a warehouse on the site, and, further, that the State of
     Mississippi has no jurisdiction in view of the consent decree  of  the
     federal court.  The petition further requested a hearing before the MCEQ.
     No hearing date has been set.  A PRP committee is attempting to draft a
     settlement proposal for all of the PRPs on sharing clean-up costs. The MCEQ
     issued a similar order on the same date to Entergy Louisiana's contractors,
     Ebasco Services, Inc., which Entergy Louisiana has agreed to defend and
     indemnify.  The MCEQ issued a similar order on the same date to Bechtel
     Power, the contractor for System Energy on the Grand Gulf plant.  System
     Energy was not named as a defendant in the order.  Bechtel has filed a
     petition asking for a hearing.  Entergy Louisiana's remediation costs at
     the site are not expected to be material.
  
  -  From 1992 to 1994, Entergy Louisiana performed site assessments and
     remedial activities at three retired power plants, known as the Homer,
     Jonesboro, and Thibodaux municipal sites, previously owned and operated by
     Louisiana municipalities.  Entergy Louisiana purchased power plants at
     these sites as part of the acquisition of municipal electric systems.  The
     site assessments indicated some subsurface contamination from fuel oil.
     Remediation of the Homer and Jonesboro sites has been completed at  an
     aggregate cost of approximately $180,000, and remediation of the Thibodaux
     site  is  expected to continue through 2000. The cost incurred through
     December 31, 1997 for the Thibodaux site is $305,000, and future costs are
     not expected to exceed the existing provision of $530,000.

      Entergy Louisiana and Entergy New Orleans have been named by the  EPA
as PRPs for associated clean-up costs for certain Louisiana disposal sites.
Such  sites include Combustion Inc., an abandoned waste oil recycling plant
site  located  in Livingston Parish (involving at least 70 PRPs,  including
Entergy  Gulf States, but not Entergy New Orleans), and the Dutchtown  site
(also  included on the NPL and involving 57 PRPs).  Entergy  Louisiana  has
settled  its  alleged involvement in the Combustion Inc. site  in  a  court
approved settlement for a payment of $225,000.  Entergy Louisiana has  also
agreed  to  pay a portion of any future clean-up costs related to  residual
ground  water,  but does not expect that any such costs will  be  incurred.
With respect to the Dutchtown site, Entergy New Orleans believes it has  no
liability  because the material it sent to this site was  not  a  hazardous
substance.

      During  1993,  the LDEQ issued new rules for solid waste  regulation,
including  regulation of waste water impoundments.  Entergy  Louisiana  has
determined  that  certain of its power plant waste water impoundments  were
affected by these regulations and has chosen to upgrade or close them.   As
a  result,  a  remaining recorded liability in the amount of  $6.7  million
existed  at  December  31,  1997  for waste water  upgrades  and  closures.
Completion  of  this  work  is  awaiting the LDEQ's  approval.   Cumulative
expenditures  relating  to  the  upgrades  and  closures  of  waste   water
impoundments are $7.1 million as of  December 31, 1997.

UK Environmental Regulation  (Entergy London)

      London  Electricity's businesses are subject to  numerous  regulatory
requirements  with  respect  to  the protection  of  the  environment.  The
Electricity Act obligates the UK Secretary of State for Trade and  Industry
(the   "Secretary  of  State")  to  consider  the  effect  of   electricity
generation,  transmission, and supply activities upon  the  environment  in
approving  applications for the construction of generating  facilities  and
the  location of overhead power lines. The Electricity Act requires  London
Electricity to have regard to the desirability of preserving natural beauty
and  the  conservation  of  natural  and man-made  features  of  particular
interest  when  it formulates proposals for development of certain  of  its
activities.  London Electricity mitigates the effects of its  proposals  on
natural and man-made features and is required to carry out an environmental
assessment  before laying cables, constructing overhead lines, or  carrying
out  any  other  development in connection with  its  licensed  activities.
London Electricity also has produced an Environmental Policy Statement that
sets  forth  its  plans  for compliance with its environmental  obligations
under the Electricity Act.

      The  Environmental  Protection Act 1990  addresses  waste  management
issues  and imposes certain obligations and duties on companies that handle
and  dispose of waste. Some of London Electricity's distribution activities
produce  waste,  but London Electricity believes that it is  in  compliance
with the applicable standards.

      Possible  adverse  health  effects  of  EMFs  from  various  sources,
including transmission and distribution lines, have been the subject  of  a
number of studies and increasing public discussion. The scientific research
currently is inconclusive as to whether EMFs cause adverse health  effects.
The  only  UK  standards  for exposure to power frequency  EMFs  are  those
promulgated by the National Radiological Protection Board and relate to the
levels  above  which non-reversible physiological effects may be  observed.
London  Electricity  fully  complies with  these  standards.  However,  the
possibility  exists  that passage of legislation and change  of  regulatory
standards could require measures to mitigate EMFs, with resulting increases
in  capital  and  operating costs. In addition, the  potential  exists  for
public  liability  with respect to lawsuits brought by plaintiffs  alleging
damages caused by EMFs.

       London   Electricity  has  approximately  677  miles  of  oil-filled
underground cables that operate at 33kV and 132kV.  These cables  generally
supply  substantial  amounts of electricity to large substations  in  urban
areas and to large customers.  The majority of these cables are between  30
and  50  years old.  London Electricity operates these cables in accordance
with  the  "Environment Agency and Electricity Companies  (in  England  and
Wales) Operating Code on the Management of Fluid-Filled Cables," monitoring
and  repairing both gradual and substantial leaks, which arise through  age
deterioration and third party damage.  London Electricity has a program  to
minimize   oil   leakage  and  reduce  the  possibility  of  pollution   to
watercourses  and ground water.  This program includes a plan  for  gradual
replacement  of  these  cables  with  more  modern  solid  cables.   London
Electricity  believes  that  the existing monitoring  systems  and  planned
replacement  program are sufficient to avoid major environmental  incidents
or  unnecessary replacement expenditures.  London Electricity  could  incur
significant   expenditures  if  it  were  required  to   replace   all   or
substantially  all of its fluid-filled cables, other than in  the  ordinary
course of business, pursuant to new or existing legislation.

Other Regulation and Litigation

Merger  (Entergy Corporation and Entergy Gulf States)

      In July and August 1992, applications were filed with FERC, the LPSC,
the PUCT, and the SEC under PUHCA, seeking authorization of various aspects
of the Merger.  In January 1993, Entergy Gulf States filed two applications
with  the  NRC seeking approval of the change in ownership of Entergy  Gulf
States  and an amendment to the operating license for River Bend to reflect
its  operation  by  Entergy  Operations.   All  regulatory  approvals  were
obtained in 1993 and the Merger was consummated on December 31, 1993.

      FERC's  orders approving the Merger were appealed to the D.C. Circuit
by  Entergy Services, the City of New Orleans, the Arkansas Electric Energy
Consumers (AEEC), the APSC, Cajun, the MPSC, the American Forest and  Paper
Association, the State of Mississippi, the City of Benton and other cities,
and  Occidental Chemical Corporation (Occidental).  Entergy Services sought
review  of  FERC's  deletion of a 40% cap on the  amount  of  fuel  savings
Entergy  Gulf States may be required to transfer to other Entergy  domestic
utility companies under a tracking mechanism designed to protect the  other
companies  from  certain unexpected increases in  fuel  costs.   The  other
parties  sought to overturn FERC's decisions on various grounds,  including
issues  as to whether FERC appropriately conditioned the Merger to  protect
various  interested  parties  from alleged  harm  and  FERC's  reliance  on
Entergy's  transmission  tariff to mitigate any  potential  anticompetitive
impacts  of  the  Merger.  On November 18, 1994, the  D.C.  Circuit  denied
motions  filed by Cajun, Occidental, and AEEC for a remand to  FERC  and  a
partial  summary grant of the petitions for review.  At the same time,  the
D.C.  Circuit  ordered  that the cases be held in abeyance  pending  FERC's
issuance  of  (i) a final order on remand in the proceedings  on  Entergy's
transmission  tariff (see discussion of tariff case in  "RATE  MATTERS  AND
REGULATION  -  Rate  Matters  -  Wholesale  Rate  Matters  -  Open   Access
Transmission" above), and (ii) a final order on competition issues  in  the
proceedings on the Merger.

      On  December  30,  1993, Entergy Services submitted  to  FERC  tariff
revisions  to  comply with FERC's order dated December 15, 1993,  approving
the Merger.  On February 4, 1994, the APSC and AEEC filed with FERC a joint
protest,  alleging  that  Entergy  should  be  required  to  insulate   the
ratepayers of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans from all litigation liabilities related to Entergy Gulf
States'  River  Bend  nuclear  facility.  In  a  May  17,  1994,  order  on
rehearing, FERC addressed Entergy's commitment to insulate the customers of
Entergy  Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy  New
Orleans against liability resulting from certain litigation involving River
Bend.  In response to FERC's clarification of Entergy's commitment, Entergy
Services filed a new compliance filing on June 16, 1994.  The APSC and AEEC
subsequently filed protests questioning the adequacy of Entergy's June  16,
1994, compliance filing.  FERC has not yet acted on the compliance filings.

Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy  Gulf
States, Entergy Louisiana, and Entergy New Orleans)

      Entergy  Corporation, Entergy Arkansas, Entergy Gulf States,  Entergy
Louisiana, and Entergy New Orleans are defendants in numerous lawsuits that
have  been  filed  by former employees asserting that they were  wrongfully
terminated  and/or  discriminated against due to  age,  race,  and/or  sex.
Entergy   Corporation,  Entergy  Arkansas,  Entergy  Gulf  States,  Entergy
Louisiana, and Entergy New Orleans are vigorously defending these suits and
deny  any liability to the plaintiffs.  However, no assurance can be  given
as  to  the outcome of these cases, and an adverse outcome in one  or  more
cases  could have a material adverse financial effect on any of the Entergy
defendants.    See  "Employment  Litigation"  in  Note  9  for  information
regarding these lawsuits.

Asbestos and Hazardous Waste Suits

(Entergy Gulf States and Entergy Louisiana)

     A number of plaintiffs who allegedly suffered damage or injury, or are
survivors  of  persons  who died, allegedly as  a  result  of  exposure  to
"hazardous  toxic  waste" that emanated from a site in  Livingston  Parish,
Louisiana,  sued Entergy Gulf States and approximately 70 other defendants,
including  Entergy  Louisiana, in 17 suits filed in the  Livingston  Parish
District  Court.   The  plaintiffs alleged that the  defendants  generated,
transported, or participated in the storage of such wastes at the facility,
which  was  previously operated as a waste oil recycling  facility.   These
suits,  and  three  federal  suits in three  states  other  than  Louisiana
involving issues arising from the same facility, were consolidated  in  the
U.S.  District  Court for the Middle District of Louisiana.   Entergy  Gulf
States  and Entergy Louisiana have settled all claims against them  in  the
suits and the settlements were approved by court order on February 7,  1996
and   June  4,  1997,  respectively.   Entergy  Gulf  States'  and  Entergy
Louisiana's  shares of the settlements of these cases is  not  material  to
their financial position or results of operations.

(Entergy Gulf States)

      A  total of 25 suits have been filed on behalf of approximately 1,200
plaintiffs  in  state and federal courts in Jefferson and Orange  Counties,
Texas.   These  suits  seek relief from Entergy  Gulf  States  as  well  as
numerous other defendants for damages caused to the plaintiffs or others by
the  alleged  exposure to hazardous waste and asbestos on  the  defendants'
premises. The plaintiffs in some of these suits are also suing Entergy Gulf
States  and  all  other defendants on a conspiracy claim.   There  are  ten
asbestos-related  lawsuits filed in the District Court of Calcasieu  Parish
in  Lake  Charles, Louisiana, on behalf of approximately fifteen plaintiffs
naming numerous defendants including Entergy Gulf States.  The suits allege
that each plaintiff contracted an asbestos-related disease from exposure to
asbestos insulation products on the premises of the defendants.  A total of
eighteen  lawsuits have been filed in Louisiana on behalf of 24  plaintiffs
in  state  courts  in East Baton Rouge, Iberville, and Ascension  Parishes.
These  suits  seek  relief  from Entergy Gulf  States  and  numerous  other
defendants  for  damages  caused to the plaintiffs  or  others  by  alleged
exposure  to hazardous waste and asbestos on the defendants' premises.   It
is  not known yet how many of the plaintiffs in any of the foregoing  cases
worked  on  Entergy Gulf States' premises.  Settlements with  approximately
800  of the  Jefferson County plaintiffs and with approximately 100 of  the
Calcasieu  Parish  plaintiffs  are in the  process  of  being  consummated.
Entergy  Gulf  States'  share of the settlements  of  these  cases  is  not
material to its financial position or results of operations.

Cajun - River Bend Litigation (Entergy Corporation and Entergy Gulf States)

      See "Cajun - River Bend Litigation" in Note 9 herein for a discussion
of this litigation.

Cajun - Transmission Service (Entergy Corporation and Entergy Gulf States)

      See "Cajun - River Bend Litigation" in Note 9 herein for a discussion
of this litigation.

Cajun - Coal Contracts  (Entergy Corporation and Entergy Gulf States)

      See  "Cajun-Coal Contracts" in Note 9 herein for a discussion of this
litigation.

Service Area Dispute (Entergy Corporation and Entergy Mississippi)

      In October 1994, twelve Mississippi cities filed a complaint in state
court  against  Entergy Mississippi and eight electric  power  associations
seeking  a judgment declaring unconstitutional certain Mississippi statutes
relating to the acquisition by a municipality of facilities and certificate
rights  of  a utility serving in the municipality.  The suit requests  that
the   court  declare  unconstitutional  certain  1987  amendments  to   the
Mississippi  Public  Utilities Act that require  that  the  MPSC  cancel  a
utility's  certificate to serve in the municipality before  a  municipality
may  acquire a utility's facilities located in the municipality.  The  suit
also requests that the court find that Mississippi municipalities can serve
any  consumer  in  the boundaries of the municipality and within  one  mile
thereof.   Entergy  Mississippi and the other defendants filed  motions  to
dismiss,  which were granted in October 1995.  The plaintiffs appealed  the
dismissal  to  the  Mississippi  Supreme Court.   In  September  1997,  the
Mississippi Supreme Court affirmed the decision of the lower court  finding
in   favor  of  Entergy  Mississippi  and  dismissing  the  municipalities'
complaint.  A petition for rehearing filed by the municipalities was denied
by the Mississippi Supreme Court in November 1997.

Taxes Paid Under Protest (Entergy Corporation and Entergy Louisiana)

     Since the mid-1980's, Entergy Louisiana and the tax authorities of St.
Charles  Parish,  Louisiana (Parish), where Waterford 3  is  located,  have
disputed use taxes on nuclear fuel paid under protest by Entergy Louisiana,
and  lease  tax  issues pertaining to fuel financing arrangements.  In  May
1997,  the  Parish and Entergy Louisiana settled all pending use and  lease
tax  litigation.  This settlement includes the return to Entergy  Louisiana
of  tax  payments  made  under protest and the dismissal  of  nuclear  fuel
related suits against Entergy Louisiana and/or the fuel lessors.

      Since  1990,  Entergy  Louisiana and the  state  tax  authority  have
disputed state use tax paid under protest on nuclear fuel ($8.8 million  at
December  31,  1997)  by  Entergy Louisiana.  The fuel  was  purchased  for
Waterford 3.  Entergy Louisiana has filed lawsuits to recover these  taxes,
and  certain of these suits involve additional legal issues related  to  an
exemption  for boiler fuel.  The suits regarding these disputes  have  been
consolidated for trial, but a trial date has not been set.

Catalyst Technologies, Inc.  (Entergy Corporation)

      In  June 1993, Catalyst Technologies, Inc. (CTI) filed a petition  in
the  Civil  District  Court  for the Parish of  Orleans,  Louisiana  (CDC),
against Electec, Inc., now named Entergy Enterprises, Inc. (EEI), which  is
a wholly-owned non-utility subsidiary of Entergy Corporation.  The petition
alleged,  among  other  things,  breach of  contract,  and  breach  of  the
obligation of good-faith and fair dealing.  On August 8, 1997,  a  jury  in
the  CDC returned a verdict against EEI in the amount of $346 million  plus
interest  of approximately $118 million.  On November 15, 1997,  the  trial
judge  entered a judgment notwithstanding the verdict in the  CTI  lawsuit.
Finding as a matter of law that the jury's verdict was incorrect, the judge
ruled  that  no contract ever existed between CTI and Entergy  Enterprises,
and  that  the verdict was contrary to the law and the evidence.   CTI  has
appealed  this  ruling  to the Louisiana Court of  Appeal  for  the  Fourth
Circuit.   No date for the filing of appellate briefs or oral argument  has
been set.

      On  September  30,  1997, CTI filed another lawsuit  against  Entergy
Corporation, Entergy Services, Entergy Enterprises and certain  individuals
who  are,  or at one time were, directors of those corporations.  The  suit
claims,  among  other  things, that CTI suffered damages  as  a  result  of
actions  on  the  part  of  Entergy that allegedly  caused  the  individual
defendants  to  breach their fiduciary duties owed to  Entergy  Enterprises
and,  indirectly, to CTI as Entergy Enterprises' judgment creditor.   After
the  decision of the trial judge in the original CTI suit, CTI  voluntarily
moved to dismiss this proceeding, and it was dismissed without prejudice on
January 16, 1998.

Union Pacific Railroad (Entergy Corporation and Entergy Arkansas)

      In  October 1997, Entergy Arkansas and Entergy Services filed a civil
suit  against Union Pacific Railroad Company (Union Pacific) in the  United
States  District  Court for the Middle District of Louisiana.   This  suit,
which  seeks  damages and the termination of coal shipping  contracts  with
Union  Pacific,  maintains  that  Union Pacific  has  failed  to  meet  its
contractual  obligations to ship coal to Entergy Arkansas' two large  coal-
fired  plants and that such failure has impaired Entergy Arkansas'  ability
to generate and sell electricity from these plants.


     EARNINGS RATIOS OF DOMESTIC UTILITY COMPANIES, SYSTEM ENERGY, AND
                              ENTERGY LONDON

     The domestic utility companies', System Energy's, and Entergy London's
ratios  of  earnings  to fixed charges and ratios of earnings  to  combined
fixed  charges  and  preferred  dividends  pursuant  to  Item  503  of  SEC
Regulation S-K are as follows:

                                    Ratios of Earnings to Fixed Charges
                                        Years Ended December 31,
                                1993     1994      1995     1996   1997
     Entergy Arkansas           3.11(b)  2.32      2.56     2.93   2.54
     Entergy Gulf States        1.54     (c)-      1.86     1.47   1.42
     Entergy Louisiana          3.06     2.91      3.18     3.16   2.74
     Entergy Mississippi        3.79(b)  2.12      2.92     3.40   2.98
     Entergy New Orleans        4.68(b)  1.91      3.93     3.51   2.70
     System Energy              1.87     1.23      2.07     2.21   2.31
     Entergy London             N/A      N/A       N/A      N/A    (d)-

     
                                    Ratios of Earnings to Combined Fixed
                                     Charges and Preferred Dividends
                                        Years Ended December 31,
                                1993       1994     1995    1996     1997
     Entergy Arkansas           2.54(b)    1.97     2.12    2.44     2.24
     Entergy Gulf States(a)     1.21       (c)-     1.54    1.19     1.23
     Entergy Louisiana          2.39       2.43     2.60    2.64     2.36
     Entergy Mississippi        3.08(b)    1.81     2.51    2.95     2.69
     Entergy New Orleans        4.12(b)    1.73     3.56    3.22     2.44
     
(a)  "Preferred Dividends" in the case of Entergy Gulf States also  include
     dividends on preference stock.

(b)  Earnings  for  the year ended December 31, 1993, include approximately
     $81  million,  $52  million,  and $18 million  for  Entergy  Arkansas,
     Entergy Mississippi, and Entergy New Orleans, respectively, related to
     the  change  in  accounting principle to provide for  the  accrual  of
     estimated unbilled revenues.

(c)  Earnings for the year ended December 31, 1994, for Entergy Gulf States
     were  not  adequate to cover fixed charges and combined fixed  charges
     and   preferred  dividends  by  $144.8  million  and  $197.1  million,
     respectively.

(d)  As  a result of the windfall profits tax of $234 million, earnings for
     the  twelve  months ended December 31, 1997, for Entergy  London  were
     insufficient to cover fixed charges by $204 million.

                                     
                             INDUSTRY SEGMENTS

Entergy New Orleans

Narrative Description of Entergy New Orleans Industry Segments

Electric Service

      Entergy New Orleans supplied retail electric service to approximately
189,000  customers as of December 31, 1997.  During 1997, 39%  of  electric
operating  revenues was derived from residential sales, 38% from commercial
sales,  7%  from  industrial sales, and 16% from sales to governmental  and
municipal customers.

Natural Gas Service

       Entergy   New  Orleans  supplied  retail  natural  gas  service   to
approximately 151,000 customers as of December 31, 1997.  During 1997,  55%
of  gas  operating revenues was derived from residential  sales,  19%  from
commercial  sales,  11%  from  industrial sales,  and  15%  from  sales  to
governmental  and  municipal customers. (See "FUEL  SUPPLY  -  Natural  Gas
Purchased for Resale.")

Selected Financial Information Relating to Industry Segments

      For  selected financial information relating to Entergy New  Orleans'
industry  segments, see Entergy New Orleans' financial statements and  Note
15.

Entergy Gulf States

      For  the  year ended December 31, 1997, 96% of Entergy  Gulf  States'
operating revenues was derived from the electric utility business.  Of  the
remaining operating revenues, 2% was derived from the steam business and 2%
from the natural gas business.

Entergy London

      Entergy  London's  distribution and  supply  businesses  both  served
approximately 2.0 million customers as of December 31, 1997.  During  1997,
operating  revenues derived from the distribution and supply business  were
22%  and  74%,  respectively.  The remaining 4% of operating  revenues  was
derived  from Entergy London's investment in private distribution networks,
electricity contracting services, and investments in generating assets.
                                     
                                 PROPERTY

Generating Stations

     The total capability of Entergy's owned and leased generating stations
as of December 31, 1997, by company and by fuel type, is indicated below:

                                 Owned and Leased Capability MW(1)
                                                           Gas             
                                                         Turbine           
                                                           and                 
                                                         Internal              
 Company                 Total       Fossil    Nuclear  Combustion   Hydro

 Entergy Arkansas        4,373 (2)   2,379      1,694     230 (4)      70
 Entergy Gulf States     6,854 (2)   5,843        936      75           -
 Entergy Louisiana       5,423 (2)   4,329      1,075      19           -
 Entergy Mississippi     3,063 (2)   3,052          -      11           -
 Entergy New Orleans       934 (2)     918          -      16           -
 System Energy           1,080           -      1,080       -           -
                        -------------------------------------------------
   Total                21,727 (3)  16,521 (3)  4,785     351          70
                        =================================================



(1)  "Owned   and  Leased  Capability"  is  the  dependable  load  carrying
     capability as demonstrated under actual operating conditions based  on
     the  primary  fuel  (assuming no curtailments) that each  station  was
     designed to utilize.

(2)  Excludes  the capacity of fossil-fueled generating stations placed  on
     extended  reserve as follows: Entergy Arkansas - 506 MW; Entergy  Gulf
     States - 405 MW; Entergy Louisiana - 157 MW; Entergy Mississippi -  73
     MW;  Entergy New Orleans - 143 MW.  Generating stations that  are  not
     expected to be utilized in the near-term to meet load requirements are
     placed  in  extended  reserve shutdown in order to minimize  operating
     expenses.

(3)  Excludes  net  capability of generating facilities  owned  by  Entergy
     Power, which owns 725 MW of fossil-fueled capacity.

(4)  Includes 188 MW of capacity leased by Entergy Arkansas through 1999.

      Load and capacity projections are reviewed periodically to assess the
need  and  timing of additional generating capacity and of interconnections
in  light  of  the availability of power, the location of  new  loads,  and
maximum  economy  to Entergy.  Domestically, based on load  and  capability
projections  and bulk power availability, Entergy has no current  plans  to
install new generating capacity.  When new generation resources are needed,
Entergy expects to meet this need by means other than construction  of  new
base  load  generating capacity.  Entergy expects to meet  future  capacity
needs  by,  among  other things, purchasing power in  the  wholesale  power
market and/or removing generating stations from extended reserve shutdown.

      Under  the terms of the System Agreement, certain generating capacity
and  other power resources are shared among the domestic utility companies.
The  System  Agreement provides, among other things,  that  parties  having
generating  reserves greater than their load requirements (long  companies)
shall receive payments from those parties having deficiencies in generating
reserves (short companies) and an amount sufficient to cover certain of the
long companies' costs, including operating expenses, fixed charges on debt,
dividend requirements on preferred and preference stock, and a fair rate of
return  on  common  equity investment.  Under the System  Agreement,  these
charges  are  based  on  costs associated with the  long  companies'  steam
electric  generating  units fueled by oil or gas.   In  addition,  for  all
energy  exchanged  among the domestic utility companies  under  the  System
Agreement,  the  short  companies are required to  pay  the  cost  of  fuel
consumed  in generating such energy plus a charge to cover other associated
costs  (see  "RATE MATTERS AND REGULATION - Rate Matters -  Wholesale  Rate
Matters  -  System Agreement," above, for a discussion of FERC  proceedings
relating to the System Agreement).

      Entergy's domestic business is subject to seasonal fluctuations, with
the  peak  period occurring in the summer months. The 1997 peak  demand  of
19,545  MW  occurred  on  August 19, 1997.  The  total  operational  system
capability at the time of peak was 21,446 MW.  This gives a reserve  margin
at  the  time  of  the peak of approximately 8.9%.  This does  not  include
capacity  owned  by Entergy Power.  London Electricity and  CitiPower  both
normally have peak activity in their winter months.

Interconnections

      The  electric  generating  facilities of Entergy's  domestic  utility
companies  consist  principally  of  steam-electric  production  facilities
strategically located with reference to availability of fuel, protection of
local   loads,   and  other  controlling  economic  factors.    These   are
interconnected by a transmission system operating at various voltages up to
500  kV.   Generally, with the exception of Grand Gulf 1,  Entergy  Power's
capacity  and a small portion of Entergy Mississippi's capacity,  operating
facilities  or interests therein are owned by the domestic utility  company
serving  the  area in which the facilities are located.  All  of  Entergy's
generating  facilities are centrally dispatched and operated  in  order  to
obtain  low  cost  sources  of  energy with a  minimum  of  investment  and
efficient use of plant.

      In addition to the many neighboring utilities with which the domestic
utility  companies interconnect, the domestic utility companies are members
of  the  Southeastern Electric Reliability Council, the primary purpose  of
which  is to ensure the reliability and adequacy of the electric bulk power
supply  in  the  southeast region of the United States.   The  Southeastern
Electric  Reliability  Council is a member of the North  American  Electric
Reliability Council.

Gas Property

      As  of  December  31,  1997,  Entergy  New  Orleans  distributed  and
transported  natural gas for distribution solely within the limits  of  the
City of New Orleans through a total of 1487 miles of gas distribution mains
and  62 miles of gas transmission pipelines.  Koch Gateway Pipeline Company
is  a  principal supplier of natural gas to Entergy New Orleans, delivering
to six of Entergy New Orleans' thirteen delivery points.

      As  of  December 31, 1997, the gas properties of Entergy Gulf  States
were not material to Entergy Gulf States.

Titles

      Entergy's  generating  stations are generally located  on  properties
owned  in  fee  simple.   The  greater  portion  of  the  transmission  and
distribution lines of the domestic utility companies have been  constructed
over property of private owners pursuant to easements or on public highways
and streets pursuant to appropriate franchises, and pursuant to statute  in
the case of Entergy London.  The rights of such company in the property  on
which its facilities are located are considered by each such company to  be
adequate  for  its use in the conduct of its business.  Minor  defects  and
irregularities customarily found in properties of like size  and  character
exist, but such defects and irregularities do not materially impair the use
of  the  properties  affected  thereby.   The  domestic  utility  companies
generally have the right of eminent domain, whereby they may, if necessary,
perfect or secure titles to, or easements or servitudes on, privately  held
lands used in or reasonable necessary for their utility operations.

      Substantially  all  the physical properties owned  by  each  domestic
utility  company, and System Energy, are subject to the lien  of  mortgages
securing  the  first  mortgage  bonds of such  company.   The  Lewis  Creek
generating  station is owned by GSG&T, Inc., a subsidiary of  Entergy  Gulf
States,  and is not subject to the lien of the Entergy Gulf States mortgage
securing the first mortgage bonds of Entergy Gulf States, but is leased  to
and  operated  by  Entergy Gulf States.  In the case of Entergy  Louisiana,
certain  properties  are  also subject to the lien  of  a  second  mortgage
securing  other obligations of Entergy Louisiana.  In the case  of  Entergy
Mississippi,  substantially  all  of its properties  and  assets  are  also
subject  to the second mortgage lien of its general and refunding  mortgage
bond indenture.
                                     
                                     
                                FUEL SUPPLY

      The  sources  of  generation and average fuel cost per  KWH  for  the
domestic utility companies and System Energy for the years 1995-1997 were:

             Natural Gas     Fuel Oil    Nuclear Fuel      Coal
              %    Cents    %     Cents    %    Cents     %    Cents
              of    per     of     per     of    Per      of    Per
Year         Gen    KWH    Gen     KWH    Gen    KWH     Gen    KWH
                                                               
1997          39   2.97     4     3.11    41     .54     16    1.73
1996          42   2.99     1     3.03    41     .56     16    1.73
1995          50   1.99     -       -     35     .60     15    1.73

      Actual 1997 and projected 1998 sources of generation for the domestic
utility companies and System Energy are:

                      Natural Gas     Fuel Oil       Nuclear           Coal
                      1997   1998   1997   1998  1997     1998     1997    1998
                                                                              
Entergy Arkansas        5%     8%   -       -     62%      51%       32%    40%
Entergy Gulf States    65%    64%   -       -     19%      21%       16%    15%
Entergy Louisiana      63%    47%   1%      -     36%      53%       -      -
Entergy Mississippi    38%    69%  33%      -     -        -         29%    31%
Entergy New Orleans    89%   100%  11%      -     -        -         -      -
System Energy          -      -     -       -    100%(a)  100%(a)    -      -
Total                  39%    40%   4%      -     41%      41%       16%    19%
                    

(a)Capacity  and energy from System Energy's interest in Grand  Gulf  1  is
   allocated as follows: Entergy Arkansas - 36%; Entergy Louisiana  -  14%;
   Entergy Mississippi - 33%; and Entergy New Orleans - 17%.

The   balance  of  generation,  which  was  immaterial,  was  provided   by
hydroelectric power.

Natural Gas

      The  domestic  utility companies have long-term firm  and  short-term
interruptible gas contracts.  Long-term firm contracts comprise  less  than
30% of the domestic utility companies' total requirements but can be called
upon,  if  necessary, to satisfy a significant percentage of  the  domestic
utility  companies' needs.  Additional gas requirements  are  satisfied  by
short-term contracts and spot-market purchases.  Entergy Gulf States has  a
transportation service agreement with a gas supplier that provides flexible
natural gas service to certain generating stations by using such supplier's
pipeline and gas storage facility.

      Many factors, including wellhead deliverability, storage and pipeline
capacity,  and demand requirements of end users, influence the availability
and  price  of natural gas supplies for power plants.  Demand  is  tied  to
weather  conditions  as  well as to the prices  of  other  energy  sources.
Supplies  of  natural gas are expected to be adequate  in  1998.   However,
pursuant to federal and state regulations, gas supplies to power plants may
be  interrupted  during  periods of shortage.  To the  extent  natural  gas
supplies  may  be  disrupted,  the  domestic  utility  companies  will  use
alternate fuels, such as oil, or rely on coal and nuclear generation.

Coal

     Entergy Arkansas has long-term contracts with suppliers for the supply
of  low-sulfur coal from mines in the State of Wyoming for White Bluff  and
Independence.  These contracts, which expire in 2002 and 2011, provide  for
approximately  85%  of Entergy Arkansas' expected annual coal  requirements
through 2002.  Additional requirements are satisfied by annual spot  market
purchases.   Entergy Gulf States has a contract for a supply of  low-sulfur
Wyoming  coal for Nelson Unit 6, which should be sufficient to satisfy  its
fuel  requirements for that unit through 2010.  Cajun has  advised  Entergy
Gulf States that Cajun has contracts that should provide an adequate supply
of coal until 1999 for the operation of Big Cajun 2, Unit 3.

Nuclear Fuel

      The nuclear fuel cycle involves the mining and milling of uranium ore
to  produce  a  concentrate, the conversion of the concentrate  to  uranium
hexafluoride  gas,  enrichment of that gas,  fabrication  of  nuclear  fuel
assemblies for use in fueling nuclear reactors, and disposal of  the  spent
fuel.

      System Fuels is responsible for contracts to acquire nuclear material
to  be  used in fueling Entergy Arkansas',  Entergy Louisiana's, and System
Energy's nuclear units and maintaining inventories of such materials during
the  various  stages of processing.  Each of these companies contracts  for
the fabrication of its own nuclear fuel and purchases the required enriched
uranium  hexafluoride from System Fuels. The requirements for Entergy  Gulf
States'  River  Bend plant are covered by contracts made  by  Entergy  Gulf
States.  Entergy Operations acts as agent for System Fuels and Entergy Gulf
States in negotiating and/or administering nuclear fuel contracts.

     Based upon currently planned fuel cycles, Entergy's nuclear units have
existing  contracts  and  inventory  to  provide  adequate  materials   and
services.  Current contracts for uranium concentrate and conversion of  the
concentrate  to uranium hexafluoride will provide a significant  percentage
of these materials and services through termination dates ranging from 1998-
2002.   Additional materials and services required beyond these  dates  are
expected to be available for the foreseeable future.

     Current contracts for enrichment will provide a significant percentage
of  these  materials  and  services through  approximately  2002.   Current
fabrication  contracts  will  provide a  significant  percentage  of  these
materials  and services for termination dates ranging from 2000-2002.   The
Nuclear Waste Policy Act of 1982 provides for the disposal of spent nuclear
fuel  or  high  level  waste  by  the DOE.  See  Note  9,  COMMITMENTS  AND
CONTINGENCIES, Spent Nuclear Fuel and Decommissioning Costs for  additional
discussion of spent nuclear fuel disposal.

      Entergy  will  enter into additional arrangements to acquire  nuclear
fuel  beyond the dates shown above.  Except as noted above, Entergy  cannot
predict the ultimate cost of such arrangements.

      Entergy Arkansas,  Entergy Gulf States, Entergy Louisiana, and System
Energy  have made arrangements to lease nuclear fuel and related  equipment
and services.  The lessors finance the acquisition and ownership of nuclear
fuel through credit agreements and the issuance of notes.  These agreements
are subject to annual renewal with, in Entergy Louisiana's and Entergy Gulf
States'  case,  the  consent  of  the lenders.  See  Note  10  for  further
discussion of nuclear fuel leases.

     Entergy Gulf States received nuclear fuel as part of the settlement of
the Cajun litigation.  This nuclear fuel is currently owned by Entergy Gulf
States and is not under lease.

Natural Gas Purchased for Resale

      Entergy New Orleans has several suppliers of natural gas for  resale.
Its  system  is  interconnected with three interstate and three  intrastate
pipelines.   Presently,  Entergy New Orleans' primary  suppliers  are  Koch
Energy  Trading  Company (KET), an interstate gas marketer, Bridgeline  and
Pontchartrain via Louisiana Gas Services (LGS).  Entergy New Orleans has  a
"no-notice" service gas purchase contract with KET.  The KET gas supply  is
transported  to  Entergy  New Orleans pursuant to a transportation  service
agreement  with  Koch  Gateway Pipeline Company (KGPC).   This  service  is
subject  to  FERC-approved rates.  Entergy New Orleans has  firm  contracts
with  its two intrastate suppliers and also makes interruptible spot market
purchases.   In  recent  years, natural gas deliveries  have  been  subject
primarily  to weather-related curtailments.  However, Entergy  New  Orleans
has experienced no such curtailments.

       After   the  implementation  of  FERC-mandated  interstate  pipeline
restructuring in 1993, curtailments of interstate gas supply could occur if
Entergy  New  Orleans'  suppliers failed to perform  their  obligations  to
deliver   gas   under   their  supply  agreements.   KGPC   could   curtail
transportation  capacity only in the event of pipeline system  constraints.
Based  on  the  current supply of natural gas, and absent extreme  weather-
related   curtailments,  Entergy  New  Orleans  does  not  anticipate   any
interruptions in natural gas deliveries to its customers.

      Entergy  Gulf  States  purchases natural  gas  for  resale  under  an
agreement  with Mid Louisiana Gas Company.  Abandonment of service  by  the
present supplier would be subject to abandonment proceedings by FERC.

Research

      Entergy  Arkansas,  Entergy Gulf States, Entergy  Louisiana,  Entergy
Mississippi,  and  Entergy New Orleans are members of  the  Electric  Power
Research  Institute  (EPRI).  EPRI conducts a broad range  of  research  in
major  technical fields related to the electric utility industry.   Entergy
participates  in  various  EPRI  projects  based  on  Entergy's  needs  and
available  resources.   During  each of the years  1997,  1996,  and  1995,
Entergy  contributed approximately $9 million for EPRI and  other  research
programs.


I
tem 2.   Properties

      Refer to Item 1. "Business - PROPERTY," for information regarding the
properties of the registrants.


Item 3.   Legal Proceedings

     Refer to Item 1. "Business - RATE MATTERS AND REGULATION," for details
of the registrants' material rate proceedings, environmental regulation and
proceedings,  and  other  regulatory proceedings and  litigation  that  are
pending or that terminated in the fourth quarter of 1997.


Item 4.   Submission of Matters to a Vote of Security Holders

     During the fourth quarter of 1997, no matters were submitted to a vote
of  the  security holders of Entergy Corporation, Entergy Arkansas, Entergy
Gulf  States, Entergy Louisiana, Entergy Mississippi, Entergy New  Orleans,
System Energy, or Entergy London.


<PAGE>
          DIRECTORS AND EXECUTIVE OFFICERS OF ENTERGY CORPORATION
                                     
Directors

      Information  required by this item concerning  directors  of  Entergy
Corporation  is  set  forth  under  the heading  "Proposal  1--Election  of
Directors"  contained in the Proxy Statement of Entergy  Corporation,  (the
"Proxy  Statement"), to be filed in connection with its Annual  Meeting  of
Stockholders  to  be  held   May  15,  1998,  ("Annual  Meeting"),  and  is
incorporated  herein  by  reference.  Information  required  by  this  item
concerning officers and directors of the remaining registrants is  reported
in Part III of this document.

Executive Officers

<TABLE>
<CAPTION>
         Name           Age                Position                    Period
<S>                     <C>  <C>                                        <C>
Edwin Lupberger (a)     61   Chairman of the Board, Chief               1985-Present
                              Executive Officer, and Director of
                              Entergy Corporation
                             Chairman of the Board and Chief            1993-Present
                              Executive Officer of Entergy
                              Arkansas, Entergy Louisiana, Entergy
                              Mississippi, and Entergy New Orleans
                             Chairman of the Board, Chief               1994-Present
                              Executive Officer, and Director of
                              Entergy Gulf States
                             Chairman of the Board and Director of      1996-Present
                              Entergy Integrated Solutions, Inc.
                             Chairman of the Board of System            1986-Present
                              Energy and Entergy Enterprises
                             Chairman of the Board of Entergy           1990-Present
                              Operations
                             Chairman of the Board of Entergy           1985-Present
                              Services
                             Chief Executive Officer of Entergy         1991-Present
                              Services
                             Chief Executive Officer of Entergy         1993-Present
                              Power,  EPDC, and Entergy-Richmond
                              Power Corporation
                             Chief Executive Officer of Entergy         1994-Present
                              Pakistan, Ltd. and Entergy Power
                              Asia, Ltd.
                             Chief Executive Officer of EP Edegel,      1995-Present
                              Inc.,  Entergy Power Holding II,
                              Ltd., EPMC, Entergy Power Operations
                              Corporation, Entergy Power
                              Operations Holdings, Ltd., Entergy
                              Power Operations Pakistan LDC,
                              Entergy Victoria LDC, Entergy
                              Victoria Holdings LDC, EPG Cayman
                              Holding I, EPG Cayman Holding II,
                              Entergy Power CBA Holding, Ltd., and
                              Entergy Power Edesur Holding, Ltd.
                             Chief Executive Officer of Entergy         1995-1997
                              Power Development International
                              Corporation 
                             Chief Executive Officer of Entergy         1996-Present
                              Power International Holdings
                              Corporation and Entergy Mexico Ltd.
                             Chief Executive Officer of Entergy         1997-Present
                              London Limited, Entergy London, and
                              Entergy Power Chile, Inc.
                             President of Entergy Corporation           1995-Present
                             President of Entergy Services and          1994-Present
                              Entergy Enterprises
                             General Manager of Entergy Power           1997-Present
                              Chile, S.A.
                             Director and Chairman of the Board of      1997-Present
                              Entergy Nuclear, Inc., Entergy
                              Technology Company, ETHC, Entergy
                              London Limited and Entergy London
                             Director of Entergy Arkansas, Entergy      1986-Present
                              Louisiana, Entergy Mississippi,
                              Entergy New Orleans, and System
                              Energy
                             Director of Entergy Operations and         1994-Present
                              Entergy Services
                             Director of Entergy Enterprises            1984-Present
                             Chief Executive Officer of Entergy         1995-1996
                              Edegel I, Inc., Entergy Power
                              Holding I, Ltd., and Entergy
                              Yacyreta I, Inc.
                             Chairman of the Board of Entergy           1990-1993
                              Power
                             Chief Executive Officer of Entergy         1991-1994
                              Enterprises
Jerry L. Maulden        61   Vice Chairman of Entergy Corporation       1995-Present
                             Vice Chairman and Chief Operating          1993-Present
                              Officer of Entergy Arkansas, Entergy
                              Gulf States, Entergy Louisiana,
                              Entergy Mississippi, and Entergy
                              New Orleans
                             Vice Chairman of Entergy Services          1992-Present
                             Director of Entergy Arkansas               1979-Present
                             Director of Entergy Gulf States            1993-Present
                             Director of Entergy Louisiana and          1991-Present
                              Entergy New Orleans
                             Director of Entergy Mississippi            1988-Present
                             Director of Entergy Operations             1990-Present
                             Director of System Energy                  1987-Present
                             Director of Entergy Services               1979-Present
                             Director of Entergy Nuclear, Inc.          1997-Present
                             Chairman of the Board of Entergy           1989-1993
                              Arkansas
                             Chairman of the Board and Chief            1991-1993
                              Executive Officer of Entergy
                              Louisiana and Entergy New Orleans
                             Chairman of the Board and Chief            1989-1993
                              Executive Officer of Entergy
                              Mississippi
                             Chief Executive Officer of Entergy         1979-1993
                              Arkansas
                             President and Chief Operating Officer      1993-1995
                              of Entergy Corporation
                             Group President, System Executive -        1991-1993
                              Transmission, Distribution, and
                              Customer Service of Entergy
                              Corporation
Jerry D. Jackson        53   Chief Administrative Officer of            1997-Present
                              Entergy Corporation, Entergy
                              Services,  Entergy Arkansas, Entergy
                              Gulf States, Entergy Louisiana,
                              Entergy Mississippi, and Entergy New
                              Orleans
                             Executive Vice President - External        1994-Present
                              Affairs of Entergy Corporation and
                              Entergy Services
                             Executive Vice President - External        1995-Present
                              Affairs of Entergy Arkansas, Entergy
                              Gulf States, Entergy Louisiana,
                              Entergy Mississippi, and Entergy New
                              Orleans
                             Director of Entergy Arkansas, Entergy      1992-Present
                              Louisiana, Entergy Mississippi, and
                              Entergy New Orleans
                             Director of Entergy Gulf States            1994-Present
                             Director of Entergy Services               1990-Present
                             Director of Entergy Enterprises            1996-Present
                             Executive Vice President of Marketing      1994-1995
                              of Entergy Corporation
                             Executive Vice President - Marketing       1995-1995
                              of Entergy Arkansas, Entergy Gulf
                              States, Entergy Louisiana, Entergy
                              Mississippi, and Entergy New Orleans
                             Executive Vice President - Marketing       1994-1995
                              of Entergy Services
                             President and Chief Administrative         1992-1994
                              Officer of Entergy Services
                             Executive Vice President - Finance         1990-1994
                              and External Affairs of Entergy
                              Corporation
                             Executive Vice President - Finance         1992-1994
                              and External Affairs and Secretary
                              of Entergy Arkansas, Entergy
                              Louisiana, Entergy Mississippi, and
                              Entergy New Orleans
                             Executive Vice President - Finance         1993-1994
                              and External Affairs of Entergy Gulf
                              States
                             Secretary of Entergy Corporation           1991-1994
                             Secretary of Entergy Gulf States           1994-1995
                             Director of System Energy                  1993-1995
Donald  C. Hintz        55   Group President and Chief Nuclear          1997-Present
                              Operating Officer of Entergy
                              Corporation, Entergy Services,
                              Entergy Arkansas, Entergy Gulf
                              States, and Entergy Louisiana
                             Executive Vice President and Chief         1994-1997
                              Nuclear Officer of Entergy
                              Corporation
                             Executive Vice President - Nuclear of      1994-1997
                              Entergy Arkansas, Entergy Gulf
                              States, and Entergy Louisiana
                             Executive Vice President of Nuclear        1996-1997
                              of  Entergy Services
                             Chief Executive Officer and President      1992-Present
                              of System Energy and Entergy
                              Operations
                             Director of Entergy Arkansas, Entergy      1992-Present
                              Louisiana, Entergy Mississippi,
                              System Energy, System Fuels, and
                              Entergy Services
                             Director of Entergy Gulf States            1993-Present
                             Director of Entergy Operations             1990-Present
                             Director of GSG&T, Prudential Oil &        1994-Present
                              Gas, Southern Gulf Railway, and
                              Varibus Corporation
                             Senior Vice President and Chief            1993-1994
                              Nuclear Officer of Entergy
                              Corporation
                             Senior Vice President - Nuclear of         1990-1994
                              Entergy Arkansas
                             Senior Vice President - Nuclear of         1993-1994
                              Entergy Gulf States
                             Senior Vice President - Nuclear of         1992-1994
                              Entergy Louisiana
                             Director of Entergy New Orleans            1992-1994
                             Chief Executive Officer, President,        1997-Present
                              and Director of Entergy Nuclear,
                              Inc.
Gerald D. McInvale      54   Vice Chairman and Chief Financial          1997-1997
                              Officer of Entergy Corporation
                             Executive Vice President and Chief         1995-1997
                              Financial Officer of Entergy
                              Corporation, Entergy Services,
                              Entergy Arkansas, Entergy Gulf
                              States, Entergy Louisiana, Entergy
                              Mississippi, Entergy New Orleans,
                              System Energy, Entergy Enterprises,
                              Entergy Operations, System Fuels
                              Inc., Entergy Integrated Solutions,
                              Inc., GSG&T, Prudential Oil & Gas,
                              Southern Gulf Railway, and Varibus
                              Corporation
                             Executive Vice President, Chief            1996-1997
                              Financial Officer, and Director of
                              ETHC
                             Executive Vice President and Chief         1996-1997
                              Financial Officer of Entergy
                              Operations Services, Inc.
                             Senior Vice President, Treasurer, and      1994-1997
                              Director of Entergy Pakistan, Ltd.
                              and Entergy Power Asia, Ltd.
                             Senior Vice President, Treasurer, and      1993-1997
                              Director of EPDC and Entergy-
                              Richmond Power Corporation
                             Senior Vice President, Treasurer, and      1995-1997
                              Director of EP Edegel, Inc., Entergy
                              Power Development International
                              Corporation, Entergy Power Holding
                              II, Ltd., EPMC, Entergy Power
                              Operations Corporation, Entergy
                              Power Operations Holdings, Ltd.,
                              Entergy Power Operations Pakistan
                              LDC, Entergy Victoria LDC, Entergy
                              Victoria Holdings LDC, EPG Cayman
                              Holding I, EPG Cayman Holding II,
                              Entergy Power CBA Holding, Ltd., and
                              Entergy Power Edesur Holding, Ltd.
                             Senior Vice President, Treasurer, and      1996-1997
                              Director of Entergy Power
                              International Holdings Corporation
                             Senior Vice President, Treasurer, and      1993-1997
                              Director of Entergy Power
                             Senior Vice President and Director of      1996-1997
                              Entergy Mexico Ltd.
                             Senior Vice President and Treasurer        1996-1997
                              of Entergy Power Peru, S.A.
                             Director of Entergy Arkansas, Entergy      1995-1997
                              Gulf States, Entergy Louisiana,
                              Entergy Mississippi, Entergy New
                              Orleans, Entergy Services, System
                              Energy, Entergy Operations, GSG&T,
                              Prudential Oil & Gas, Southern Gulf
                              Railway, and Varibus Corporation
                             Director of System Fuels                   1992-1997
                             Director of Entergy Integrated             1993-1997
                              Solutions, Inc.
                             Director of Entergy Power                  1996-1997
                              International Corporation
                             Senior Vice President, Treasurer, and      1995-1996
                              Director of Entergy Edegel I, Inc.,
                              Entergy Power Holding I, Ltd., and
                              Entergy Yacyreta I, Inc.
                             Chairman of the Board of Entergy           1994-1995
                              Integrated Solutions, Inc.
                             Senior Vice President and Chief            1991-1995
                              Financial Officer of Entergy
                              Corporation, Entergy Arkansas,
                              Entergy Louisiana, Entergy
                              Mississippi, Entergy New Orleans,
                              System Energy, Entergy Operations,
                              Entergy Services, and Entergy
                              Enterprises
                             Senior Vice President and Chief            1993-1995
                              Financial Officer of Entergy Gulf
                              States
                             Senior Vice President and Chief            1994-1995
                              Financial Officer of System Fuels
                             Director and Acting Chief Operating        1994-1995
                              Officer of Entergy Enterprises
                             Treasurer of Entergy Enterprises           1992-1996
Michael G. Thompson     57   Senior Vice President and General          1992-Present
                              Counsel of Entergy Corporation and
                              Entergy Services
                             Senior Vice President,  General            1995-Present
                              Counsel, and Secretary of Entergy
                              Arkansas, Entergy Gulf States,
                              Entergy Louisiana, Entergy
                              Mississippi, and Entergy New Orleans
                             Senior Vice President - Law and            1992-Present
                              Secretary of Entergy Enterprises
                             Senior Vice President, Secretary, and      1994-Present
                              Director of Entergy Pakistan, Ltd.
                              and Entergy Power Asia, Ltd.
                             Senior Vice President, Secretary, and      1994-Present
                              Director of EPMC, Entergy Power
                              Operations Holdings, Ltd., and EP
                              Edegel, Inc.
                             Senior Vice President, Secretary, and      1995-1997
                              Director of Entergy Power
                              Development International
                              Corporation
                             Senior Vice President, Secretary, and      1995-Present
                              Director of Entergy Power Holding
                              II, Ltd., Entergy Power Operations
                              Corporation, and Entergy Power
                              Operations Pakistan LDC
                             Senior Vice President, Secretary, and      1996-Present
                              Director of Entergy Victoria LDC,
                              Entergy Victoria Holdings LDC, EPG
                              Cayman Holding I, EPG Cayman Holding
                              II, Entergy Power CBA Holding, Ltd.,
                              and Entergy Power Edesur Holding,
                              Ltd.
                             Senior Vice President, Secretary, and      1996-Present
                              Director of Entergy Power
                              International Holdings Corporation
                             Senior Vice President and Secretary        1997-Present
                              of Entergy London, Entergy London
                              Limited, Entergy Nuclear,  Inc.,
                              Entergy Technology Company, ETHC,
                              and Entergy Power Generation Corporation
                             Senior Vice President, Secretary, and      1997-Present
                              Director of Entergy Electric Asia,
                              Ltd., Entergy Power Kingsnorth
                              Ltd., and Entergy Power Chile, Inc.
                             Manager, Secretary, and Director of        1997-Present
                              Entergy Power Chile, S.A.
                             Director of Entergy Power Peru, S.A.       1997-Present
                             Senior Vice President, Secretary, and      1992-Present
                              Director of EPDC
                             Senior Vice President, Secretary and       1992-1997
                              Director of Entergy-Richmond Power
                              Corporation
                             Vice President, Secretary, and             1994-Present
                              Director of Entergy Power
                             Vice President of Entergy Integrated       1994-Present
                              Solutions, Inc.
                             Secretary of Entergy Integrated            1993-Present
                              Solutions, Inc.
                             Director of ETHC and Entergy               1997-Present
                              Technology Company
                             Secretary of Entergy Corporation           1994-Present
                             Director of Entergy Integrated             1992-1996
                              Solutions, Inc.
                             Director of Entergy Operations             1996-Present
                              Services, Inc., and Entergy Power
                              Generation Corporation
                             Secretary of Entergy Services              1996-Present
	     		     Senior Vice President, Chief Legal         1993-1994
                              Officer, Director,  and Secretary of
                              Entergy Power
                             Assistant Secretary of Entergy             1993-1994
                              Corporation
S. M. Henry Brown, Jr.  59   Vice President - Federal Governmental      1989-Present
                              Affairs of Entergy Corporation and
                              Entergy Services
William J. Regan, Jr.   51   Vice President of Entergy Services         1995-Present
                             Vice President and Treasurer of            1995-1998
                              Entergy Corporation, Entergy
                              Arkansas, Entergy Gulf States,
                              Entergy Louisiana, Entergy
                              Mississippi, Entergy New Orleans,
                              System Energy, Entergy Operations,
                              Entergy Services, System Fuels Inc.,
                              GSG&T, Prudential Oil & Gas,
                              Southern Gulf Railway, and Varibus
                              Corporation
                             Vice President and Treasurer of ETHC,      1996-1998
                              Entergy Operations Services, Inc.,
                              and Entergy Enterprises
                             Vice President and Treasurer of            1997-1998
                              Entergy Nuclear, Inc., Entergy
                              Technology Company, and Entergy
                              Integrated Solutions, Inc.
                             Vice President and Treasurer of            1997-1998
                              Entergy Electric Asia, Ltd.
                             Vice President and Treasurer of            1997-Present
                              Entergy Power Chile, Inc., Entergy Power
                              International Holdings Corporation,
                              Entergy Power Kingsnorth Ltd.,
                              Entergy Pakistan, Ltd., EP Edegel,
                              Inc., Entergy Power Chile, S.A.,
                              Entergy Power Asia, Inc. and Entergy
                              Power Generation Corporation
                             Vice President and Treasurer of            1996-Present
                              EPDC, EPMC, Entergy Power Operations
                              Corporation, Entergy Power, and
                              Entergy- Richmond Power Corporation
                             Treasurer of Entergy London Limited        1997-Present
                              and Entergy London
                             Treasurer of Entergy Mexico Ltd.           1996-Present
                             Senior Vice President and Corporate        1989-1995
                              Treasurer of United Services
                             Automobile Association
Louis E. Buck, Jr.      49   Vice President and Chief Accounting        1995-Present
                              Officer and Assistant Secretary of 
                              Entergy Corporation, Entergy Arkansas, 
                              Entergy Gulf States, Entergy Louisiana, 
                              Entergy Mississippi, Entergy New Orleans,
                              System Energy, Entergy Operations,
                              and Entergy Services
                             Audit Controller of Entergy London         1997-Present
                              and Entergy London Limited
                             Assistant Secretary of Entergy             1995-Present
                              Arkansas, Entergy Gulf States,
                              Entergy Louisiana, Entergy
                              Mississippi, Entergy New Orleans,
                              Entergy Operations, and Entergy
                              Services
                             Director of Entergy Operations             1996-Present
                              Services, Inc.
                             Assistant Secretary of Entergy             1996-Present
                              Corporation and System Energy
                             Vice President and Chief Operating         1997-Present
                              Officer of Entergy International
                              Holdings Ltd., LLC, Entergy
                              International Ltd., LLC, Entergy
                              International Investments No. 1 LLC,
                              and Entergy International
                              Investments No. 2 LLC
                             Vice President and Chief Financial         1992-1995
                              Officer of North Carolina Electric
                              Membership Corporation
Michael B. Bemis (b)    50   Director and President of Entergy            1997-Present
                              London, Entergy London Limited,
                              London Electricity and CitiPower
                             Executive Vice President -                   1997-Present
                              International Retail Operations of
                              Entergy Corporation and Entergy 
                              Services
                             Executive Vice President - Retail            1992-1997
                              Services and Director of Entergy
                              Arkansas, Entergy Louisiana, and
                              Entergy Mississippi
                             Executive Vice President - Retail            1996-1997
                              Services of Entergy Corporation
                             Executive Vice President - Retail            1993-1997
                              Services of Entergy Gulf States
                             Executive Vice President - Retail            1992-1997
                              Services of Entergy New Orleans
                             Director of Entergy Gulf States              1994-1997
                             Director of Entergy New Orleans              1992-1994
                             Director of System Fuels                     1992-1997
                             Director of Varibus Corporation,             1994-1997
                              Prudential Oil & Gas, Inc., GSG&T,
                              and Southern Gulf Railway Company
                             Director of Entergy Services and             1996-Present
                              Entergy Integrated Solutions, Inc.
                             Director of Entergy Enterprises              1996-1997
Frank F. Gallaher       52   Group President and Chief Utility            1997-Present
                              Operating Officer of  Entergy
                              Corporation and Entergy Services
                             Director, Group President and Chief          1997-Present
                              Utility Operating Officer of Entergy
                              Arkansas, Entergy Louisiana, and Entergy
                              Mississippi
			     Group President and Chief Utility            1997-Present
                              Operating Officer of Entergy New Orleans
                             Group President and Chief Utility            1997-Present
                              Operating Officer of Entergy Gulf
                              States
                             Executive Vice President of                  1996-1997
                              Operations of  Entergy Corporation
                             Chairman of the Board of System Fuels        1992-Present
                             Chairman of the Board and Director of        1993-Present
                              Varibus Corporation, Prudential Oil
                              & Gas, Inc., GSG&T, and Southern
                              Gulf Railway Company
                             Chairman of the Board and Director of        1996-Present
                              Entergy Operations Services, Inc.
                             Executive Vice President - Operations        1993-1997
                              of Entergy Arkansas, Entergy
                              Louisiana, Entergy Mississippi,
                              Entergy New Orleans, and Entergy
                              Services
                             President of Entergy Gulf States             1994-1996
                             Director of Entergy Gulf States              1993-Present
                             Director of Entergy Services and             1992-Present
                              System Fuels
                             Senior Vice President - Fossil               1992-1993
                              Operations of Entergy Arkansas,
                              Entergy Louisiana, Entergy
                              Mississippi, Entergy New Orleans,
                              and Entergy Services
 Naomi A. Nakagama      32   Senior Vice President-Finance and Treasurer  1998-Present
                              of Entergy Corporation
                             Senior Vice President and Treasurer of       1998-Present
		              Entergy Enterprises and Entergy 
                              Integrated Solutions, Inc.
                             Vice President, Treasurer and Director       1998-Present
                              of Entergy Electric Asia, Ltd.
                             Vice President and Sector Manager of         1990-1997
                              Banque Nationale de Paris (financial
                              institution)
</TABLE>


(a) Mr.  Lupberger  is a director of First Commerce Corporation,  New
    Orleans,  LA, International Shipholding Corporation, New Orleans,
    LA, and First National Bank of Commerce, New Orleans, LA.
    
(b) Mr.  Bemis  is an advisory director of Deposit Guaranty  National
    Bank, Jackson, MS.
    
      Each officer of Entergy Corporation is elected yearly by the Board of
Directors.

      Directorships  shown  in footnotes (a) and (b)  above  are  generally
limited  to  entities subject to Section 12 or 15(d) of the Securities  and
Exchange Act of 1934 or to the Investment Company Act of 1940.

                                     

                                  PART II


Item  5.    Market  for Registrants' Common Equity and Related  Stockholder
Matters

Entergy Corporation

     The shares of Entergy Corporation's common stock are listed on the New
York Stock, Chicago Stock, and Pacific Exchanges.

     The high and low prices of Entergy Corporation's common stock for each
quarterly period in 1997 and 1996 were as follows:

                               1997                    1996
                          High        Low          High       Low
                                       (In Dollars)
                                                           
      First              28 3/8       24          30 3/8     26 3/8
      Second             27 1/2       22 3/8      28 1/2     25 1/4
      Third              28           24 1/16     28 5/8     24 7/8
      Fourth             30 1/4       23          29         26 3/4

      Dividends  of  45 cents per share were paid on Entergy  Corporation's
common stock in each of the quarters of 1997 and 1996.

      As  of February 28, 1998, there were 88,685  stockholders  of  record
of Entergy Corporation.

      For  information with respect to Entergy Corporation's future ability
to pay dividends, refer to Note 8, "DIVIDEND RESTRICTIONS."  In addition to
the restrictions described in Note 8, PUHCA provides that, without approval
of  the  SEC,  the  unrestricted, undistributed retained  earnings  of  any
Entergy  Corporation  subsidiary  are not  available  for  distribution  to
Entergy  Corporation's  common stockholders until such  earnings  are  made
available  to  Entergy Corporation through the declaration of dividends  by
such subsidiaries.

Entergy   Arkansas,   Entergy  Gulf  States,  Entergy  Louisiana,   Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy London

      There  is  no  market  for the common stock of Entergy  Corporation's
wholly  owned  subsidiaries.  Cash dividends on common stock  paid  by  the
subsidiaries to Entergy Corporation during 1997 and 1996, were as follows:

                                1997            1996
                                   (In Millions)
                                               
Entergy Arkansas               $128.6          $142.8
Entergy Gulf States            $ 77.2            --
Entergy Louisiana              $145.4          $179.2
Entergy Mississippi            $ 59.2          $ 79.9
Entergy New Orleans            $ 26.0          $ 34.0
System Energy                  $113.8          $112.5
Entergy London                  --              --
Entergy S.A.                    --             $  0.7
Entergy Transener S.A.          --             $  1.7
Entergy Argentina S.A.          --             $  0.3
Entergy Argentina S.A. Ltd.     --             $  3.1

      In  January  and February  1998, Entergy Corporation received common
stock dividend payments  from its  subsidiaries  totaling  $103.9 million.
For  information with  respect  to restrictions  that limit the ability of
System Energy,  the domestic  utility companies  and Entergy London to pay
dividends, see Note 8.  In order to improve its capital structure, Entergy
Gulf States ceased paying  common  stock dividends after the third quarter
of 1994.   However, such dividends  were  resumed  in  the  third  quarter
of 1997. (See "Management's Financial Discussion and Analysis -  Liquidity
and Capital Resources.")


Item 6.   Selected Financial Data

     Entergy Corporation..  Refer to information under the heading "ENTERGY
CORPORATION   AND   SUBSIDIARIES  SELECTED  FINANCIAL  DATA   -   FIVE-YEAR
COMPARISON."

      Entergy  Arkansas.  Refer to information under the  heading  "ENTERGY
ARKANSAS, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

      Entergy Gulf States.  Refer to information under the heading "ENTERGY
GULF STATES, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

      Entergy  Louisiana.  Refer to information under the heading  "ENTERGY
LOUISIANA, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

      Entergy Mississippi.  Refer to information under the heading "ENTERGY
MISSISSIPPI, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

      Entergy New Orleans.  Refer to information under the heading "ENTERGY
NEW ORLEANS, INC. SELECTED FINANCIAL DATA -  FIVE-YEAR COMPARISON."

      System Energy.  Refer to information under the heading "SYSTEM ENERGY
RESOURCES, INC. SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON."

      Entergy  London (Successor Company).  Refer to information under  the
headings  "ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY SELECTED FINANCIAL
DATA" AND "LONDON ELECTRICITY PLC AND SUBSIDIARIES SELECTED FINANCIAL  DATA
- - FOUR-YEAR COMPARISON."


Item  7.   Management's Discussion and Analysis of Financial Condition  and
Results of Operations

      Entergy Corporation and Subsidiaries.  Refer to information under the
heading   "ENTERGY  CORPORATION  AND  SUBSIDIARIES  MANAGEMENT'S  FINANCIAL
DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES," " - SIGNIFICANT
FACTORS AND KNOWN TRENDS," and "- RESULTS OF OPERATIONS."

      Entergy  Arkansas.  Refer to information under the  heading  "ENTERGY
ARKANSAS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS  OF
OPERATIONS."

      Entergy Gulf States.  Refer to information under the heading "ENTERGY
GULF  STATES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS
OF OPERATIONS."

      Entergy  Louisiana.  Refer to information under the heading  "ENTERGY
LOUISIANA, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF
OPERATIONS."

      Entergy Mississippi.  Refer to information under the heading "ENTERGY
MISSISSIPPI, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -  RESULTS
OF OPERATIONS."

      Entergy New Orleans.  Refer to information under the heading "ENTERGY
NEW  ORLEANS, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS
OF OPERATIONS."

      System Energy.  Refer to information under the heading "SYSTEM ENERGY
RESOURCES, INC. MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - RESULTS OF
OPERATIONS."

      Entergy  London (Successor Company).  Refer to information under  the
headings  "ENTERGY  LONDON  INVESTMENTS  PLC  AND  SUBSIDIARY  MANAGEMENT'S
FINANCIAL  DISCUSSION  AND ANALYSIS - RESULTS OF  OPERATIONS"  AND  "LONDON
ELECTRICITY  PLC  AND  SUBSIDIARIES MANAGEMENT'S FINANCIAL  DISCUSSION  AND
ANALYSIS - RESULTS OF OPERATIONS."


I
tem 7A.  Quantitative and Qualitative Disclosures About Market Risk

      Entergy Corporation and Subsidiaries.  Refer to information under the
heading   "ENTERGY  CORPORATION  AND  SUBSIDIARIES  MANAGEMENT'S  FINANCIAL
DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS."



Item 8.   Financial Statements and Supplementary Data.

                       INDEX TO FINANCIAL STATEMENTS
                                     
Entergy Corporation and Subsidiaries:                                    
  Report of Management                                                 46
  Audit Committee Chairperson's Letter                                 47
  Management's Financial Discussion and Analysis                       48
  Report of Independent Accountants                                    62
  Management's Financial Discussion and Analysis                       63
  Statements of Consolidated Income For the Years Ended December 31,   67
   1997, 1996, and 1995
  Statements of Consolidated Cash Flows For the Years Ended December   68
   31, 1997, 1996, and 1995
  Consolidated Balance Sheets, December 31, 1997 and 1996              70
  Statements of Consolidated Retained Earnings and Paid-In Capital     72
   for the Years Ended December 31, 1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                       73
Entergy Arkansas, Inc.:                                                  
  Report of Independent Accountants                                    75
  Management's Financial Discussion and Analysis                       76
  Statements of Income For the Years Ended December 31, 1997, 1996,    78
   and 1995
  Statements of Cash Flows For the Years Ended December 31, 1997,      79
   1996, and 1995
  Balance Sheets, December 31, 1997 and 1996                           80
  Statements of Retained Earnings for the Years Ended December 31,     82
   1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                       83
Entergy Gulf States, Inc.:                                               
  Report of Independent Accountants                                    85
  Management's Financial Discussion and Analysis                       86
  Statements of Income (Loss) For the Years Ended December 31, 1997,   88
   1996, and 1995
  Statements of Cash Flows For the Years Ended December 31, 1997,      89
   1996, and 1995
  Balance Sheets, December 31, 1997 and 1996                           90
  Statements of Retained Earnings for the Years Ended December 31,     92
   1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                       93
Entergy Louisiana, Inc.:                                                 
  Report of Independent Accountants                                    95
  Management's Financial Discussion and Analysis                       96
  Statements of Income For the Years Ended December 31, 1997, 1996,    98
   and 1995
  Statements of Cash Flows For the Years Ended December 31, 1997,      99
   1996, and 1995
  Balance Sheets, December 31, 1997 and 1996                          100
  Statements of Retained Earnings for the Years Ended December 31,    102
   1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                      103
Entergy Mississippi, Inc.:                                               
  Report of Independent Accountants                                   105
  Management's Financial Discussion and Analysis                      106
  Statements of Income For the Years Ended December 31, 1997, 1996,   108
   and 1995
  Statements of Cash Flows For the Years Ended December 31, 1997,     109
   1996, and 1995
  Balance Sheets, December 31, 1997 and 1996                          110
  Statements of Retained Earnings for the Years Ended December 31,    112
   1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                      113
Entergy New Orleans, Inc.:                                               
  Report of Independent Accountants                                   115
  Management's Financial Discussion and Analysis                      116
  Statements of Income For the Years Ended December 31, 1997, 1996,   118
   and 1995
  Statements of Cash Flows For the Years Ended December 31, 1997,     119
   1996, and 1995
  Balance Sheets, December 31, 1997 and 1996                          120
  Statements of Retained Earnings for the Years Ended December 31,    122
   1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                      123
System Energy Resources, Inc.:                                           
  Report of Independent Accountants                                   124
  Management's Financial Discussion and Analysis                      125
  Statements of Income For the Years Ended December 31, 1997, 1996,   126
   and 1995
  Statements of Cash Flows For the Years Ended December 31, 1997,     127
   1996, and 1995
  Balance Sheets, December 31, 1997 and 1996                          128
  Statements of Retained Earnings for the Years Ended December 31,    130
   1997, 1996, and 1995
  Selected Financial Data - Five-Year Comparison                      131
Entergy London Investments plc and Subsidiary (Successor Company):       
  Report of Independent Accountants                                   132
  Management's Financial Discussion and Analysis                      133
  Consolidated Statement of Loss For the Year Ended December 31, 1997 138
  Consolidated Statement of Cash Flows For the Year Ended December    139
   31, 1997
  Consolidated Balance Sheet, December 31, 1997                       140
  Consolidated Statement of Changes in Shareholder's Equity for the   142
   Year Ended December 31, 1997
  Selected Financial Data                                             143
Notes to Financial Statements for Entergy Corporation and             144
  Subsidiaries
London Electricity plc (Predecessor Company):                            
  Report of Independent Accountants                                   201
  Management's Financial Discussion and Analysis                      202
  Consolidated Statement of Operations For the Period from April 1,   206
   1996 to January 31, 1997 and the Year Ended March 31, 1996
  Consolidated Statement of Cash Flows For the Period from April 1,   207
   1996 to January 31, 1997 and the Year Ended March 31, 1996
  Consolidated Balance Sheet, March 31, 1996                          208
  Consolidated Statement of Changes in Shareholder's Equity for the   210
   Period from April 1, 1996 to January 31, 1997 and the Year Ended
   March 31, 1996
  Selected Financial Data - Four-Year Comparison                      211
  Notes to Financial Statements                                       212


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
                           REPORT OF MANAGEMENT


      The  management of Entergy Corporation and subsidiaries has  prepared
and  is  responsible  for the financial statements  and  related  financial
information  included  herein.   The  financial  statements  are  based  on
generally  accepted accounting principles in the United States.   Financial
information  included  elsewhere in this  report  is  consistent  with  the
financial statements.

      To  meet  its responsibilities with respect to financial information,
management maintains and enforces a system of internal accounting  controls
that  is  designed  to  provide reasonable assurance, on  a  cost-effective
basis,  as  to the integrity, objectivity, and reliability of the financial
records,  and  as  to  the  protection of  assets.   This  system  includes
communication through written policies and procedures, an employee Code  of
Conduct,  and  an  organizational structure that provides  for  appropriate
division  of responsibility and the training of personnel.  This system  is
also tested by a comprehensive internal audit program.

      The independent public accountants provide an objective assessment of
the  degree  to which management meets its responsibility for  fairness  of
financial  reporting.   They  regularly evaluate  the  system  of  internal
accounting  controls and perform such tests and other  procedures  as  they
deem  necessary  to  reach and express an opinion on the  fairness  of  the
financial statements.

      Management  believes  that  these  policies  and  procedures  provide
reasonable  assurance  that its operations are  carried  out  with  a  high
standard of business conduct.


/s/ Ed Lupberger				   /s/ Louis E. Buck

ED LUPBERGER                                         LOUIS E. BUCK
Chairman of the Board and Chief             Vice President, Chief Accounting
Executive Officer of Entergy                Officer and Assistant Secretary
Corporation, Entergy Arkansas,              (Principal Accounting Officer)
Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans,
and Entergy London



/s/ Donald C. Hintz

DONALD C. HINTZ
President and Chief Executive Officer of System Energy



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
                   AUDIT COMMITTEE CHAIRPERSON'S LETTER
                                     
                                     
      The  Entergy  Corporation  Board of  Directors'  Audit  Committee  is
comprised  of  five directors who are not officers of Entergy  Corporation:
Dr.  Paul  W.  Murrill, Chairperson, Lucie J. Fjeldstad, James R.  Nichols,
Eugene  H.  Owen,  and  Bismark A. Steinhagen.  The  committee  held  three
meetings during 1997.

     The Audit Committee oversees Entergy Corporation's financial reporting
process  on  behalf  of  the  Board of Directors  and  provides  reasonable
assurance to the Board that sufficient operating, accounting, and financial
controls  are  in  existence and are adequately  reviewed  by  programs  of
internal and external audits.

     The Audit Committee discussed with Entergy's internal auditors and the
independent public accountants (Coopers & Lybrand L.L.P.) the overall scope
and  specific  plans  for  their respective  audits,  as  well  as  Entergy
Corporation's   financial   statements  and   the   adequacy   of   Entergy
Corporation's   internal  controls.   The  committee  met,   together   and
separately,  with  Entergy's  internal  auditors  and  independent   public
accountants,  without management present, to discuss the results  of  their
audits,  their  evaluation of Entergy Corporation's internal controls,  and
the  overall  quality  of Entergy Corporation's financial  reporting.   The
meetings  were  designed to facilitate and encourage private  communication
between  the  committee  and the internal auditors and  independent  public
accountants.




				   /s/ Dr. Paul W. Murrill
	
                                   DR. PAUL W. MURRILL
                                   Chairperson, Audit Committee


                                     

<PAGE>

                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                      LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

      Net  cash  flow  from  operations for Entergy, the  domestic  utility
companies  and System Energy for the years ended December 31,  1997,  1996,
and  1995, and for Entergy London for the year ended December 31, 1997, was
as follows:

                                1997      1996    1995
                                      (In Millions)
                                                 
       Entergy                  $1,725   $1,528   $1,504
       Entergy Arkansas         $  434   $  377   $  338
       Entergy Gulf States      $  466   $  322   $  401
       Entergy Louisiana        $  341   $  352   $  385
       Entergy Mississippi      $  159   $  182   $  185
       Entergy New Orleans      $   49   $   44   $   99
       System Energy            $  278   $  287   $   96
       Entergy London           $   51     N/A     N/A

      The  positive  cash  flow from operations for  the  domestic  utility
companies  results from continued efforts to streamline operations  and  to
reduce  costs, as well as from collections under rate phase-in  plans  that
exceed  current  cash requirements for the related costs.   In  the  income
statement,  these  revenue collections are offset by  the  amortization  of
previously  deferred costs; thus, there is no effect on net income.   These
phase-in  plans will continue to contribute to Entergy's cash  position  in
the  immediate future.  Specifically, the Grand Gulf 1 phase-in plans  will
expire in September 1998 for Entergy Arkansas and Entergy Mississippi,  and
in  2001  for Entergy New Orleans.  Entergy Gulf States' phase-in plan  for
River Bend expired in February 1998, and Entergy Louisiana's phase-in  plan
for  Waterford  3  expired  in  June 1997.  Competitive  growth  businesses
contributed $104 million to Entergy Corporation's cash flow from operations
in  1997.   In  accordance with the purchase method of  accounting,  London
Electricity's results of operations are not included in Entergy Corporation
and  Subsidiaries' Statements of Consolidated Cash Flows prior to  February
1, 1997, the effective date of the acquisition of London Electricity.

Financing Sources

      As  discussed in Note 13, Entergy London acquired London  Electricity
for  $2.1 billion in February 1997.  The acquisition was financed with $1.7
billion  of  debt  that  is non-recourse to Entergy Corporation,  and  $392
million  of equity provided by Entergy Corporation from available cash  and
borrowings  under  its  $300  million  line  of  credit.   Entergy   London
refinanced a portion of this debt during the fourth quarter of 1997 through
the  issuance  of  $300  million  of quarterly income preferred securities.
Subsequent  to  the refinancing,  the debt is  now an obligation of Entergy 
UK Limited,  an indirect, wholly-owned subsidiary of   Entergy Corporation.
However, the obligation is reflected in the financial statements of Entergy 
London, because  the  facility is guaranteed by Entergy London, Entergy  UK
Limited's  indirect,  wholly-owned subsidiary.  Entergy  London  recognizes
the interest expense associated with this debt in its financial statements,
with a  credit to  shareholder's  equity for the same  amount.  This credit
to shareholder's equity offsets dividends as they are declared from Entergy
London to  Entergy UK Limited.  These dividends are the  funding  mechanism  
for  Entergy  UK  Limited  to  service  this  debt.  Management  intends to 
declare future dividends from Entergy London to  enable Entergy UK  Limited 
to continue to service this debt.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                      LIQUIDITY AND CAPITAL RESOURCES

     London Electricity is Entergy London's sole investment and only asset.
Entergy   London  is  therefore  dependent  upon  dividends   from   London
Electricity  for all of its cash flow.  In addition to London Electricity's
cash  flow  from  operations, Entergy London has other primary  sources  of
liquidity  including London Electricity's several uncommitted credit  lines
provided by banking institutions, and London Electricity's commercial paper
program.  In addition, London Electricity intends to use availability under
existing  facilities,  or replacements thereof, to  finance  its  remaining
payment  of  windfall  profits taxes in December  1998,  which  will  total
approximately $117 million (approximately BPS70 million).

      Management  believes  that cash flow from operations,  together  with
Entergy  London's existing sources of credit and the restructuring  of  its
credit  facilities  in  November 1997, will result in sufficient  financial
resources being available to meet Entergy London's projected capital  needs
and  other  expenditure  requirements for the foreseeable  future.   London
Electricity  has represented to the Regulator, in connection with  its  PES
license,  that  it  will  use  all  reasonable  endeavors  to  maintain  an
investment grade rating on its long-term debt.

      Entergy Mississippi issued a series of general and refunding mortgage
bonds in June 1997 totaling $65 million, the proceeds of which were used to
meet  a  scheduled  July  1,  1997  debt maturity.   Excluding  the  London
Electricity investment and the Entergy Mississippi bond issuance, cash from
operations,  supplemented  by  cash  on  hand,  was  sufficient   to   meet
substantially  all  investing and financing requirements  of  the  domestic
utility  companies,  System Energy, and Entergy London,  including  capital
expenditures, dividends, and debt/preferred stock maturities during 1997.

      Entergy's  domestic utility companies other than Entergy  Mississippi
have been able to fund their capital requirements with cash from operations
as  discussed  above in "Cash Flow."  Should additional cash be  needed  to
fund  investments  or  to retire debt, the domestic utility  companies  and
System  Energy  each have the ability, subject to regulatory  approval  and
compliance  with issuance tests, to issue debt or preferred  securities  to
meet  such requirements.  In addition, to the extent market conditions  and
interest  and dividend rates allow, the domestic utility companies,  System
Energy, and Entergy London will continue to refinance and/or redeem  higher
cost  debt  and  preferred stock prior to maturity.   See  Note  10  for  a
discussion  of  the  refinancing by Entergy Louisiana.  Entergy's  domestic
utility  companies and Entergy  London  may  continue to establish  special
purpose  trusts or limited partnerships as financing subsidiaries  for  the
purpose  of  issuing quarterly income preferred securities, such  as  those
issued  in 1996 by Entergy Louisiana Capital I and Entergy Arkansas Capital
I,  and  those issued in 1997 by Entergy Gulf States Capital I and  Entergy
London  Capital L.P.  Entergy Corporation, the domestic utility  companies,
System  Energy, and Entergy London also have the ability to  effect  short-
term borrowings.  See Notes 4, 5, 6, 7, and 9 for additional information on
Entergy's  capital and refinancing requirements in 1998-2002 and  available
lines of credit.

Financing Uses

      Management believes that productive investment by Entergy is integral
to  enhancing  the long-term value of its common stock.  Entergy  has  been
expanding its investments in business opportunities overseas as well as  in
the  United  States.   As  of December 31, 1997, Entergy  had  acquired  or
participated  in foreign electric ventures in Australia, Argentina,  Chile,
China,   Pakistan,   Peru,   and   the  UK   and   had   acquired   several
telecommunications-based businesses in the United States.  The  ability  of
Entergy  Corporation  to  provide additional capital  to  exempt  wholesale
generators or foreign utility companies currently is subject to  the  SEC's
regulations under PUHCA.  Absent SEC approval, these regulations limit  the
aggregate  amount that Entergy may invest in foreign utility companies  and
exempt wholesale generators to 50% of consolidated retained earnings at the
time  an  investment is made.  As of November 1997, Entergy Corporation  no
longer  had capacity to make additional investments under these regulations
without  SEC approval.  Entergy has applied to the SEC to obtain additional
authority to make such investments, and is also exploring means of  raising
capital  for  other  foreign investments in a manner not inconsistent  with
these regulations.   As of December 31, 1997, Entergy Corporation had a net
investment  of  $1.3  billion  in  equity  capital  in  competitive  growth
businesses.   See Note 13 for a discussion of Entergy London's  acquisition
of London Electricity effective February 1, 1997.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                                        
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                      LIQUIDITY AND CAPITAL RESOURCES
                                     

     To make capital investments, fund its subsidiaries, and pay dividends,
Entergy Corporation will utilize internally generated funds, cash on  hand,
funds  available under its bank credit facilities, funds received from  its
dividend  reinvestment  and stock purchase plan, and  bank  financings,  as
required.  See Note 5 for information regarding proceeds from the  issuance
of common stock under Entergy Corporation's dividend reinvestment and stock
purchase  plan  during  1997.   See Note 9  for  a  discussion  of  capital
requirements.  Entergy Corporation receives funds through dividend payments
from   its   subsidiaries.   During  1997,  such  dividend  payments   from
subsidiaries  totaled $550.2 million.  Entergy Gulf States  resumed  paying
common  stock  dividends in the third quarter of 1997.   In  1997,  Entergy
Corporation  paid  $438  million of cash dividends  on  its  common  stock.
Declarations  of  dividends  on Entergy's common  stock  are  made  at  the
discretion  of  its  Board of Directors.  See Note  8  for  information  on
dividend restrictions.

      Entergy London's primary need for liquidity is to pay interest on its
debt,  and  management  believes that it will receive sufficient  dividends
from  London  Electricity to make such payments.  Entergy  London  believes
that  London Electricity will be able to distribute all cash flow generated
in  excess  of  amounts  necessary for London Electricity  to  conduct  its
business in compliance with its PES License.

Entergy Corporation and Entergy Gulf States

      See Notes 2 and 9 regarding River Bend and Cajun  litigation.  During
the  fourth  quarter  of 1997, Entergy  Gulf States established reserves of 
$381  million ($227 million  net  of  tax)  for the probable effects of the
agreement in principle  as discussed in Note 2.  Final resolution  of these
matters could negatively affect Entergy  Gulf  States' ability  to   obtain
financing, which in turn could  affect  Entergy  Gulf States' liquidity and 
ability to pay common stock dividends to  Entergy Corporation.  See Note  2 
for information related to the proposed agreement in  principle between the
parties to the Entergy Gulf States rate proceedings in Texas.

Entergy Corporation and System Energy

      Under the Capital Funds Agreement, Entergy Corporation has agreed  to
supply  System  Energy with sufficient capital to maintain System  Energy's
equity  capital at a minimum of 35% of its total capitalization  (excluding
short-term  debt),  to permit the continued commercial operation  of  Grand
Gulf  1,  and to pay in full all indebtedness for borrowed money of  System
Energy  when  due.   In addition, under supplements to  the  Capital  Funds
Agreement  assigning  System  Energy's rights thereunder  as  security  for
specific debt of System Energy, Entergy Corporation has committed  to  make
cash  capital contributions, if required, to enable System Energy  to  make
payments  on  such  debt  when due.  The Capital  Funds  Agreement  may  be
terminated by the parties thereto, subject to consent of certain creditors.



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS


Domestic Competition and Industry Challenges

      The  electric  utility  industry  traditionally  has  operated  as  a
regulated  monopoly  in  which  there was  little  opportunity  for  direct
competition  in  the provision of electric service.  The  industry  is  now
undergoing a transition to an environment of increased retail and wholesale
competition.   The causes of the movement toward competition  are  numerous
and   complex.    They   include  legislative   and   regulatory   changes,
technological advances, consumer demands, relative cost and availability of
natural  gas and other fuels, environmental regulations, and other factors.
The  increasingly competitive environment presents opportunities to compete
for  new customers, as well as the risk of loss of existing customers.  The
following  issues have been identified by Entergy as its major  competitive
challenges.

Open Access Transmission
                                     
      In  response  to  FERC Order No. 888, which was issued  in  1996  and
requires  that  all  public utilities subject to FERC jurisdiction  provide
comparable  wholesale transmission access through the filing  of  a  single
open  access  tariff,  Entergy Services filed on  behalf  of  the  domestic
utility  companies  a  request  for  clarification  and  rehearing  of  the
following  four issues:  (i)  the special nature and treatment of  stranded
nuclear  decommissioning costs; (ii) the reciprocity  rules  applicable  to
rural  electric cooperatives; (iii) the functional unbundling  requirements
for  registered holding companies; and (iv) the nature of network  service.
The request for rehearing remains pending.

      FERC  also issued Order No. 889 in 1996, prescribing the requirements
and  procedures  for the implementation and maintenance of an  open  access
same-time  information system by each public utility.   In  addition,  FERC
issued  a  notice  of  proposed rulemaking concerning capacity  reservation
tariffs  as the next phase of its efforts to promote wholesale competition.
In  July  1996, Entergy Services filed an open access pro forma  tariff  on
behalf of the domestic utility companies.

      In  September  1996,  FERC  issued an  order  revising  the  original
requirement  that  open  access  same-time information  service  sites  and
standards of conduct be in place for all transmission providers by November
1, 1996.  FERC scheduled the operation of open access same-time information
service  sites  to  begin  on  a test basis in  December  1996,  with  full
commercial operation and compliance with the standards of conduct beginning
in  January 1997.  In January 1997, Entergy Services filed its standards of
conduct  with  FERC  and  an  open access same-time  information  site  was
established.    In  July  1997,  Entergy  Services  filed   its   wholesale
transmission  open access compliance tariff incorporating the  requirements
of FERC Order No. 888-A.

Transition to Competition Filings

      Entergy has initiated discussions with its state and local regulators
regarding   an  orderly  transition  to  a  more  competitive  market   for
electricity.   As discussed in more detail in Note 2, each of the  domestic
utility companies made filings in 1996 or 1997 with their respective  state
or  local  regulators  concerning  the transition  to  competition.   These
filings  called  for  the  accelerated recovery of the  companies'  nuclear
investment  and  nuclear-related purchase  obligations  over  a  seven-year
period  and  for  the  protection of certain  classes  of  ratepayers  from
possibly unfairly bearing the burden of cost shifting which may result from
competition.   The  majority of the domestic utility companies' current net
investment  in  nuclear  generation shown in Note 1  was  included  in  the
proposals for accelerated recovery filed with state and local regulators.



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS


Retail and Wholesale Rate Issues

      The  retail  regulatory philosophy is shifting in some  jurisdictions
from  traditional cost-of-service regulation to incentive-rate  regulation.
Incentive  and  performance-based  rate plans  encourage  efficiencies  and
productivity while permitting utilities and their customers to share in the
results.   Entergy  Mississippi  and  Entergy  Louisiana  have  implemented
incentive-rate plans, although Entergy Louisiana's plan has now expired.

      Several of the domestic utility companies have recently been  ordered
to  grant base rate reductions and have refunded or credited customers  for
previous  overcollections  of  rates.   The  continuing  pattern  of   rate
reductions  reflects both lower costs of service ordered by regulators  and
the  competitive environment in which the domestic utilities operate.   See
Note  2  for  additional discussion of rate reductions  and  incentive-rate
regulation, as well as a proposed System Energy rate increase.

Legislative Activity

     Retail wheeling is the transmission and/or distribution by an electric
utility   of   energy  produced  by  another  entity  over  the   utility's
transmission  and distribution system to a retail customer in the  electric
utility's  area  of  service.   California, Rhode  Island,  New  Hampshire,
Massachusetts, Montana, Oklahoma, Illinois, and Pennsylvania, among others,
have   begun  the  restructuring  of  the  utility  industry  within  their
respective  states.  Most other states have initiated studies  of  industry
restructuring.  Included in many of these restructuring plans  and  studies
are  provisions  or  proposals  allowing utilities  to  have  a  reasonable
opportunity  to  recover investments in utility plant that have  previously
been  determined to be prudently incurred.  However, some states  have  not
allowed full recovery of such investments.  Within the areas served by  the
domestic   utility   companies,   formal  proceedings   to   study   retail
competition/industry restructuring are being conducted  by  the  LPSC,  the
MPSC, the PUCT, and the Council.

      A number of bills have been introduced in the U.S. Congress  calling
for deregulation of the electric power industry.  Included among these are
some that would amend or repeal PUHCA and/or PURPA.  These bills generally
have provisions that would give consumers the ability to choose their  own
electricity  service provider.  The Energy and Power Subcommittee  of  the
Commerce  Committee of the U.S. House of Representatives held hearings  on
this  issue  in  October  1997, at which it was agreed  that  a  consensus
approach  to  electricity deregulation was needed.  However, no  agreement
has been reached as to a specific approach.

      Entergy Gulf States was an active participant in discussions aimed at
developing  legislation relating to electric utility industry restructuring
and  competition in the Texas Legislature. However, no such legislation was
passed before the Legislature adjourned in June 1997.  The legislature will
not reconvene until January 1999, by which time Entergy Gulf States expects
that  the  PUCT will have acted on the transition to competition filing  of
Entergy Gulf States.

      The Arkansas Senate has passed a resolution requesting a study of the
impact  of  electric  utility  industry  competition  on  the  citizens  of
Arkansas,  the electric utility industry, and the regulatory  authority  of
the APSC.  This study, to be performed by a joint legislative committee  of
the  Arkansas General Assembly, began in December 1997, and is expected  to
conclude prior to the 1999 legislative session.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS


      The  SEC issued Rule 58 under PUHCA, which became effective on March
22,  1997, permitting registered public utility holding companies such  as
Entergy  to  enter  into an array of energy-related businesses  for  which
specific approval had previously been required.  These businesses include,
among other things, management, operations and maintenance contracting for
energy-related facilities, energy efficiency contracting, and the sale and
servicing  of  a  range of electric appliances and  equipment.   EPMC  and
Entergy  Holdings, Inc., wholly-owned subsidiaries of Entergy, now operate
pursuant to Rule 58.  EPMC terminated its EWG status shortly after Rule 58
became effective.

Municipalization

      In  some  areas of the country, municipalities whose  residents  are
served at retail by investor-owned utilities are exploring the possibility
of  establishing new electric distribution systems, or extending  existing
ones.   In some cases, municipalities are also seeking new delivery points
in order to serve retail customers, especially large industrial customers,
that  currently  receive  service from an investor-owned  utility.   Where
successful, the establishment of a municipal system or the acquisition  by
a  municipal system of a utility's customers could result in the utility's
inability to recover costs that it has incurred for the purpose of serving
those customers.

Industry Consolidation

      Another  factor in the transition to competition nationwide  is  the
continuing  and accelerating trend of utility mergers and joint  ventures.
A  significant trend over the last several years has been the  combination
of  electric  utilities  and gas pipeline and/or  distribution  companies.
Such  mergers  and  joint ventures for the same purpose  are  expected  to
continue.

Functional Unbundling
                                     
      An  additional  trend  is  the  unbundling  of  traditional  utility
functions.   In some areas of the country, utilities have either  sold  or
are  attempting  to sell all or a substantial portion of their  generation
assets  and  will become, in large part, suppliers of transmission  and/or
distribution services only.

Effects  of Alternate Energy Sources on Retail Electric Sales to Industrial
and Large Commercial Customers

     Many industrial and large commercial customers of the domestic utility
companies  have  energy  intensive needs.  These  customers  are  exploring
available  energy alternatives such as fuel switching, cogeneration,  self-
generation,  production shifting, and efficiency measures in an  effort  to
reduce  their energy costs.  To the extent that customers avail  themselves
of these options, the domestic utility companies may suffer a loss of load.

      Recognizing  the  options that customers might pursue,  the  domestic
utility   companies,  in  particular,  Entergy  Gulf  States  and   Entergy
Louisiana, have negotiated electric service contracts with large industrial
and  commercial customers for the purpose of retaining the load represented
by these customers.  Electric service under such agreements may be provided
at  tariffed  rates  lower than would otherwise be  applicable.  While  the
results  of operations of the domestic utility companies have not thus  far
been materially adversely affected as a result of the negotiation of retail
electric service agreements with industrial and large commercial customers,
this  has  been due in large measure to the utilities' success in  reducing
costs,  overall load growth, increasing sales to all customer classes,  and
the   regulatory   treatment  accorded  to  negotiated   electric   service
agreements.   In  view of the likelihood of increased  competition  in  the
electric  utility  business in the future, there can be no  assurance  that
at risk  industrial  and  large  commercial  customers  will continue to be 
retained by the domestic utility companies.

<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS

      In  1995, Entergy Louisiana received separate notices from two  large
industrial  customers that they were proceeding with proposed  cogeneration
projects for the purpose of fulfilling their future electric energy  needs.
In  1997,  net  income  decreased by approximately  $6  million  and  sales
declined by 1,662 megawatt hours from the prior year, as a result of  these
customers  proceeding  with  their proposed cogeneration  projects.   These
customers will continue to purchase energy from Entergy Louisiana, but at a
reduced level.

Change in Contract with Steam Customer

      In  1996,  Entergy Gulf States entered into agreements  concerning  a
steam  generating station that historically had been dedicated to providing
steam  and cogenerated electricity for a large industrial customer.   Under
these  agreements, the generating facility was leased to the customer,  but
Entergy  Gulf  States continues to operate the facility.  The  customer  is
spending  approximately  $190 million to make  major  improvements  to  the
facility,  including a new 150 MW gas turbine generator.  As  a  result  of
these  agreements,  which were entered into with the expectation  that  the
customer  otherwise would terminate its contracts with Entergy Gulf  States
and  construct its own generating facilities, Entergy Gulf States' revenues
from  this customer are being reduced by approximately $33 million annually
from the 1996 level of revenues, beginning in August 1997, and Entergy Gulf
States'  net income is being reduced by approximately $15 million annually.
Revenue from this customer amounted to $44 million and $59 million in  1997
and 1996, respectively.

Domestic and Foreign Competitive Growth Businesses

       Entergy  Corporation  seeks  opportunities  to  expand  its  foreign
businesses and its domestic businesses that are not regulated by state  and
local  regulatory  authorities.  Such business ventures  currently  include
power development and operations and retail services related to the utility
business.   Refer  to  "MANAGEMENT'S FINANCIAL DISCUSSION  AND  ANALYSIS  -
LIQUIDITY  AND CAPITAL RESOURCES" for a discussion of Entergy Corporation's
1997  investments  in domestic and foreign nonregulated businesses.   These
investments may involve a greater risk than domestically regulated  utility
enterprises.  In 1997, Entergy Corporation's competitive growth  businesses
reduced  consolidated net income by approximately $139 million  principally
due  to the impact of a windfall profits tax in the UK, which was partially
offset by a reduction in the UK corporation tax rate, as discussed in  more
detail  below  in  "Windfall Profits Tax".  Excluding the impact  of  these
and   other   non-recurring   items,   the  competitive  growth  businesses  
contributed $51 million to consolidated net income during 1997.

     In an effort to expand into new energy-related businesses, Entergy has
begun  to  commercialize  the fiber optic telecommunications  network  that
connects its facilities and supports its internal business needs.   Entergy
provides   long-haul  fiber  optic  capacity  to  major  telecommunications
carriers  which,  in  turn,  market that service  to  third  parties.   The
Telecommunications Act of 1996 permits a company such as Entergy to  market
such  a service, subject to state and local regulatory approval.  This  law
contains  an  exemption  from  PUHCA that will  permit  registered  utility
holding  companies  to  form  and  capitalize  subsidiaries  to  engage  in
telephone,  telecommunications, and information service businesses  without
SEC  approval.   However,  the  law requires that  such  telecommunications
subsidiaries   file  for  exemption  from  regulation  with   the   Federal
Communications  Commission, and that they not engage in  transactions  with
utility  affiliates within their holding company systems or acquire utility
affiliates' rate-based property without state or local regulatory approval.

     EPMC,  which  was  created in 1995 to become a  buyer  and  seller  of
electric  energy and generating fuels, operates pursuant to Rule  58  under
PUHCA.   In  February 1996, FERC approved sales of electricity by  EPMC  at
market-based  rates.   Such  approval  allows  EPMC  to  provide  wholesale
customers  with  a  variety of services, including  physical  trading.   An
application  before  the  SEC  seeking additional  authority  for  EPMC  to
purchase  and sell derivative contracts relating to electricity,  gas,  and
fuels was approved in January 1998.



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS

      On  December  18, 1996, Entergy made a formal cash offer  to  acquire
London  Electricity for $2.1 billion.  London Electricity is an REC serving
approximately  two million customers in the metropolitan  area  of  London,
England.   The  offer was approved by authorities in the UK  and  was  made
unconditional on February 7, 1997.  Entergy subsequently gained control  of
100%  of  the  common  shares of London Electricity.  The  acquisition  was
financed  with  $1.7  billion  of  debt that  is  non-recourse  to  Entergy
Corporation,  and  $392 million of equity provided by  Entergy  Corporation
from  available cash and borrowings under its $300 million line of  credit,
which  has  since been refinanced (see Note 7).  Entergy has accounted  for
the  transaction as a purchase and accordingly has included the results  of
London  Electricity  in  its consolidated results of  operations  effective
February 1, 1997.

      Through its London Electricity acquisition, Entergy expects  to  gain
valuable   experience  in  the  deregulated  UK  electricity   market,   in
anticipation  of the deregulation of the electricity market in  the  United
States.   London  Electricity  has already experienced  seven  years  of  a
partially  competitive supply environment and expects  to  be  in  a  fully
competitive supply market beginning in late 1998.  In conjunction with  the
acquisition  of  London Electricity, Entergy established  an  international
retail operations group to coordinate retail electric operations in the UK,
Australia, and Argentina.

      In September 1997, EPDC acquired KPL for $67 million.  KPL owns land
in  Southeast  England and certain rights to build a power  station.   The
acquisition  of KPL was financed by borrowings under a BPS50 million  ($82
million) credit facility with an international bank, which has since  been
increased  to BPS100 million ($165 million).  In early October 1997,  EPDC
announced  construction of a 770 MW combined cycle  gas  turbine  merchant
power plant on the KPL site to be known as Damhead Creek.  Construction is
scheduled  to  begin in April 1998, at an estimated cost of $625  million.
The  target date for commercial operation is the second quarter  of  2000.
Financing and other project requirements are currently in the final stages
of development
                                     
     In December 1997, SCC, a wholly-owned subsidiary of EPDC, entered into
a  BPS646  million  ($1.07  billion) nonrecourse credit  facility  with  an
international  bank group for the construction of 1,200 MW gas-fired  power
plant  in Hull, England.  The power plant will sell power into the UK power
pool  at  prices  established by the market.  SCC entered into  a  lump-sum
contract  to  build the power plant with a major international  contractor.
SCC  has  also  entered  into a series of contracts including  a  long-term
ground lease for the site, a long-term gas supply agreement including take-
or-pay obligations, and a long-term power supply with the industrial  host.
In  connection with an equity contribution obligation to SCC, EPDC provided
a BPS48 million ($79 million) letter of credit under a BPS100 million ($165
million) revolving credit facility.  Entergy Corporation has issued a  $170
million guaranty of EPDC's obligations under the revolving credit facility.
The  total cost of this  project currently is estimated to be approximately
$875 million and the project is expected to be operational by January 2000.

      In  1997, Entergy continued to expand and diversify its domestic  and
foreign businesses.  Such efforts included the formation of a joint venture
(Entergy  Hyperion  Telecommunications) to offer competitive  local  access
telephone  services  to  business customers in the  metropolitan  areas  of
Little  Rock,  Arkansas, Jackson, Mississippi, and Baton Rouge,  Louisiana.
Entergy  Nuclear,  Inc., a wholly-owned subsidiary of Entergy  Enterprises,
entered  into  an  agreement  to provide management  services  for  initial
decommissioning activities (through September 30, 1998) at the Maine Yankee
nuclear plant, owned by the Maine Yankee Atomic Power Company, whose  board
of directors announced in August 1997 the permanent closure of the plant.

      Entergy  also  continued its expansion into the  electronic  security
service  field in 1997 through the acquisition by Entergy Security  Company
(a  wholly-owned  subsidiary  of ETHC) of  the  Ranger  American  group  of
companies,  a  leading  provider of electronic  security  services  in  the
largest  cities  in Texas and in Atlanta, Georgia, which has  approximately
140,000  customers and annual revenues of approximately $53  million.   The
aggregate  purchase price (comprised of Entergy common stock and cash)  was
approximately $61 million.



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS

      As  a  part  of  its  efforts to reposition itself  in  the  evolving
international  power market, Entergy sold all or part of its  interests  in
various  power development projects for proceeds of $64 million,  realizing
after-tax  gains of $17.6 million.  Entergy Power Chile, S.A., an  indirect
wholly-owned  subsidiary of Entergy Power purchased a 25% interest  in  the
San  Isidro project, a 370 MW gas-fired, combined cycle generating facility
under  construction in Chile.  Entergy also announced in 1997 that, through
a  joint venture entered into by a subsidiary, it commenced construction of
a 24 MW cogeneration plant in Nantong, China.

Foreign Distribution and Supply

      On  April  1,  1995,  1996,  and 1997 certain  reductions  in  London
Electricity's  allowed distribution revenues were made  by  the  Regulator.
Such allowed distribution revenues were reduced by 14% and 11% on April  1,
1995  and  April 1, 1996, respectively, following reviews by the Regulator.
On  April 1, 1997, London Electricity's allowed distribution revenues  were
further  decreased by 3%, with further annual reductions of 3% to occur  on
April  1, 1998 and 1999.  London Electricity is pursuing a number  of  cost
efficiency initiatives in an attempt to partially offset the expected price
decreases.   Such  efficiencies  will include  voluntary  early  retirement
programs,  work  force  reductions, and labor  cost  realignment,  and  are
expected  to  generate substantial cost savings when fully  implemented  by
fiscal  year 2001.  The one-time cost of such savings will be approximately
$58 million, which has been provided for by London Electricity.

     At present, London Electricity has an exclusive right in its franchise
area  to  supply electricity to customers with demand of less than 100  KW.
In  late  1998,  this segment of the supply business will  become  open  to
competition,  subject to a six-month transition period.   See  Note  2  for
additional  information  related  to expanded  competition  in  the  supply
business and London Electricity's expected expenditures in preparation  for
full  competition  in  supply by June 1999 and  the  Regulator's  proposals
regarding recovery of such costs.

      On  July 1 in each of the years 1997 through 2000 certain adjustments
to  Entergy's  Australian subsidiary's (CitiPower's)  allowed  distribution
revenues  have  been  made  by  CitiPower's regulator.   Such  distribution
revenues have been and will be adjusted by 1% less than the change  in  the
consumer  price  index  for each of the respective  years.   CitiPower  has
implemented  certain cost efficiency and marketing initiatives to  mitigate
the impact of such revenue adjustments.

      At present, CitiPower has an exclusive right in its franchise area to
supply electricity to customers with annual usage of less than 750 MWH.  In
July  1998  and  January 2001, CitiPower customers  with  annual  usage  of
between 160 MWH to 750 MWH and less than 160 MWH, respectively, will become
open to supply business competition.

     Retail prices for CitiPower non-franchise supply customers are subject
to  competitive  market  forces and are not regulated  except  for  network
tariffs,  which are based on a maximum average charge incorporating  annual
price changes of 1.5% less than the change in the consumer price index plus
full  recovery of transmission charges.  These controls will apply  through
the year 2000.

      The  London  Electricity  and CitiPower supply  businesses  generally
involve  entering  into  fixed price contracts  to  supply  electricity  to
customers  who  have  become subject to competition.   The  electricity  is
obtained  primarily  by purchases on a spot basis in which  prices  can  be
volatile.   London Electricity and CitiPower are exposed to  risks  arising
from  differences  between the fixed prices at which they sell  electricity
and  the  fluctuating prices at which electricity is purchased unless  such
exposure  can  be  effectively  hedged.  This  risk  will  be  extended  to
additional  supply  business customers as described above  as  they  become
subject to competition.

      To  mitigate its exposure to volatility, London Electricity  utilizes
contracts  for  differences  ("CFDs") and  power  purchase  contracts  with
certain  UK  generators to fix the price of electricity  for  a  contracted
quantity  over a specific period of time.  As of December 31, 1997,  London
Electricity   had  outstanding  CFDs  and  power  purchase  contracts   for
approximately 40,000 GWH of electricity.  These include a long  term  power
purchase  contract  with  an affiliate, which is  based  on  27.5%  of  the
affiliate's  capacity  from its 1000 MW facility  through  the  year  2010.
London Electricity's sales volumes were approximately 18,000 GWH for  1997.
Management's  estimate  of  the  fair value of  London  Electricity's  CFDs
outstanding  at December 31, 1997 is that fair value approximates  contract
value.

      In  accordance  with  the debt covenants included  in  the  financing
provisions of the CitiPower acquisition, CitiPower must hedge at least  80%
of  its  energy  purchases.   CitiPower's  current  strategy  is  to  hedge
approximately  100%  of  its  forecasted energy  purchases  through  energy
trading  swaps entered into with certain generators.  At December 31,  1997
CitiPower  has outstanding energy trading swaps totaling a notional  amount
of  38,372 MW of average daily load of electricity.  These contracts mature
through  the  year 2000.  Management's estimate of the fair value  of  such
swaps  outstanding at December 31, 1997 is a net liability of approximately
$86.1 million.

      The potential exists for additional distribution price reductions  in
both  the UK and Australia.  Cost efficiency initiatives may not result  in
sufficient  savings  to  offset  price reductions.   Price  reductions  are
mitigated  by  the  inclusion of the general index  for  inflation  in  the
determination of allowed revenues.

Windfall Profits Tax

     As a result of Parliamentary elections held on May 1, 1997, the Labour
Party  gained control of the UK Government.  On July 31, 1997, the  British
government   enacted  a  one-time  "windfall  profits  tax"  on  privatized
industries,   including  regional  electric  utilities   such   as   London
Electricity.   London  Electricity's  windfall  profits  tax  liability  is
approximately BPS140 million (approximately $234 million), which  will  not
be  deductible  for UK corporation tax purposes.  Payment  of  the  tax  is
required in two equal installments, the first of which was paid on December
1, 1997, and the second due on December 1, 1998.

      The UK Government also decreased the UK corporation tax rate from 33%
to  31%, effective April 1, 1997.  In accordance with SFAS 109, "Accounting
for  Income  Taxes",  this reduction resulted in a  one-time  reduction  in
income  tax  expense  of  approximately BPS38  million  (approximately  $65
million).The  liability for the windfall profits tax (with a  corresponding
increase  in  income tax expense) and the reduction in London Electricity's
deferred income tax liability (with a corresponding reduction in income tax
expense) were recorded in July 1997.

Waterford 3

      On January 6, 1997, Waterford 3 received from the NRC its SALP report
for  the  period  April 29, 1995 through November 30,  1996.   During  this
period,  observed performance declined from the previous SALP  report,  and
three  of  the four functional areas received lower ratings.   Waterford  3
personnel  are  meeting  with NRC personnel periodically,  and  significant
Waterford 3 management changes have been effected in order to address these
matters.  Additionally, Waterford 3 has instituted a multi-year program  to
improve performance and is incurring additional costs in doing so.

     A scheduled 45-day refueling outage for the Waterford 3 nuclear plant
began  on April 12, 1997.  Additional work and two minor incidents  caused
the  outage  to be extended from May 27 to mid-June.  On May 28,  1997,  a
start-up  transformer at Waterford 3 failed due to an internal  fault.   A
replacement  transformer was located and shipped  to  Waterford  3,  where
certain   plant   configuration  changes  were  made  to  facilitate   its
installation.   After  installation of the  replacement  transformer,  the
plant was restarted on July 29, 1997.

Cajun - River Bend

      On  October 7, 1997, the RUS elected not to become the transferee  of
Cajun's 30% interest in  River Bend.  Accordingly, under the terms  of  the
Cajun Settlement, Cajun's interest in River Bend was transferred by Cajun's
Trustee  in Bankruptcy to Entergy Gulf  States on  December 23, 1997.  As a
result,  Entergy  Gulf  States  recorded  this 30% interest at $139 million 
based on management's estimate of the  fair  value of the asset at the time
of  transfer.  Entergy  Gulf  States recorded a  corresponding gain of $139
million  in its  results of  operations  in 1997  to reflect this transfer. 
This portion  of  River  Bend  will  not  be subject  to  cost  of  service 
regulation.  In  connection  with  the  transfer, Cajun established a trust 
fund  in  the  amount  of  $132  million  to  satisfy  its  obligation  for 
decommissioning its  30%  share  of  the plant.  See Note 9  for additional 
information.



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS
                                     

Labor Agreements

      In  April  1997,  Entergy Gulf States and a union representing  1,000
employees in Texas and Louisiana signed a two-year labor contract (expiring
August  14, 1999).  The contract stipulates that no layoffs will  occur  in
the  next  two years and wages will be increased  3% per year in  1997  and
1998.

      In  July  1997,  Entergy  Operations and the union  representing  317
employees  at River Bend and Entergy Mississippi and the union representing
400  of  its employees signed two-year labor contracts for the period  from
October  1998  to October 2000 which stipulate that no layoffs  of  covered
employees  will  occur  over the next two years  and  that  wages  will  be
increased 3% in each of the next two years.

Deregulated Utility Operations

      Entergy Gulf States discontinued regulatory accounting principles for
its   wholesale  jurisdiction  and  steam  department  and  the   Louisiana
deregulated portion of River Bend during 1989 and 1991, respectively.   The
operating  income from these operations was $19.7 million  in  1997,  $13.9
million in 1996, and $1.2 million in 1995.

      The  increase  in  1997  net income from deregulated  operations  was
primarily  due to decreased steam department expenses, partially offset  by
reduced  wholesale jurisdiction revenues.  The increase in 1996 net  income
from  such  operations was principally due to increased revenues, partially
offset  by  increased depreciation.  The future impact of  the  deregulated
utility  operations  on  Entergy  and  Entergy  Gulf  States'  results   of
operations  and  financial position will depend on future operating  costs,
the  efficiency and availability of generating units, the future market for
energy  over the remaining life of the assets, the operation of  the  steam
generating station leased to a large industrial customer described above in
"Change  in  Contract with Steam Customer", and the recoverability  through
nonregulated power sales of the $139 million of net book value of  the  30%
of River Bend previously owned by Cajun.  See "Cajun - River Bend" above.

Property Tax Exemptions

      Waterford 3's local property tax exemptions expired in December 1995.
In  a  March  1996  LPSC order, Entergy Louisiana was  permitted  to  defer
recovery  of  the  estimated Waterford 3 property  tax  from  January  1996
through  June  1996.  The order allowed the recovery of  the  property  tax
beginning in July 1996 and for recovery, from July 1996 through June  1997,
of  the  related deferral.  Entergy Louisiana paid property taxes of  $18.9
million on Waterford 3 in 1997.

      River Bend's local property tax exemptions expired in December  1996.
The  1997 property tax was approximately $12.9 million.  The portion of the
property  tax related to the Texas jurisdiction was included  in  the  rate
proceeding filed with the PUCT in November 1996 and in the fourth  required
Merger-related earnings review filed with the LPSC in May 1997.

Accounting Issues

Continued Application of SFAS 71

      The  electric  utility  industry is moving toward  a  combination  of
competition  and  a modified regulatory environment.  The domestic  utility
companies' and System Energy's financial statements currently reflect,  for
the  most  part,  assets and costs based on existing cost-based  ratemaking
regulations  in  accordance with SFAS 71, "Accounting for  the  Effects  of
Certain Types of Regulation" (SFAS 71).  Continued applicability of SFAS 71
to the domestic utility companies' and System Energy's financial statements
requires  that  rates set by an independent regulator on a  cost-of-service
basis  be  charged  to  and collected from customers  for  the  foreseeable
future.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS


     In the event that all or a portion of a utility's operations cease to
meet  those criteria for various reasons, including deregulation, a change
in  the  method of regulation, or a change in the competitive  environment
for  the  utility's  regulated  services,  the  utility  is  required   to
discontinue  application  of  SFAS 71 for  the  relevant  portion  of  its
operations  by  eliminating from the balance  sheet  the  effects  of  any
actions  of  regulators  recorded as regulatory  assets  and  liabilities.
Discontinuation  of  the  application of SFAS 71  could  have  a  material
adverse impact on Entergy's financial statements.

     The SEC has expressed concern regarding the continued applicability of
SFAS  71  to the financial statements of electric utilities that have  been
ordered  by regulators to adopt transition to competition plans or  are  in
the  process of participating with the state legislatures and/or regulators
in  the development of such plans.  While such plans may call for rate caps
or  decreases,  they  generally  provide for  recovery  of  investments  in
uneconomic or noncompetitive generating plants and other regulatory  assets
(together  defined as stranded costs).  The SEC is concerned that  portions
of  entities  subject  to  such plans may not meet  the  criteria  for  the
continued application of SFAS 71.

      During 1997, EITF 97-4: "Deregulation of the Pricing of Electricity -
Issues  Related to the Application of FASB Statements No. 71 and  101"  was
issued,  specifying that SFAS 71 should be discontinued at a date no  later
than  when the details of the transition to competition plan for all  or  a
portion  of  the  entity  subject to such plan are known.   However,  other
factors  could  cause  the discontinuation of SFAS  71  before  that  date.
Additionally, EITF 97-4 promulgates that regulatory assets to be  recovered
through  cash  flows  derived  from another portion  of  the  entity  which
continues  to apply SFAS 71 should not be written off; rather, they  should
be considered regulatory assets of the segment which will continue to apply
SFAS 71.

       The  domestic  utility  companies'  and  System  Energy's  financial
statements continue to apply SFAS 71 for their regulated operations, except
for   those  portions  of  Entergy  Gulf  States'  business  described   in
"Deregulated   Utility  Operations"  above.   Although   discussions   with
regulatory authorities regarding retail competition have occurred  and  are
expected  to  continue, definitive outcomes have not yet  been  determined;
therefore, the regulated operations continue to apply SFAS 71.  See Note  1
for additional discussion of Entergy's application of SFAS 71.

Accounting for Decommissioning Costs

       In  February 1996, the FASB issued an exposure draft of  a  proposed
SFAS  addressing  the  accounting  for  decommissioning  costs  of  nuclear
generating units as well as liabilities related to the closure and  removal
of  all long-lived assets.  See Note 9 for a discussion of proposed changes
in  the  accounting  for decommissioning/closure costs  and  the  potential
impact of these changes on Entergy.

Year 2000 Issues

      Like  many  companies, Entergy is currently evaluating its  computer
software,   databases,  embedded  microprocessors,  suppliers, and   other
constituent  relationships to determine the extent to which  modifications
are  required  to  prevent problems related to  the  year  2000,  and  the
resources  which  will  be  required to make  such  modifications.   These
problems  could  result in malfunctions in certain software  applications,
databases,  computer equipment, and supplier performance with  respect  to
dates  on  or after January 1, 2000, unless corrected.  Entergy  has  been
working  on the above mentioned modifications and contingencies throughout
most  of  1997, and will continue these efforts throughout 1998  and  into
1999.   Preliminary  estimates  of the  total  costs  to  be  incurred  by
Entergy's  global  enterprises in 1998 through mid-2000 are  approximately
$95 million.  Maintenance  or  modification  costs  will  be  expensed  as
incurred,  while  the  costs  of  new  software  will  be capitalized  and
amortized over the software's useful life in accordance with  EITF  96-14:
"Accounting  for  the Costs  Associated  with  Modifying Computer Software
for the Year 2000."


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS



Market Risks

      Entergy uses derivative instruments to manage the interest rate  risk
associated  with  certain  of  its variable  rate  credit  facilities,  the
currency  exchange  rate  risk for interest payments  associated  with  its
Entergy  London Perpetual Junior Subordinated Debentures (Debentures),  and
the commodity price risk associated with its foreign electricity supply and
domestic energy marketing businesses.

     Entergy uses interest rate swaps to reduce the impact of interest rate
changes   on  its  CitiPower  and  Entergy  London  variable  rate   credit
facilities.   The  interest rate swap agreements involve  the  exchange  of
floating  rate interest payments for fixed rate interest payments over  the
life  of  the  agreements.  As of December 31, 1997, 77% of the outstanding
variable interest rate borrowings on these credit facilities were converted
to fixed interest rates through interest rate swaps.  The potential loss in
fair  value from these positions resulting from a hypothetical 10%  adverse
movement  in base interest rates is estimated at $29 million as of December
31, 1997.  See Note 7 for further discussion of these swaps.

      Entergy  London's cash flows are predominately denominated   in  BPS.
Entergy  London  has  entered a U.S. dollar denominated obligation  through
issuance  of the Perpetual Junior Subordinate Debentures (Debentures).   To
hedge  currency  exposure  on the Debentures, Entergy  London  has  entered
foreign  currency  swap  agreements  to  fix  the  British  pound  sterling
equivalent which will be required to service interest on the Debentures for
the next seven years.  See Note 6 for further discussion of these swaps.

      Entergy's  UK  and  Australian electricity supply businesses  utilize
fixed  price  contracts  to supply electricity  to  their  customers.   The
electricity  is  obtained  primarily by purchases  from  the  spot  market.
Because the price of electricity purchased from the market can be volatile,
Entergy's  UK and Australian electricity supply businesses are  exposed  to
risks arising from differences between the fixed prices at which they  sell
electricity  and the fluctuating prices at which they purchase electricity.
To mitigate exposure to volatility, Entergy's UK and Australian electricity
supply  businesses  utilize  contracts for differences  (CFDs)  and  energy
trading  swaps  to  fix  the  price of their  electricity  purchases.   The
potential  loss  in  fair  value of these CFDs  and  energy  trading  swaps
resulting  from  a hypothetical 10% adverse movement in future  electricity
prices  is  estimated at $103 million.  Management, however, believes  that
any loss actually realized would be substantially offset by the effects  of
electricity      price  movements  on  the  respective  underlying   hedged
electricity  supply contracts.  See Note 9 for further  discussion  of  the
CFDs and energy trading swaps.

      Entergy's  domestic energy and natural gas marketing business  enters
into sales and purchases of electricity and natural gas for delivery up  to
twelve  months  into the future.  Because the market prices of  electricity
and  natural gas can be volatile, Entergy's domestic energy and natural gas
marketing business is exposed to risk arising from differences between  the
fixed prices in its commitments and fluctuating market prices.  To mitigate
its  exposure, Entergy's domestic energy and natural gas marketing business
enters into electricity and natural gas futures and option contracts.  This
business  utilizes a value-at-risk model to assess the market risk  of  its
derivative  financial instruments.  Value-at-risk represents the  potential
losses  for  an  instrument  or portfolio from adverse  changes  in  market
factors  for  a specified time period and confidence level.  The  value-at-
risk  was estimated using historical simulation calculated on a daily basis
over  a  thirty-day period with a 95% confidence level and a holding period
of  one  business  day.    Based  on  these  assumptions,   the  business's
value-at-risk as of December 31, 1997 was not material to Entergy.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                   SIGNIFICANT FACTORS AND KNOWN TRENDS
                                     


      Management's  calculation of  value-at-risk  exposure  represents  an
estimate of reasonably possible net losses that would be recognized on  its
portfolio   of  derivative  financial  instruments,  assuming  hypothetical
movements  in  future  market rates, and is not necessarily  indicative  of
actual future results.  It does not represent the maximum possible loss  or
an  expected  loss that may occur, because actual future gains  and  losses
will  differ from those estimated, based upon actual fluctuations in market
rates,  operating  exposures, and the timing thereof, and  changes  in  the
portfolio of derivative financial instruments during the year.



<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy Corporation


      We  have  audited  the accompanying consolidated  balance  sheets  of
Entergy Corporation and Subsidiaries as of December 31, 1997 and 1996,  and
the  related statements of consolidated income, retained earnings and  paid
in  capital and cash flows for each of the three years in the period  ended
December  31,  1997.  These financial statements are the responsibility  of
the  Corporation's management.  Our responsibility is to express an opinion
on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the consolidated financial statements  referred  to
above  present fairly, in all material respects, the financial position  of
Entergy Corporation and Subsidiaries as of December 31, 1997 and 1996,  and
the  results of their operations and their cash flows for each of the three
years  in  the period ended December 31, 1997 in conformity with  generally
accepted accounting principles.

      As  discussed in Note 1 to the consolidated financial statements,  at
January  1,  1996  the  Company adopted Statement of  Financial  Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets  and
for Long-Lived Assets to Be Disposed Of".   Also, as discussed in Note 1 to
the  consolidated  financial statements, in 1996, one of the  Corporation's
subsidiaries changed its method of accounting for incremental nuclear plant
outage maintenance costs.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS


      On  February  7, 1997, Entergy Corporation, through its  wholly-owned
subsidiary,  Entergy London, made unconditional its offer to  acquire  100%
ownership of London Electricity.  In accordance with the purchase method of
accounting,  the  results  of  operations for  1996  and  1995  of  Entergy
Corporation and Subsidiaries do not include London Electricity's results of
operations.  Consolidated net income for 1997 reflects London Electricity's
results  subsequent  to  February 1, 1997.   See  Note  13  for  additional
information regarding London Electricity.

      On January 5, 1996, Entergy Corporation finalized its acquisition  of
CitiPower.   In  accordance  with the purchase method  of  accounting,  the
results  of operations for 1995 of Entergy Corporation and Subsidiaries  do
not include CitiPower's results of operations.

Net Income

      Consolidated  net  income  decreased in 1997  primarily  due  to  the
recording  of a one-time windfall profits tax at Entergy London, a  reserve
for  regulatory  adjustments at Entergy Gulf States, the write-off  of  the
radioactive  waste  facility deferrals at Entergy  Arkansas,  Entergy  Gulf
States,  and  Entergy Louisiana, and the reversal of the  Cajun-River  Bend
litigation accrual at Entergy Gulf States in September 1996.  The  decrease
in  net income was partially offset by the one-time write-off of River Bend
rate deferrals pursuant to SFAS 121 at Entergy Gulf States in January 1996,
by the 1997 one-time reduction in income tax expense for London Electricity
due  to a reduction in the UK corporation tax rate from 33% to 31%, and  by
the  Cajun  litigation settlement at Entergy Gulf States in December  1997.
Excluding these items, net income would have decreased 8% due to a decrease
in  the  earnings  from domestic regulated operations offset  by  increased
earnings from competitive growth businesses, primarily London Electricity.

      Consolidated net income decreased in 1996 primarily due to  the  $174
million net of tax write-off of River Bend rate deferrals pursuant to  SFAS
121  and  the  one-time recording in 1995 of the cumulative effect  of  the
change  in  accounting  method  for incremental  nuclear  refueling  outage
maintenance  costs  at Entergy Arkansas.  The effect  of  these  items  was
partially  offset by the reversal of a Cajun-River Bend litigation  accrual
at  Entergy  Gulf  States.  Excluding these items, net  income  would  have
increased 17% due to decreased other operation and maintenance expenses for
domestic  regulated  operations as a result of restructuring  programs  and
ongoing efficiency improvement programs throughout Entergy.

      Significant factors affecting the results of operations  and  causing
variances between the years 1997 and 1996, and between the years  1996  and
1995,  are  discussed under "Revenues and Sales", "Expenses",  and  "Other"
below.
                                     
Revenues and Sales

      See  "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following  the
financial  statements, for information on operating revenues by source  and
KWH sales.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS

      The  changes  in  electric operating revenues for Entergy's  domestic
utility  companies for the twelve months ended December 31, 1997  and  1996
are as follows:
                                             Increase/(Decrease)
             Description                      1997         1996
                                                (In Millions)
                                                                 
Change in base revenues                     ($189.1)     ($117.5)
Rate riders                                    (3.6)         1.8
Fuel cost recovery                             90.1        382.3
Sales volume/weather                           31.3        108.0
Other revenue (including unbilled)            147.3        (49.3)
Sales for resale                              (16.6)        37.6
                                              -----       ------
Total                                         $59.4       $362.9
                                              =====       ======


      Electric  operating revenues for Entergy's domestic utility companies
increased  slightly in 1997 as a result of increased other  revenues,  fuel
adjustment  revenues,  which do not affect net  income,  and  higher  sales
volume/weather.   These increases were partially offset by  a  decrease  in
base  revenues  and  sales for resale to non-associated  utilities.   Other
revenue  increased due to the gain on the Cajun Settlement for Cajun's  30%
interest  in  the  property associated with River  Bend.   Fuel  adjustment
revenues  increased in 1997 due to a PUCT order that approved  recovery  of
$18.5  million of previously under-recovered fuel expenses by Entergy  Gulf
States.   Sales  volume/weather increased primarily due to an  increase  in
sales to industrial customers, particularly, certain cogeneration customers
who purchased replacement electricity from Entergy Gulf States offset by  a
decrease  due  to  milder  weather in 1997.  Base rate  revenues  decreased
primarily  due  to the reserve for regulatory adjustments at  Entergy  Gulf
States,  rate reductions for Louisiana retail customers, aggressive pricing
strategies for targeted customer segments, and a change in sales  mix  from
residential  and  commercial customers to industrial customers  at  Entergy
Gulf States.  Sales for resale to non-associated utilities decreased due to
changes  in  generation requirements and availability  among  the  domestic
utility  companies,  primarily Entergy Arkansas and  Entergy  Gulf  States.
During the fourth quarter of 1997, Entergy Gulf States established reserves
for potential regulatory adjustments based on management's estimates of the
financial effect of potential adverse rulings in connection with the  River
Bend plant-related costs and pending rate proceedings in Texas.  See Note 2
for  further  discussion of the PUCT order related to under-recovered  fuel
expenses,  the  River  Bend plant-related costs,  and  other  pending  rate
proceedings.


      Electric  operating revenues increased in 1996 as a result of  higher
fuel  adjustment revenues, which do not affect net income, and higher sales
volume,  partially  offset  by  rate reductions  at  the  domestic  utility
companies.   The  increase  in sales volume was  primarily  the  result  of
increases in customers and in customer usage.

      Gas  operating revenues increased in 1996 due to higher unit purchase
prices  for gas purchased for resale and colder than normal weather in  the
first quarter of 1996.

     Competitive growth business revenues increased by $2.3 billion in 1997
primarily  due  to the February 1997 acquisition of London  Electricity  by
Entergy  London.   London Electricity generated revenues  of  $1.8  billion
during  the  eleven  months it is included in 1997 results  of  operations.
Also  contributing to the increase in competitive growth business  revenues
was  an increase in revenue at EPMC of $427 million.    After obtaining the
appropriate regulatory and board approvals, EPMC began trading in late  May
1996.  EPMC's increased revenues in 1997 are primarily due to full year  of
trading  in  1997  as  compared  to six months  in  1996  coupled  with  an
aggressive  marketing  effort  in 1997.  These  increases  were  offset  by
increased  power purchased for resale as discussed below.  The increase  of
$501  million  in  competitive growth business revenues  in  1996  was  due
primarily to the acquisition of CitiPower.


<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS
                                     
                                     
Expenses

      Operating  expenses  for  1997  include  Entergy  London's  operating
expenses  of $1.7 billion for the year ended December 31, 1997, which  were
not included in the prior year's financial statements.  Operating expenses,
excluding  Entergy London, increased primarily due to increases in  nuclear
refueling  outage expenses, depreciation, amortization, and decommissioning
expenses, increases in the amortization of rate deferrals, and increases in
power purchased for resale by EPMC.   These increases in operating expenses
were  partially  offset  by a decrease in other operation  and  maintenance
expenses.   The increase in purchased power is primarily the  result  of  a
higher  level  of  power  purchased for resale by EPMC.   The  increase  in
nuclear  refueling outage expenses is primarily due to the amortization  of
previously  deferred November 1996 outage expenses at System Energy,  which
are  now  being  amortized over an 18-month period that began  in  December
1996.   Prior to this outage, such costs were expensed as incurred  and  no
such  expenses  were  incurred  in 1996.   The  increase  in  depreciation,
amortization, and decommissioning is primarily due to the reduction of  the
regulatory  asset  established at System Energy to defer  the  depreciation
associated  with the sale and leaseback in 1989 of a portion of Grand  Gulf
1.  An increase in plant additions and improvements also contributed to the
increase  in depreciation, amortization, and decommissioning.  The increase
in rate deferral amortization is primarily due to greater Grand Gulf 1 rate
deferral  amortization  at Entergy Arkansas and  Entergy  New  Orleans,  as
prescribed  in  the  Grand  Gulf  1 rate phase-in  plan  and,  for  Entergy
Arkansas,  the  December  1997 APSC Stipulation and Settlement  Agreements.
The  decrease in other operation and maintenance expenses was primarily due
to the Cajun litigation settlement at Entergy Gulf States in December 1997.
This  decrease  was  partially offset by the write-off of  the  radioactive
waste  facility  deferrals at Entergy Arkansas, Entergy  Gulf  States,  and
Entergy Louisiana.

      Operating  expenses  for  1996  include  the  operating  expenses  of
CitiPower,  which  were  not  included in the  1995  financial  statements.
Excluding the operating expenses of CitiPower, Entergy's operating expenses
increased  in  1996.  The following discussion excludes the impact  of  the
acquisition  of  CitiPower.   In 1996, fuel and  purchased  power  expenses
increased as a result of higher fuel costs and an increase in sales volume.
Other  operation and maintenance expenses decreased in 1996  due  to  lower
payroll-related expenses, resulting from restructuring programs in addition
to  ongoing  operating efficiency improvement programs throughout  Entergy.
Other regulatory credits reducing operating expenses in 1996 represent  the
deferral of Waterford 3 local property taxes and the deferral of a  portion
of  the  proposed  System Energy rate increase at Entergy  Mississippi  and
Entergy New Orleans.  Nuclear refueling outage expenses decreased primarily
due  to  the  effect of deferring the nuclear refueling outage expenses  at
Grand  Gulf  1 in the fourth quarter of 1996 rather than recognizing  those
expenses  as  incurred.   The majority of the increase  in  decommissioning
costs  and  depreciation rates is reflected in the 1995 System Energy  FERC
rate  increase  filing, subject to refund.  See Note 2 for a discussion  of
the proposed rate increase.

Other

      Other  income  decreased in 1997 primarily due  to  the  reserve  for
regulatory adjustments at Entergy Gulf States, offset by interest income on
the  Cajun  Settlement in December 1997, the write-off of River  Bend  rate
deferrals pursuant to SFAS 121 at Entergy Gulf States in January  1996  and
the Cajun litigation reversal in 1996.



<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS
                                     
                                     
      Other income decreased in 1996 as a result of the write-off of  River
Bend  rate deferrals pursuant to SFAS 121, and a decrease in Grand  Gulf  1
carrying  charges  at  Entergy Arkansas due to a decline  in  the  deferral
balance, partially offset by Entergy Gulf States' reversal of a Cajun-River
Bend  litigation  accrual.  Interest on long-term debt,  excluding  Entergy
London,  decreased  in  1997  due  primarily  to  ongoing  retirement   and
refinancing of higher cost debt.  Distributions on preferred securities  of
subsidiaries  increased due to the issuance of Cumulative Income  Preferred
Securities  at Entergy Arkansas in August 1996, Entergy Louisiana  in  July
1996,  at  Entergy  Gulf  States in January 1997,  and  Entergy  London  in
November 1997.
                                     
      Excluding CitiPower, interest on long-term debt decreased in 1996 due
primarily  to  ongoing  retirement and refinancing  of  higher  cost  debt.
Borrowings  by  Entergy  Corporation from a $300  million  line  of  credit
related  to the CitiPower investment contributed to the increase  in  other
interest-net in 1996.

      Preferred  dividend requirements decreased in 1997 and  1996  due  to
stock redemption activities.

      The  effective income tax rates for 1997, 1996, and 1995 were  61.0%,
46.2%, and 37.5% respectively.  The effective income tax rate was higher in
1997  primarily due to the one-time windfall profits tax at Entergy  London
in 1997 and the tax effects of the Cajun litigation settlement and the 1996
SFAS  121 write-off at Entergy Gulf States, which included AFUDC which  was
originally recorded net of its related income tax benefits.  In  1996,  the
effective  income tax rate increased primarily due to higher  state  income
taxes,  depreciation related taxes, and the SFAS 121 write-off  at  Entergy
Gulf States.  For a further discussion of income taxes, see Note 3.

<PAGE>

<TABLE>
<CAPTION>
            ENTERGY CORPORATION AND SUBSIDIARIES
             STATEMENTS OF CONSOLIDATED INCOME
                                                                                                       
                                                                                                       
                                                                         For the Years Ended December 31,
                                                                        1997           1996           1995
                                                                        (In Thousands, Except Share Data)
<S>                                                                  <C>            <C>            <C>
Operating Revenues:
  Domestic electric                                                  $6,538,831     $6,450,940     $6,088,018
  Natural gas                                                           137,345        134,456        103,992
  Steam products                                                         43,664         59,143         49,295
  Competitive growth businesses                                       2,841,881        533,118         31,767
                                                                     ----------     ----------     ----------
        Total                                                         9,561,721      7,177,657      6,273,072
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
     Fuel, fuel-related expenses, and                                                                        
       gas purchased for resale                                       1,677,041      1,635,885      1,395,889
     Purchased power                                                  2,318,811        704,744        356,596
     Nuclear refueling outage expenses                                   73,857         55,148         84,972
     Other operation and maintenance                                  1,886,149      1,577,383      1,528,351
  Depreciation, amortization, and decommissioning                       980,008        790,948        695,865
  Taxes other than income taxes                                         365,439        353,270        300,120
  Other regulatory charges (credits)                                    (18,545)       (47,542)        29,311
  Amortization of rate deferrals                                        421,803        414,969        378,776
                                                                     ----------     ----------     ----------
        Total                                                         7,704,563      5,484,805      4,769,880
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Income                                                      1,857,158      1,692,852      1,503,192
                                                                     ----------     ----------     ----------
                                                                                                             
Other Income (Deductions):                                                                                   
  Allowance for equity funds used                                                                            
   during construction                                                   10,057          9,951          9,629
  Write-off of River Bend rate deferrals                                      -       (194,498)             -
  Miscellaneous - net                                                  (232,703)       123,452         45,127
                                                                     ----------     ----------     ----------
        Total                                                          (222,646)       (61,095)        54,756
                                                                     ----------     ----------     ----------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                            797,266        674,532        633,851
  Other interest - net                                                   51,624         49,053         33,749
  Distributions on preferred securities of subsidiaries                  21,319          4,797              -
  Allowance for borrowed funds used                                                                          
   during construction                                                   (7,937)        (8,347)        (8,368)
                                                                     ----------     ----------     ----------
        Total                                                           862,272        720,035        659,232
                                                                     ----------     ----------     ----------
                                                                                                             
Income Before Income Taxes                                              772,240        911,722        898,716
                                                                                                             
Income Taxes                                                            471,341        421,159        336,182
                                                                     ----------     ----------     ----------
                                                                                                             
Income before the Cumulative Effect                                                                          
  of Accounting Changes                                                 300,899        490,563        562,534
                                                                                                             
Cumulative Effect of Accounting                                                                              
   Changes (net of income taxes)                                              -              -         35,415
                                                                     ----------     ----------     ----------
                                                                                                             
Net Income                                                              300,899        490,563        597,949
                                                                                                             
Preferred and Preference Dividend Requirements of                                         
   Subsidiaries and Other                                                53,216         70,536         77,969
                                                                     ----------     ----------     ----------
                                                                                                             
Earnings Applicable to Common Stock                                    $247,683       $420,027       $519,980
                                                                     ==========     ==========     ==========
Earnings per average common share before                                         
 cumulative effect of accounting changes:                                                 
     Basic and diluted                                                    $1.03          $1.83          $2.13
                                                                                                             
Earnings per average common share:                                                                           
     Basic and diluted                                                    $1.03          $1.83          $2.28
                                                                                                             
Dividends declared per common share                                       $1.80          $1.80          $1.80
Average number of common shares outstanding:                                         
     Basic                                                          240,207,539    229,084,241    227,669,970
     Diluted                                                        240,297,842    229,175,392    227,729,975
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

              ENTERGY CORPORATION AND SUBSIDIARIES
             STATEMENTS OF CONSOLIDATED CASH FLOWS
                                                                                                            
                                                                                                            
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:
  Net income                                                           $300,899      $490,563       $597,949
  Noncash items included in net income:                                                                     
    Write-off of River Bend rate deferrals                                    -       194,498              -
    Cumulative effect of a change in accounting principle                     -             -        (35,415)
    Gain on Cajun Settlement                                           (246,022)            -              -
    Reserve for regulatory adjustments                                  381,285             -              -
    Amortization of  rate deferrals                                     421,803       414,969        378,776
    Other regulatory charges  (credits)                                 (18,545)      (47,542)        29,311
    Depreciation, amortization, and decommissioning                     980,008       790,948        695,865
    Deferred income taxes and investment tax credits                   (252,955)       76,920        (31,006)
    Allowance for equity funds used during construction                 (10,057)       (9,951)        (9,629)
  Changes in working capital:                                                                               
    Receivables                                                         (99,411)      (30,322)       (30,550)
    Fuel inventory                                                       20,272       (17,220)       (28,956)
    Accounts payable                                                    181,243         4,011        (19,124)
    Taxes accrued                                                       143,151       (27,488)       115,250
    Interest accrued                                                     (9,849)        7,176           (194)
    Other working capital accounts                                     (130,715)     (121,692)       (85,454)
  Changes in other regulatory assets                                     28,016       (85,051)        (3,876)
  Decommissioning trust contributions and realized change in trust      (68,139)      (52,204)       (37,756)
   assets
  Proceeds from settlement of Cajun litigation                          102,299             -              -
  Other                                                                   1,349       (59,566)       (31,509)
                                                                     ----------    ----------     ----------
    Net cash flow provided by operating activities                    1,724,632     1,528,049      1,503,682
                                                                     ----------    ----------     ----------
                                                                                                            
Investing Activities:                                                                                       
  Construction/capital expenditures                                    (847,223)     (571,890)      (618,436)
  Allowance for equity funds used during construction                    10,057         9,951          9,629
  Nuclear fuel purchases                                                (89,237)     (123,929)      (207,501)
  Proceeds from sale/leaseback of nuclear fuel                          144,442       109,980        226,607
  Acquisition of London Electricity, net of cash acquired            (1,951,701)            -              -
  Acquisition of CitiPower                                                    -    (1,156,112)             -
  Acquisition of  security companies                                    (87,669)      (83,000)             -
  Investment in other nonregulated/nonutility properties                  1,322             -       (172,814)
  Proceeds from sale of Hub Power and Transener stock                    54,153        26,955              -
  Proceeds from sale of  Independence 2                                       -        39,398              -
  Other                                                                 (17,288)      (25,710)       (28,982)
                                                                     ----------    ----------     ----------
                                                                                                            
    Net cash flow used in investing activities                       (2,783,144)   (1,774,357)      (791,497)
                                                                     ----------    ----------     ----------


</TABLE>


<PAGE>

<TABLE>
<CAPTION>
              ENTERGY CORPORATION AND SUBSIDIARIES
             STATEMENTS OF CONSOLIDATED CASH FLOWS
                                                                                                            
                                                                                                            
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Financing Activities                                                                                 
  Proceeds from the issuance of:                                                                     
    General and refunding mortgage bonds                                 64,827        39,608        109,285
    First mortgage bonds                                                129,564       431,906              -
    Bank notes and other long-term debt                               1,852,891     1,066,858        273,542
    Preferred securities of subsidiary trusts and partnership           382,323       125,963              -
    Common stock                                                        305,379       118,087              -
  Retirement of:                                                                                             
    First mortgage bonds                                               (402,692)     (821,575)      (225,800)
    General and refunding mortgage bonds                                 (7,622)      (56,000)       (69,200)
    Other long-term debt                                               (341,355)     (145,110)      (221,043)
  Redemption of preferred stock                                        (124,367)     (157,503)       (46,564)
  Changes in short-term borrowings - net                                142,025       (24,981)      (126,200)
  Preferred stock dividends paid                                        (51,270)      (70,536)       (77,969)
  Common stock dividends paid                                          (438,183)     (405,346)      (408,553)
                                                                     ----------    ----------     ----------
                                                                                                             
    Net cash flow provided by (used in) financing activities          1,511,520       101,371       (792,502)
                                                                     ----------    ----------     ----------
                                                                                                             
Effect of exchange rates on cash and cash equivalents                   (11,164)           50              -
                                                                     ----------    ----------     ----------
                                                                                                             
Net increase (decrease) in cash and cash equivalents                    441,844      (144,887)       (80,317)
                                                                                                             
Cash and cash equivalents at beginning of period                        388,703       533,590        613,907
                                                                     ----------    ----------     ----------
                                                                                                             
Cash and cash equivalents at end of period                             $830,547      $388,703       $533,590
                                                                     ==========    ==========     ==========
                                                                                                             
                                                                                                            
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       
  Cash paid during the period for:                                                                           
    Interest - net of amount capitalized                               $858,871      $677,535       $626,531
    Income taxes                                                       $390,238      $373,247       $285,738
  Noncash investing and financing activities:                                                                
     Capital lease obligations incurred                                       -       $16,358              -
     Change in unrealized appreciation of                                                     
       decommissioning trust assets                                     $30,951        $7,803        $16,614
     Acquisition of nuclear fuel                                              -       $47,695              -
     Treasury shares issued to acquire Ranger American                  $21,464             -              -
     Net assets acquired from Cajun settlement                         $319,056             -              -
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                                  ASSETS
                                                                                                                
                                                                                                                
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                   $85,067                  $34,807
    Temporary cash investments - at cost,                                                                                  
      which approximates market                                                            700,431                  346,782
    Special deposits                                                                        45,049                    7,114
                                                                                       -----------              -----------
           Total cash and cash equivalents                                                 830,547                  388,703
  Notes receivable                                                                           8,157                    1,384
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts of                                                                      
       $31.7 million in 1997 and $9.2 million in 1996)                                     458,085                  324,687
    Other                                                                                  225,523                   99,066
    Accrued unbilled revenues                                                              580,194                  351,429
  Deferred fuel                                                                            150,596                  122,184
  Fuel inventory - at average cost                                                         119,331                  139,603
  Materials and supplies - at average cost                                                 367,870                  339,622
  Rate deferrals                                                                           259,628                  444,543
  Prepayments and other                                                                    171,391                  151,312
                                                                                       -----------              -----------
           Total                                                                         3,171,322                2,362,533
                                                                                       -----------              -----------
                                                                                                                           
Other Property and Investments:                                                                                            
  Decommissioning trust funds                                                              589,050                  357,962
  Non-regulated investments                                                                568,951                  513,058
  Other                                                                                    225,818                   59,053
                                                                                       -----------              -----------
           Total                                                                         1,383,819                  930,073
                                                                                       -----------              -----------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                              25,310,122               22,739,797
  Plant acquisition adjustment - Entergy Gulf States                                       439,160                  455,425
  Electric plant under leases                                                              674,483                  679,991
  Property under capital leases - electric                                                 134,278                  147,277
  Natural gas                                                                              169,964                  168,143
  Steam products                                                                            82,289                   81,743
  Construction work in progress                                                            565,667                  401,676
  Nuclear fuel under capital leases                                                        269,011                  250,651
  Nuclear fuel                                                                              72,875                  112,625
                                                                                       -----------              -----------
           Total                                                                        27,717,849               25,037,328
  Less - accumulated depreciation and amortization                                       9,585,021                8,866,764
                                                                                       -----------              -----------
           Utility plant - net                                                          18,132,828               16,170,564
                                                                                       -----------              -----------
                                                                                                                           
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    Rate deferrals                                                                         162,602                  399,493
    SFAS 109 regulatory asset - net                                                      1,174,187                1,196,041
    Unamortized loss on reacquired debt                                                    196,891                  217,664
    Other regulatory assets                                                                466,780                  477,942
  Long-term receivables                                                                     36,984                  216,082
  CitiPower license (net of amortization of $25.6 million in 1997                                                          
     and $15.6 million in 1996)                                                            486,153                  606,214
  London Electricity license (net of $31.1 million of amortization)                      1,327,312                        -
  Other                                                                                    461,822                  379,419
                                                                                       -----------              -----------
           Total                                                                         4,312,731                3,492,855
                                                                                       -----------              -----------
                                                                                                                           
           TOTAL                                                                       $27,000,700              $22,956,025
                                                                                       ===========              ===========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                   ENTERGY CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                                                                
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                       $390,674                 $345,620
  Notes payable                                                                            428,964                   20,686
  Accounts payable                                                                         915,800                  554,558
  Customer deposits                                                                        178,162                  155,534
  Taxes accrued                                                                            359,996                  180,340
  Accumulated deferred income taxes                                                         56,524                   78,010
  Interest accrued                                                                         214,763                  203,425
  Dividends declared                                                                         8,166                    8,950
  Obligations under capital leases                                                         167,700                  151,287
  Other                                                                                     81,303                  184,157
                                                                                       -----------              -----------
           Total                                                                         2,802,052                1,882,567
                                                                                       -----------              -----------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                      4,567,052                3,760,491
  Accumulated deferred investment tax credits                                              587,781                  607,641
  Obligations under capital leases                                                         236,000                  247,360
  Other                                                                                  1,857,514                1,298,306
                                                                                       -----------              -----------
           Total                                                                         7,248,347                5,913,798
                                                                                       -----------              -----------
                                                                                                                           
  Long-term debt                                                                         9,068,325                7,590,804
  Subsidiaries' preferred stock with sinking fund                                          185,005                  216,986
  Subsidiary's preference stock                                                            150,000                  150,000
  Company-obligated mandatorily redeemable                                                                                 
   preferred securities of subsidiary trusts holding                                                                       
   solely junior subordinated deferrable debentures                                        215,000                  130,000
  Company-obligated redeemable preferred securities of subsidiary                                                          
   partnership holding solely junior subordinated deferrable debentures                    300,000                        -
                                                                                                                           
                                                                                                                           
Shareholders' Equity:                                                                                                      
  Subsidiaries' preferred stock without sinking fund                                       338,455                  430,955
  Common stock, $.01 par value, authorized 500,000,000                                                                     
    shares; issued 246,149,198 shares in 1997 and 234,456,457                                                              
    shares in 1996                                                                           2,461                    2,345
  Paid-in capital                                                                        4,613,572                4,320,591
  Retained earnings                                                                      2,157,912                2,341,703
  Cumulative foreign currency translation adjustment                                       (69,817)                  21,725
  Less - treasury stock (306,852 shares in 1997 and                                                                        
  1,496,118 shares in 1996)                                                                 10,612                   45,449
                                                                                       -----------              -----------
           Total                                                                         7,031,971                7,071,870
                                                                                       -----------              -----------
                                                                                                                           
Commitments and Contingencies (Notes 2, 9, and 10)                                                                         
                                                                                                                           
           TOTAL                                                                       $27,000,700              $22,956,025
                                                                                       ===========              ===========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

      ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND
                 PAID-IN CAPITAL
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
Retained Earnings, January 1                             $2,341,703   $2,335,579     $2,223,739
                                                                                               
  Add:                                                                                         
    Earnings applicable to common stock                     247,683      420,027        519,980
                                                                                               
  Deduct:                                                                                      
    Dividends declared on common stock                      432,268      412,250        409,801
    Capital stock and other expenses                           (794)       1,653         (1,661)
                                                         ----------   ----------     ----------
        Total                                               431,474      413,903        408,140
                                                         ----------   ----------     ----------
                                                                                               
Retained Earnings, December 31                           $2,157,912   $2,341,703     $2,335,579
                                                         ==========   ==========     ==========
                                                                                               
                                                                                               
                                                                                               
Paid-in Capital, January 1                               $4,320,591   $4,201,483     $4,202,134
                                                                                               
  Add:                                                                                         
    Gain (loss) on reacquisition of                                                            
      subsidiaries' preferred stock                             273        1,795            (26)
    Common stock issuances related to stock plans           292,870      117,560         (3,002)
                                                         ----------   ----------     ----------
       Total                                                293,143      119,355         (3,028)
                                                         ----------   ----------     ----------
                                                                                               
  Deduct:                                                                                      
    Capital stock discounts and other expenses                  162          247         (2,377)
                                                         ----------   ----------     ----------
                                                                                               
Paid-in Capital, December 31                             $4,613,572   $4,320,591     $4,201,483
                                                         ==========   ==========     ==========
                                                                                               
                                                                                               
See Notes to Financial Statements.                                                             

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON

                                      1997 (4)      1996 (3)      1995           1994       1993
                                                 (In Thousands, Except Per Share Amounts)
<S>                                 <C>           <C>          <C>          <C>          <C>
Operating revenues                  $ 9,561,721   $ 7,177,657  $ 6,273,072  $  5,981,820 $ 4,475,224
Income before cumulative                                                                 
  effect of a change in                                                                  
  accounting principle              $   300,899   $   490,563  $   562,534  $    423,559 $   514,648
Earnings per share before                                                                
  cumulative effect of accounting                                                        
  changes                                                                                
     Basic                          $      1.03   $      1.83  $      2.13  $       1.49 $      2.62
     Diluted                        $      1.03   $      1.83  $      2.13  $       1.49 $      2.62
Dividends declared per share        $      1.80   $      1.80  $      1.80  $       1.80 $      1.65
Return on average common equity           3.71%         6.41%        8.11%         5.31%      12.58%
Book value per share, year-end (2)  $     27.23   $     28.51  $     28.41  $      27.93 $     28.27
Total assets (2)                    $27,000,700   $22,956,025  $22,265,930  $ 22,621,874 $22,876,697
Long-term obligations (1)(2)        $10,154,330   $ 8,335,150  $ 7,484,248  $  7,817,366 $ 8,177,882
</TABLE>

(1)  Includes long-term debt (excluding currently maturing debt), preferred
     and  preference  stock  with  sinking fund,  preferred  securities  of
     subsidiary  trusts  and  partnership,  and  noncurrent  capital  lease
     obligations.

(2)  1993 amounts include the effects of the Merger in accordance with  the
     purchase method of accounting for combinations.

(3)  1996 amounts include the effects of the CitiPower acquisition.

(4)  1997 amounts include the effects of the London Electricity acquisition
     as of February 7, 1997 (see Note 13).

<TABLE>
<CAPTION>

                           1997          1996          1995          1994          1993
<S>                      <C>           <C>            <C>            <C>           <C>
Domestic Utility Electric                          (In Thousands)
  Operating Revenues:                                                                      
   Residential           $2,271,363    $2,277,647     $2,177,348     $2,127,820    $1,594,515
   Commercial             1,581,878     1,573,251      1,491,818      1,500,462     1,071,070
   Industrial             2,018,625     1,987,640      1,810,045      1,834,155     1,197,695
   Governmental             171,773       169,287        154,032        159,840       136,471
                         --------------------------------------------------------------------
     Total retail         6,043,639     6,007,825      5,633,243      5,622,277     3,999,751
   Sales for resale         359,881       376,011        334,874        293,702       280,505
   Other (1)                135,311        67,104        119,901       (123,569)       88,713
                         --------------------------------------------------------------------
     Total               $6,538,831    $6,450,940     $6,088,018     $5,792,410    $4,368,969
                         ====================================================================
Billed Electric Energy
 Sales (GWH):                                                                                  
   Residential               28,286        28,303         27,704         26,231        18,946
   Commercial                21,671        21,234         20,719         20,050        13,420
   Industrial                44,649        44,340         42,260         41,030        24,889
   Governmental               2,507         2,449          2,311          2,233         1,887
                         --------------------------------------------------------------------
     Total retail            97,113        96,326         92,994         89,544        59,142
   Sales for resale           9,707        10,583         10,471          7,908         8,291
                         --------------------------------------------------------------------
     Total                  106,820       106,909        103,465         97,452        67,433
                         ====================================================================
</TABLE>

(1) 1994 includes the effects of the FERC Settlement, the 1994 NOPSI
    Settlement, and an Entergy Gulf States reserve for rate refund.

<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy Arkansas, Inc.


      We  have audited the accompanying balance sheets of Entergy Arkansas,
Inc. (formerly Arkansas Power & Light Company) as of December 31, 1997  and
1996,  and  the  related statements of income, retained earnings  and  cash
flows  for  each of the three years in the period ended December 31,  1997.
These   financial  statements  are  the  responsibility  of  the  Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly, in all material respects, the financial position of the Company  as
of  December 31, 1997 and 1996, and the results of its operations  and  its
cash  flows  for each of the three years in the period ended  December  31,
1997 in conformity with generally accepted accounting principles.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998




<PAGE>
                          ENTERGY ARKANSAS, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS

Net Income

      Net  income decreased in 1997 primarily due to decreases in  electric
operating  revenues and Grand Gulf 1 carrying charges, partially offset  by
lower income taxes.

      Net  income decreased in 1996 due primarily to the one-time recording
of  the  cumulative effect of the change in accounting method in  1995  for
incremental nuclear refueling outage maintenance costs. Excluding the above
mentioned  item,  net  income would have increased $21.1  million  in  1996
primarily due to a decrease in other operation and maintenance expenses.

      Significant factors affecting the results of operations  and  causing
variances between the years 1997 and 1996, and between the years  1996  and
1995,  are  discussed under "Revenues and Sales", "Expenses",  and  "Other"
below.

Revenues and Sales

      See  "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON," following  the
financial  statements, for information on operating revenues by source  and
KWH sales.

     The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:

                                           Increase/(Decrease)
            Description                     1997         1996
                                             (In Millions)
                                                              
Change in base revenues                    ($8.1)      ($10.1)
Rate riders                                 15.4         (5.3)
Fuel cost recovery                          10.3          8.0
Sales volume/weather                         5.9         19.5
Other revenue (including unbilled)         (24.2)        (7.1)
Sales for resale                           (27.0)        90.2
                                          ------        -----
Total                                     ($27.7)       $95.2
                                          ======        =====
                                                              
      Electric  operating  revenues decreased  in  1997  due  primarily  to
decreases  in  sales for resale and other revenue, partially offset  by  an
increase in rate rider revenues and higher fuel adjustment revenues,  which
do not affect net income.  The decrease in sales for resale resulted from a
decrease  in  sales  to associated companies primarily due  to  changes  in
generation  requirements  and  availability  among  the  domestic   utility
companies.  Other revenue (primarily unbilled revenue) decreased  primarily
as  a  result  of the volume difference in the unbilled beginning  of  year
amount  and due to the $10.6 million impact of a rate reduction implemented
in 1997 related to the transition to  competition filing with the APSC. The
increase in rate rider revenues was due to an increase in Grand Gulf 1 rate
rider revenues as a result of warmer weather during the second half of  the
year.

      Electric  operating  revenues increased  in  1996  due  primarily  to
increased  sales  for  resale and higher sales volume.   Sales  for  resale
increased due to an increase in sales to associated companies primarily due
to  changes in generation requirements and availability among the  domestic
utility  companies.  The increase in sales volume resulted  from  increased
customer  usage, partially attributable to more severe weather as  compared
to 1995.


<PAGE>
                          ENTERGY ARKANSAS, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS


Expenses

      Operating expenses increased in 1997 primarily due to the recognition
of  additional  regulatory  liabilities  related  to  the  APSC  settlement
agreement  and  the  write-off  of previously  deferred  radioactive  waste
facility costs, partially offset by a decrease in fuel and purchased  power
expenses. The increase in the amortization of rate deferrals is due  to  an
increase in amortization prescribed in the Grand Gulf 1 rate phase-in  plan
and the Stipulation and Settlement Agreement with the APSC.  See Note 2 for
further  discussion  of  the  APSC agreement.   Fuel  and  purchased  power
expenses decreased primarily as a result of significantly lower prices.

      Operating expenses increased in 1996 primarily due to an increase  in
fuel  and  purchased  power expenses,  partially offset  by  reduced  other
regulatory charges and decreased other operation and maintenance  expenses.
The  increase  in fuel and purchased power expenses is largely  due  to  an
increase  in generation and purchases related to the increase in sales  for
resale.  The decrease in other operation and maintenance expenses  resulted
from  lower  payroll expenses.  Payroll expenses decreased as a  result  of
restructuring  costs  recorded  in  1995  and  the  resulting  decrease  in
employees.

Other

      Miscellaneous other income - net decreased in 1997 and  1996  due  to
reduced  Grand  Gulf 1 carrying charges as a result of  a  decline  in  the
deferral balance which does not impact net income.

      The  effective income tax rates for 1997, 1996, and 1995 were  31.6%,
34.9%,  and 34.5%, respectively.  The decrease in 1997 is primarily due  to
the  impact of recording the tax benefit of Entergy Corporation's  expenses
as  prescribed by the tax allocation agreement.  The effective  income  tax
rate for 1996 was relatively unchanged from 1995.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                   ENTERGY ARKANSAS, INC.
                    STATEMENTS OF INCOME
                                                                                                       
                                                                          For the Years Ended December 31,
                                                                       1997            1996           1995
                                                                                  (In Thousands)
<S>                                                                  <C>            <C>            <C> 
Operating Revenues                                                   $1,715,714     $1,743,433     $1,648,233
                                                                     ----------     ----------     ----------
                                                                                                             
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
     Fuel and fuel-related expenses                                     254,703        257,008        231,619
     Purchased power                                                    419,128        432,825        363,199
     Nuclear refueling outage expenses                                   27,969         29,365         31,754
     Other operation and maintenance                                    360,860        358,789        375,059
  Depreciation, amortization, and decommissioning                       166,652        167,878        162,087
  Taxes other than income taxes                                          36,700         37,688         38,319
  Other regulatory charges (credits)                                     29,686         18,096         60,227
  Amortization of rate deferrals                                        153,141        131,634        114,102
                                                                     ----------     ----------     ----------
        Total                                                         1,448,839      1,433,283      1,376,366
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Income                                                        266,875        310,150        271,867
                                                                     ----------     ----------     ----------
                                                                                                             
Other Income:                                                                                                
  Allowance for equity funds used                                                                            
   during construction                                                    3,563          3,886          3,567
  Miscellaneous - net                                                    18,663         32,591         46,227
                                                                     ----------     ----------     ----------
        Total                                                            22,226         36,477         49,794
                                                                     ----------     ----------     ----------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                             95,122         98,531        106,853
  Other interest - net                                                    3,943          6,257          8,485
  Distributions on preferred securities of subsidiary trust               5,100          1,927              -
  Allowance for borrowed funds used                                                                          
   during construction                                                   (2,261)        (2,330)        (2,424)
                                                                     ----------     ----------     ----------
        Total                                                           101,904        104,385        112,914
                                                                     ----------     ----------     ----------
                                                                                                             
Income Before Income Taxes                                              187,197        242,242        208,747
                                                                                                             
Income Taxes                                                             59,220         84,444         72,082
                                                                     ----------     ----------     ----------
                                                                                                             
Income before the Cumulative Effect                                                                          
  of Accounting Changes                                                 127,977        157,798        136,665
                                                                                                             
Cumulative Effect of Accounting                                                                              
   Changes (net of income taxes)                                              -              -         35,415
                                                                     ----------     ----------     ----------
                                                                                                             
Net Income                                                              127,977        157,798        172,080
                                                                                                             
Preferred Stock Dividend Requirements                                                                        
  and Other                                                              10,988         16,110         18,093
                                                                     ----------     ----------     ----------
                                                                                                             
Earnings Applicable to Common Stock                                    $116,989       $141,688       $153,987
                                                                     ==========     ==========     ==========
See Notes to Financial Statements.                                                                           

</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                            ENTERGY ARKANSAS, INC.                        
                            STATEMENTS OF CASH FLOWS                      
                                                                                                      
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:
  Net income                                                           $127,977      $157,798       $172,080
  Noncash items included in net income:                                                                      
    Cumulative effect of a change in accounting principle                     -             -        (35,415)
    Amortization of rate deferrals                                      153,141       139,701        125,504
    Other regulatory charges (credits), net                              29,686        18,096         60,227
    Depreciation, amortization, and decommissioning                     166,652       167,878        162,087
    Deferred income taxes and investment tax credits                    (77,814)      (46,026)       (33,882)
    Allowance for equity funds used during construction                  (3,563)       (3,886)        (3,567)
  Changes in working capital:                                                                                
    Receivables                                                           9,099        (4,292)       (39,209)
    Fuel inventory                                                       29,150           137        (22,895)
    Accounts payable                                                    (25,451)       (1,112)        55,732
    Taxes accrued                                                        23,133        14,035         (5,080)
    Interest accrued                                                      1,201        (2,615)          (824)
    Other working capital accounts                                      (10,220)       (7,529)       (28,375)
  Decommissioning trust contributions and realized                                                          
   change in trust assets                                               (24,956)      (30,474)       (30,568)
  Provision for estimated losses and reserves                             9,594         4,125          2,849
  Other                                                                  26,111       (29,258)       (40,306)
                                                                     ----------    ----------     ----------
    Net cash flow provided by operating activities                      433,740       376,578        338,358
                                                                     ----------    ----------     ----------
                                                                                                              
Investing Activities:                                                                                        
  Construction expenditures                                            (140,913)     (145,529)      (165,071)
  Allowance for equity funds used during construction                     3,563         3,886          3,567
  Nuclear fuel purchases                                                (59,104)      (26,084)       (41,219)
  Proceeds from sale/leaseback of nuclear fuel                           59,065        25,451         41,832
                                                                     ----------    ----------     ----------
    Net cash flow used in investing activities                         (137,389)     (142,276)      (160,891)
                                                                     ----------    ----------     ----------
                                                                                                             
Financing Activities:                                                                                        
  Proceeds from issuance of:                                                                                 
     First mortgage bonds                                                84,064        84,256              -
     Other long-term debt                                                45,500             -        118,662
     Preferred securities of subsidiary trust                                 -        58,168              -
  Retirement of:                                                                                             
     First mortgage bonds                                              (117,587)     (112,807)       (25,800)
     Other long-term debt                                                     -        (1,700)      (124,025)
  Redemption of preferred stock                                          (9,000)      (69,624)        (9,500)
  Changes in short-term borrowings - net                                      -             -        (34,000)
  Dividends paid:                                                                                            
    Common stock                                                       (128,600)     (142,800)      (153,400)
    Preferred stock                                                     (11,194)      (17,736)       (18,362)
                                                                     ----------    ----------     ----------
    Net cash flow used in financing activities                         (136,817)     (202,243)      (246,425)
                                                                     ----------    ----------     ----------
                                                                                                             
Net increase (decrease) in cash and cash equivalents                    159,534        32,059        (68,958)
                                                                                                             
Cash and cash equivalents at beginning of period                         43,857        11,798         80,756
                                                                     ----------    ----------     ----------
                                                                                                             
Cash and cash equivalents at end of period                             $203,391       $43,857        $11,798
                                                                     ==========    ==========     ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       
  Cash paid during the period for:                                                                           
    Interest - net of amount capitalized                               $101,839       $94,662       $102,851
    Income taxes                                                       $111,394      $110,211       $113,080
  Noncash investing and financing activities:                                                                
    Capital lease obligations incurred                                        -       $16,358              -
    Acquisition of nuclear fuel                                               -       $27,500              -
    Change in unrealized appreciation of                                                                     
     decommissioning trust assets                                       $22,343        $5,968         $9,128
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                          ENTERGY ARKANSAS, INC.
                              BALANCE SHEETS
                                  ASSETS
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                    $6,076                   $5,117
    Temporary cash investments - at cost,                                                                                  
      which approximates market:                                                                                           
        Associated companies                                                                41,389                   17,462
        Other                                                                              110,877                   21,278
    Special deposits                                                                        45,049                        -
                                                                                       -----------              -----------
           Total cash and cash equivalents                                                 203,391                   43,857
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts                                                                         
     of $1.8 million in 1997 and $2.3 million in 1996)                                      71,910                   71,144
    Associated companies                                                                    46,166                   45,303
    Other                                                                                   10,282                    5,862
    Accrued unbilled revenues                                                               89,616                  104,764
  Fuel inventory - at average cost                                                          28,169                   57,319
  Materials and supplies - at average cost                                                  79,692                   72,976
  Rate deferrals                                                                            75,249                  153,141
  Deferred nuclear refueling outage costs                                                   24,335                   24,534
  Prepayments and other                                                                      8,647                   16,496
                                                                                       -----------              -----------
           Total                                                                           637,457                  595,396
                                                                                       -----------              -----------
                                                                                                                           
Other Property and Investments:                                                                                            
  Investment in subsidiary companies - at equity                                            11,213                   11,211
  Decommissioning trust fund                                                               250,573                  203,274
  Other - at cost (less accumulated depreciation)                                            4,939                    5,058
                                                                                       -----------              -----------
           Total                                                                           266,725                  219,543
                                                                                       -----------              -----------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                               4,650,065                4,578,728
  Property under capital leases                                                             53,843                   57,869
  Construction work in progress                                                            123,087                   83,524
  Nuclear fuel under capital lease                                                          92,621                   79,103
  Nuclear fuel                                                                                   -                   27,500
                                                                                       -----------              -----------
           Total                                                                         4,919,616                4,826,724
  Less - accumulated depreciation and amortization                                       2,116,826                1,976,204
                                                                                       -----------              -----------
           Utility plant - net                                                           2,802,790                2,850,520
                                                                                       -----------              -----------
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    Rate deferrals                                                                               -                   75,249
    SFAS 109 regulatory asset - net                                                        252,712                  244,767
    Unamortized loss on reacquired debt                                                     53,780                   56,664
    Other regulatory assets                                                                 79,461                   80,257
  Other                                                                                     13,952                   31,421
                                                                                       -----------              -----------
           Total                                                                           399,905                  488,358
                                                                                       -----------              -----------
                                                                                                                           
           TOTAL                                                                        $4,106,877               $4,153,817
                                                                                       ===========              =========== 
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                                                                                                                           
                                                                                                                           
                          ENTERGY ARKANSAS, INC.
                              BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDER'S EQUITY
                                                                                                                
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                        $60,650                  $32,465
  Notes payable                                                                                667                      667
  Accounts payable:                                                                                   
    Associated companies                                                                    59,438                   91,205
    Other                                                                                   76,405                   97,589
  Customer deposits                                                                         23,437                   21,800
  Taxes accrued                                                                             77,327                   54,194
  Accumulated deferred income taxes                                                         32,239                   70,506
  Interest accrued                                                                          28,826                   27,625
  Co-owner advances                                                                          7,666                   33,873
  Deferred fuel cost                                                                        16,244                    6,955
  Obligations under capital leases                                                          62,623                   53,012
  Other                                                                                     21,696                   17,967
                                                                                       -----------              -----------
           Total                                                                           467,218                  507,858
                                                                                       -----------              -----------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                        759,489                  785,994
  Accumulated deferred investment tax credits                                              103,899                  108,307
  Obligations under capital leases                                                          83,841                   83,940
  Other                                                                                    169,884                  113,998
                                                                                       -----------              -----------
           Total                                                                         1,117,113                1,092,239
                                                                                       -----------              -----------
                                                                                                                           
Long-term debt                                                                           1,244,860                1,255,388
Preferred stock with sinking fund                                                           31,027                   40,027
Company-obligated mandatorily redeemable                                                                                   
  preferred securities of subsidiary trust holding                                                                         
  solely junior subordinated deferrable debentures                                          60,000                   60,000
                                                                                                                           
Shareholder's Equity:                                                                                                      
  Preferred stock without sinking fund                                                     116,350                  116,350
  Common stock, $0.01 par value, authorized                                                                                
    325,000,000 shares; issued and outstanding                                                                             
    46,980,196 shares                                                                          470                      470
  Additional Paid-in capital                                                               590,134                  590,169
  Retained earnings                                                                        479,705                  491,316
                                                                                       -----------              -----------
           Total                                                                         1,186,659                1,198,305
                                                                                       -----------              -----------
                                                                                                                           
Commitments and Contingencies (Notes 2, 9 and 10)                                                                          
                                                                                                                           
           TOTAL                                                                        $4,106,877               $4,153,817
                                                                                       ===========              ===========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
             ENTERGY ARKANSAS, INC.
         STATEMENTS OF RETAINED EARNINGS
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
                                                                                               
Retained Earnings, January 1                               $491,316     $492,386       $491,799
                                                                                               
  Add:                                                                                         
    Net income                                              127,977      157,798        172,080
    Increase in investment in subsidiary                          -           42              -
                                                           --------     --------       --------
        Total                                               127,977      157,840        172,080
                                                           --------     --------       --------
                                                                                               
  Deduct:                                                                                      
    Dividends declared:                                                                        
      Preferred stock                                        10,988       16,110         18,093
      Common stock                                          128,600      142,800        153,400
                                                           --------     --------       --------
        Total                                               139,588      158,910        171,493
                                                           --------     --------       --------
                                                                                               
Retained Earnings, December 31 (Note 8)                    $479,705     $491,316       $492,386
                                                           ========     ========       ========
                                                                                               
                                                                                               
See Notes to Financial Statements.                                                             
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          ENTERGY ARKANSAS, INC.
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON


                                    1997        1996         1995         1994         1993
                                         (In Thousands)
<S>                              <C>         <C>          <C>          <C>          <C>
Operating revenues               $1,715,714  $1,743,433   $1,648,233   $1,590,742   $1,591,568
Income before cumulative                                                            
  effect of accounting changes   $  127,977  $  157,798   $  136,665   $  142,263   $  155,110
Total assets                     $4,106,877  $4,153,817   $4,204,415   $4,292,215   $4,334,105
Long-term obligations (1)        $1,419,728  $1,439,355   $1,423,804   $1,446,940   $1,478,203
</TABLE>

(1)  Includes long-term debt (excluding currently maturing debt), preferred
     stock with sinking fund, preferred securities of subsidiary trust, and
     noncurrent capital lease obligations.

<TABLE>
<CAPTION>
                                      1997          1996          1995          1994          1993
                                                             (In Thousands)
<S>                               <C>           <C>            <C>            <C>           <C>
Electric Operating Revenues:
   Residential                      $551,821      $546,100       $542,862       $506,160      $528,734
   Commercial                        332,715       323,328        318,475        307,296       306,742
   Industrial                        372,083       364,943        362,854        338,988       336,856
   Governmental                       18,200        16,989         17,084         16,698        16,670
                                  --------------------------------------------------------------------
     Total retail                  1,274,819     1,251,360      1,241,275      1,169,142     1,189,002
   Sales for resale                                                                          
     Associated companies            213,845       248,211        178,885        212,314       175,784
     Non-associated companies        215,249       207,887        195,844        182,920       203,696
   Other                              11,801        35,975         32,229         26,366        23,086
                                  --------------------------------------------------------------------
     Total                        $1,715,714    $1,743,433     $1,648,233     $1,590,742    $1,591,568
                                  ====================================================================
Billed Electric Energy
 Sales (GWH):                                                                                           
   Residential                         5,988         6,023          5,868          5,522         5,680
   Commercial                          4,445         4,390          4,267          4,147         4,067
   Industrial                          6,647         6,487          6,314          5,941         5,690
   Governmental                          239           234            243            231           230
                                  --------------------------------------------------------------------
     Total retail                     17,319        17,134         16,692         15,841        15,667
   Sales for resale                                                                         
     Associated companies              9,557        10,471          8,386         10,591         8,307
     Non-associated companies          6,828         6,720          5,066          4,906         5,643
                                  --------------------------------------------------------------------
     Total                            33,704        34,325         30,144         31,338        29,617
                                  ====================================================================
</TABLE>


<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy Gulf States, Inc.


      We  have  audited  the accompanying balance sheets  of  Entergy  Gulf
States,  Inc.  (formerly Gulf States Utilities Company) as of December  31,
1997  and  1996, and  the  related statements of  income  (loss),  retained
earnings  and  cash flows for each of the three years in the  period  ended
December  31,  1997.  These financial statements are the responsibility  of
the Company's  management.  Our responsibility is to express an opinion  on
these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly, in all material respects, the financial position of the Company  as
of  December 31, 1997 and 1996, and the results of its operations  and  its
cash  flows  for each of the three years in the period ended  December  31,
1997 in conformity with generally accepted accounting principles.

      As  discussed in Note 1 to the consolidated financial statements,  at
January  1,  1996  the  Company adopted Statement of  Financial  Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets  and
for Long-Lived Assets to Be Disposed Of".



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998





<PAGE>
       
                         ENTERGY GULF STATES, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS

Net Income

      Net  income increased in 1997 due to (i) the $146 million net of  tax
receipt  of funds and property resulting from the settlement of  the  Cajun
litigation, and (ii) the 1996 net of tax write-off of $174 million of River
Bend  rate deferrals required by the adoption of SFAS 121.  These increases
were  partially offset by (i) the 1997 $227 million net of tax reserve  for
regulatory adjustments; (ii) the 1997 net of tax write-off of $7.4  million
of previously deferred radioactive waste facility costs; and (iii) the 1996
reversal of the Cajun-River Bend litigation accrual.  Excluding the effects
of  the  settlement of the Cajun litigation, the 1997 and 1996  write-offs,
the  reserve  for  regulatory adjustments,  and the accrual  reversal,  net
income  for 1997 would have increased approximately $11 million due  to  an
increase in electric operating revenues.

      Net  income decreased in 1996 primarily due to the write-off of  rate
deferrals,  offset  by  the  reversal of the  Cajun-River  Bend  litigation
accrual  as  discussed above.  Excluding the River Bend rate deferrals  and
the  Cajun-River  Bend litigation accrual, net income for 1996  would  have
increased slightly due to an increase in electric operating revenues and  a
decrease in other operation and maintenance expenses.

      Significant factors affecting the results of operations  and  causing
variances between the years 1997 and 1996, and between the years  1996  and
1995,  are  discussed under "Revenues and Sales", "Expenses",  and  "Other"
below.

Revenues and Sales

      See  "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following  the
financial  statements, for information on operating revenues by source  and
KWH sales.

     The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:

                                            Increase/(Decrease)
            Description                      1997          1996
                                                (In Millions)
                                                                
Change in base revenues                    ($103.8)      ($60.3)
Fuel cost recovery                            66.8        152.0
Sales volume/weather                          46.2         65.1
Other revenue (including unbilled)           151.1         12.8
Sales for resale                             (24.8)       (32.6)
                                            ------       ------
Total                                       $135.5       $137.0
                                            ======       ======

     Electric operating revenues increased in 1997 as a result of increased
other revenue, increased fuel adjustment revenues, which do not affect  net
income, and increased sales volume.  These increases were partially  offset
by  a  decrease  in  base  revenues and sales  for  resale.  Other  revenue
increased  due  to  the gain on the Cajun Settlement  for  Cajun's  30%  of
property  associated with River Bend.  Fuel adjustment  revenues  increased
due  to  a  PUCT  order  that  approved recovery  of  under-recovered  fuel
expenses.  Sales volume increased primarily due to an increase in sales  to
industrial  customers,  in particular, certain cogeneration  customers  who
purchased  electricity  from  Entergy  Gulf  States  for  less  than  their
production  cost.  Base revenues decreased in 1997 due to the  reserve  for
regulatory  adjustments, the provision for rate reductions implemented  for
Louisiana  retail customers in November 1996 and February 1997,  aggressive
pricing  strategies for targeted customer segments, and  a  change  in  the


<PAGE>
                         ENTERGY GULF STATES, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS
                                     
sales mix from residential customers to  industrial  customers.  Sales  for
resale decreased due to decreased sales to both associated and non-associated
companies.   During  the  fourth  quarter  of  1997,  Entergy  Gulf  States
established  reserves  for  potential  regulatory  adjustments   based   on
management's estimates of the financial effect of potential adverse rulings
in  connection  with the River Bend plant-related costs  and  pending  rate
proceedings in Texas.  See Note 2 for further discussion of the PUCT  order
related  to  under-recovered fuel expenses, the  River  Bend  plant-related
costs, and other pending rate proceedings.

      Gas  operating revenues increased in 1997 due to an increase  in  the
fuel  factor  granted  by  the  LPSC.  This increase  permits  recovery  of
previously deferred gas costs.  The increase in gas operating revenues  was
offset  by  a  decrease in steam operating revenues due to a  change  in  a
customer contract in 1997 and an increase in customer requirements in 1996.

      Electric  operating  revenues increased  in  1996  primarily  due  to
increased  fuel  adjustment  revenues, which do   not  affect  net  income,
increased  customers, and increased customer usage.  These  increases  were
partially  offset by rate reductions in effect for both Texas and Louisiana
retail  customers and increased base revenues for 1995. Base revenues  also
increased in 1995 as a result of rate refund reserves established in  1994,
which  were  subsequently reduced as a result of  an  amended  PUCT  order.
Sales  for resale to associated companies decreased as a result of  changes
in  generation  availability and requirements among  the  domestic  utility
companies.

     Gas operating revenues and steam operating revenues increased for 1996
primarily due to higher fuel prices and increased usage.

Expenses

     Operating expenses increased slightly in 1997 due to increases in fuel
and  purchased  power expenses and in the amortization of  rate  deferrals,
partially  offset  by  decreased other operation and  maintenance  expenses
resulting  from  the  Cajun settlement. Fuel and purchased  power  expenses
increased  due  to  increased gas usage and increased  energy  requirements
resulting  from  higher  sales  volume.   Amortization  of  rate  deferrals
increased based on the LPSC-approved River Bend phase-in plan.  See Note  2
for  further  discussion.  The decrease in other operation and  maintenance
expenses  was  partially  offset  by the  write-off  of  radioactive  waste
facility costs.

      Operating  expenses  increased in 1996 as a  result  of  higher  fuel
expenses,  including  purchased  power, partially  offset  by  lower  other
operation  and  maintenance expenses.  Fuel and  purchase  power  expenses,
taken together, increased because of higher gas prices and increased energy
requirements  resulting  from  higher sales volume.   Other  operation  and
maintenance  expenses  decreased primarily  due  to  lower  payroll-related
expenses associated with restructuring programs accrued for in 1995.

Other

     Other income decreased in 1997 due to the reserve for other regulatory
adjustments,  partially  offset  by  the  1997  settlement  of  the   Cajun
litigation  and the 1996 write-off of River Bend rate deferrals.   Interest
expense decreased in 1997 due to the retirement of long-term debt.

      Other   income decreased in 1996 due to the write-off of  River  Bend
rate  deferrals  pursuant to the adoption of SFAS  121.   See  Note  2  for
further  discussion.  This decrease was partially offset by the Cajun-River
Bend litigation accrual reversal.

      The  effective income tax rates for 1997, 1996, and 1995 were  27.2%,
104.0%, and 35.3%, respectively.  The decrease in the effective income  tax
rate  in  1997 is due to a decrease in regulatory operating reserves  which
receive  flow through treatment in 1997 and the $194.5 million  River  Bend
SFAS  121  write-off in 1996.  The change in effective income tax rates  in
1996  is  primarily  due  to the River Bend SFAS 121  write-off  of  $194.5
million in January 1996.


<PAGE>

<TABLE>
<CAPTION>

                 ENTERGY GULF STATES, INC.
                STATEMENTS OF INCOME (LOSS)
                                                                                                             
                                                                         For the Years Ended December 31,
                                                                        1997           1996           1995
                                                                                   (In Thousands)
<S>                                                                  <C>            <C>            <C>
Operating Revenues:
  Electric                                                           $2,061,511     $1,925,988     $1,788,964
  Natural gas                                                            42,654         34,050         23,715
  Steam products                                                         43,664         59,143         49,295
                                                                     ----------     ----------     ----------
        Total                                                         2,147,829      2,019,181      1,861,974
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
    Fuel, fuel-related expenses, and                                                                         
     gas purchased for resale                                           560,104        520,065        516,812
    Purchased power                                                     327,037        295,960        169,767
    Nuclear refueling outage expenses                                    10,829          8,660         10,607
    Other operation and maintenance                                     316,253        402,719        432,647
  Depreciation, amortization, and decommissioning                       214,644        206,070        202,224
  Taxes other than income taxes                                         109,572        102,170        102,228
  Other regulatory charges (credits)                                    (26,611)       (25,317)       (24,359)
  Amortization of rate deferrals                                        105,455         96,956         90,384
                                                                     ----------     ----------     ----------
        Total                                                         1,617,283      1,607,283      1,500,310
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Income                                                        530,546        411,898        361,664
                                                                     ----------     ----------     ----------
                                                                                                             
Other Income (Deductions):                                                                                   
  Allowance for equity funds used                                                                            
    during construction                                                   2,211          2,618          1,125
  Write-off of River Bend rate deferrals                                      -       (194,498)             -
  Miscellaneous - net                                                  (272,135)        69,841         22,573
                                                                     ----------     ----------     ----------
        Total                                                          (269,924)      (122,039)        23,698
                                                                     ----------     ----------     ----------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                            163,146        181,071        191,341
  Other interest - net                                                   10,026         12,819          8,884
  Distributions on preferred securities of subsidiary trust               6,901              -              -
  Allowance for borrowed funds used                                                              
    during construction                                                  (1,829)        (2,235)        (1,026)
                                                                     ----------     ----------     ----------
        Total                                                           178,244        191,655        199,199
                                                                     ----------     ----------     ----------
                                                                                                             
Income Before Income Taxes                                               82,378         98,204        186,163
                                                                                                             
Income Taxes                                                             22,402        102,091         63,244
                                                                     ----------     ----------     ----------
                                                                                                             
Net Income (Loss)                                                        59,976         (3,887)       122,919
                                                                                                             
Preferred and Preference Stock                                                                               
  Dividend Requirements and Other                                        23,865         28,505         29,643
                                                                     ----------     ----------     ----------
                                                                                                             
Earnings (Loss) Applicable to Common Stock                              $36,111       ($32,392)       $93,276
                                                                     ==========     ==========     ==========
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                              
                   ENTERGY GULF STATES, INC.
                    STATEMENTS OF CASH FLOWS
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:                                                                                        
  Net income (loss)                                                     $59,976       ($3,887)       $122,919
  Noncash items included in net income (loss):                                                               
    Write-off of River Bend rate deferrals                                    -       194,498               -
    Gain on Cajun Settlement                                           (246,022)            -               -
    Reserve for regulatory adjustments                                  381,285             -               -
    Amortization of rate deferrals                                      105,455        96,956          90,384
    Other regulatory charges (credits)                                  (26,611)      (25,317)        (24,359)
    Depreciation, amortization, and decommissioning                     214,644       206,070         202,224
    Deferred income taxes and investment tax credits                    (52,486)      101,380          63,231
    Allowance for equity funds used during construction                  (2,211)       (2,618)         (1,125)
  Changes in working capital:                                                                                
    Receivables                                                         (19,679)        3,691          40,193
    Fuel inventory                                                        7,382       (12,868)         (6,357)
    Accounts payable                                                     16,999       (26,706)         (4,820)
    Taxes accrued                                                        12,171        (1,266)         24,935
    Interest accrued                                                     (4,497)       (7,186)          1,510
    Reserve for rate refund                                                   -             -         (56,972)
    Deferred fuel                                                       (46,254)      (68,349)        (24,840)
    Other working capital accounts                                      (11,765)      (70,775)        (16,079)
  Decommissioning trust contributions and realized                                                           
    change in trust assets                                               (9,540)       (7,436)         (9,513)
  Provision for estimated losses and reserves                            (5,852)       (1,885)         10,119
  Proceeds from settlement of Cajun litigation                          102,299             -               -
  Other                                                                  (8,970)      (51,947)        (10,696)
                                                                     ----------    ----------      ----------
    Net cash flow provided by operating activities                      466,324       322,355         400,754
                                                                     ----------    ----------      ----------
                                                                                                             
Investing Activities:                                                                                        
  Construction expenditures                                            (132,566)     (154,993)       (185,944)
  Allowance for equity funds used during construction                     2,211         2,618           1,125
  Nuclear fuel purchases                                                (25,522)      (25,124)         (1,425)
  Proceeds from sale/leaseback of nuclear fuel                           25,522        26,523             542
                                                                     ----------    ----------      ----------
    Net cash flow used in investing activities                         (130,355)     (150,976)       (185,702)
                                                                     ----------    ----------      ----------
                                                                                                             
Financing Activities:                                                                                        
  Proceeds from the issuance of:                                                                             
    Long-term debt                                                            -           780           2,277
    Preferred securities of subsidiary trust                             82,323             -               -
  Retirement of:                                                                                             
    First mortgage bonds                                               (132,240)     (195,417)              -
    Other long-term debt                                                (50,865)      (50,425)        (50,425)
  Redemption of preferred and preference stock                          (93,367)      (10,179)         (7,283)
  Dividends paid:                                                                                            
    Common stock                                                        (77,200)            -               -
    Preferred and preference stock                                      (21,862)      (28,336)        (29,661)
                                                                     ----------    ----------      ----------
    Net cash flow used in financing activities                         (293,211)     (283,577)        (85,092)
                                                                     ----------    ----------      ----------
                                                                                                             
Net increase (decrease) in cash and cash equivalents                     42,758      (112,198)        129,960
                                                                                                             
Cash and cash equivalents at beginning of period                        122,406       234,604         104,644
                                                                     ----------    ----------      ----------
                                                                                                             
Cash and cash equivalents at end of period                             $165,164      $122,406        $234,604
                                                                     ==========    ==========      ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       
  Cash paid during the period for:                                                                           
    Interest - net of amount capitalized                               $167,642      $189,962        $187,918
    Income taxes                                                        $50,477          $285            $208
  Noncash investing and financing activities:                                                                
    Change in unrealized appreciation of                                                                     
      decommissioning trust assets                                       $3,939        $1,604          $2,121
  Net assets acquired from Cajun settlement                            $319,056             -               -
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                        ENTERGY GULF STATES, INC.
                              BALANCE SHEETS
                                  ASSETS
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                   $10,549                   $6,573
    Temporary cash investments - at cost,                                                                                  
      which approximates market:                                                                                           
        Associated companies                                                                37,389                   45,234
        Other                                                                              117,226                   70,599
                                                                                        ----------               ----------
           Total cash and cash equivalents                                                 165,164                  122,406
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts                                                                         
     of $1.8 million in 1997 and $2.0 million in 1996)                                      99,762                   87,883
    Associated companies                                                                     9,024                    2,777
    Other                                                                                   32,837                   30,758
    Accrued unbilled revenues                                                               74,825                   75,351
  Deferred fuel costs                                                                      145,757                   99,503
  Accumulated deferred income taxes                                                         22,093                   56,714
  Fuel inventory - at average cost                                                          37,627                   45,009
  Materials and supplies - at average cost                                                 104,690                   86,157
  Rate deferrals                                                                            21,749                  105,456
  Prepayments and other                                                                     21,680                   16,321
                                                                                        ----------               ----------
           Total                                                                           735,208                  728,335
                                                                                        ----------               ----------
                                                                                                                           
Other Property and Investments:                                                                                            
  Decommissioning trust fund                                                               187,462                   41,983
  Other - at cost (less accumulated depreciation)                                          176,953                   38,358
                                                                                        ----------               ----------
           Total                                                                           364,415                   80,341
                                                                                        ----------               ----------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                               7,168,668                7,040,654
  Natural Gas                                                                               47,656                   45,443
  Steam products                                                                            82,289                   81,743
  Property under capital leases                                                             67,946                   72,800
  Construction work in progress                                                             90,333                  112,137
  Nuclear fuel under capital lease                                                          54,390                   49,833
  Nuclear fuel                                                                              23,051                        -
                                                                                        ----------               ----------
           Total                                                                         7,534,333                7,402,610
  Less - accumulated depreciation and amortization                                       2,996,147                2,827,275
                                                                                        ----------               ----------
           Utility plant - net                                                           4,538,186                4,575,335
                                                                                        ----------               ----------
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    Rate deferrals                                                                          98,410                  120,158
    SFAS 109 regulatory asset - net                                                        376,275                  372,817
    Unamortized loss on reacquired debt                                                     48,417                   54,761
    Other regulatory assets                                                                 86,819                   87,429
    Long-term receivables                                                                   36,984                  216,082
  Other                                                                                    203,923                  185,921
                                                                                        ----------               ----------
           Total                                                                           850,828                1,037,168
                                                                                        ----------               ----------
                                                                                                                           
           TOTAL                                                                        $6,488,637               $6,421,179
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                        ENTERGY GULF STATES, INC.
                              BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDER'S EQUITY
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                       $190,890                 $160,865
  Accounts payable:                                                                                                        
    Associated companies                                                                    48,726                   55,630
    Other                                                                                  109,444                   85,541
  Customer deposits                                                                         30,311                   25,572
  Taxes accrued                                                                             48,318                   36,147
  Interest accrued                                                                          45,154                   49,651
  Nuclear refueling reserve                                                                  3,386                   12,354
  Obligations under capital leases                                                          30,280                   39,110
  Other                                                                                     17,646                   18,186
                                                                                        ----------               ----------
           Total                                                                           524,155                  483,056
                                                                                        ----------               ----------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                      1,124,644                1,190,666
  Accumulated deferred investment tax credits                                              215,438                  219,188
  Obligations under capital leases                                                          92,055                   83,524
  Deferred River Bend finance charges                                                        9,330                   33,688
  Other                                                                                    914,079                  539,752
                                                                                        ----------               ----------
           Total                                                                         2,355,546                2,066,818
                                                                                        ----------               ----------
                                                                                                                           
Long-term debt                                                                           1,702,719                1,915,346
Preferred stock with sinking fund                                                           68,978                   77,459
Preference stock                                                                           150,000                  150,000
Company - obligated mandatorily redeemable                                                                                 
    preferred securities of subsidiary trust holding                                                                       
    solely junior subordinated deferrable debentures                                        85,000                        -
                                                                                                                           
                                                                                                                           
Shareholder's Equity:                                                                                                      
  Preferred stock without sinking fund                                                      51,444                  136,444
  Common stock, no par value, authorized                                                                                   
    200,000,000 shares; issued and outstanding                                                                             
    100 shares                                                                             114,055                  114,055
  Additional paid-in capital                                                             1,152,575                1,152,689
  Retained earnings                                                                        284,165                  325,312
                                                                                        ----------               ----------
           Total                                                                         1,602,239                1,728,500
                                                                                        ----------               ----------
                                                                                                                           
Commitments and Contingencies (Notes 2, 9 and 10)                                                                          
                                                                                                                           
           TOTAL                                                                        $6,488,637               $6,421,179
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                               
            ENTERGY GULF STATES, INC.
         STATEMENTS OF RETAINED EARNINGS
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
                                                                                               
Retained Earnings, January 1                               $325,312     $357,704       $264,626
                                                                                               
  Add:                                                                                         
    Net income (loss)                                        59,976       (3,887)       122,919
                                                                                               
  Deduct:                                                                                      
    Dividends declared:                                                                        
     Preferred and preference stock                          21,862       28,336         29,482
     Common stock                                            77,200            -              -
    Preferred and preference stock                                                             
      redemption and other                                    2,061          169            359
                                                           --------     --------       --------
        Total                                               101,123       28,505         29,841
                                                           --------     --------       --------
                                                                                               
Retained Earnings, December 31 (Note 8)                    $284,165     $325,312       $357,704
                                                           ========     ========       ========
                                                                                               
See Notes to Financial Statements.                                                             
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                ENTERGY GULF STATES, INC. AND SUBSIDIARIES
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON

                                1997        1996          1995        1994         1993
                                                      (In Thousands)
<S>                         <C>          <C>          <C>          <C>          <C>
Operating revenues          $2,147,829   $2,019,181   $ 1,861,974  $1,797,365   $1,827,620
Net income (loss)           $   59,976   $   (3,887)  $   122,919  $  (82,755)  $   69,461
Total assets                $6,488,637   $6,421,179   $ 6,861,058  $6,843,461   $7,137,351
Long-term obligations (1)   $2,098,752   $2,226,329   $ 2,521,203  $2,689,042   $2,772,002
</TABLE>

 (1) Includes long-term debt (excluding currently maturing debt), preferred
     and  preference  stock  with  sinking fund,  preferred  securities  of
     subsidiary trust, and noncurrent capital lease obligations.


<TABLE>
<CAPTION>
                                  1997          1996         1995         1994         1993
                                                        (In Thousands)
<S>                             <C>          <C>           <C>           <C>          <C>
Electric Operating Revenues:
   Residential                    $624,862     $612,398      $573,566      $569,997     $585,799
   Commercial                      452,724      444,133       412,601       414,929      415,267
   Industrial                      740,418      685,178       604,688       626,047      650,230
   Governmental                     33,774       31,023        25,042        25,242       26,118
                                ----------------------------------------------------------------
     Total retail                1,851,778    1,772,732     1,615,897     1,636,215    1,677,414
   Sales for resale                                                                                
     Associated companies           14,260       20,783        62,431        45,263            -
     Non-associated companies       57,936       76,173        67,103        52,967       31,898
   Other (1)                       137,537       56,300        43,533       (15,244)      38,649
                                ----------------------------------------------------------------
     Total                      $2,061,511   $1,925,988    $1,788,964    $1,719,201   $1,747,961
                                ================================================================
Billed Electric Energy                                                                        
 Sales (GWH):                                                                                     
   Residential                       8,178        8,035         7,699         7,351        7,192
   Commercial                        6,575        6,417         6,219         6,089        5,711
   Industrial                       18,038       16,661        15,393        15,026       14,294
   Governmental                        481          438           311           297          296
                                ----------------------------------------------------------------
     Total retail                   33,272       31,551        29,622        28,763       27,493
   Sales for resale                                                                                
     Associated companies              414          656         2,935         1,866            -
     Non-associated companies        1,503        2,148         2,212         1,650          666
                                ----------------------------------------------------------------
     Total Electric Department      35,189       34,355        34,769        32,279       28,159
                                ================================================================

(1)  1994 includes the effects of an Entergy Gulf States reserve for rate
     refund.
</TABLE>
                                     

<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy Louisiana, Inc.


      We have audited the accompanying balance sheets of Entergy Louisiana,
Inc. (formerly Louisiana Power & Light Company) as of December 31, 1997 and
1996,  and  the  related statements of income, retained earnings  and  cash
flows  for each of  the three years in the period ended December 31,  1997.
These   financial  statements  are  the  responsibility  of  the  Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly, in all material respects, the financial position of the Company  as
of  December 31, 1997 and 1996, and the results of its operations  and  its
cash  flows  for each of the three years in the period ended  December  31,
1997 in conformity with generally accepted accounting principles.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998




<PAGE>
                                     
                          ENTERGY LOUISIANA, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS


Net Income

      Net  income decreased in 1997 primarily due to a decrease in electric
operating  revenues  and  an  increase in other operation  and  maintenance
expenses, partially offset by lower income taxes.

     Net income decreased in 1996 primarily due  to a decrease in base rate
revenues,  partially offset by decreases in other operation and maintenance
expenses and lower interest charges.

      Significant factors affecting the results of operations  and  causing
variances between the years 1997 and 1996, and between the years  1996  and
1995,  are  discussed under "Revenues and Sales", "Expenses",  and  "Other"
below.

Revenues and Sales

      See  "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following  the
financial  statements, for information on operating revenues by source  and
KWH sales.

     The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:

                                             Increase/(Decrease)
             Description                      1997          1996
                                                 (In Millions)
                                                                  
Change in base revenues                      ($26.9)       ($36.4)
Fuel cost recovery                             29.7         160.2
Sales volume/weather                          (23.8)         19.7
Other revenue (including unbilled)                -           3.9
Sales for resale                               (4.6)          6.6
                                             ------        ------
Total                                        ($25.6)       $154.0
                                             ======        ======

     Electric operating revenues decreased in 1997 primarily as a result of
a  decrease  in base revenues and lower sales volume, partially  offset  by
higher  fuel  adjustment revenues, which do not affect  net  income.   Base
revenues decreased due to base rate reductions that became effective in the
third  quarters of 1996 and 1997.  Sales volume decreased because of milder
weather  during  the first half of 1997 and the loss of a large  industrial
customer  as well as substantially lower sales to another large  industrial
customer  in  1997 due to customer cogeneration.  Fuel adjustment  revenues
increased  due  to  shifting generation requirements as  a  result  of  the
extended Waterford 3 refueling outage.

      Electric operating revenues increased in 1996 due primarily to higher
fuel  adjustment revenues, which do not affect net income,  and  to  higher
sales  volume,  primarily due to modest growth in the number of  customers.
These increases were partially offset by the impact of base rate reductions
ordered  in  the second quarters of 1995 and 1996, and by a  settlement  of
related rate issues during the fourth quarter of 1995.


<PAGE>
                          ENTERGY LOUISIANA, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS


Expenses

      Operating  expenses increased in 1997 primarily due to  increases  in
fuel  and  purchased  power  expenses and other operation  and  maintenance
expenses.   Fuel  and purchased power expenses increased primarily  due  to
shifting  generation  requirements resulting from  the  extended  refueling
outage  at  the Waterford 3 nuclear plant, partially offset by  lower  fuel
prices.   Other operation and maintenance expenses increased due  primarily
to  the  write-off of previously deferred radioactive waste facility costs.
Also  contributing  to  the  increase in other  operation  and  maintenance
expenses  were  nonfueling outage related contract work at Waterford  3  as
well  as maintenance performed at Waterford 3 and expenses related to  fire
damage sustained at the Little Gypsy fossil plant in September 1997.

      Operating  expenses increased in 1996 primarily due to  increases  in
fuel  and  purchased power expenses, higher depreciation, and higher  taxes
other  than  income  taxes.  These increases were  partially  offset  by  a
decrease  in  other  operation and maintenance  expenses  as  a  result  of
restructuring  charges  recorded in 1995  and  by  the  recording  of  rate
deferrals  in 1996, as discussed below.  The increase in fuel and purchased
power  expenses  is due to both higher gas costs and higher  sales  volume.
Depreciation  expense increased due to capital improvements to transmission
lines  and  substations  and due to an increase in  the  depreciation  rate
associated  with  Waterford  3.  Taxes other than  income  taxes  increased
largely  as a result of the expiration of Waterford 3's local property  tax
exemption  in  December 1995.  This increase was offset for the  first  six
months  of  1996  by the recording of the LPSC-approved rate  deferral  for
these taxes as discussed in Note 2.

Other

      Interest charges on long-term debt decreased for 1996 and 1997 due to
the retirement and refinancing of higher-cost long-term debt.

      The  effective income tax rates for 1997, 1996, and 1995 were  41.1%,
38.3%,  and 36.8%, respectively.  The increase in 1997 is primarily due  to
decreased   amortization  of  deferred  income  taxes  on  property   fully
depreciated  for  income  tax  purposes.  The effective income tax rate for 
1996 was relatively unchanged from 1995.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                  ENTERGY LOUISIANA, INC.
                    STATEMENTS OF INCOME
                                                                                                       
                                                                         For the Years Ended December 31,
                                                                        1997           1996           1995
                                                                                 (In Thousands)
<S>                                                                  <C>            <C>            <C>
Operating Revenues                                                   $1,803,272     $1,828,867     $1,674,875
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
     Fuel and fuel-related expenses                                     429,823        419,331        300,015
     Purchased power                                                    413,532        403,322        351,583
     Nuclear refueling outage expenses                                   18,634         15,885         17,675
     Other operation and maintenance                                    318,856        297,667        311,535
  Depreciation, amortization, and decommissioning                       172,035        167,779        161,023
  Taxes other than income taxes                                          71,558         72,329         55,867
  Other regulatory charges (credits)                                      5,505         (3,752)             -
  Amortization of rate deferrals                                          5,749         19,860         28,422
                                                                     ----------     ----------     ----------
        Total                                                         1,435,692      1,392,421      1,226,120
                                                                     ----------     ----------     ----------
                                                                                                             
Operating Income                                                        367,580        436,446        448,755
                                                                     ----------     ----------     ----------
                                                                                                             
Other Income (Deductions):                                                                                   
  Allowance for equity funds used                                                                            
   during construction                                                    1,149            862          1,950
  Miscellaneous - net                                                      (517)         2,933          2,831
                                                                     ----------     ----------     ----------
        Total                                                               632          3,795          4,781
                                                                     ----------     ----------     ----------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                            116,715        122,604        129,691
  Other interest - net                                                    5,885          6,938          7,210
  Distributions on preferred securities of subsidiary trust               6,300          2,870              -
  Allowance for borrowed funds used                                                                          
   during construction                                                   (1,410)        (1,493)        (2,016)
                                                                     ----------     ----------     ----------
        Total                                                           127,490        130,919        134,885
                                                                     ----------     ----------     ----------
                                                                                                             
Income Before Income Taxes                                              240,722        309,322        318,651
                                                                                                             
Income Taxes                                                             98,965        118,560        117,114
                                                                     ----------     ----------     ----------
                                                                                                             
Net Income                                                              141,757        190,762        201,537
                                                                                                             
Preferred Stock Dividend Requirements                                                                        
  and Other                                                              13,355         19,947         21,307
                                                                     ----------     ----------     ----------
                                                                                                             
Earnings Applicable to Common Stock                                    $128,402       $170,815       $180,230
                                                                     ==========     ==========     ==========
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                    ENTERGY LOUISIANA, INC.
                    STATEMENTS OF CASH FLOWS
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:                                                                                        
  Net income                                                           $141,757      $190,762        $201,537
  Noncash items included in net income:                                                                      
    Amortization of rate deferrals                                        5,749        19,860          28,422
    Other regulatory charges (credits)                                    5,505        (3,752)              -
    Depreciation, amortization, and decommissioning                     172,035       167,779         161,023
    Deferred income taxes and investment tax credits                    (15,456)       18,809           2,450
    Allowance for equity funds used during construction                  (1,149)         (862)         (1,950)
  Changes in working capital:                                                                                
    Receivables                                                           2,445        (4,889)         (8,069)
    Accounts payable                                                      9,140        22,838           4,420
    Taxes accrued                                                        17,853       (11,222)         20,472
    Interest accrued                                                    (14,678)        5,047           1,215
    Other working capital accounts                                       19,329       (26,831)        (16,993)
  Decommissioning trust contributions and realized                                                     
    change in trust assets                                              (11,191)      (11,620)         (9,180)
  Provision for estimated losses and reserves                             3,986         3,240          (1,996)
  Other                                                                   5,801       (17,488)          3,306
                                                                     ----------    ----------      ----------
    Net cash flow provided by operating activities                      341,126       351,671         384,657
                                                                     ----------    ----------      ----------
                                                                                                             
Investing Activities:                                                                                        
  Construction expenditures                                             (84,767)     (103,187)       (120,244)
  Allowance for equity funds used during construction                     1,149           862           1,950
  Nuclear fuel purchases                                                (43,332)            -         (44,707)
  Proceeds from sale/leaseback of nuclear fuel                           43,332             -          47,293
                                                                     ----------    ----------      ----------
    Net cash flow used in investing activities                          (83,618)     (102,325)       (115,708)
                                                                     ----------    ----------      ----------
                                                                                                             
Financing Activities:                                                                                        
  Proceeds from the issuance of:                                                                             
    First mortgage bonds                                                      -       113,994               -
    Other long-term debt                                                      -             -          16,577
    Preferred securities of subsidiary trust                                  -        67,795               -
  Retirement of:                                                                                             
    First mortgage bonds                                                (34,000)     (130,000)        (75,000)
    Other long-term debt                                                   (288)         (270)           (308)
  Redemption of preferred stock                                          (7,500)      (67,824)        (11,256)
  Changes in short-term borrowings - net                                (31,066)      (45,393)         49,305
  Dividends paid:                                                                                            
    Common stock                                                       (145,400)     (179,200)       (221,500)
    Preferred stock                                                     (13,251)      (19,072)        (21,115)
                                                                     ----------    ----------      ----------
    Net cash flow used in financing activities                         (231,505)     (259,970)       (263,297)
                                                                     ----------    ----------      ----------
                                                                                                             
Net increase (decrease) in cash and cash equivalents                     26,003       (10,624)          5,652
                                                                                                             
Cash and cash equivalents at beginning of period                         23,746        34,370          28,718
                                                                     ----------    ----------      ----------
                                                                                                             
Cash and cash equivalents at end of period                              $49,749       $23,746         $34,370
                                                                     ==========    ==========      ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       
   Cash paid during the period for:                                                                          
     Interest - net of amount capitalized                              $132,199      $118,007        $128,485
     Income taxes                                                       $68,323      $125,924         $96,066
   Noncash investing and financing activities:                                                               
     Acquisition of nuclear fuel                                                      $32,685                
                                                                              -                            -
     Change in unrealized appreciation of                                                                    
        decommissioning trust assets                                     $3,432          $301          $2,304
                                                                                                             
 See Notes to Financial Statements.                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                         ENTERGY LOUISIANA, INC.
                              BALANCE SHEETS
                                  ASSETS
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                    $5,148                   $1,804
    Temporary cash investments - at cost,                                                                                  
      which approximates market                                                             44,601                   21,942
                                                                                        ----------               ----------
           Total cash and cash equivalents                                                  49,749                   23,746
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts                                                                         
     of $1.2 million in 1997 and $1.4 million in 1996)                                      69,566                   73,823
    Associated companies                                                                    15,035                   11,606
    Other                                                                                    7,441                    7,053
    Accrued unbilled revenues                                                               61,874                   63,879
  Deferred fuel costs                                                                            -                   18,347
  Accumulated deferred income taxes                                                         10,994                    1,465
  Materials and supplies - at average cost                                                  82,850                   78,449
  Rate deferrals                                                                                 -                    5,749
  Deferred nuclear refueling outage costs                                                   27,176                    5,300
  Prepaid income tax                                                                             -                   24,651
  Prepayments and other                                                                     10,793                   10,234
                                                                                        ----------               ----------
           Total                                                                           335,478                  324,302
                                                                                        ----------               ----------
                                                                                                                           
Other Property and Investments:                                                                                            
  Nonutility property                                                                       22,525                   22,525
  Decommissioning trust fund                                                                65,104                   50,481
  Investment in subsidiary companies - at equity                                            14,230                   14,230
                                                                                        ----------               ----------
           Total                                                                           101,859                   87,236
                                                                                        ----------               ----------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                               5,058,130                4,997,456
  Property under capital leases                                                            233,513                  232,582
  Construction work in progress                                                             52,632                   56,180
  Nuclear fuel under capital lease                                                          57,811                   38,157
  Nuclear fuel                                                                               1,560                   34,191
                                                                                        ----------               ----------
           Total                                                                         5,403,646                5,358,566
  Less - accumulated depreciation and amortization                                       2,021,392                1,881,847
                                                                                        ----------               ----------
           Utility plant - net                                                           3,382,254                3,476,719
                                                                                        ----------               ----------
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    SFAS 109 regulatory asset - net                                                        278,234                  295,836
    Unamortized loss on reacquired debt                                                     33,468                   37,552
    Other regulatory assets                                                                 29,991                   30,320
  Other                                                                                     14,116                   27,313
                                                                                        ----------               ----------
           Total                                                                           355,809                  391,021
                                                                                        ----------               ----------
                                                                                                                           
           TOTAL                                                                        $4,175,400               $4,279,278
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                                                                                                                           
                         ENTERGY LOUISIANA, INC.
                              BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDER'S EQUITY
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                        $35,300                  $34,275
  Notes payable - associated companies                                                           -                   31,066
  Accounts payable:                                                                                   
    Associated companies                                                                    43,508                   73,389
    Other                                                                                   95,886                   89,550
  Customer deposits                                                                         55,331                   59,070
  Taxes accrued                                                                             25,243                    7,390
  Interest accrued                                                                          34,571                   49,249
  Dividends declared                                                                         3,253                    3,489
  Deferred fuel costs                                                                        3,268                        -
  Obligations under capital leases                                                          29,232                   28,000
  Other                                                                                      8,578                    4,940
                                                                                        ----------               ----------
           Total                                                                           334,170                  380,418
                                                                                        ----------               ----------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                        813,748                  831,093
  Accumulated deferred investment tax credits                                              134,276                  139,899
  Obligations under capital leases                                                          28,579                   10,156
  Deferred interest - Waterford 3 lease obligation                                          17,799                   16,809
  Other                                                                                    119,519                  114,665
                                                                                        ----------               ----------
           Total                                                                         1,113,921                1,112,622
                                                                                        ----------               ----------
                                                                                                                           
Long-term debt                                                                           1,338,464                1,373,233
Preferred stock with sinking fund                                                           85,000                   92,500
Company-obligated mandatorily redeemable                                                                                   
  preferred securities of subsidiary trust holding                                                                         
  solely junior subordinated deferrable debentures                                          70,000                   70,000
                                                                                                                           
Shareholder's Equity:                                                                                                      
  Preferred stock without sinking fund                                                     100,500                  100,500
  Common stock, no par value, authorized                                                                                   
    250,000,000 shares; issued and outstanding                                                                             
    165,173,180 shares                                                                   1,088,900                1,088,900
  Capital stock expense and other                                                           (2,321)                  (2,659)
  Retained earnings                                                                         46,766                   63,764
                                                                                        ----------               ----------
           Total                                                                         1,233,845                1,250,505
                                                                                        ----------               ----------
                                                                                                                           
Commitments and Contingencies (Notes 2, 9 and 10)                                                                          
                                                                                                                           
           TOTAL                                                                        $4,175,400               $4,279,278
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                               
                                                                                               
             ENTERGY LOUISIANA, INC.
         STATEMENTS OF RETAINED EARNINGS
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
                                                                                               
Retained Earnings, January 1                                $63,764      $72,150       $113,420
                                                                                               
  Add:                                                                                         
    Net income                                              141,757      190,762        201,537
                                                                                               
  Deduct:                                                                                      
    Dividends declared:                                                                        
      Preferred stock                                        13,016       17,412         20,775
      Common stock                                          145,400      179,200        221,500
    Capital stock expenses                                      339        2,536            532
                                                           --------     --------       --------
        Total                                               158,755      199,148        242,807
                                                           --------     --------       --------
                                                                                               
Retained Earnings, December 31 (Note 8)                     $46,766      $63,764        $72,150
                                                           ========     ========       ========
                                                                                               
                                                                                               
See Notes to Financial Statements.                                                             
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                          ENTERGY LOUISIANA, INC.
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON


                               1997            1996        1995        1994        1993
                                           (In Thousands)
<S>                         <C>           <C>           <C>         <C>         <C>
Operating revenues          $1,803,272    $ 1,828,867   $1,674,875  $1,710,415  $1,731,541
Net income                  $  141,757    $   190,762   $  201,537  $  213,839  $  188,808
Total assets                $4,175,400    $ 4,279,278   $4,331,523  $4,435,439  $4,463,998
Long-term obligations (1)   $1,522,043    $ 1,545,889   $1,528,542  $1,530,558  $1,611,436
</TABLE>

(1)  Includes long-term debt (excluding currently maturing debt), preferred
     stock with sinking fund, preferred securities of subsidiary trust, and
     noncurrent capital lease obligations.

<TABLE>
<CAPTION>
                                 1997          1996          1995          1994          1993
                                                         (In Thousands)
<S>                            <C>           <C>            <C>            <C>           <C>
Electric Operating Revenues:
   Residential                   $606,173      $609,308       $583,373       $577,084      $572,738
   Commercial                     379,131       374,515        353,582        358,672       345,254
   Industrial                     708,356       727,505        641,196        659,061       652,574
   Governmental                    34,171        33,621         31,616         31,679        29,723
                               --------------------------------------------------------------------
     Total retail               1,727,831     1,744,949      1,609,767      1,626,496     1,600,289
   Sales for resale                                                                       
     Associated companies           3,817         5,065          1,178            352         4,849
     Non-associated companies      55,345        58,685         48,987         36,928        46,414
   Other                           16,279        20,168         14,943         46,639        79,989
                               --------------------------------------------------------------------
     Total                     $1,803,272    $1,828,867     $1,674,875     $1,710,415    $1,731,541
                               ====================================================================
Billed Electric Energy
 Sales (GWH):                                                                                        
   Residential                      7,826         7,893          7,855          7,449         7,368
   Commercial                       4,906         4,846          4,786          4,631         4,435
   Industrial                      16,390        17,647         16,971         16,561        15,914
   Governmental                       460           457            439            423           398
                               --------------------------------------------------------------------
     Total retail                  29,582        30,843         30,051         29,064        28,115
   Sales for resale                                                                       
     Associated companies             104           143             44             10           112
     Non-associated companies         805           982          1,293            776         1,213
                               --------------------------------------------------------------------
     Total                         30,491        31,968         31,388         29,850        29,440
                               ====================================================================
                                                                                                 
</TABLE>


<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy Mississippi, Inc.


       We   have  audited  the  accompanying  balance  sheets  of   Entergy
Mississippi,  Inc.  (formerly Mississippi Power  &  Light  Company)  as  of
December  31, 1997 and 1996, and the related statements of income, retained
earnings  and  cash flows for each of the three years in the  period  ended
December  31,  1997.  These financial statements are the responsibility  of
the Company's  management.  Our responsibility is to express an opinion  on
these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly, in all material respects, the financial position of the Company  as
of  December 31, 1997 and 1996, and the results of its operations  and  its
cash  flows  for each of the three years in the period ended  December  31,
1997 in conformity with generally accepted accounting principles.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998


                                     
                                     


<PAGE>
                         ENTERGY MISSISSIPPI, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS


Net Income

      Net  income  decreased in 1997 as a result of a decrease in  electric
operating  revenues  and  an  increase in other operation  and  maintenance
expenses, partially offset by lower income taxes.

      Net income increased in 1996 primarily due to reduced other operation
and maintenance expenses, partially offset by higher income taxes.

      Significant factors affecting the results of operations  and  causing
variances between the years 1997 and 1996, and between the years  1996  and
1995,  are  discussed under "Revenues and Sales", "Expenses",  and  "Other"
below.

Revenues and Sales

      See  "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following  the
financial  statements, for information on operating revenues by source  and
KWH sales.

     The changes in electric operating revenues for the twelve months ended
December 31, 1997 and 1996 are as follows:

                                            Increase/(Decrease)
            Description                     1997          1996
                                               (In Millions)
                                                               
Change in base revenues                     ($7.7)       ($2.2)
Grand Gulf rate rider                       (19.0)         7.1
Fuel cost recovery                          (14.5)        33.6
Sales volume/weather                          3.8          8.5
Other revenue (including unbilled)           (1.6)        (2.1)
Sales for resale                             18.0         23.7
                                           ------        -----
Total                                      ($21.0)       $68.6
                                           ======        =====

      Electric  operating revenues decreased in 1997  primarily  due  to  a
decrease in the Grand Gulf 1 rate rider and fuel adjustment revenues, which
do  not  affect net income, partially offset by an increase  in  sales  for
resale.  In connection with an annual MPSC review, in October 1996, Entergy
Mississippi's Grand Gulf 1 rate rider was decreased based on  the  estimate
of  costs  over the next year.  Therefore, Grand Gulf 1 rate rider revenues
for  1997  were lower than those in 1996.  The decrease in fuel  adjustment
revenues is due to an MPSC order, effective May 1, 1997, that changed  fuel
recovery  pricing  to  a  fixed fuel factor.  Sales  for  resale  increased
because  of an increase in sales to associated companies due to changes  in
generation  requirements  and  availability  among  the  domestic   utility
companies.


<PAGE>
                         ENTERGY MISSISSIPPI, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS


      Electric  operating  revenues increased  in  1996  primarily  due  to
increases  in fuel adjustment revenues, the Grand Gulf 1 rate rider,  sales
for resale, and higher sales volume.  Fuel adjustment revenues increased in
response  to higher fuel costs.  In connection with an annual MPSC  review,
in October 1995, Entergy Mississippi's Grand Gulf 1 rate rider was adjusted
upward as a result of its undercollection of Grand Gulf 1 costs.  The  fuel
adjustment clause and the Grand Gulf 1 rate rider do not affect net income.
Sales  for  resale increased because of an increase in sales to  associated
companies due to changes in generation requirements and availability  among
the  domestic utility companies.  The increase in sales volume is primarily
due to increased customer usage.

Expenses

      Operating expenses increased in 1997 due to an increase in  purchased
power  expenses  and  other operation and maintenance  expenses,  partially
offset  by  decreases in fuel expense and net rate deferral activity.   The
increase  in purchased power expenses in 1997 compared to 1996 is due  both
to the shift in use from higher priced fuel to lower priced purchased power
and  to  an  increase in generation and purchases related to  increases  in
sales  volume  and sales for resale.  The increase in other  operation  and
maintenance  expenses  is  due to increases  in  contract  labor  and  loss
reserves.  Contract labor increased because of maintenance and plant outage
expenses in 1997.  Loss reserves expense increased as a result of increased
litigation reserves.

      The other regulatory credits reducing operating expenses in 1996  and
1997  principally represents the deferral of Entergy Mississippi's  portion
of  the  proposed  System Entergy rate increase.  See Note  2  for  further
discussion.

      Operating expenses increased in 1996 due to an increase in  fuel  and
purchased power expenses, partially offset by a decrease in other operation
and maintenance expenses.  Fuel and purchased power expenses increased as a
result  of higher fuel costs and higher sales volume.  Other operation  and
maintenance expenses decreased as a result of lower payroll, contract work,
and  materials  and supplies expenses.  Payroll expenses decreased  due  to
restructuring  costs  recorded  in  1995  and  the  resulting  decrease  in
employees.   Contract  work and materials and supplies  expenses  decreased
because  of the turbine repairs at some of Entergy Mississippi's generating
plants in 1995.

Other

      The  effective income tax rates for 1997, 1996, and 1995 were  28.6%,
34.2%,  and 33.7% respectively.  The decrease in 1997 is primarily  due  to
the  impact of recording the tax benefit of Entergy Corporation's  expenses
as  prescribed by the tax allocation agreement.  The effective  income  tax
rate for 1996 was relatively unchanged from 1995.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                 ENTERGY MISSISSIPPI, INC.
                    STATEMENTS OF INCOME
                                                                                                       
                                                                         For the Years Ended December 31,
                                                                         1997          1996            1995
                                                                                   (In Thousands)
<S>                                                                    <C>            <C>            <C>                 
Operating Revenues                                                     $937,395       $958,430       $889,843
                                                                       --------       --------       --------
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
     Fuel, fuel-related expenses                                        199,880        207,116        163,198
     Purchased power                                                    285,447        272,812        240,519
     Other operation and maintenance                                    129,812        122,628        144,183
  Depreciation and amortization                                          43,300         40,313         38,197
  Taxes other than income taxes                                          43,142         43,389         46,019
  Other regulatory charges (credits)                                    (20,731)       (23,026)        (6,965)
  Amortization of rate deferrals                                        119,797        130,602        114,304
                                                                       --------       --------       --------
        Total                                                           800,647        793,834        739,455
                                                                       --------       --------       --------
                                                                                                             
Operating Income                                                        136,748        164,596        150,388
                                                                       --------       --------       --------
                                                                                                             
Other Income:                                                                                                
  Allowance for equity funds used                                                                            
   during construction                                                      543          1,143            950
  Miscellaneous - net                                                       919          1,662          3,036
                                                                       --------       --------       --------
        Total                                                             1,462          2,805          3,986
                                                                       --------       --------       --------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                             40,791         44,137         46,998
  Other interest - net                                                    4,483          3,870          4,638
  Allowance for borrowed funds used                                                                          
   during construction                                                     (469)          (923)          (806)
                                                                       --------       --------       --------
        Total                                                            44,805         47,084         50,830
                                                                       --------       --------       --------
                                                                                                             
Income Before Income Taxes                                               93,405        120,317        103,544
                                                                                                             
Income Taxes                                                             26,744         41,106         34,877
                                                                       --------       --------       --------
                                                                                                             
Net Income                                                               66,661         79,211         68,667
                                                                                                             
Preferred Stock Dividend Requirements                                                                        
  and Other                                                               4,044          5,010          7,515
                                                                       --------       --------       --------
                                                                                                             
Earnings Applicable to Common Stock                                     $62,617        $74,201        $61,152
                                                                       ========       ========       ========
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                   ENTERGY MISSISSIPPI, INC.
                    STATEMENTS OF CASH FLOWS
                                                                                                     
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:                                                                                        
  Net income                                                            $66,661       $79,211         $68,667
  Noncash items included in net income:                                                                      
    Amortization of rate deferrals                                      119,797       130,602         114,304
    Other regulatory charges (credits)                                  (20,731)      (23,026)         (6,965)
    Depreciation and amortization                                        43,300        40,313          38,197
    Deferred income taxes and investment tax credits                    (32,204)      (32,887)        (36,774)
    Allowance for equity funds used during construction                    (543)       (1,143)           (950)
  Changes in working capital:                                                                                
    Receivables                                                           2,978        (4,123)         (5,277)
    Fuel inventory                                                        3,275            20          (1,901)
    Accounts payable                                                     (9,246)           88          15,553
    Taxes accrued                                                         5,832        (2,157)          7,818
    Interest accrued                                                     (6,600)         (925)          1,457
    Other working capital accounts                                      (12,283)        4,074         (21,108)
  Other                                                                  (1,150)       (8,081)         11,922
                                                                     ----------    ----------      ----------
    Net cash flow provided by operating activities                      159,086       181,966         184,943
                                                                     ----------    ----------      ----------
                                                                                                             
Investing Activities:                                                                                        
  Construction expenditures                                             (50,334)      (85,018)        (79,146)
  Allowance for equity funds used during construction                       543         1,143             950
                                                                     ----------    ----------      ----------
    Net cash flow used in investing activities                          (49,791)      (83,875)        (78,196)
                                                                     ----------    ----------      ----------
                                                                                                             
Financing Activities:                                                                                        
  Proceeds from the issuance of general and refunding                                                        
    mortgage bonds                                                       64,827             -          79,480
  Retirement of:                                                                                             
    General and refunding mortgage bonds                                (96,000)      (26,000)        (45,000)
    First mortgage bonds                                                      -       (35,000)        (20,000)
    Other long-term debt                                                    (15)          (15)           (965)
  Redemption of preferred stock                                         (14,500)       (9,876)        (15,000)
  Changes in short-term borrowings - net                                 (3,091)       50,253         (30,000)
  Dividends paid:                                                                                            
    Common stock                                                        (59,200)      (79,900)        (61,700)
    Preferred stock                                                      (3,998)       (5,000)         (6,215)
                                                                     ----------    ----------      ----------
    Net cash flow used in financing activities                         (111,977)     (105,538)        (99,400)
                                                                     ----------    ----------      ----------
                                                                                                             
Net increase (decrease) in cash and cash equivalents                     (2,682)       (7,447)          7,347
                                                                                                             
Cash and cash equivalents at beginning of period                          9,498        16,945           9,598
                                                                     ----------    ----------      ----------
                                                                                                             
Cash and cash equivalents at end of period                               $6,816        $9,498         $16,945
                                                                     ==========    ==========      ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       
  Cash paid during the period for:                                                                           
    Interest - net of amount capitalized                                $50,194       $46,769         $48,617
    Income taxes                                                        $51,598       $73,687         $67,746
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                        ENTERGY MISSISSIPPI, INC.
                              BALANCE SHEETS
                                  ASSETS
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                    $6,816                   $2,384
    Special deposits                                                                             -                    7,114
                                                                                        ----------               ----------
           Total cash and cash equivalents                                                   6,816                    9,498
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts                                                                         
     of $1 million in 1997 and $1.4 million and 1996)                                       36,636                   44,809
    Associated companies                                                                     6,842                    4,382
    Other                                                                                    4,139                    2,014
    Accrued unbilled revenues                                                               49,993                   49,383
  Fuel inventory - at average cost                                                           3,386                    6,661
  Materials and supplies - at average cost                                                  17,657                   17,567
  Rate deferrals                                                                           127,295                  142,504
  Prepayments and other                                                                     17,537                    7,434
                                                                                        ----------               ----------
           Total                                                                           270,301                  284,252
                                                                                        ----------               ----------
                                                                                                                           
Other Property and Investments:                                                                                            
  Investment in subsidiary companies - at equity                                             5,531                    5,531
  Other - at cost (less accumulated depreciation)                                            7,757                    7,923
                                                                                        ----------               ----------
           Total                                                                            13,288                   13,454
                                                                                        ----------               ----------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                               1,687,400                1,633,484
  Construction work in progress                                                             22,960                   47,373
                                                                                        ----------               ----------
           Total                                                                         1,710,360                1,680,857
  Less - accumulated depreciation and amortization                                         656,828                  635,754
                                                                                        ----------               ----------
           Utility plant - net                                                           1,053,532                1,045,103
                                                                                        ----------               ----------
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    Rate deferrals                                                                               -                  104,588
    SFAS 109 regulatory asset - net                                                         22,993                   11,813
    Unamortized loss on reacquired debt                                                      8,404                    9,254
    Other regulatory assets                                                                 64,827                   46,309
  Other                                                                                      6,216                    6,693
                                                                                        ----------               ----------
           Total                                                                           102,440                  178,657
                                                                                        ----------               ----------
                                                                                                                           
           TOTAL                                                                        $1,439,561               $1,521,466
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                        ENTERGY MISSISSIPPI, INC.
                              BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDER'S EQUITY
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                            $20                  $96,015
  Notes payable - associated companies                                                      47,162                   50,253
  Accounts payable:                                                                                                        
    Associated companies                                                                    36,057                   32,878
    Other                                                                                   11,276                   23,701
  Customer deposits                                                                         24,084                   26,258
  Taxes accrued                                                                             32,314                   26,482
  Accumulated deferred income taxes                                                         44,277                   58,634
  Interest accrued                                                                          14,309                   20,909
  Other                                                                                      2,806                    3,065
                                                                                        ----------               ----------
           Total                                                                           212,305                  338,195
                                                                                        ----------               ----------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                        244,464                  249,522
  Accumulated deferred investment tax credits                                               23,915                   25,422
  Other                                                                                     15,892                   19,445
                                                                                        ----------               ----------
           Total                                                                           284,271                  294,389
                                                                                        ----------               ----------
                                                                                                                           
Long-term debt                                                                             464,156                  399,054
Preferred stock with sinking fund                                                                -                    7,000
                                                                                                                           
Shareholder's Equity:                                                                                                      
  Preferred stock without sinking fund                                                      50,381                   57,881
  Common stock, no par value, authorized                                                                                   
    15,000,000 shares; issued and outstanding                                                                              
    8,666,357 shares                                                                       199,326                  199,326
  Capital stock expense and other                                                              (59)                    (143)
  Retained earnings                                                                        229,181                  225,764
                                                                                        ----------               ----------
           Total                                                                           478,829                  482,828
                                                                                        ----------               ----------
                                                                                                                           
Commitments and Contingencies (Notes 2 and 9)                                                                              
                                                                                                                           
           TOTAL                                                                        $1,439,561               $1,521,466
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                               
            ENTERGY MISSISSIPPI, INC.
         STATEMENTS OF RETAINED EARNINGS
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
                                                                                               
Retained Earnings, January 1                               $225,764     $231,463       $232,011
                                                                                               
  Add:                                                                                         
    Net income                                               66,661       79,211         68,667
                                                                                               
  Deduct:                                                                                      
    Dividends declared:                                                                        
      Preferred stock                                         3,656        4,803          5,971
      Common stock                                           59,200       79,900         61,700
    Preferred stock expenses                                    388          207          1,544
                                                           --------     --------       --------
        Total                                                63,244       84,910         69,215
                                                           --------     --------       --------
                                                                                               
Retained Earnings, December 31 (Note 8)                    $229,181     $225,764       $231,463
                                                           ========     ========       ========
                                                                                               
                                                                                               
See Notes to Financial Statements                                                              
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                         ENTERGY MISSISSIPPI, INC.
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
                                     
                                     
                               1997         1996          1995       1994         1993
                                                     (In Thousands)
<S>                         <C>          <C>          <C>          <C>          <C>
Operating revenues          $  937,395   $  958,430   $  889,843   $  859,845   $  883,818
Net Income                  $   66,661   $   79,211   $   68,667   $   48,779   $   69,037
Total assets                $1,439,561   $1,521,466   $1,581,983   $1,637,828   $1,681,992
Long-term obligations (1)   $  464,156   $  406,054   $  511,613   $  507,555   $  563,612
</TABLE>

(1)  Includes  long-term  debt  (excluding  currently  maturing  debt)  and
     preferred stock with sinking fund.

<TABLE>
<CAPTION>
                                1997      1996      1995       1994      1993
                                                  (In Thousands)
<S>                           <C>        <C>        <C>        <C>       <C>
Electric Operating Revenues:
   Residential                $342,818   $358,264   $336,194   $332,567  $341,620
   Commercial                  274,195    281,626    262,786    257,154   251,285
   Industrial                  173,152    185,351    178,466    184,637   182,060
   Governmental                 26,882     29,093     27,410     27,495    28,530
                              ---------------------------------------------------
     Total retail              817,047    854,334    804,856    801,853   803,495
   Sales for resale                                                       
     Associated companies       78,233     58,749     35,928     37,747    34,640
     Non-associated companies   21,276     22,814     21,906     16,728    21,100
   Other                        20,839     22,533     27,153      3,517    24,583
                              ---------------------------------------------------
     Total                    $937,395   $958,430   $889,843   $859,845  $883,818
                              ===================================================
Billed Electric Energy
 Sales (GWH):                                                                    
   Residential                   4,323      4,355      4,233      4,014     3,983
   Commercial                    3,673      3,508      3,368      3,151     2,928
   Industrial                    3,089      3,063      3,044      2,985     2,787
   Governmental                    333        346        336        330       336
                              ---------------------------------------------------
     Total retail               11,418     11,272     10,981     10,480    10,034
   Sales for resale                                                       
     Associated companies        1,918      1,368        959      1,079       758
     Non-associated companies      412        521        692        512       670
                              ---------------------------------------------------
     Total                      13,748     13,161     12,632     12,071    11,462
                              ===================================================

</TABLE>


<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy New Orleans, Inc.


      We  have  audited  the  accompanying balance sheets  of  Entergy  New
Orleans, Inc. (formerly New Orleans Public Service Inc.) as of December 31,
1997 and 1996, and the related statements of income, retained earnings  and
cash  flows  for each of the three years in the period ended  December  31,
1997.   These financial statements are the responsibility of the  Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly, in all material respects, the financial position of the Company  as
of  December 31, 1997 and 1996, and the results of its operations  and  its
cash  flows  for each of  the three years in the period ended December  31,
1997 in conformity with generally accepted accounting principles.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998



<PAGE>
                         ENTERGY NEW ORLEANS, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS

Net Income

      Net  income decreased in 1997 primarily due to an increase in  taxes
other than income taxes, partially offset by lower income taxes.

      Net  income decreased in 1996 primarily due to the electric and  gas
rate  refund recorded in December 1996, based on the Council's  review  of
Entergy  New  Orleans' 1996 earnings.  This decrease  in  net  income  was
partially offset by reduced other operation and maintenance expenses.

      Significant factors affecting the results of operations and  causing
variances between the years 1997 and 1996, and between the years 1996  and
1995,  are  discussed under "Revenues and Sales", "Expenses", and  "Other"
below.

Revenues and Sales

      See "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON", following  the
financial  statements, for information on electric operating  revenues  by
source and KWH sales.

      The  changes  in electric operating revenues for the  twelve  months
ended December 31, 1997 and 1996 are as follows:

                                            Increase/(Decrease)
            Description                      1997          1996
                                               (In Millions)
                                                                
Change in base revenues                    ($13.6)        ($8.5)
Fuel cost recovery                           (2.2)         28.5
Sales volume/weather                         (0.8)         (4.8)
Other revenue (including unbilled)           16.7          (1.4)
Sales for resale                              6.8          (0.5)
                                           ------         -----
Total                                        $6.9         $13.3
                                           ======         =====

      Electric  operating  revenues increased in  1997  primarily  due  to
increases  in other revenue and sales for resale, partially  offset  by  a
decrease in base revenues.  Other revenue increased as a result of a  rate
refund  recorded in 1996.  Sales for resale increased as a  result  of  an
increase  in  electric  sales  to associated companies  primarily  due  to
changes  in  generation requirements and availability among  the  domestic
utility  companies.  The decrease in base revenues is caused by 1996   and
1997  reductions in residential and commercial rates.  Electric  operating
revenues  increased  in  1996  primarily due  to  higher  fuel  adjustment
revenues,  as  a  result of higher fuel prices, which do  not  affect  net
income.   This increase was partially offset by a rate refund recorded  in
1996, as discussed in "Net Income" above, and lower sales attributable  to
a  significant  reduction  in  electricity usage  by  a  large  industrial
customer.

      Gas operating revenues decreased in 1997 primarily due to lower  gas
prices.  Gas operating revenues increased in 1996 primarily due to  higher
gas  prices.   This  increase  was partially offset  by  the  rate  refund
recorded in 1996, as discussed in "Net Income" above.


<PAGE>

                         ENTERGY NEW ORLEANS, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS
                                     

Expenses

      Operating  expenses increased in 1997 due primarily to increases  in
taxes  other than income taxes and lower other regulatory credits.   These
increases  were  partially offset by a decrease in  total  fuel  expenses,
including  purchased power and gas purchased for resale. Taxes other  than
income taxes increased because of higher franchise taxes resulting from  a
December  1996  Council  order  increasing  Entergy  New  Orleans'  annual
franchise  fee from 2.5% to 5% of gross revenues.  The decrease  in  other
regulatory  credits is primarily a result of the 1996 deferral of  Entergy
New  Orleans'  portion of the proposed System Energy rate  increase.   See
Note  2  for  further  discussion.   Fuel  and  purchased  power  expenses
decreased  in  1997 primarily due to a shift from higher priced  purchased
power to lower priced fuel.

      Operating  expenses increased in 1996 primarily due to  higher  fuel
expenses,  including  purchased power and gas  purchased  for  resale  and
increased amortization of rate deferrals, partially offset by an  increase
in  other  regulatory  credits  and  a decrease  in  other  operation  and
maintenance expenses.  Fuel expenses, including gas purchased for  resale,
increased  as  a  result of significantly higher unit  prices.   Purchased
power increased due to changes in generation availability and requirements
among  the domestic utility companies.  Other regulatory credits increased
due  to the deferral of a portion of the System Energy rate increase being
billed  to  Entergy New Orleans, as discussed in Note 2.  Other  operation
and maintenance expenses decreased primarily due to lower payroll expenses
as a result of restructuring and reduced regulatory commission expenses.

Other

      The  effective income tax rates for 1997, 1996, and 1995 were 44.0%,
37.7%, and 37.3%, respectively.  The increase in 1997 is primarily due  to
decreased  amortization  of  deferred  income  taxes  on  property   fully
depreciated  for  federal income tax purposes.  The effective  income  tax
rate for 1996 was relatively unchanged from 1995.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                 ENTERGY NEW ORLEANS, INC.
                    STATEMENTS OF INCOME
                                                                                                       
                                                                         For the Years Ended December 31,
                                                                        1997           1996           1995
                                                                                  (In Thousands)
<S>                                                                    <C>            <C>            <C>
Operating Revenues:                                                                                          
  Electric                                                             $410,131       $403,254       $390,002
  Natural gas                                                            94,691        101,023         80,276
                                                                       --------       --------       --------
        Total                                                           504,822        504,277        470,278
                                                                       --------       --------       --------
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
    Fuel, fuel-related expenses,                                                                             
     and gas purchased for resale                                       141,902        129,059        102,314
    Purchased power                                                     156,542        176,450        145,920
    Other operation and maintenance                                      72,748         71,421         76,510
  Depreciation and amortization                                          21,107         20,007         19,420
  Taxes other than income taxes                                          38,964         27,388         27,805
  Other regulatory charges (credits)                                     (6,394)       (13,543)        (3,985)
  Amortization of rate deferrals                                         37,662         35,917         31,564
                                                                       --------       --------       --------
        Total                                                           462,531        446,699        399,548
                                                                       --------       --------       --------
                                                                                                             
Operating Income                                                         42,291         57,578         70,730
                                                                       --------       --------       --------
                                                                                                             
Other Income (Deductions):                                                                                   
  Allowance for equity funds used                                                                            
    during construction                                                     380            321            158
  Miscellaneous - net                                                       (77)         1,146          1,639
                                                                       --------       --------       --------
        Total                                                               303          1,467          1,797
                                                                       --------       --------       --------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                             13,918         15,268         15,948
  Other interest - net                                                    1,369          1,036          1,853
  Allowance for borrowed funds used                                                                          
    during construction                                                    (286)          (252)          (127)
                                                                       --------       --------       --------
        Total                                                            15,001         16,052         17,674
                                                                       --------       --------       --------
                                                                                                             
Income Before Income Taxes                                               27,593         42,993         54,853
                                                                                                             
Income Taxes                                                             12,142         16,217         20,467
                                                                       --------       --------       --------
                                                                                                             
Net Income                                                               15,451         26,776         34,386
                                                                                                             
Preferred Stock Dividend Requirements                                                                        
  and Other                                                                 965            965          1,411
                                                                       --------       --------       --------
                                                                                                             
Earnings Applicable to Common Stock                                     $14,486        $25,811        $32,975
                                                                       ========       ========       ========
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                                                                                                             
                   ENTERGY NEW ORLEANS, INC.
                    STATEMENTS OF CASH FLOWS
                                                                                                             
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:                                                                                        
  Net income                                                            $15,451       $26,776         $34,386
  Noncash items included in net income:                                                                      
    Amortization of rate deferrals                                       37,662        35,917          31,564
    Other regulatory charges (credits)                                   (6,394)      (13,543)         (3,985)
    Depreciation and amortization                                        21,107        20,007          19,420
    Deferred income taxes and investment tax credits                     (1,957)      (12,274)         (1,998)
    Allowance for equity funds used during construction                    (380)         (321)           (158)
  Changes in working capital:                                                                                
    Receivables                                                          (1,260)          832          (5,468)
    Accounts payable                                                        540        (5,638)         12,566
    Taxes accrued                                                         4,066        (4,350)          3,225
    Interest accrued                                                       (276)          214            (131)
    Income tax refund                                                         -             -          20,172
    Other working capital accounts                                      (18,148)       (5,216)         (4,803)
  Other                                                                  (1,823)        1,602          (5,515)
                                                                     ----------    ----------      ----------
    Net cash flow provided by operating activities                       48,588        44,006          99,275
                                                                     ----------    ----------      ----------
                                                                                                             
Investing Activities:                                                                                        
  Construction expenditures                                             (16,137)      (27,956)        (27,836)
  Allowance for equity funds used during construction                       380           321             158
                                                                     ----------    ----------      ----------
    Net cash flow used in investing activities                          (15,757)      (27,635)        (27,678)
                                                                     ----------    ----------      ----------
                                                                                                             
Financing Activities:                                                                                        
  Proceeds from the issuance of general and refunding mortgage bonds          -        39,608          29,805
  Retirement of:                                                                                             
    First mortgage bonds                                                (12,000)      (23,250)              -
    General and refunding mortgage bonds                                      -       (30,000)        (24,200)
  Redemption of preferred stock                                               -             -          (3,525)
  Dividends paid:                                                                                            
    Common stock                                                        (26,000)      (34,000)        (30,600)
    Preferred stock                                                        (965)         (965)         (1,362)
                                                                     ----------    ----------      ----------
   Net cash flow used in financing activities                           (38,965)      (48,607)        (29,882)
                                                                     ----------    ----------      ----------
                                                                                                             
Net increase (decrease) in cash and cash equivalents                     (6,134)      (32,236)         41,715
                                                                                                             
Cash and cash equivalents at beginning of period                         17,510        49,746           8,031
                                                                     ----------    ----------      ----------
                                                                                                             
Cash and cash equivalents at end of period                              $11,376       $17,510         $49,746
                                                                     ==========    ==========      ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:                                                                           
    Interest - net of amount capitalized                                $14,951       $15,357         $17,187
    Income taxes - net                                                  $10,981       $31,870           ($941)
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                        ENTERGY NEW ORLEANS, INC.
                              BALANCE SHEETS
                                  ASSETS
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                    $4,321                   $1,015
    Temporary cash investments - at cost,                                                                                  
      which approximates market:                                                                                           
       Associated companies                                                                  1,918                    7,435
       Other                                                                                 5,137                    9,060
                                                                                          --------                 --------
           Total cash and cash equivalents                                                  11,376                   17,510
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts                                                                         
     of $0.7 million in 1997 and 1996)                                                      26,913                   27,430
    Associated companies                                                                     1,081                      714
    Other                                                                                    4,155                    1,764
    Accrued unbilled revenues                                                               16,083                   17,064
  Deferred electric fuel and resale gas costs                                                9,384                    7,290
  Materials and supplies - at average cost                                                   9,389                    9,904
  Rate deferrals                                                                            35,336                   37,692
  Prepayments and other                                                                      6,087                    7,157
                                                                                          --------                 --------
           Total                                                                           119,804                  126,525
                                                                                          --------                 --------
                                                                                                                           
Other Property and Investments:                                                                                            
  Investment in subsidiary companies - at equity                                             3,259                    3,259
                                                                                          --------                 --------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                                 508,338                  503,061
  Natural gas                                                                              122,308                  122,700
  Construction work in progress                                                             19,184                   18,247
                                                                                          --------                 --------
           Total                                                                           649,830                  644,008
  Less - accumulated depreciation and amortization                                         355,854                  347,790
                                                                                          --------                 --------
           Utility plant - net                                                             293,976                  296,218
                                                                                          --------                 --------
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    Rate deferrals                                                                          64,192                   99,498
    SFAS 109 regulatory asset - net                                                          1,202                    6,051
    Unamortized loss on reacquired debt                                                      1,435                    1,647
    Other regulatory assets                                                                 13,392                   15,908
  Other                                                                                        890                      890
                                                                                          --------                 --------
           Total                                                                            81,111                  123,994
                                                                                          --------                 --------
                                                                                                                           
           TOTAL                                                                          $498,150                 $549,996
                                                                                          ========                 ========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                        ENTERGY NEW ORLEANS, INC.
                              BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDER'S EQUITY
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                             $-                  $12,000
  Accounts payable:                                                                                                        
    Associated companies                                                                    15,922                   18,757
    Other                                                                                   17,505                   14,130
  Customer deposits                                                                         16,982                   18,974
  Taxes accrued                                                                              5,270                    1,204
  Accumulated deferred income taxes                                                         11,544                    5,584
  Interest accrued                                                                           5,049                    5,325
  Provision for rate refund                                                                  3,108                   19,465
  Other                                                                                      2,231                    1,521
                                                                                          --------                 --------
           Total                                                                            77,611                   96,960
                                                                                          --------                 --------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                         61,000                   72,895
  Accumulated deferred investment tax credits                                                7,396                    7,984
  Accumulated provision for property insurance                                              15,487                   15,666
  Other                                                                                     16,327                   24,713
                                                                                          --------                 --------
           Total                                                                           100,210                  121,258
                                                                                          --------                 --------
                                                                                                                           
Long-term debt                                                                             168,953                  168,888
                                                                                                                           
Shareholder's Equity:                                                                                                      
  Preferred stock without sinking fund                                                      19,780                   19,780
  Common Shareholder's Equity:                                                                                             
   Common stock, $4 par value, authorized                                                                                  
    10,000,000 shares; issued and outstanding                                                                              
    8,435,900 shares                                                                        33,744                   33,744
  Additional paid-in capital                                                                36,294                   36,294
  Retained earnings subsequent to the elimination of                                                                       
     the accumulated deficit on November 30, 1988                                           61,558                   73,072
                                                                                          --------                 --------
           Total                                                                           151,376                  162,890
                                                                                          --------                 --------
                                                                                                                           
Commitments and Contingencies (Notes 2 and 9)                                                                              
                                                                                                                           
           TOTAL                                                                          $498,150                 $549,996
                                                                                          ========                 ========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                               
            ENTERGY NEW ORLEANS, INC.
         STATEMENTS OF RETAINED EARNINGS
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
Retained Earnings, January 1                                $73,072      $81,261        $78,886
                                                                                               
  Add:                                                                                         
    Net income                                               15,451       26,776         34,386
                                                                                               
  Deduct:                                                                                      
    Dividends declared:                                                                        
      Preferred stock                                           965          965          1,231
      Common stock                                           26,000       34,000         30,600
    Capital stock expenses                                        -            -            180
                                                           --------     --------       --------
        Total                                                26,965       34,965         32,011
                                                           --------     --------       --------
                                                                                               
Retained Earnings, December 31 (Note 8)                     $61,558      $73,072        $81,261
                                                           ========     ========       ========
                                                                                               
                                                                                               
See Notes to Financial Statements.                                                             
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                         ENTERGY NEW ORLEANS, INC.
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
                                     
                                     
                                1997       1996       1995       1994       1993
                                                 (In Thousands)
<S>                          <C>        <C>         <C>        <C>       <C>
Operating revenues           $504,822   $ 504,277   $470,278   $447,787  $ 514,822
Net Income                   $ 15,451   $  26,776   $ 34,386   $ 13,211  $  36,761
Total assets                 $498,150   $ 549,996   $596,206   $592,894  $ 647,605
Long-term obligations (1)    $168,953   $ 168,888   $155,958   $167,610  $ 193,262
</TABLE>

(1)  Includes long-term debt (excluding currently maturing debt).

<TABLE>
<CAPTION>
                                1997      1996      1995       1994      1993
                                                (In Thousands)
<S>                           <C>        <C>        <C>        <C>       <C>
Electric Operating Revenues:
   Residential                $145,688   $151,577   $141,353   $142,013  $151,423
   Commercial                  143,113    149,649    144,374    162,410   167,788
   Industrial                   24,616     24,663     22,842     25,422    26,205
   Governmental                 58,746     58,561     52,880     58,726    61,548
                              ---------------------------------------------------
     Total retail              372,163    384,450    361,449    388,571   406,964
   Sales for resale                                                       
     Associated companies       10,342      2,649      3,217      2,061     2,487
     Non-associated companies    8,996      9,882      9,864      7,512     9,291
   Other (1)                    18,630      6,273     15,472    (37,714)    5,088
                              ---------------------------------------------------
     Total                    $410,131   $403,254   $390,002   $360,430  $423,830
                              ===================================================
Billed Electric Energy
 Sales (GWH):                                                                    
   Residential                   1,971      1,998      2,049      1,896     1,914
   Commercial                    2,072      2,073      2,079      2,031     1,989
   Industrial                      484        481        537        518       499
   Governmental                    994        974        983        951       924
                              ---------------------------------------------------
     Total retail                5,521      5,526      5,648      5,396     5,326
   Sales for resale                                                       
     Associated companies          316         66        149         92        89
     Non-associated companies      160        212        297        202       262
                              ---------------------------------------------------
     Total                       5,997      5,804      6,094      5,690     5,677
                              ===================================================
</TABLE>
                           

(1)  1994 includes the effects of the 1994 NOPSI Settlement.

<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholder of
System Energy Resources, Inc.


      We  have  audited  the accompanying balance sheets of  System  Energy
Resources,  Inc.  as  of  December  31, 1997  and  1996,  and  the  related
statements  of income, retained earnings and cash flows for  each  of   the
three  years  in  the  period  ended December 31,  1997.   These  financial
statements  are  the  responsibility  of  the  Company's  management.   Our
responsibility is to express an opinion on these financial statements based
on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the financial statements referred to above  present
fairly, in all material respects, the financial position of the Company  as
of  December 31, 1997 and 1996, and the results of its operations  and  its
cash  flows  for each of the three years in the period ended  December  31,
1997 in conformity with generally accepted accounting principles.

      As  discussed in Note 1 to the consolidated financial statements,  in
1996  the Company changed its method of accounting for incremental  nuclear
plant outage maintenance costs.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998





<PAGE>                                     
                                     
                       SYSTEM ENERGY RESOURCES, INC.
                                     
              MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
                                     
                           RESULTS OF OPERATIONS

Net Income

     Net income increased slightly in 1997 and 1996 primarily due to lower
interest charges attributed to the refinancing of higher-cost debt.

      Significant factors affecting the results of operations and  causing
variances between the years 1997 and 1996, and between the years 1996  and
1995, are discussed under "Revenues", "Expenses",  and "Other" below.

Revenues

      Operating  revenues  recover operating expenses,  depreciation,  and
capital costs attributable to Grand Gulf 1.  Capital costs are computed by
allowing a return on System Energy's common equity funds allocable to  its
net  investment in Grand Gulf 1 and adding to such amount System  Energy's
effective interest cost for its debt allocable to its investment in  Grand
Gulf  1.   See Note 2 herein for a discussion of System Energy's  proposed
rate increase.

Expenses

      Operating expenses increased in 1997 due to higher nuclear refueling
outage expenses and higher depreciation, amortization, and decommissioning
expenses.   Nuclear refueling outage expenses increased due to costs  that
were deferred from the November 1996 outage, which are now being amortized
over  an  18-month  period that began in December  1996.   Prior  to  this
outage,  such  costs were expensed as incurred and no such  expenses  were
incurred  in  1996.   The  increase  in  depreciation,  amortization,  and
decommissioning  expense is due to the reduction of the  regulatory  asset
set up to defer the depreciation associated with the sale and leaseback in
1989 of a portion of Grand Gulf 1.  The depreciation was deferred to match
the  collection  of lease principal and revenues with the depreciation  of
the  asset.  Grand Gulf 1 was on-line for 365 days in 1997 as compared  to
322 days in 1996.

      Operating  expenses increased in 1996 due primarily to increases  in
other  operation and maintenance expenses, and depreciation, amortization,
and  decommissioning  expenses.  Other operation and maintenance  expenses
increased  primarily because of higher waste disposal  costs  and  medical
benefit  charges for the year.  The increase in decommissioning costs  and
depreciation  rates  is  reflected in the 1995  System  Energy  FERC  rate
increase  filing,  subject to refund (see Note 2).  These  increases  were
partially offset by a decrease in nuclear refueling outage expenses.   The
decrease  in  nuclear outage expenses was primarily due to the  effect  of
deferring  the nuclear refueling outage expenses in the fourth quarter  of
1996  rather  than recognizing those expenses as incurred  (see  Note  1).
Grand Gulf 1 was on-line for 322 days in 1996 as compared with 285 days in
1995.   The  increase in the on-line days was primarily due to the  unit's
shorter  eighth  refueling outage that lasted from  October  19,  1996  to
November 30, 1996 (41 days), compared to a 68-day outage in 1995, and to a
lesser extent, unplanned outages in 1996 totaling 3 days, compared  to  12
days for 1995.

Other

      Interest charges decreased in both 1997 and in 1996 due primarily to
the retirement and refinancing of higher-cost long-term debt.

      The  effective income tax rates in 1997, 1996, and 1995 were  42.2%,
45.4%,  and 44.8%, respectively. The decrease in 1997 is primarily due  to
the  impact of recording the tax benefit of Entergy Corporation's expenses
as  prescribed by the tax allocation agreement.  The effective income  tax
rate for 1996 was relatively unchanged from 1995.

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
               SYSTEM ENERGY RESOURCES, INC.
                    STATEMENTS OF INCOME
                                                                                                       
                                                                           For the Years Ended December 31,
                                                                         1997           1996           1995
                                                                                 (In Thousands)
<S>                                                                    <C>            <C>            <C>
Operating Revenues                                                     $633,698       $623,620       $605,639
                                                                       --------       --------       --------
                                                                                                             
Operating Expenses:                                                                                          
  Operation and maintenance:                                                                                 
     Fuel and fuel-related expenses                                      48,475         43,761         40,262
     Nuclear refueling outage expenses                                   16,425          1,239         24,935
     Other operation and maintenance                                    101,269        105,453         98,441
  Depreciation, amortization, and decommissioning                       147,859        128,474        100,747
  Taxes other than income taxes                                          26,477         27,654         27,549
                                                                       --------       --------       --------
        Total                                                           340,505        306,581        291,934
                                                                       --------       --------       --------
                                                                                                             
Operating Income                                                        293,193        317,039        313,705
                                                                       --------       --------       --------
                                                                                                             
Other Income:                                                                                                
  Allowance for equity funds used                                                                            
   during construction                                                    2,209          1,122          1,878
  Miscellaneous - net                                                     8,517          5,234          2,492
                                                                       --------       --------       --------
        Total                                                            10,726          6,356          4,370
                                                                       --------       --------       --------
                                                                                                             
Interest Charges:                                                                                            
  Interest on long-term debt                                            121,633        135,376        143,020
  Other interest - net                                                    7,020          8,344          8,491
  Allowance for borrowed funds used                                                                          
   during construction                                                   (1,683)        (1,114)        (1,968)
                                                                       --------       --------       --------
        Total                                                           126,970        142,606        149,543
                                                                       --------       --------       --------
                                                                                                             
Income Before Income Taxes                                              176,949        180,789        168,532
                                                                                                             
Income Taxes                                                             74,654         82,121         75,493
                                                                       --------       --------       --------
                                                                                                             
Net Income                                                             $102,295        $98,668        $93,039
                                                                       ========       ========       ========
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
                 SYSTEM ENERGY RESOURCES, INC.
                    STATEMENTS OF CASH FLOWS
                                                                         For the Years Ended December 31,
                                                                        1997          1996          1995
                                                                                  (In Thousands)
<S>                                                                    <C>           <C>            <C>
Operating Activities:                                                                                        
  Net income                                                           $102,295       $98,668         $93,039
  Noncash items included in net income:                                                                      
    Depreciation, amortization, and decommissioning                     147,859       128,474         100,747
    Deferred income taxes and investment tax credits                    (39,370)       48,975         (45,337)
    Allowance for equity funds used during construction                  (2,209)       (1,122)         (1,878)
  Changes in working capital:                                                                                
    Receivables                                                          (9,543)        3,436         (66,433)
    Accounts payable                                                     11,172           560         (18,955)
    Taxes accrued                                                         7,852        (4,825)         37,266
    Interest accrued                                                      8,127        (2,548)         (4,053)
    Other working capital accounts                                       19,054       (13,430)        (21,874)
  Decommissioning trust contributions and realized                                                           
   change in trust assets                                               (22,452)      (21,366)         (7,507)
  FERC Settlement - refund obligation                                    (4,539)       (4,009)         (3,540)
  Provision for estimated losses and reserves                            43,216        46,919           3,167
  Other                                                                  16,684         7,125          31,818
                                                                     ----------    ----------      ----------
    Net cash flow provided by operating activities                      278,146       286,857          96,460
                                                                     ----------    ----------      ----------
                                                                                                             
Investing Activities:                                                                                        
  Construction expenditures                                             (35,141)      (29,469)        (21,747)
  Allowance for equity funds used during construction                     2,209         1,122           1,878
  Nuclear fuel purchases                                                (16,524)      (44,704)        (51,455)
  Proceeds from sale/leaseback of nuclear fuel                           16,524        43,971          52,188
                                                                     ----------    ----------      ----------
    Net cash flow used in investing activities                          (32,932)      (29,080)        (19,136)
                                                                     ----------    ----------      ----------
                                                                                                             
Financing Activities:                                                                                        
  Proceeds from the issuance of:                                                                             
    First mortgage bonds                                                      -       233,656               -
    Other long-term debt                                                      -       133,933          73,343
  Retirement of:                                                                                             
    First mortgage bonds                                                (10,000)     (325,101)       (105,000)
    Other long-term debt                                                 (7,319)      (92,700)        (45,320)
  Changes in short-term borrowings - net                                      -        (2,990)          2,990
  Common stock dividends paid                                          (113,800)     (112,500)        (92,800)
                                                                     ----------    ----------      ----------
    Net cash flow used in financing activities                         (131,119)     (165,702)       (166,787)
                                                                     ----------    ----------      ----------
                                                                                                             
Net  increase (decrease) in cash and cash equivalents                   114,095        92,075         (89,463)
                                                                                                             
Cash and cash equivalents at beginning of period                         92,315           240          89,703
                                                                     ----------    ----------      ----------
                                                                                                             
Cash and cash equivalents at end of period                             $206,410       $92,315            $240
                                                                     ==========    ==========      ========== 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       
  Cash paid during the period for:                                                                           
    Interest - net of amount capitalized                               $103,684      $138,483        $147,492
    Income taxes                                                       $105,621       $36,397         $87,016
  Noncash investing and financing activities:                                                                
    Change in unrealized appreciation (depreciation) of                                                      
    decommissioning trust assets                                         $1,237          ($70)         $3,061
                                                                                                             
See Notes to Financial Statements.                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                      SYSTEM ENERGY RESOURCES, INC.
                              BALANCE SHEETS
                                  ASSETS
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Assets:                                                                                                            
  Cash and cash equivalents:                                                                                               
    Cash                                                                                      $792                      $26
    Temporary cash investments - at cost,                                                                                  
      which approximates market:                                                                                           
        Associated companies                                                                55,891                   41,600
        Other                                                                              149,727                   50,689
                                                                                        ----------               ----------
           Total cash and cash equivalents                                                 206,410                   92,315
  Accounts receivable:                                                                                                     
    Associated companies                                                                    79,262                   71,337
    Other                                                                                    4,140                    2,522
  Materials and supplies - at average cost                                                  63,782                   66,302
  Deferred nuclear refueling outage costs                                                    7,777                   24,005
  Prepayments and other                                                                      3,658                    4,929
                                                                                        ----------               ----------
           Total                                                                           365,029                  261,410
                                                                                        ----------               ----------
                                                                                                                           
Other Property and Investments:                                                                                            
  Decommissioning trust fund                                                                85,912                   62,223
                                                                                        ----------               ----------
                                                                                                                           
Utility Plant:                                                                                                             
  Electric                                                                               3,025,389                2,994,445
  Electric plant under leases                                                              440,970                  447,409
  Construction work in progress                                                             36,445                   41,362
  Nuclear fuel under capital lease                                                          64,190                   83,558
                                                                                        ----------               ----------
           Total                                                                         3,566,994                3,566,774
  Less - accumulated depreciation and amortization                                       1,086,820                  974,472
                                                                                        ----------               ----------
           Utility plant - net                                                           2,480,174                2,592,302
                                                                                        ----------               ----------
                                                                                                                           
Deferred Debits and Other Assets:                                                                                          
  Regulatory assets:                                                                                                       
    SFAS 109 regulatory asset - net                                                        243,027                  264,758
    Unamortized loss on reacquired debt                                                     51,386                   57,785
    Other regulatory assets                                                                192,290                  207,214
  Other                                                                                     14,213                   15,601
                                                                                        ----------               ----------
           Total                                                                           500,916                  545,358
                                                                                        ----------               ----------
                                                                                                                           
           TOTAL                                                                        $3,432,031               $3,461,293
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                      SYSTEM ENERGY RESOURCES, INC.
                              BALANCE SHEETS
                   LIABILITIES AND SHAREHOLDER'S EQUITY
                                                                                                     December 31,
                                                                                            1997                     1996
                                                                                                   (In Thousands)
<S>                                                                                        <C>                      <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                        $70,000                  $10,000
  Accounts payable:                                                                                                        
    Associated companies                                                                    29,131                   18,245
    Other                                                                                   19,122                   18,836
  Taxes accrued                                                                             75,675                   67,823
  Interest accrued                                                                          42,322                   34,195
  Obligations under capital leases                                                          41,977                   28,000
  Other                                                                                      1,341                    2,306
                                                                                        ----------               ----------
           Total                                                                           279,568                  179,405
                                                                                        ----------               ----------
                                                                                                                           
Deferred Credits and Other Liabilities:                                                                                    
  Accumulated deferred income taxes                                                        562,051                  624,020
  Accumulated deferred investment tax credits                                              100,171                  103,647
  Obligations under capital leases                                                          22,213                   55,558
  FERC Settlement - refund obligation                                                       48,300                   52,839
  Other                                                                                    227,847                  165,517
                                                                                        ----------               ----------
           Total                                                                           960,582                1,001,581
                                                                                        ----------               ----------
                                                                                                                           
Long-term debt                                                                           1,341,948                1,418,869
                                                                                                                           
Common Shareholder's Equity:                                                                                               
  Common stock, no par value, authorized                                                                                   
    1,000,000 shares; issued and outstanding                                                                               
    789,350 shares                                                                         789,350                  789,350
  Retained earnings                                                                         60,583                   72,088
                                                                                        ----------               ----------
           Total                                                                           849,933                  861,438
                                                                                        ----------               ----------
                                                                                                                           
Commitments and Contingencies (Notes 2, 9 and 10)                                                                          
                                                                                                                           
           TOTAL                                                                        $3,432,031               $3,461,293
                                                                                        ==========               ==========
See Notes to Financial Statements.                                                                                         
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                               
                                                                                               
          SYSTEM ENERGY RESOURCES, INC.
         STATEMENTS OF RETAINED EARNINGS
                                                                                        
                                                                                        
                                                              For the Years Ended December 31,
                                                            1997         1996           1995
                                                                     (In Thousands)
<S>                                                      <C>          <C>            <C>                   
                                                                                               
Retained Earnings, January 1                                $72,088      $85,920        $85,681
                                                                                               
  Add:                                                                                         
    Net income                                              102,295       98,668         93,039
                                                                                               
  Deduct:                                                                                      
    Dividends declared                                      113,800      112,500         92,800
                                                           --------     --------       --------
                                                                                               
Retained Earnings, December 31 (Note 8)                     $60,583      $72,088        $85,920
                                                           ========     ========       ========
                                                                                               
                                                                                               
See Notes to Financial Statements.                                                             
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                       SYSTEM ENERGY RESOURCES, INC.
                                     
              SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
                                     
                                     
                                  1997        1996         1995          1994        1993
                                                       (In Thousands)
<S>                           <C>          <C>          <C>          <C>          <C>
Operating revenues            $  633,698   $  623,620   $  605,639   $  474,963   $   650,768
Net income                    $  102,295   $   98,668   $   93,039   $    5,407   $    93,927
Total assets                  $3,432,031   $3,461,293   $3,431,012   $3,613,359   $ 3,891,066
Long-term obligations (1)     $1,364,161   $1,474,427   $1,264,024   $1,456,993   $ 1,536,593
Electric energy sales (GWH)        9,735        8,302        7,212        8,653         7,113


(1)  Includes  long-term debt (excluding current maturities) and noncurrent
     capital lease obligations.

</TABLE>


<PAGE>

                     REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Entergy London Investments plc


     We have audited the accompanying consolidated balance sheet of Entergy
London  Investments plc and Subsidiary as of December  31,  1997,  and  the
related consolidated  statements of loss, retained  earnings and cash flows
for  the year ended December 31, 1997.  These financial statements are  the
responsibility of the Corporation's management.  Our responsibility  is  to
express an opinion on these financial statements based on our audit.

      We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement  presentation.  We  believe  that  our  audit
provides a reasonable basis for our opinion.

      In  our  opinion, the consolidated financial statements  referred  to
above  present fairly, in all material respects, the financial position  of
Entergy London Investments plc and Subsidiary as of December 31, 1997,  and
the  results  of their operations and their cash flows for the  year  ended
December   31,  1997  in  conformity  with  generally  accepted  accounting
principles.



COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
March 4, 1998




<PAGE>
               ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS
                                     
                                     
Background

      Entergy London (formerly Entergy Power UK plc) was incorporated as  a
public limited company under the laws of England and Wales in October 1996,
as  a vehicle for the acquisition of London Electricity.  In February 1997,
Entergy  London  gained  effective control of  London  Electricity,  having
acquired over 90% of its shares.  In May 1997, Entergy London acquired  the
remaining  shares  of  London  Electricity.  Total  consideration  for  the
acquisition was approximately $2.0 billion, based on the exchange  rate  at
the  time  of the acquisition.  Entergy London's sole significant asset  is
the  stock of London Electricity.  Entergy London has no operations outside
of its investment in London Electricity.

Accounting for the Acquisition

      Entergy London's acquisition of London Electricity effective February
1,  1997  was  accounted  for as a purchase in  accordance  with  US  GAAP.
Accordingly,  the  results of operations of London  Electricity  have  been
consolidated into the results of operations for Entergy London beginning on
such  date.  In accordance with the purchase method of accounting,  Entergy
London  has  allocated  the  price paid for London  Electricity  to  London
Electricity's assets and liabilities based on their estimated  fair  market
values  with  the remainder allocated to London Electricity's  distribution
license  which  represents  an other identifiable  intangible  asset.   The
assets and liabilities acquired as of February 1, 1997 were as follows  (in
millions):

     Current assets                              $ 518.2
     Network assets                              2,134.3
     Other long term assets                      1,601.2
     Current liabilities                          (614.8)
     Long term debt                               (333.9)
     Other long term liabilities                (1,285.9)
                                                --------
          Total purchase price                  $2,019.1
                                                ========

      The principal adjustments to London Electricity's historical cost  of
its  assets  and liabilities include: (a) increase in the value of  network
assets  ($782.9 million); (b) increase in pension asset for defined benefit
pension   plan   under  US  GAAP  ($108.6  million);  (c)  recordation   of
distribution  license ($1,335.8 million); and (d) recordation of  liability
for  unfavorable  long term contracts ($159.4 million).  Additionally,  the
Company provided for the deferred income tax effect of these adjustments at
a  rate  of 33%, which is included in other long term liabilities.  Entergy
London   is  amortizing  the  adjustments  for  network  assets   and   the
distribution  license  over estimated useful lives  of  40  years  and  the
adjustment  for unfavorable long term contracts over their remaining  lives
ranging  from  14  to 18 years.  Entergy London's asset  recorded  for  the
defined  benefit  pension  plan  will  be  increased  or  decreased  on   a
prospective basis based on future actuarial studies of the plan's projected
benefit  obligation and fair value of pension plan assets.   The  liability
for  unfavorable long term contracts is based on the estimated fair  market
value  of  these contracts over the present value of the future cash  flows
under  the contracts at the applicable discount rates and prices.  Although
amortization  of  the  liability for unfavorable long-term  contracts  will
reduce  the expense related to these contracts, it will not impact  Entergy
London's actual payments or cash flow obligations.

      London Electricity has utilized a portion of the pension plan surplus
to   increase  benefits  to  members  and  reduce  employer  and   employee
contributions. A recent court ruling in the UK upheld such uses of  pension
surplus.  However, the decision is under appeal and should the decision  be
reversed  on  appeal,  Entergy London could be required  to  repay  pension
surplus  utilized  and  recompute Entergy London's prepaid  pension  asset,
which was $241 million at December 31, 1997.


<PAGE>

               ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


Results of Operations - Successor Company

      The  following discussion compares the results of operations for  the
year  ended  December  31,  1997 for Entergy London  with  the  results  of
operations of London Electricity for the ten month period ended January 31,
1997  (London  Electricity's fiscal year ended on March 31,  prior  to  its
acquisition).  The year ended December 31, 1997 for Entergy London includes
eleven  months  results for London Electricity due to  its  acquisition  on
February  1,  1997.   Periods  prior  to  February  1,  are  included   for
comparative  purposes,  however,  they  do  not  include  the  effects   of
acquisition   adjustments  described  above  under  "Accounting   for   the
Acquisition".

Operating Income

     Operating income was $187 million for the year ended December 31, 1997
which included London Electricity for the eleven month period from February
1,  1997  through December 31, 1997.  This represented an increase  of  $18
million  compared to the historical London Electricity results for the  ten
month  period  from April 1, 1996 through January 31, 1997.  This  increase
was due principally to higher revenue from an additional month's results of
operations  in  the later period and restructuring charges of  $19  million
during the earlier period.  Partially offsetting this were increases of $59
million  in  depreciation  and  amortization  expense  due  principally  to
acquisition  adjustments and $17 million in other operation and maintenance
costs.   The  above variances were all impacted by an increase  in  the  US
dollar  to  BPS  average exchange rate from 1.58 to 1.00 in the  ten  month
period from April 1, 1996 through January 31, 1997 to 1.64 to 1.00 for  the
eleven month period ending December 31, 1997.

      Operating income by segments for the year ended December 31, 1997 was
$141  million,  $15 million, and $31 million for the distribution,  supply,
and  other  segments, respectively.  Income (loss) from those segments  for
the  ten month period from April 1, 1996 through January 31, 1997 was  $159
million, $(1) million, and $11 million, respectively.

      The decrease in distribution operating income was principally due  to
additional  depreciation and amortization expense of  $59  million  in  the
later  period attributable to acquisition adjustments for fixed assets  and
the distribution license based on 40-year useful lives partially offset  by
one  additional month of operations in the later period.  Increases in  the
supply  and other segments are due principally to one additional  month  of
operations  in  the later period and improved margins in the  non-Franchise
supply  market and one-time charges in the period ending January  31,  1997
relating   to   the  disposal  of  certain  subsidiaries   and   associated
undertakings.

Net Income

      Net  income  decreased by $245 million, from $98 million  during  the
period  from  April 1, 1996 to January 31, 1997, to a loss of $147  million
for  the  year ended December 31, 1997.  The net loss for the later  period
includes a one-time charge of $234 million (reflected in income taxes)  for
the  windfall profits tax enacted by the UK government in July  1997.   The
windfall  profits  tax is not deductible for UK corporation  tax  purposes.
This  charge  was  partially offset by a reduction of $65  million  in  the
Company's  deferred income tax liability, in accordance with  Statement  of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"  due
to  the UK government also reducing the UK corporation tax rate from 33% to
31%,  effective  April 1, 1997.  Acquisition related adjustments  including
increased  depreciation and amortization of approximately $59 million  ($41
million  after  tax effect) and increased interest expense, principally  on
acquisition  debt,  of approximately $152 million ($105 million  after  tax
effect)  also contributed to the reduction in net income.  The increase  in
operating  income  of $18 million ($12 million after  tax  effect)  and  an
increase in interest and dividend income of $17 million ($12 million  after
tax effect) partially offset the above impacts.


<PAGE>

               ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


Revenues

      Operating revenues increased by $82 million (5%) from $1,765  million
during  the  ten  month period from April 1, 1996 to January  31,  1997  to
$1,847 million for the year ended December 31, 1997, as follows:

                                             Operating Revenues
                                             Increase (Decrease)
                                            from ten-month Period
                                             from April 1, 1996
                                             through January 31,
                                           1997 to the year ended
                                              December 31, 1997
                                                (In millions)
                                                
  Electricity distribution                           $64
  Electricity supply                                  26
  Other                                               (4)
  Intra-business                                      (4)
                                                     ---
      Total operating revenues                       $82
                                                     ===

     Two principal factors determine the amount of revenues produced by the
main  electricity distribution business: the unit price of the  electricity
distributed (which is controlled by the Distribution Price Control Formula)
and the number of electricity units distributed which depends on the demand
of  London  Electricity's customers for electricity  within  its  Franchise
Area.   Demand varies based upon weather conditions and economic  activity.
Following  London  Electricity's regulatory distribution  price  review  in
1994,  London  Electricity's allowable expected distribution revenues  were
reduced by 14%, during the fiscal year ended March 31, 1996.  Subsequently,
the  Regulator announced a further allowed distribution price reduction  of
11% beginning April 1, 1996, and an additional 3%, beginning April 1, 1997.
These  price  reductions have reduced and will continue  to  reduce  London
Electricity's distribution revenues.

     Revenues from the distribution business increased by $64 million (15%)
from  $435  million for the ten month period from April 1, 1996 to  January
31,  1997 to $499 million for the year ended December 31, 1997, principally
due  to  an  11% increase in units distributed as a result of  there  being
eleven  months of London Electricity operations in the year ended  December
31,  1997  compared  to  only  ten months  in  the  earlier  period.   Also
contributing to the total increase was the increase in the U.S. dollars  to
BPS exchange rate during the year ended December 31, 1997.

     Two principal factors determine the amount of revenues produced by the
supply business: the unit price of the electricity supplied (which, in  the
case  of the franchise supply customers, is controlled by the Supply  Price
Control  Formula)  and  the number of electricity units  supplied.   London
Electricity is expected to have the exclusive right to supply all franchise
supply customers in its Franchise Area until late 1998.

      Franchise supply customers, who are generally residential  and  small
commercial customers, comprised  56% of total sales volume for the February
1,  1997 through December 31, 1997 period of London Electricity's inclusion
in  Entergy London's 1997 results of operations.  The volume of unit  sales
of  electricity for franchise supply customers is influenced largely by the
number  of  customers  in  London  Electricity's  Franchise  Area,  weather
conditions and prevailing economic conditions.  Unit sales to non-franchise
supply  customers,  who  are  typically  large  commercial  and  industrial
businesses,  constituted  44% of total sales volume  for  the  period  from



<PAGE>
               ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


February 1, 1997  through December 31, 1997. Sales to non-franchise  supply
customers are determined primarily by the success of  the  supply  business
in contracting  to  supply customers with electricity  who are located both
inside and outside London Electricity's Franchise Area.

      During  the  February 1, 1997 through December 31, 1997  period  that
London  Electricity  was  included  in Entergy  London's  1997  results  of
operations, the number of electricity units supplied increased by 5%  while
total  revenues  produced  by  the supply business  increased  by  2%  ($26
million)  to  $1,689 million from $1,663 million for the ten  month  period
from  April 1, 1996 to January 31, 1997.  While volume increased  for  both
Franchise  Supply Customers and Non-Franchise Supply Customers due  to  the
additional month included in the later period, this was partially offset by
lower  average  unit  prices for both customer categories.   Reductions  in
prices for Franchise Supply Customers are due primarily to pass-through  of
reduced  costs  of purchased power.  Reductions in prices for Non-Franchise
Supply  Customers are due primarily to competitive pressures in this market
as purchased power costs decline.

      Other  revenues  for the February 1, 1997 through December  31,  1997
period  that  London  Electricity was included  in  Entergy  London's  1997
results  of operations were $103 million, a decrease of $4 million compared
to  the ten month period from April 1, 1996 to January 31, 1997.  This  was
due  principally  to reduced revenues in the contracting business  and  the
exclusion  of  revenues from subsidiaries disposed of in the period  ending
January 31, 1997.

Expenses

      Operating expenses increased by $64 million (4%) from $1,596  million
in  the  ten month period from April 1, 1996 to January 31, 1997 to  $1,660
million  in  the  February 1, 1997 through December 31,  1997  period  that
London  Electricity  was  included  in Entergy  London's  1997  results  of
operations.   This  increase was due principally to one additional  month's
operations  in  the  later  period  and to  increases  of  $59  million  in
depreciation   and   amortization  expense  related  to   the   acquisition
adjustments  for  fixed assets and distribution license  based  on  40-year
useful  lives and of $17 million in other operation and maintenance  costs.
These  increases  were  partially offset by restructuring  charges  of  $19
million  during  the earlier period and a  decrease in purchase power costs
due to a decline  in  the average  purchase price per unit which was offset
by  an  increase  in  the  exchange  rate.  Also  contributing to the total
increase  was  the increase in the U.S. dollars to BPS exchange rate during
the year ended December 31, 1997.

Other

Interest Expense, Net

      Interest  expense,  net increased by $152 million  from  $27  million
during the ten month period from April 1, 1996 to January 31, 1997 to  $179
million  for  the  year  ended  December  31,  1997.   This  increase   was
principally  as a result of the financing costs associated  with  the  debt
facilities  entered into to finance the acquisition of London  Electricity,
effective February 1, 1997.


<PAGE>
               ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


Income Taxes

      Entergy London's effective income tax rate was approximately 596% and
34% for the year ended December 31, 1997, and for the ten month period from
April 1, 1996 to January 31, 1997, respectively.  The effective rate in the
1997  period  was affected by the recording of a one-time  charge  of  $234
million  during  the year ended December 31, 1997 for the windfall  profits
tax  enacted  by  the UK government in July 1997 and the non-deductibility,
for UK corporation tax purposes, of this charge.  This impact was partially
offset  by  the  $65 million favorable impact of the reduction  in  the  UK
corporation tax rate from 33% to 31%, as discussed above.

      Entergy  London's  34% effective income tax rate for  the  ten  month
period  from April 1, 1996 to January 31, 1997, approximated the  statutory
rate of 33%.


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
       ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
               CONSOLIDATED STATEMENT OF LOSS
                                                                      
                                                                      
                                                                 For the Year Ended
                                                                 December 31, 1997
                                                                   (In Thousands)
<S>                                                                  <C>              
Operating Revenues                                                   $1,847,042 
                                                                                
Operating Expenses:                                                             
 Purchased power                                                      1,222,034 
 Depreciation and amortization                                          121,365 
 Other operation and maintenance costs                                  316,833 
                                                                     ----------
     Total                                                            1,660,232
                                                                     ----------
                                                                                
Operating Income                                                        186,810 
                                                                     ----------
                                                                                
Other income (deductions):                                                      
 Interest and dividend income                                            22,328 
 Miscellaneous - net                                                       (803) 
                                                                     ----------
     Total                                                               21,525 
                                                                     ----------
                                                                                
Interest Charges:                                                               
 Distributions on preferred securities of subsidiaries                    3,019 
 Other interest - net                                                   175,628 
                                                                     ----------
      Total                                                             178,647 
                                                                     ----------
                                                                                
Income Before Income Taxes                                               29,688 
                                                                                
Income tax expense                                                      177,023 
                                                                     ----------
                                                                                
Net Loss                                                              ($147,335) 
                                                                     ==========
See Notes to Financial Statements.                                              
                                                                                

</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                             
         ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
              CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                         
                                                                 For the Year Ended
                                                                 December 31, 1997
                                                                   (In Thousands)
<S>                                                                  <C>
Operating Activities:
  Net loss                                                            ($147,335) 
  Noncash items included in net income:                                         
    Depreciation and amortization                                       121,365 
    Deferred income taxes                                               (56,217) 
  Changes in assets and liabilities:                                            
    Inventory                                                               375 
    Accounts receivable and unbilled revenue                            (66,019) 
    Other receivables                                                    42,506 
    Prepayments and other                                                (4,340) 
    Long-term receivables and other                                       4,546 
    Accounts payable                                                    116,091 
    Income taxes accrued                                                 81,568 
    Interest accrued                                                     (8,270) 
    Deferred revenue and other current liabilities                      (32,383) 
    Other liabilities                                                   (37,002) 
    Other                                                                36,372
                                                                     ----------
       Net cash flow provided by operating activities                    51,257 
                                                                     ----------
                                                                                
Investing Activities:                                                           
  Construction expenditures                                            (181,165) 
  Acquisition of London Electricity, net of cash acquired            (1,951,701) 
  Other investments                                                       1,321 
                                                                     ----------
    Net cash flow used in investing activities                       (2,131,545) 
                                                                     ----------
                                                                                
Financing Activities:                                                           
  Proceeds from the issuance of:                                                
    Bank notes and other long-term debt                               1,559,748 
    Common Stock                                                        505,953 
    Preferred securities of subsidiary partnership                      300,000 
  Payment of long-term debt                                            (259,428) 
  Changes in short-term borrowings - net                                (25,460) 
                                                                     ----------
    Net cash flow provided by financing activities                    2,080,813 
                                                                     ----------
                                                                                
Effect of exchange rates on cash and cash equivalents                   (10,615) 
                                                                     ----------
                                                                                
Net decrease in cash and cash equivalents                               (10,090) 
                                                                                
Cash and cash equivalents at beginning of period                         54,478 
                                                                     ----------
                                                                                
Cash and cash equivalents at end of period                              $44,388 
                                                                     ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
  Cash paid for interest                                               $139,578 
  Cash paid for income taxes                                           $127,585 
                                                                                
See Notes to Financial Statements.                                              
                                                                                
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
              ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY                                                    
                        CONSOLIDATED BALANCE SHEET                                                             
                                  ASSETS                                                                  
                                                                                    December 31, 1997
                                                                                     (In Thousands)
<S>                                                                                     <C>
Current Assets:                                                                                                            
  Cash and cash equivalents                                                                                                
    Cash                                                                                $        -                         
    Temporary cash investments                                                              44,388
                                                                                        ----------
        Total cash and cash equivalents                                                     44,388
  Notes receivable                                                                           7,364                         
  Accounts receivable:                                                                                                     
    Customer (less allowance for doubtful accounts of $21.9 million)                       139,265                         
    Other                                                                                   39,764                         
    Accrued unbilled revenue                                                               262,818                         
  Accumulated deferred income taxes                                                         12,401                         
  Inventory                                                                                  1,976                         
  Prepayments and other                                                                     13,623                         
                                                                                        ----------
       Total                                                                               521,599                         
                                                                                        ----------
                                                                                                                           
Property, Plant, and Equipment:                                                                                            
  Property, plant and equipment                                                          2,283,549
  Construction work in progress                                                             81,306                         
                                                                                        ----------
       Total                                                                             2,364,855                         
  Less - accumulated depreciation and amortization                                          90,021                         
                                                                                        ----------
       Property, plant, and equipment - net                                              2,274,834                         
                                                                                        ----------
                                                                                                                           
Other Property, Investments, and Assets:                                                                                   
  Investments, long-term                                                                    11,413                         
  Distribution license (net of accumulated amortization of $31.1 million)                1,327,312                         
  Long-term receivables                                                                     17,172                         
  Prepaid pension asset                                                                    241,216                         
  Other                                                                                     10,079                         
                                                                                        ----------
        Total                                                                            1,607,192                         
                                                                                        ----------
                                                                                                                           
        TOTAL                                                                           $4,403,625                         
                                                                                        ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
              ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY                                                    
                        CONSOLIDATED BALANCE SHEET                                                             
                    LIABILITIES AND SHAREHOLDERS' EQUITY                                        
                                                                                    December 31, 1997
                                                                                     (In Thousands)
<S>                                                                                     <C>
Current Liabilities:                                                                                                       
  Currently maturing long-term debt                                                        $33,814                         
  Notes payable                                                                            240,794                         

  Accounts payable                                                                         349,821                         
  Customer deposits                                                                         24,946                         
  Taxes accrued                                                                            120,981                         
  Interest accrued                                                                          14,201                         
  Other                                                                                        805                         
                                                                                        ----------
         Total                                                                             785,362
                                                                                        ----------
                                                                                                                           
Other Liabilities:                                                                                                         
  Accumulated deferred income taxes                                                        995,865                         
  Other                                                                                    250,470                         
                                                                                        ----------
         Total                                                                           1,246,335                         
                                                                                        ----------
                                                                                                                           
Long-term debt                                                                           1,706,096                         
Company-obligated redeemable preferred securities                                                                          
 of subsidiary partnership holding solely junior subordinated                                                              
  deferrable debentures                                                                    300,000                         
                                                                                                                           
Shareholders' Equity:                                                                                                      
  Common stock, BPS1 par value, authorized, issued,                                                                        
    and outstanding 50,000 shares                                                          114,081                         
  Paid-in capital                                                                          391,900                         
  Accumulated deficit                                                                     (132,390)                         
  Cumulative foreign currency translation adjustment                                        (7,759)                         
                                                                                        ----------
        Total                                                                              365,832                         
                                                                                        ----------
                                                                                                                           
Commitments and Contingencies (Notes 2, 9 and 10)                                                                          
                                                                                                                           
        TOTAL                                                                           $4,403,625                         
                                                                                        ==========
See Notes to Financial Statements.                                                                                         
                                                                                                                           
                                                                                                                           

</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                                               
                                                                                               
        ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY                                            
         STATEMENT OF CONSOLIDATED RETAINED EARNINGS                                             
                                                                                               
                                                                                               
                                                     For the Year Ended
                                                     December 31, 1997
                                                      (In Thousands)                             
<S>                                                      <C>
Retained Earnings, January 1                             $       -                            
                                                                                               
  Add:                                                                                         
    Net loss                                              (147,335)                            
    Imputed interest on parent company debt                 14,945                            
                                                         ---------
Accumulated Deficit, December 31                         ($132,390)
                                                         =========
                                                                                               
                                                                                               
See Notes to Financial Statements.                                                             
                                                                                               
                                                                                               

</TABLE>


<PAGE>

               ENTERGY LONDON INVESTMENTS PLC AND SUBSIDIARY
                                     
                          SELECTED FINANCIAL DATA


                                             1997
                                         (In Thousands)

            Operating revenues            $1,847,042
            Net loss                      $(147,335)
            Total assets                  $4,403,625
            Long-term obligations (1)     $2,006,096

(1)  Includes  long-term  debt  (excluding  currently  maturing  debt)  and
     preferred securities of subsidiary partnership.





<PAGE>
                   ENTERGY CORPORATION AND SUBSIDIARIES
                                     
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation,
Entergy   Arkansas,   Entergy  Gulf  States,  Entergy  Louisiana,   Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy London)

       The  accompanying  consolidated  financial  statements  include  the
accounts  of  Entergy Corporation and its direct and indirect subsidiaries,
including  the  domestic  utility companies,  System  Energy,  and  Entergy
London,  whose financial statements are included in this document.   Except
for London Electricity, which was the predecessor company to Entergy London
(see  Note 13), the financial statements presented herein result from these
companies having registered securities with the SEC.

      All  significant  intercompany  transactions  have  been  eliminated.
Entergy  Corporation's domestic utility subsidiaries maintain  accounts  in
accordance  with FERC and other regulatory guidelines.  Certain  previously
reported   amounts   have   been  reclassified  to   conform   to   current
classifications, with no effect on net income or shareholders' equity.

Use of Estimates in the Preparation of Financial Statements

     The preparation of Entergy Corporation and its subsidiaries' financial
statements,  in  conformity with generally accepted accounting  principles,
requires  management  to  make estimates and assumptions  that  affect  the
reported  amounts  of assets and liabilities and disclosure  of  contingent
assets  and liabilities, and the reported amounts of revenues and expenses.
Adjustments  to  the  reported amounts of assets  and  liabilities  may  be
necessary  in  the  future to the extent that future  estimates  or  actual
results are different from the estimates used.

Revenues and Fuel Costs

     Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate,
transmit,  and  distribute electricity (primarily to retail  customers)  in
Arkansas,  Louisiana, and Mississippi, respectively.  Entergy  Gulf  States
generates,  transmits,  and  distributes electricity  primarily  to  retail
customers  in  Texas and Louisiana; distributes gas at retail primarily  in
Baton Rouge, Louisiana, and also sells steam to a large refinery complex in
Baton  Rouge.  Entergy New Orleans sells both electricity and gas to retail
customers  in  the City of New Orleans (except for Algiers,  where  Entergy
Louisiana  is  the  electricity  supplier).   London  Electricity,  Entergy
London's  sole asset, distributes and supplies electricity to customers  in
the London metropolitan area.

       System  Energy's  operating  revenues  recover  operating  expenses,
depreciation, and capital costs attributable to Grand Gulf 1  from  Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New  Orleans.
Capital  costs are computed by allowing a return on System Energy's  common
equity  funds allocable to its net investment in Grand Gulf 1, plus  System
Energy's  effective interest cost for its debt allocable to its  investment
in  Grand  Gulf 1.  See Note 2 for a discussion of System Energy's proposed
rate increase.

      A  portion  of Entergy Arkansas' and Entergy Louisiana's purchase  of
power  from  Grand Gulf has not been included in the determination  of  the
cost of service to retail customers by the APSC and LPSC, respectively,  as
described in Note 2.

      The  domestic  utility companies and Entergy London accrue  estimated
revenues  for  energy delivered since the latest billings.  Entergy  London
records revenue net of value-added tax.

      The  domestic utility companies' rate schedules include  either  fuel
adjustment  clauses  or  fixed fuel factors, both  of  which  allow  either
current  recovery or deferrals of fuel costs until such costs are reflected
in the related revenues.  Fixed fuel factors remain in effect until changed
as  part of a general rate case, fuel reconciliation, or fixed fuel  factor
filing.

      Entergy  London purchases power primarily from the wholesale  trading
market  for  electricity  in  England and Wales  (Electricity  Pool).   The
Electricity  Pool  monitors  supply  and  demand  between  generators   and
suppliers,  sets prices for generation, and provides centralized settlement
of amounts due between generators and suppliers.

Price Control

      Certain  supply  customers of Entergy London  are  subject  to  price
control  formulas  through December 1998 which allow a maximum  charge  per
unit  of  electricity.  Distribution customers are subject to price control
formulas which allow a maximum charge per unit of electricity.  Differences
in  the charges, or in the purchase cost of electricity, can result in  the
under or over-recovery of revenues in a particular year.

      Where  there  is an over-recovery of supply or distribution  business
revenues  against  the  regulated maximum allowable  amount,  revenues  are
deferred  in  an  amount  equivalent to  the  over-recovered  amount.   The
deferred  amount is deducted from operating revenues and included in  other
liabilities.   Where there is an under-recovery, no asset  is  recorded  in
anticipation of any potential future recovery.

Utility Plant

      Utility  plant  is  stated at original cost.  The  original  cost  of
utility  plant retired or removed, plus the applicable removal costs,  less
salvage, is charged to accumulated depreciation.  Maintenance, repairs, and
minor  replacement costs are charged to operating expenses.   Substantially
all of the utility plant is subject to liens from mortgage bond indentures.

      Utility  plant includes the portions of Grand Gulf 1 and Waterford  3
that  have  been  sold and leased back.  For financial reporting  purposes,
these   sale   and  leaseback  arrangements  are  reflected  as   financing
transactions.

      Net utility plant, by company and functional category, as of December
31, 1997 is shown below (in millions):

<TABLE>
<CAPTION>

                                           Entergy     Entergy     Entergy     Entergy      Entergy    System    Entergy
Production                       Entergy   Arkansas  Gulf States  Louisiana  Mississippi  New Orleans  Energy    London
<S>                              <C>      <C>         <C>          <C>         <C>           <C>        <C>      <C>
    Nuclear                      $ 7,559  $     951   $    2,312   $ 1,940     $       -     $      -   $2,356   $     -
    Other                          1,538        366          631        224          213           14        -            
Transmission                       1,703        450          467        329          304           21       10         -
Distribution                       5,370        916          788        731          424          162        -      1,976
Other                                859        131          189        107           90           17       13        218
Plant acquisition adjustment-                                                                                       
    Entergy Gulf States              439          -            -          -            -            -        -          -
Other                                 93          -           32          -            -           61        -          -
Construction Work                                                                                                        
    in Progress                      566        123           90         52           23           19       37         81
Nuclear Fuel                                                                                                             
(leased and owned)                   342         93           78         59            -            -       64          -
Accumulated Provision                                                                                               
   For Decommissioning (1)          (336)      (227)         (49)       (60)           -            -        -          -
                                 ----------------------------------------------------------------------------------------
          Utility Plant - Net    $18,133  $   2,803    $   4,538    $ 3,382   $    1,054     $    294   $2,480   $  2,275
                                 ========================================================================================
(1)  System  Energy's decommissioning liability is recorded on the  Balance
     Sheet in "Deferred Credits and Other Liabilities - Other"

      Depreciation is computed on the straight-line basis at rates based on
the estimated service lives and costs of removal of the various classes  of
property.   Depreciation rates on average depreciable  property  are  shown
below:

</TABLE>


<TABLE>
<CAPTION>
                  Entergy     Entergy       Entergy    Entergy      Entergy      System     Entergy
      Entergy     Arkansas    Gulf States   Louisiana  Mississippi  New Orleans  Energy     London
<S>   <C>         <C>          <C>          <C>         <C>           <C>        <C>        <C>
1997  3.2%        3.1%         2.8%         3.0%        2.5%          3.1%       3.4%       4.4%
1996  3.0%        3.2%         2.7%         3.0%        2.4%          3.1%       3.3%        N/A
1995  2.9%        3.3%         2.7%         3.0%        2.4%          3.1%       2.9%        N/A
</TABLE>


      AFUDC  represents  the  approximate net composite  interest  cost  of
borrowed  funds  and  a  reasonable return on the  equity  funds  used  for
construction.  Although AFUDC increases both utility plant and earnings, it
is only realized in cash through depreciation provisions included in rates.

Jointly-Owned Generating Stations

       Certain   Entergy  Corporation  subsidiaries  jointly  own  electric
generating  facilities with third parties, and record the  investments  and
expenses  associated with these generating stations to the extent of  their
respective  undivided ownership interests.  As of December  31,  1997,  the
subsidiaries'  investment and accumulated depreciation  in  each  of  these
generating stations were as follows:

<TABLE>
<CAPTION>
                                                         Total                             
                                                       Megawatt                            Accumulated
Generating Stations                           Fuel    Capability   Ownership  Investment   Depreciation
                                              Type
                                                                                  (In Thousands)
<S>                      <C>                   <C>     <C>           <C>                                  
Entergy Arkansas                                                                           
 Independence            Unit 1                Coal      836         31.50%    $117,515       $45,471
                         Common Facilities     Coal                  15.75%      29,568        10,591
 White Bluff             Units 1 and 2         Coal    1,659         57.00%     397,304       174,227
Entergy Gulf States (1)                                                                     
 Roy S. Nelson           Unit 6                Coal      550         70.00%     400,409       177,305
 Big Cajun 2             Unit 3                Coal      540         42.00%     222,957        92,960
Entergy Mississippi -                                                                       
 Independence            Units 1 and 2         Coal    1,678         25.00%     224,081        85,860
System Energy -                                                                             
 Grand Gulf              Unit 1               Nuclear  1,200        90.00%(2) 3,454,067     1,086,820
Entergy Power -                                                                             
 Independence            Unit 2                Coal      842         21.50%     121,138        41,883
</TABLE>


(1)On  December 23, 1997, Cajun's 30% ownership interest in River Bend Unit
   1,  a 936 MW nuclear unit located near St. Francisville, Louisiana,  was
   transferred  to  Entergy  Gulf States, which previously  had  owned  the
   other 70% of the unit.  See Note 9.
(2)Includes  an 11.5% leasehold interest held by System Energy.   See  Note
   10.

Income Taxes

      Entergy  Corporation and its subsidiaries file  a  U.S.  consolidated
federal  income tax return.  Income taxes are allocated to the subsidiaries
in  proportion to their contribution to consolidated taxable  income.   SEC
regulations require that no Entergy Corporation subsidiary pay  more  taxes
than  it  would have paid if a separate income tax return had  been  filed.
Entergy  London, as a member of an affiliated group in the UK, is  eligible
for group relief.  Group relief enables current losses to be surrendered by
one affiliated company to another affiliated company.  It is the policy  of
Entergy  London's affiliated group to apply the group relief provisions  in
order  to  minimize  the  UK  corporation income  tax  of  the  group.   In
accordance  with  SFAS 109, "Accounting for Income Taxes", deferred  income
taxes  are recorded for all temporary differences between the book and  tax
basis  of  assets  and liabilities, and for certain credits  available  for
carryforward.

      Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion of  the
deferred  tax  assets  will  not  be realized.   Deferred  tax  assets  and
liabilities are adjusted for the effects of changes in tax laws  and  rates
on the date of enactment.

      Investment  tax  credits are deferred and amortized  based  upon  the
average  useful  life  of  the related property, in  accordance  with  rate
treatment.

Distribution Licenses

      Distribution  licenses represent the identifiable  intangible  assets
related   to   Entergy  London  and  CitiPower  which  exclusively   permit
distribution  services  to be provided within defined  territories.   These
licenses are being amortized over 40 years using the straight-line  method.
Entergy's  future net cash flows are expected to be sufficient  to  recover
the amortization of the cost of the CitiPower and Entergy London licenses.

Reacquired Debt

     The premiums and costs associated with reacquired debt of the domestic
utility  companies  and  System  Energy  (except  that  allocable  to   the
deregulated operations of Entergy Gulf States) are being amortized over the
life of the related new issuances, in accordance with ratemaking treatment.

Cash and Cash Equivalents

      Entergy  considers  all unrestricted highly liquid  debt  instruments
purchased  with  an original maturity of three months or less  to  be  cash
equivalents.

Investments

       Entergy  applies  the  provisions  of  SFAS  115,  "Accounting   for
Investments  for  Certain Debt and Equity Securities",  in  accounting  for
investments.  As a result, Entergy has recorded on the consolidated balance
sheet  an  additional $53 million in decommissioning  trust  funds  of  the
domestic  utility companies.  Such increase represents the amount by  which
the  fair  value of the securities held in such funds exceeds  the  amounts
deposited  from  rate recovery, plus the related earnings  on  the  amounts
deposited.  In accordance with the regulatory treatment for decommissioning
trust  funds, Entergy has recorded an offsetting amount in unrealized gains
on  investment  securities  as  a regulatory liability  in  other  deferred
credits.

      Entergy London accounts for investments whose fair market values  are
readily  determinable  in accordance with SFAS 115.  These  securities  are
considered  available-for-sale securities under SFAS  115  and  their  fair
values approximate cost.  Other securities whose fair market values are not
readily  determinable  and  in  which  Entergy  London  does  not  have   a
significant interest are recorded at cost.

      Investments in which Entergy London's ownership interest ranges  from
20%  to 50%, or which are less than 20% owned but over which Entergy London
exercises significant influence over operating and financial policies,  are
accounted for using the equity method.  The following are Entergy  London's
principal equity method investments as of December 31, 1997:

               Investment                  Percentage Ownership
                                                
               Thames Valley Power Ltd             50%
               London Total Energy Ltd             50%
               Barking Power Limited              13.5%

     These investments were acquired effective February 1, 1997, as part of
Entergy's acquisition of London Electricity.

Foreign Currency Translation

     In accordance with SFAS 52, "Foreign Currency Translation," all assets
and  liabilities of Entergy's foreign subsidiaries are translated into U.S.
dollars  at  the  exchange rate in effect at the end  of  the  period,  and
revenues  and expenses are translated at average exchange rates  prevailing
during the period.  The resulting translation adjustments are reflected  in
a  separate component of shareholders' equity.  Current exchange rates  are
used  for  U.S.  dollar  disclosures of future obligations  denominated  in
foreign  currencies.  No representation is made that the  foreign  currency
denominated amounts have been, could have been, or could be converted  into
U.S. dollars at the rates indicated or at any other rates.

Earnings per Share - SFAS 128

      The  FASB  issued SFAS 128, "Earnings per Share", in  February  1997,
effective for calendar year-end 1997 financial statements.  Entergy adopted
SFAS 128 and has included a dual presentation of basic and diluted earnings
per  share on its consolidated statement of income.  The average number  of
common shares outstanding  for  the presentation  of  diluted earnings  per  
share  for the  years 1997, 1996, and 1995  were  greater  by approximately  
90,000, 91,000, and 60,000  shares,  respectively, than the number  of such 
shares for  the  presentation  of basic earnings per share due to Entergy's 
stock option and other  stock  compensation  plans  discussed more fully in 
Note 5.

     Options to purchase approximately 120,000, 235,000, and 155,000 shares
of  common  stock at various prices were outstanding at the  end  of  1997,
1996,  and 1995, respectively, but were not included in the computation  of
diluted  earnings  per  share  because the options'  exercise  prices  were
greater  than the market price of the common shares at the end of  each  of
the years presented.

Application of SFAS 71

     The domestic utility companies and System Energy currently account for
the  effects of regulation pursuant to SFAS 71, "Accounting for the Effects
of  Certain Types of Regulation".  This statement applies to the  financial
statements  of a rate-regulated enterprise that meets three criteria.   The
enterprise must have rates that (i) are approved by the regulator; (ii) are
cost-based;  and  (iii)  can  be charged to and collected  from  customers.
These  criteria  may also be applied to separable portions of  a  utility's
business, such as the generation or transmission functions, or to  specific
classes  of  customers.   If an enterprise meets  these  criteria,  it  may
capitalize  costs that would otherwise be charged to expense  if  the  rate
actions  of  its  regulator  make it probable  that  those  costs  will  be
recovered  in  future  revenue.  Such capitalized costs  are  reflected  as
regulatory  assets  in  the  accompanying  financial  statements.  SFAS  71
requires   that  rate-regulated  enterprises  assess  the  probability   of
recovering  their regulatory assets at each balance sheet  date.   When  an
enterprise  concludes  that recovery of a regulatory  asset  is  no  longer
probable,  the  regulatory asset must be removed from the entity's  balance
sheet.

      SFAS 101, "Accounting for the Discontinuation of Application of  FASB
Statement  No.  71", specifies how an enterprise that ceases  to  meet  the
criteria  for  application of SFAS 71 for all or  part  of  its  operations
should report that event in its financial statements.  In general, SFAS 101
requires  that the enterprise report the discontinuation of the application
of  SFAS 71 by eliminating from its balance sheet all regulatory assets and
liabilities  related  to the applicable segment.  Additionally,  if  it  is
determined that a regulated enterprise is no longer recovering all  of  its
costs  and  therefore  no longer qualifies for SFAS 71  accounting,  it  is
possible that an impairment (see further discussion below) may exist  which
could require further write-offs of plant assets.

      During 1997, EITF 97-4: "Deregulation of the Pricing of Electricity -
Issues  Related to the Application of FASB Statements No. 71 and  101"  was
issued and specifies that SFAS 71 should be discontinued at a date no later
than  when the details of the transition to competition plan for all  or  a
portion  of  the  entity  subject to such plan are known.   However,  other
factors  could  cause  the discontinuation of SFAS  71  before  that  date.
Additionally, EITF 97-4 promulgates that regulatory assets to be  recovered
through  cash  flows  derived  from another portion  of  the  entity  which
continues  to apply SFAS 71 should not be written off; rather, they  should
be considered regulatory assets of the segment which will continue to apply
SFAS 71.

      As  of  December  31,  1997, the majority  of  the  domestic  utility
companies'  and  System Energy's operations continue to meet  each  of  the
criteria  required for the use of SFAS 71, and the companies have  recorded
significant regulatory assets.

      During  1996,  FERC  issued Orders No. 888  and  889,  which  require
utilities to provide open access to their transmission system to promote  a
more competitive market for wholesale power sales.  As described in Note 2,
the  domestic  utility  companies  have  filed  transition  to  competition
proposals  with  their  regulators  providing,  among  other  things,   for
accelerated  recovery  of certain capitalized costs to  facilitate  for  an
orderly  transition to a competitive retail power market.  In  response  to
these  filings,  certain regulatory commissions have begun  proceedings  to
consider retail competition in their jurisdictions.

      Regulators  have generally deferred action on the plans  in  lieu  of
their  general proceedings on competition.  Entergy cannot, at  this  time,
predict  the  completion  dates  or  ultimate  outcome  of  all  of   these
proceedings.  Accordingly, the domestic utility companies and System Energy
anticipate that they will continue to meet the criteria for the application
of SFAS 71 in the foreseeable future.

      Entergy's  foreign utility operations are not subject  to  cost-based
rate regulation in the jurisdictions in which they operate, but rather  are
subject  to  price cap regulation in certain instances and  to  competitive
market forces in other instances.  Therefore, the provisions of SFAS 71  do
not apply to Entergy's foreign utility operations.

Domestic Deregulated Operations

      Entergy Gulf States discontinued regulatory accounting principles for
its wholesale jurisdiction and its steam department during 1989 and for the
Louisiana retail deregulated portion of River Bend in 1991.  The results of
these  deregulated operations (before interest charges) for the years ended
December 31, 1997, 1996, and 1995 are as follows:

                                           1997       1996       1995
                                                (In Thousands)
                                                              
Operating Revenues                       $155,471   $174,751   $141,171
Operating Expenses:                                               
    Fuel, operating, and maintenance       89,987    119,784    115,799
    Depreciation                           36,351     31,455     31,129
                                          -------    -------    -------
Total Operating Expenses                  126,338    151,239    146,928
Income Taxes                                9,416      9,598     (6,979)
                                          -------    -------    -------
Net Income from Deregulated Utility       $19,717    $13,914     $1,222
 Operations                               =======    =======    =======
                                                                  
                                     
      The net investment associated with these deregulated  operations was
approximately $964 million as of December 31, 1997, which includes Cajun's
interest  in  River  Bend  which  was transferred  by  Cajun's  Trustee in
Bankruptcy to Entergy Gulf  States in  late  1997 at a fair value of  $139
million,  based  on  management's  estimate  of  such value at the time of 
transfer.

Impairment of Long-Lived Assets

      Note  2  describes  regulatory assets of $169 million  (net  of  tax)
related to Texas retail deferred River Bend
operating  and carrying costs which were written off upon the  adoption  of
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of" (SFAS 121), in the first quarter of 1996.

      In  accordance with the provisions of SFAS 121, Entergy  periodically
reviews  long-lived  assets  whenever events or  changes  in  circumstances
indicate that recoverability of these assets is uncertain.  Generally,  the
determination of recoverability is based on the net cash flows expected  to
result from such operations and assets.  Projected net cash flows depend on
the  future operating costs associated with the assets, the efficiency  and
availability of the assets and generating units, and the future market  and
price  for energy over the remaining life of the assets.  Based on  current
estimates of future cash flows, management anticipates that future revenues
from  such assets and operations of Entergy will fully recover all  related
costs.

      Assets  regulated under traditional cost-of-service  ratemaking,  and
thereby  subject  to  SFAS  71 accounting, are  generally  not  subject  to
impairment, because this form of regulation is designed to assure that  all
allowed costs are subject to recovery.  However, certain deregulated assets
and   other   operations  of  the  domestic  utility   companies   totaling
approximately  $1.5  billion (pre-tax) could be  affected  in  the  future.
Those  assets  include  Entergy Arkansas' and Entergy Louisiana's  retained
shares  of  Grand Gulf 1, Entergy Gulf States' Louisiana deregulated  asset
plan,  the  Texas jurisdiction abeyed portion of the River Bend plant,  and
wholesale jurisdiction and steam department operations.

Change   in   Accounting  for  Nuclear  Refueling  Outage  Costs   (Entergy
Corporation, Entergy Arkansas, and System Energy)

      In  December  1995, at the recommendation of FERC,  Entergy  Arkansas
changed  its method of accounting for nuclear refueling outage costs.   The
change,  effective  January 1, 1995, results in Entergy Arkansas  deferring
incremental  maintenance  costs incurred during an  outage  and  amortizing
those  costs  over the operating period immediately following  the  nuclear
refueling  outage,  which  is the period when the  charges  are  billed  to
customers.   Previously, estimated costs of refueling outages were  accrued
over the period (generally 18 months) preceding each scheduled outage.  The
effect  of the change for the year ended December 31, 1995, was to decrease
net  income by $5.1 million (net of income taxes of $3.3 million)  or  $.02
per  share.  The cumulative effect of the change was to increase net income
$35.4 million (net of income taxes of $22.9 million) or $.15 per share.

     System Energy filed a rate increase request with FERC in May 1995 (see
Note  2),  which, among other things, proposed a change in  the  accounting
recognition of nuclear refueling outage costs from that of expensing  those
costs  as incurred to the deferral and amortization method described  above
with  respect  to Entergy Arkansas.  As described in Note 2, the  FERC  ALJ
issued an initial decision in this proceeding in July 1996, agreeing to the
change   in  recognition  of  outage  costs  proposed  by  System   Energy.
Accordingly, System Energy deferred the refueling outage costs incurred  in
the  fourth  quarter  of  1996.  As of December 31, 1996,  System  Energy's
current assets included $24.0 million in deferred nuclear refueling  outage
costs which are being amortized over the next fuel cycle (approximately  18
months).  Amortization of these costs in the fourth quarter of 1996 and  in
1997  amounted  to  $1.2 million and $16.4 million, respectively,  and  the
deferred  outage  costs amounted to $7.8 million as of December  31,  1997.
This  change  has no impact on the net income of either Entergy  or  System
Energy  because System Energy will recover the refueling outage costs  from
Entergy  Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy  New
Orleans, and these companies, in turn, will recover these costs from  their
ratepayers.

Derivative Financial Instruments

      Entergy uses a variety of derivative financial instruments, including
interest  rate  and  foreign currency swaps, natural  gas  and  electricity
futures, natural gas and electricity options, and energy trading swaps  and
contracts  for  differences,  as  a part of  its  overall  risk  management
strategy.   Entergy  accounts for its derivative financial  instruments  in
accordance with SFAS No. 80, "Accounting for Futures Contracts,"  SFAS  No.
52,  "Foreign  Currency Translation," and various EITF pronouncements.   If
the  interest  rate swaps were to be sold or terminated, any gain  or  loss
would  be  deferred  and  amortized over the remaining  life  of  the  debt
instrument  being hedged by the interest rate swap.  If the debt instrument
being  hedged by the interest rate swaps were to be extinguished, any  gain
or  loss attributable to the swap would be recognized in the period of  the
transaction.

      Entergy  uses  energy  trading swaps and  contracts  for  differences
primarily  to  hedge  its UK and Australian supply businesses  against  the
price  risk  of electricity purchases. Use of these instruments is  carried
out  within  the  framework of Entergy's purchasing  strategy  and  hedging
guidelines.  Risk  of loss is monitored through establishment  of  approved
counterparties and maximum counterparty limits and minimum credit  ratings.
Entergy recognizes gains or losses on these instruments when settlement  is
made  on  a  basis  consistent with the treatment of the underlying  energy
customer contract being hedged.

      Entergy's  domestic energy and natural gas marketing business  enters
into sales and purchases of electricity and natural gas for delivery up  to
12  months  in the future.  To hedge price risk on such transactions,  this
business utilizes natural gas and electricity futures and option contracts.
Gains or losses are recognized on such instruments when settlement is  made
on  a basis consistent with treatment of the underlying sales and purchases
of electricity and natural gas.

      See Notes 6, 7, and 9 for additional information concerning Entergy's
derivative instruments outstanding as of December 31, 1997.

Fair Value Disclosures

     The estimated fair value of financial instruments was determined using
bid  prices  reported  by  dealer  markets  and  by  nationally  recognized
investment banking firms.  The estimated fair value of derivative financial
instruments is based on market quotes of the applicable interest or foreign
currency  exchange rates, or a survey of foreign Electricity  Pool  forward
prices.   Considerable judgment is required in developing the estimates  of
fair  value.   Therefore, estimates are not necessarily indicative  of  the
amounts  that  Entergy  could  realize in a current  market  exchange.   In
addition,  gains  or  losses  realized on  financial  instruments  held  by
regulated  businesses may be reflected in future rates  and  therefore  not
accrue to the benefit or detriment of stockholders.

      Entergy  considers  the  carrying amounts  of  financial  instruments
classified as current assets and liabilities to be a reasonable estimate of
their  fair  value because of the short maturity of these instruments.   In
addition, Entergy does not expect that performance of its obligations  will
be  required  in connection with certain off-balance sheet commitments  and
guarantees  considered  financial  instruments.   For  these  reasons,  and
because  of  the related-party nature of these commitments and  guarantees,
determination of fair value is not considered practicable.  See Notes 5, 7,
and 9 for additional disclosure.


NOTE 2.   RATE AND REGULATORY MATTERS

River Bend (Entergy Corporation and Entergy Gulf States)

      In 1988 the PUCT granted Entergy Gulf States a permanent increase  in
annual revenues of $59.9 million resulting from the inclusion in rate  base
of  approximately $1.6 billion of company-wide River Bend plant  investment
and  approximately  $182  million  of  related  Texas  retail  jurisdiction
deferred River Bend costs (Allowed Deferrals).  At the same time, the  PUCT
disallowed  as  imprudent $63.5 million of company-wide  River  Bend  plant
costs and placed in abeyance, with no finding as to prudence, approximately
$1.4  billion of company-wide River Bend plant investment and approximately
$157 million of Texas retail jurisdiction deferred River Bend operating and
carrying costs (Abeyed Deferrals).  As a result of the application  of  the
company's long-lived asset impairment policy, Entergy Gulf States wrote off
Abeyed Deferrals of $169 million, net of tax, effective January 1, 1996.

       The   PUCT's  order  has  been  the  subject  of  several  appellate
proceedings,  culminating in an appeal to the Texas Supreme Court  (Supreme
Court).  On January 31, 1997, the Supreme Court issued an opinion reversing
the   PUCT's  order  and  remanding  the  case  to  the  PUCT  for  further
proceedings.

      On January 14, 1998, the commissioners of the PUCT voted by a 2 to  1
majority to disallow recovery of $1.4 billion of company-wide abeyed  plant
costs.  The Texas share of these costs, which is not currently in rates, is
approximately  $624  million, based on 1988 costs  and  the  jurisdictional
allocation  included  in current rates. The PUCT is expected  to  enter  an
order  pursuant to its vote, but has not yet done so.  As of  December  31,
1997,  the River Bend plant costs disallowed for retail ratemaking purposes
in  Texas and the River Bend plant costs held in abeyance totaled  (net  of
taxes  and  depreciation)  approximately  $12  million  and  $252  million,
respectively.   See  "Filings with the PUCT and  Texas  Cities"  below  for
information related to additional rulings by the PUCT and other retail rate 
proceedings  as  well  as  the  proposed agreement in principle between the 
parties to the Entergy Gulf States rate proceedings in Texas.

Retail Rate Proceedings

Filings with the APSC  (Entergy Corporation and Entergy Arkansas)

      On  December  12,  1997, the APSC resolved the rate application  that
Entergy  Arkansas  filed  in  October  1996  by  approving  the  settlement
agreement among Entergy Arkansas and four other parties that was filed with
the APSC on October 9, 1997.  The settlement agreement as approved provides
for  accelerated  amortization of Entergy Arkansas'  Grand  Gulf  purchased
power  obligation  in  an amount totaling $165.3 million  over  the  period
January  1,  1999  through  June  30, 2004,  and  the  establishment  of  a
transition  cost  account to collect earnings in excess of  11%  return  on
equity  through  a  streamlined annual earnings review for  offset  against
stranded costs when retail access is implemented.  Rates will be frozen for
at  least  a three-year period.  As of December 31, 1997, Entergy  Arkansas
established  an  estimated reserve of $16.6 million in the transition  cost
account.   This  estimated  reserve will be trued  up  once  the  APSC  has
determined, in a mid-year streamlined earnings review procedure, the actual
amount  of  1997  overearnings that should go towards the  transition  cost
account.  The APSC's Order also established four generic dockets to address
competition  and  transition issues that must be resolved prior  to  retail
access.  Finally, the APSC Order approved the rate decreases agreed  to  in
the  settlement  agreement totaling $200 million over the  two-year  period
1998-1999, most involving the ending of the Grand Gulf deferrals and  other
mechanisms, such that the net income effect from these reductions  is  only
approximately  $22  million.   In management's  opinion,  Entergy  Arkansas
continues to meet each of the criteria required for the application of SFAS
71.   Refer to "Application of SFAS 71" in Note 1 for a discussion of  SFAS
71 and 101, as well as EITF 97-4.

Filings  with the PUCT and Texas Cities  (Entergy Corporation  and  Entergy
Gulf States)

      In March 1994, the Texas Office of Public Utility Counsel and certain
cities  served  by Entergy Gulf States instituted an investigation  of  the
reasonableness of Entergy Gulf States' rates.  On March 20, 1995, the  PUCT
ordered  a  retroactive annual base rate reduction of $52.9 million,  which
was  amended  to an annual level of $36.5 million.  The PUCT's  action  was
based,  in  part,  upon a Texas Supreme Court decision  not  to  require  a
utility  to  use  the  prospective  tax benefits  generated  by  disallowed
expenses  to  reduce  rates.  The May 26, 1995,  amended  order  no  longer
required  Entergy Gulf States to pass such prospective tax benefits  on  to
its  customers.  The rate refund ordered by the PUCT in its March 20, 1995,
order,  retroactive  to  March  31, 1994, was approximately  $61.8  million
(including  interest) and was refunded to customers in September,  October,
and November 1995.  Entergy Gulf States and other parties have appealed the
PUCT  order, but no assurance can be given as to the timing or  outcome  of
the appeal.

      In  December 1995, Entergy Gulf States filed a petition with the PUCT
for  reconciliation  of fuel and purchased power expenses  for  the  period
January 1, 1994  through June 30, 1995.  Entergy Gulf States believes  that
there  was  an under-recovered fuel balance, including interest,  of  $22.4
million  as of June 1995. Hearings were concluded in October 1996,  and  in
April   1997   the  PUCT  issued  an  order  which  approved  recovery   of
approximately $18.8 million of the under-recovered fuel balance,  including
interest.   In  June 1997, the PUCT issued a subsequent order  based  on  a
rehearing,  which reduced the approved recovery to $18.5 million.   Entergy
Gulf States has appealed portions of the PUCT's order to the Texas District
Court.   No  assurance can be given as to the timing or  outcome  of  these
appeals.

      In accordance with the Merger agreement, Entergy Gulf States filed  a
rate  proceeding  with the PUCT in November 1996.  In April  1996,  certain
cities served by Entergy Gulf States (Cities) instituted investigations  of
the  reasonableness of Entergy Gulf States' rates.  In May 1996, the Cities
agreed  to  forego their pending investigation based on the assurance  that
any  rate decrease ordered in the November 1996 filing would be retroactive
to  June  1,  1996,  with accrued interest until refunded.   The  agreement
further   provides  that  no  base  rate  increase  will  be   retroactive.
Subsequent  to  the  November  1996 filing, the  Cities  passed  ordinances
reducing Entergy Gulf States' rates by $43.6 million.  Entergy Gulf  States
has  appealed  these ordinances to the PUCT, and these  appeals  have  been
consolidated in the pending rate proceeding.  Included in the November 1996
filing  was a proposal to achieve an orderly transition to retail  electric
competition  in Texas, similar to the filing described below  that  Entergy
Gulf States made with the LPSC.  This filing with the PUCT was litigated in
four phases as follows: (i) fuel factor/fuel reconciliation phase, of which
Entergy  Gulf States believes there was an under-recovered fuel balance  of
$41.4 million, including interest, for the period July 1, 1995 through June
30, 1996; (ii) revenue requirement phase; (iii) cost allocation/rate design
phase;  and  (iv) competitive issues phase.  Hearings on all of the  phases
have  been  completed.  A supplemental filing with respect  to  the  fourth
phase  was  made with the PUCT on April 4, 1997, outlining a  comprehensive
market reform proposal calling for the establishment of retail competition,
service  quality standards, a regional power exchange, and  an  independent
system  operator.  Entergy Gulf States requested from the PUCT a reciprocal
commitment  to  provide an opportunity for the full recovery  of  prudently
incurred  investments  previously approved  by  regulators.   The  rebuttal
testimony  of  Entergy Gulf States in the competition  phase  of  the  case
modified  its  position to include elements from the  1997  proposed  Texas
legislation  addressing retail access.  Most notable  were  the  provisions
calling  for a transition period through the year 2001 and rate  reductions
for residential and most commercial customers.  The PUCT has not issued  an
order with respect to the completed phases.

      In  addition to the January 14, 1998 ruling discussed above in "River
Bend,"   the   PUCT  upheld  an  ALJ's  ruling  disallowing   recovery   of
approximately $40 million of Entergy Services' affiliate costs allocated to
Entergy Gulf States in Texas.  Entergy Services is responsible for managing
Entergy  Gulf  States'  fossil  generating  plants  and  transmission   and
distribution systems, as well as providing human resources, accounting, and
other  necessary services to Entergy Gulf States and Entergy  Corporation's
other  electric  utility subsidiaries.  In another matter,  the  PUCT  also
issued  an order establishing service quality standards and rate of  return
adjustments for Entergy Gulf States and its Texas retail service territory.
A  portion  of  the adjustments will be retroactive and a portion  will  be
prospective.    The  PUCT  will  evaluate  Entergy  Gulf   States'   future
performance based on several criteria including feeder reliability, billing
error   rates,  customer  call  center  performance,  service  installation
performance, line extension performance and street light replacements.

     In March 1998, the parties to the Entergy Gulf States rate proceedings
in Texas reached an agreement in principle, subject to approval by the PUCT
and  the Cities, which would resolve all of  the pending  rate issues.  The
proposed agreement in principle would include  a base  rate  reduction   of
$40  million on an annual  basis,  with  a  refund retroactive  to  June 1, 
1996;   additionally   it   would  provide  for  a recovery of $25  million
of deferred fuel costs; the base rates would remain at  the  same level for
the next four years after the reduction;  a  total service  quality  credit
of $9 million retroactive to June  1996;  and  the recovery of a portion of
the abeyed portion of River Bend such that at  the end  of  the  four  year
rate freeze there will remain $125 million  of  net plant  related to  that
abeyed  portion.   Entergy  Gulf  States has  established reserves  for the 
probable  effects  of  this  agreement  in principle based  on management's   
estimates  of  the  terms  thereof.    These   reserves   of  approximately
$381 million (or $227 million net of taxes) were  recorded  in the   fourth
quarter of 1997.  The results of operations  of  Entergy  Gulf States   for
the year ended December 31, 1997, reflect corresponding charges to operating
revenues and other  income (deductions)  of  $70  million and $311 million,  
respectively.  The parties are working to finalize  a  definitive agreement.
Entergy  Gulf  States  has  agreed  to  implement   the   refunds  and rate  
reductions, subject to  final  approval  of  the  agreement  in  principle.  
Final  approval of the agreement in principle would resolve all  regulatory
issues discussed above.

Filings with the LPSC

(Entergy Corporation and Entergy Gulf States)

Annual Earnings Reviews

      On  May 31, 1995, Entergy Gulf States filed its second required post-
Merger earnings analysis with the LPSC.  Hearings on this review were  held
in December 1995.  On October 4, 1996, the LPSC issued an order requiring a
$33.3  million annual base rate reduction and a $9.6 million  refund.   One
component of the rate reduction removes from base rates approximately $13.4
million annually of costs that will be recovered in the future through  the
fuel  adjustment clause.  On October 23, 1996, Entergy Gulf States appealed
the  LPSC's  order  and obtained an injunction to stay  the  order,  except
insofar  as  it  requires the $13.4 million reduction, which  Entergy  Gulf
States  implemented in November 1996.  In addition, pursuant to an  October
1996  settlement  with the LPSC, Entergy Gulf States  will  be  allowed  to
recover  $8.1  million annually related to certain gas  transportation  and
storage facilities costs.  This amount will be applied as an offset against
any refund that may be required by a final judgment in Entergy Gulf States'
appeal of the second post-Merger earnings review order.

      On  May 31, 1996, Entergy Gulf States filed its third required  post-
Merger earnings analysis with the LPSC.  Based on this earnings filing,  on
June  1,  1996, Entergy Gulf States implemented a $5.3 million annual  rate
reduction.  Hearings on this filing concluded in March 1997.  An additional
rate  reduction may be required upon the issuance by the LPSC  of  a  final
rate order, which is expected in early 1998.

      On  May  30,  1997, Entergy Gulf States filed its fourth  post-Merger
earnings  analysis with the LPSC.  This filing showed a revenue  deficiency
such that no rate reduction is warranted.  Entergy Gulf States' filing will
be  subject to further review by the LPSC.  Hearings are scheduled to begin
in March 1998.

LPSC Fuel Cost Review

      In  September 1996, the LPSC completed the second phase of its review
of  Entergy Gulf States' fuel costs, which covered the period October  1991
through  December 1994 (Phase II).  On October 7, 1996, the LPSC issued  an
order  requiring  a  $34.2 million refund.  The ordered refund  includes  a
disallowance of $14.3 million of capital costs (including interest) related
to  certain gas transportation and storage facilities, which were recovered
through  the  fuel  clause, and which have been refunded  pursuant  to  the
October  1996  LPSC Settlement.  Entergy Gulf States will be  permitted  to
recover these costs in the future through base rates.  On October 23, 1996,
Entergy Gulf States appealed and received an injunction to stay this order,
except  insofar  as  the  order  requires the  $14.3  million  refund.   On
September 19, 1997, the 19th Judicial District Court of Louisiana  reversed
the  LPSC's order with respect to several disallowances associated with the
operation  of  River Bend, affirmed the LPSC's order with  respect  to  the
remainder  of  the  ordered disallowances, and ordered  a  refund  of  $8.8
million,  plus  interest  from  December 31,  1995  until  payment  to  the
ratepayers.  Pleadings seeking appeals to the Louisiana Supreme Court  have
been filed.

(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)

      In  September  1996, Entergy Gulf States and Entergy Louisiana  filed
proposals with the LPSC designed to achieve an orderly transition to retail
electric  competition  in Louisiana, while protecting  certain  classes  of
ratepayers from bearing the burden of cost shifting.  The proposals do  not
increase rates for any customer class.  However, these proposals do provide
for  a  universal  service charge for customers that  remain  connected  to
Entergy Gulf States' or Entergy Louisiana's electric facilities but  choose
to  purchase  their  electricity from another  source.   In  addition,  the
proposals  include a base rate freeze, which would be put into  effect  for
seven  years  in  the Louisiana areas serviced by Entergy Gulf  States  and
Entergy  Louisiana.   Although  these  proposals  allow  for  the  complete
recovery,  over  a  seven-year period, of the  remaining  plant  investment
associated with River Bend and Waterford 3 as of December 31, 1995, the NRC
operating  licenses for these plants permit continued operation  until  the
years  2025 and 2024, respectively.  Hearings on these proposals have  been
delayed until 1998.

      In  February 1997, the LPSC identified certain issues embodied in the
Entergy  Gulf States and Entergy Louisiana proposals that will be addressed
in  those companies' existing rate dockets, and other issues that  will  be
addressed  in  an ongoing generic regulatory proceeding examining  electric
utility industry restructuring.

(Entergy Corporation and Entergy Louisiana)

     On April 15, 1996, Entergy Louisiana made its first annual performance-
based  formula rate plan filing based on the 1995 test year.  On  June  19,
1996,  the  LPSC  approved  a $12 million annual reduction  in  base  rates
effective  July 1, 1996.  This reduction was based upon the 1995 test  year
results  under  the formula rate plan and reflected the expiration  of  the
Waterford  3 phase-in plan discussed below, which was partially  offset  by
the  recovery of the property taxes on Waterford 3 and the related deferral
discussed below.  Subsequently, additional issues were resolved by means of
a  settlement  conference,  increasing the base  rate  reduction  from  $12
million  to  $16.5 million. Hearings have been conducted to review  Entergy
Louisiana's allowed return on equity and to address certain other  disputed
issues.   This may result in an additional rate reduction, which  would  be
prospective only.

      On  May 30, 1997, Entergy Louisiana made its annual formula rate plan
filing  with  the  LPSC  for the 1996 test year.  This  filing  showed  the
necessity to reduce rates by approximately $27.8 million.  Additionally, in
order  to  reflect  certain Waterford 3 related  items  (property  tax  and
termination  of the phase-in plan) that are addressed outside  the  formula
rate  plan,  the  filing showed the necessity to reduce  rates  further  by
approximately  $26.7  million.   These  two  reductions  produced  a  total
reduction  of approximately $54.5 million, which was implemented  beginning
in  the  first filing cycle of July 1997.  The May 30 filing is  the  final
filing in the two-year period of the formula rate plan.  There has been  no
determination  to  date  by the LPSC as to whether the  formula  rate  plan
should be extended, modified, or terminated.  On January 21, 1998, the LPSC
approved a $4 million refund to reflect lower rates effective July 1, 1997,
as well as an $8 million prospective annual rate reduction.

Filings with the MPSC  (Entergy Corporation and Entergy Mississippi)

      On  March  15,  1997, Entergy Mississippi filed its  annual  earnings
review  with the MPSC under its formula rate plan for the 1996  test  year.
In  April  1997,  the  MPSC issued an order approving  a  prospective  rate
reduction  of $11.2 million.  This rate reduction went into effect  May  1,
1997.

      Entergy Mississippi initiated discussions with the MPSC regarding  an
orderly transition to a more competitive market for electricity.  In August
1996,  Entergy Mississippi filed a proposal with the MPSC for a rate  rider
to  assure  recovery of all Grand Gulf costs incurred to  serve  customers.
The  rider  would maintain current rates for electric service  provided  by
Entergy   Mississippi   and  would  apply  to  customers   within   Entergy
Mississippi's  service area who obtain electricity in  the  future  from  a
source  other than Entergy Mississippi.  Entergy Mississippi designed  this
rider  to  assure  that  commitments  made  under  the  current  system  of
regulation  are honored and that cost burdens are not unfairly  transferred
from  departing  customers to those who remain on the  Entergy  Mississippi
system.   On  August  22,  1996,  the  MPSC  remanded  this  proposal   and
established  a  generic docket to consider competition for retail  electric
service.  Hearings on this docket concluded in April 1997.  In  early  July
1997  the  MPSC issued an order directing the Mississippi Public  Utilities
Staff  to  submit a report outlining a plan for restructuring the  electric
utility  industry  in  Mississippi.  On November 3, 1997,  the  Mississippi
Public Utilities Staff submitted to the MPSC a proposed transition plan for
retail  competition  in  the electric industry in  Mississippi.   The  plan
represents  the staff's current position on how retail competition  can  be
implemented in Mississippi and includes an implementation schedule in which
retail  competition would begin on January 1, 2001.  The plan  assumes  the
passage  of necessary enabling legislation in 1999.  The plan also provides
for  a  transition period, from January 1, 2001, through December 31, 2004,
for  the  recovery  of any allowed stranded costs through a  non-bypassable
charge.  Parties filed comments on the plan during January and February  of
1998 and a hearing is scheduled to be conducted by the MPSC in April 1998.

Filings with the Council  (Entergy Corporation and Entergy New Orleans)

      In March 1997, the Council established new dockets regarding electric
and  gas  utility  service competition in the City  of  New  Orleans.   The
dockets  will  address competitive issues, including competition,  stranded
costs,  consumer  savings,  cost shifting, and  potential  conflicts  among
federal, state, and local regulators, as such issues relate to electric and
gas  service.   Comments were filed by interested parties  in  April  1997.
Public  hearings  on these issues were held in May, July,  and  October  of
1997.

      The  Council issued a resolution in February 1997 indicating that  it
will  conduct  an  investigation of Entergy New Orleans'  allowed  rate  of
return, base rates, and adjustment clauses.  The Council conducted hearings
in  April  1997  on the issue of rate of return, and directed  Entergy  New
Orleans to make a cost of service and revenue requirement filing on May  1,
1997.   That filing was later deferred until September 1997.  In July 1997,
Entergy  New  Orleans and the Council agreed to implement  an  $18  million
annual  reduction  in  base rates effective May 1,  1997,  even  though  an
allowed rate of return had not yet been determined by the Council.

      Entergy  New Orleans made its cost of service and revenue requirement
filing  in conjunction with its transition to competition plan on September
17,  1997.  On  November  6,  1997,  the Council  severed  the  traditional
ratemaking  issues from the transition filings and established a procedural
schedule  for  the second phase of the rate proceeding, pursuant  to  which
hearings will be conducted in July 1998. Additionally, the Council  ordered
Entergy  New  Orleans to file unbundled gas rates, in  preparation  for  an
investigation of issues relating to gas industry competition. The  electric
transition  to competition filing is generally similar to those  filed  for
the  other domestic utility companies.  It includes a rate cap coupled with
a  continuing  right  of  the Council to conduct  reviews  of  Entergy  New
Orleans'  earnings, an offer to seek authority from FERC  for   accelerated
recovery of Grand Gulf purchased power obligations, and implementation of a
non-bypassable  universal  service  charge  for  all  existing   customers,
together  with  functional  unbundling  of  electric  rates.   Entergy  New
Orleans'  transition  filing  will be subject  to  further  review  by  the
Council.   A procedural schedule on that filing has not been set,  although
public comment has been requested by the Council.

Deregulated Asset Plan  (Entergy Corporation and Entergy Gulf States)

       A   deregulated  asset  plan  representing  an  unregulated  portion
(approximately 25%) of River Bend (plant costs, generation,  revenues,  and
expenses) was established pursuant to a January 1992 LPSC order.  The  plan
allows  Entergy  Gulf  States to sell such generation to  Louisiana  retail
customers at 4.6 cents per KWH or off-system at higher prices, with certain
provisions  for sharing such incremental revenue above 4.6  cents  per  KWH
between ratepayers and shareholders.

River Bend Cost Deferrals  (Entergy Corporation and Entergy Gulf States)

      Entergy Gulf States deferred approximately $369 million of River Bend
operating  and  purchased power costs, depreciation, and  accrued  carrying
charges,  pursuant  to  a 1986 PUCT accounting order.   Approximately  $182
million  of these costs are being amortized over a 20-year period, and  the
remaining  $187  million was written off in the first quarter  of  1996  in
accordance with SFAS 121, as discussed above.  As of December 31, 1997, the
unamortized balance of the remaining costs was $107 million.  Entergy  Gulf
States deferred approximately $400.4 million of similar costs pursuant to a
1986  LPSC accounting order, which is being amortized over a 10-year period
ending  in February 1998.  Approximately $5 million was unamortized  as  of
December 31, 1997.

      In accordance with a phase-in plan approved by the LPSC, Entergy Gulf
States  deferred $294 million of its River Bend costs related to the period
February  1988  through February 1991.  Entergy Gulf States  has  amortized
$286  million through December 31, 1997.  The remaining $8 million will  be
recovered  in the first quarter of 1998.  In connection with the completion
of  the  phase-in plan, on February 18, 1998, the LPSC approved  an  annual
prospective rate reduction of $87 million.

Grand Gulf 1 and Waterford 3 Deferrals

(Entergy Corporation and Entergy Arkansas)

      Under the settlement agreement entered into with the APSC in 1985 and
amended  in 1988, Entergy Arkansas agreed to retain a portion of its  Grand
Gulf  l-related costs, recover a portion of such costs currently, and defer
a portion of such costs for future recovery.  In 1996 and subsequent years,
Entergy  Arkansas  retains  22% of its 36% share (approximately  7.92%)  of
Grand Gulf 1 costs and recovers the remaining 78%.  The deferrals ceased in
l990,  and  Entergy  Arkansas is recovering a  portion  of  the  previously
deferred  costs  each  year through 1998.  As of  December  31,  l997,  the
balance  of deferred costs was $75 million.  Entergy Arkansas is  permitted
to  recover  on  a  current basis the incremental costs  of  financing  the
unrecovered deferrals.  In the event Entergy Arkansas is not able  to  sell
its  retained share to third parties, it may sell such energy to its retail
customers  at a price equal to its avoided energy cost, which is  currently
less than Entergy Arkansas' cost of energy from its retained share.

(Entergy Corporation and Entergy Louisiana)

      In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Waterford 3 and Entergy Louisiana's share of capacity
and  energy  from  Grand Gulf l, subject to certain terms  and  conditions.
With  respect  to  Waterford 3, Entergy Louisiana was granted  an  increase
aggregating  $170.9  million  over  the period  1985-1988,  and  agreed  to
permanently absorb, and not recover from retail ratepayers, $284 million of
its  investment in the unit and to defer $266 million of its costs  related
to  the  years 1985-1988, which was recovered from April 1988 through  June
1997.

      With  respect  to  Grand Gulf l, in November 1988, Entergy  Louisiana
agreed  to  retain and not recover from retail ratepayers, 18% of  its  14%
share  (approximately  2.52%) of the costs of Grand  Gulf  l  capacity  and
energy.   Entergy  Louisiana  is  allowed  to  recover  through  the   fuel
adjustment clause 4.6 cents per KWH for the energy related to its  retained
portion  of  these costs.  Alternatively, Entergy Louisiana may  sell  such
energy  to nonaffiliated parties at prices above the fuel adjustment clause
recovery amount, subject to the LPSC's approval.

(Entergy Corporation and Entergy Mississippi)

      Entergy  Mississippi entered into a plan with the MPSC that provides,
among  other  things,  for the recovery by Entergy  Mississippi,  in  equal
annual  installments over 10 years beginning October 1, 1988, of all  Grand
Gulf  1-related costs deferred through September 30, 1988,  pursuant  to  a
final  order  by  the MPSC.  Additionally, the plan provided  that  Entergy
Mississippi  would  defer, in decreasing amounts, a portion  of  its  Grand
Gulf  1-related  costs over four years beginning October  1,  1988.   These
deferrals are being recovered by Entergy Mississippi over a six-year period
that  began in October 1992 and will end in September 1998.  As of December
31,  1997, the uncollected balance of Entergy Mississippi's deferred  costs
was  approximately  $127  million.  The plan also allows  for  the  current
recovery of carrying charges on all deferred amounts.

(Entergy Corporation and Entergy New Orleans)

      Under  Entergy New Orleans' various rate settlements with the Council
in  1986,  1988,  and 1991, Entergy New Orleans agreed to  absorb  and  not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs.
Entergy  New  Orleans was permitted to implement annual rate  increases  in
decreasing amounts each year through 1995, and to defer certain  costs  and
related  carrying  charges for recovery on a schedule extending  from  1991
through  2001.  As of December 31, 1997, the uncollected balance of Entergy
New Orleans' deferred costs was $99 million.

Proposed Rate Increase

(System Energy)

      System Energy filed an application with FERC  on May 12, 1995,  for a
$65.5 million  rate increase.  The request seeks changes to System Energy's
rate  schedule,  including  increases in the revenue requirement associated
with  decommissioning costs, the depreciation rate, and the  rate of return 
on  common  equity.   The  request  also  includes a proposed change in the 
accounting  recognition  of  nuclear  refueling outage  costs from  that of 
expensing  those costs as incurred to the deferral and amortization  method
described in Note 1 with respect to Entergy Arkansas. On December 12, 1995,
System  Energy  implemented  the  $65.5  million rate increase,  subject to
refund, for which a portion has been reserved.  Hearings on System Energy's
request began in January 1996 and were completed in February 1996.  On July
11, 1996, the ALJ issued an initial decision in this proceeding that agreed
with  certain  of  System  Energy's  proposals,  including  the  change  in
accounting  for nuclear refueling outage costs, while rejecting a  proposed
increase  in  return on common equity and recommending a  slight  decrease.
The  ALJ  also  rejected  the proposed change in the  decommissioning  cost
methodology.  The decision of the ALJ is preliminary and may be modified in
the  final  decision by FERC.  Management is unable to  predict  the  final
outcome of the rate increase request or the amount of any refunds in excess
of reserves that may be required.

(Entergy Mississippi)

      Entergy  Mississippi's  allocation  of  the  proposed  System  Energy
wholesale  rate increase is $21.6 million annually.  In July 1995,  Entergy
Mississippi filed a schedule with the MPSC that defers the retail  recovery
of  the System Energy rate increase.  The deferral plan, which was approved
by  the  MPSC,  began in December 1995, the effective date  of  the  System
Energy  rate increase, and will end after the issuance of a final order  by
FERC.  The deferral period ends September 1998, and the deferred amount  is
to be amortized over 48 months beginning in October 1998.

(Entergy New Orleans)

      Entergy  New  Orleans'  allocation  of  the  proposed  System  Energy
wholesale  rate  increase  is $11.1 million annually.   In  February  1996,
Entergy  New  Orleans filed a plan with the Council to  defer  50%  of  the
amount  of the System Energy rate increase.  The deferral began in February
1996 and will end after the issuance of a final order by FERC.

FERC Settlement (Entergy Corporation and System Energy)

      In November 1994, FERC approved an agreement settling a long-standing
dispute  involving income tax allocation procedures of System  Energy.   In
accordance  with  the  agreement, System Energy  will  refund  a  total  of
approximately  $62  million, plus interest, to  Entergy  Arkansas,  Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans through June  2004.
System Energy also reclassified from utility plant to other deferred debits
approximately $81 million of other Grand Gulf 1 costs.  Although such costs
are  excluded from rate base, System Energy is recovering them over  a  10-
year period.  Interest on the $62 million refund and the loss of the return
on  the  $81 million of other Grand Gulf 1 costs will reduce Entergy's  and
System  Energy's  net  income by approximately $10 million  annually  until
2004.

Entergy London Regulatory Matters (Entergy Corporation and Entergy London)

Distribution Business

     The distribution business of London Electricity is regulated under its
PES  license,  pursuant  to which revenue of the distribution  business  is
controlled  by  the Distribution Price Control Formula  (DPCF).   The  DPCF
determines the maximum average price per unit of electricity (expressed  in
kilowatt  hours) that a REC may charge.  The elements used in the DPCF  are
established  for  a  five-year period and are  subject  to  review  by  the
Regulator at the end of each period and at other times at the discretion of
the  Regulator.   At  each review the Regulator can  adjust  the  value  of
certain  elements  in  the DPCF.  Following a review by  the  Regulator  in
August  1994,  a  14%  price  reduction was  set  for  London  Electricity,
effective  April  1, 1995. In July 1995, a further review  of  distribution
prices was concluded by the Regulator for fiscal years 1997 to 2000.  As  a
result  of  this  further review, London Electricity's distribution  prices
were  reduced an additional 11% effective April 1, 1996; 3% effective April
1,  1997;  and will be reduced by a further 3% on both April  1,  1998  and
1999.

Supply Business

      The  supply business of London Electricity is also regulated  by  the
Regulator,  and prices are established based upon the Supply Price  Control
Formula  (SPCF)  which is similar to the DPCF; however, the SPCF  currently
allows full pass through for all properly incurred costs and is set  for  a
four-year period by the Regulator.

      At  present,  London  Electricity has an exclusive  right  to  supply
electricity to residential and small industrial and commercial customers in
its  franchise  area with demand of less than 100 KW.  In late  1998,  this
segment of the supply business will become open to competition, subject  to
a  six-month transition period.  This means the market will be fully opened
with all customers having access to competition by June 1999.  Although the
advent of competition for all customers will permit all RECs to compete  on
a  national  level, London Electricity may be more sensitive to competition
from  its neighboring RECs due to its high customer concentration.   London
Electricity  is in the process of developing its strategy to meet  expanded
competition  in  its supply business, which will focus on active  marketing
and  customer service to defend its residential customer base and expanding
product  offerings to larger business customers.  Such strategy may include
the  development  of  strategic alliances in the provision  of  energy  and
related services and the increased use of hedging of electricity prices  to
mitigate  the increased risk from the expansion of competition.  There  can
be  no  assurance  that  this strategy will be  successful  in  avoiding  a
significant loss of customers of London Electricity's supply business.

      On  October 16, 1997, the Regulator published final proposals for new
supply  price  restraints to apply for two years beginning April  1,  1998.
The  proposals  were  accepted on November 16, 1997.  Among  other  things,
these  proposals  implement  a  price reduction  for  London  Electricity's
domestic  and  small  business supply customers of 11.8%  compared  to  the
supply  price  tariff in effect in August 1997.  A further 3% reduction  is
proposed to be effective on April 1, 1999.  The 11.8% price reduction to be
effective  on  April  1,  1998, would be decreased  by  the  supply  tariff
reductions  announced  by  London Electricity on September  29,  1997,  and
effective   from   October  1,  1997,  which  will  return  over-recoveries
experienced under the current SPCF.  The license modifications  which  took
effect  December 31, 1997, discontinued the automatic pass-through  of  all
costs  previously passed through to domestic and small business  customers,
including purchased power costs from the Electricity Pool.

      London  Electricity  expects to incur approximately  $49  million  (a
portion of which is expected to be capitalized) in fiscal year 1998 for re-
engineering  and  technology costs to prepare infrastructure  services  for
full  competition in supply beginning September 1998.  London  Electricity,
along  with  the  other PES license-holders, petitioned  the  Regulator  to
recover  such  costs  from  customers.  In  the  Regulator's  supply  price
restraint  proposals published on October 16, 1997, the Regulator proposed,
within  the  SPCF, to provide for an annual allowance of $7.6  million  for
each  PES  license-holder over the 5 years ending March 31, 2003, to  cover
data  management  services set-up costs plus an annual  allowance  of  $1.6
million  plus  $1.60 per customer to cover operating costs for  the  period
1998  through 2000.  London Electricity estimates that these proposals will
result  in  an  aggregate allowance for London Electricity of approximately
$12.6 million per annum for the period 1998 through 2000.  On November  16,
1997,  London Electricity accepted the Regulator's new SPCF to  be  applied
beginning  April 1, 1998.  In its fiscal year 1998 (ends March  31,  1998),
London Electricity also expects to incur a total of $8.2 million to procure
settlement  software for the Electricity Pool designed  to  interface  with
RECs'  data  management software.  These costs are expected to be  recouped
through Electricity Pool settlement charges.

      The  non-franchise  supply  market, which typically  includes  larger
commercial  and  industrial customers, was opened to  competition  for  all
customers with usage above 1 MW upon privatization of the industry in 1990.
The  non-franchise  supply markets of 100 KW or more were  opened  to  full
competition starting in April 1994.


NOTE 3.   INCOME TAXES

      Entergy  and its registrant subsidiaries' income tax expenses  for
1997, 1996, and 1995 consist of the following (in thousands):

<TABLE>
<CAPTION>
        1997                      Entergy    Entergy      Entergy     Entergy      Entergy      System    Entergy
                        Entergy  Arkansas  Gulf States   Louisiana   Mississippi New Orleans    Energy     London
<S>                     <C>       <C>        <C>           <C>         <C>            <C>        <C>       <C>
Current:                                                                                                           
  Federal               $433,444  $113,278   $   68,881    $ 94,448    $  49,472      $12,003    $98,428   $      -
  Foreign                237,337         -            -           -            -            -          -    234,080
  State                   76,905    23,756        6,007      19,974        9,476        2,096     15,596          -
                       --------------------------------------------------------------------------------------------
    Total                747,686   137,034       74,888     114,422       58,948       14,099    114,024    234,080
Deferred -- net         (312,691)  (73,406)    (104,435)     (9,833)     (30,697)      (1,369)   (35,894)   (57,057)
Investment tax credit                                                                                              
   adjustments -- net     36,346    (4,408)      51,949      (5,624)      (1,507)        (588)    (3,476)         -
                       --------------------------------------------------------------------------------------------
   Recorded income      $471,341  $ 59,220    $  22,402   $  98,965   $   26,744   $   12,142    $74,654   $177,023
     tax expense       ============================================================================================

</TABLE>


<TABLE>
<CAPTION>
          1996                          Entergy     Entergy      Entergy     Entergy      Entergy      System
                            Entergy    Arkansas   Gulf States   Louisiana   Mississippi New Orleans    Energy
<S>                          <C>       <C>          <C>          <C>          <C>        <C>          <C>
Current:                                                                                                       
  Federal                    $272,036  $  108,583   $      510   $  78,629    $  64,358  $    23,860  $  19,637
  State                        72,204      21,888          201      21,122        9,635        4,631     13,508
                             ----------------------------------------------------------------------------------
    Total                     344,240     130,471          711      99,751       73,993       28,491     33,145
Deferred -- net               100,572     (41,261)     106,715      24,656      (29,390)     (11,587)    52,447
Investment tax credit                                                                                          
   adjustments -- net         (23,653)     (4,766)      (5,335)     (5,847)      (3,497)        (687)    (3,471)
                             ----------------------------------------------------------------------------------
   Recorded income tax       $421,159    $ 84,444   $  102,091   $ 118,560   $   41,106   $   16,217  $  82,121
    expense                  ==================================================================================
                                                                                                               
</TABLE>


<TABLE>
<CAPTION>

          1995                           Entergy      Entergy      Entergy     Entergy       Entergy      System
                             Entergy     Arkansas   Gulf States   Louisiana   Mississippi  New Orleans    Energy
<S>                          <C>         <C>            <C>        <C>          <C>         <C>            <C>
Current:                                                                                                           
  Federal                    $ 306,910   $   87,937     $     13   $  93,670    $  62,436   $    19,071    $108,920
  State                         60,278       18,027            -      20,994        9,215         3,394      11,910
                             --------------------------------------------------------------------------------------
    Total                      367,188      105,964           13     114,664       71,651        22,465     120,830
Deferred -- net                 13,333       (5,363)      67,703       8,148      (35,224)       (1,364)    (41,871)
Investment tax credit                                                                                              
   adjustments -- net          (21,478)      (5,658)      (4,472)     (5,698)      (1,550)         (634)     (3,466)
                             --------------------------------------------------------------------------------------
   Recorded income tax       $ 359,043   $   94,943   $   63,244    $117,114    $  34,877     $  20,467   $  75,493
    expense                  ======================================================================================
                                                                                                                   
Charged to cumulative        $  22,861    $  22,861    $       -    $      -    $       -   $         -   $       -
 effect                      ======================================================================================
                                                                                                                   

</TABLE>


      Entergy  and  its registrant  subsidiaries' total income taxes differ
from  the  amounts computed by applying the statutory income  tax  rate  to
income  before taxes.  The reasons for the differences for the years  1997,
1996, and 1995 are (amounts in thousands):

<TABLE>
<CAPTION>
                                                     Entergy     Entergy     Entergy     Entergy       Entergy    System  Entergy
                1997                    Entergy     Arkansas   Gulf States  Louisiana   Mississippi  New Orleans  Energy   London
<S>                                    <C>          <C>         <C>          <C>        <C>          <C>        <C>       <C>
Computed at statutory rate (35%) (31%  $   270,284  $   64,470  $   28,833   $  84,253  $    32,691  $   9,658  $ 61,932  $   9,196
 for Entergy London)
Increases (reductions) in tax                                                                                                 
      resulting from:                                                                                                           
    State income taxes net of                                                                                                   
        federal income tax effect           33,272       8,382       1,274      12,106        3,110      1,191     7,209          -
    Depreciation                            25,471      (2,784)     (3,670)     13,162          964      2,236    15,563          -
    Rate deferrals - net                     3,484       1,543       5,575        (526)      (3,504)       396         -          -
    Amortization of investment                                                                                                 
        tax credits                        (19,592)     (4,404)     (3,981)     (5,627)      (1,512)      (589)   (3,479)         -
    Flow-through/permanent                                                                                                    
        differences                         (6,537)       (308)     (6,133)         47          (78)       (65)        -          -
    UK windfall profits tax                234,080           -           -           -            -          -         -    234,080
    Change in UK statutory rate            (64,670)          -           -           -            -          -         -    (64,670)
    Non-deductible franchise fees           17,234                                                                             
    Interest on perpetual instruments       (9,094)                                                                           
    Benefit of Entergy Corporation                                                                                             
        expenses                                 -      (4,920)          -      (4,788)      (2,704)      (831)   (4,037)         -
    Other -- net                           (12,591)     (2,759)        504         338       (2,223)       146    (2,534)    (1,583)
                                       --------------------------------------------------------------------------------------------
      Total income taxes               $   471,341   $  59,220   $  22,402   $  98,965   $   26,744  $  12,142  $ 74,654  $ 177,023
                                       ============================================================================================
Effective Income Tax Rate                    61.0%       31.6%       27.2%       41.1%        28.6%      44.0%     42.2%     596.8%
</TABLE>


<TABLE>
<CAPTION>
                                                         Entergy      Entergy      Entergy      Entergy     Entergy      System
                  1996                      Entergy     Arkansas    Gulf States   Louisiana   Mississippi New Orleans    Energy
<S>                                         <C>         <C>          <C>           <C>         <C>           <C>        <C>
Computed at statutory rate (35%)            $ 319,103   $   84,785   $    34,371   $ 108,262   $   42,111    $ 15,048   $  63,626
Increases (reductions) in tax                                                                                                    
      resulting from:                                                                                                            
    State income taxes net of                                                                                                    
        federal income tax effect              54,801       10,796        19,389      11,535        4,188       1,449       7,444
    Depreciation                               15,829       (2,102)       (6,305)      6,722        1,604         402      15,508
    Rate deferrals - net                        1,973        1,115         5,537      (1,829)      (3,430)        580           -
    Amortization of investment                                                                                                    
        tax credits                           (20,349)      (4,608)       (4,380)      (5,664)     (1,582)       (635)     (3,480)
    Flow-through/permanent                                                                                                       
        differences                             1,059         (845)        2,792        (449)        (275)       (164)          -
    SFAS 121 write-off                         48,265            -        48,265           -            -           -           -
    Other -- net                                  478       (4,697)        2,422         (17)      (1,510)       (463)       (977)
                                            -------------------------------------------------------------------------------------
      Total income taxes                    $ 421,159   $   84,444    $  102,091   $ 118,560   $   41,106   $  16,217   $  82,121
                                            =====================================================================================
Effective Income Tax Rate                       46.2%        34.9%        104.0%       38.3%        34.2%       37.7%       45.4%
                                                                                                                                 
</TABLE>


<TABLE>
<CAPTION>

                                                      Entergy     Entergy     Entergy      Entergy      Entergy     System
                 1995                     Entergy    Arkansas   Gulf States  Louisiana    Mississippi New Orleans   Energy
<S>                                       <C>         <C>         <C>         <C>         <C>          <C>          <C>
Computed at statutory rate (35%)          $ 334,944   $  93,458   $  65,157   $  111,528  $    36,240  $   19,198   $  58,986
Increases (reductions) in tax                                                                                                
      resulting from:                                                                                                        
    State income taxes net of                                                                                                
        federal income tax effect            42,599      11,551       8,375       11,532        3,344       1,971       7,036
    Depreciation                              1,670      (1,510)    (13,073)       2,693          739        (661)     13,482
    Rate deferrals - net                      1,699         975       6,240       (2,626)      (3,465)        575           -
    Amortization of investment                                                                                               
        tax credits                         (20,549)     (5,658)     (4,475)      (5,711)      (1,548)       (634)     (3,480)
    Other -- net                             (1,320)     (3,873)      1,020         (302)        (433)         18        (531)
                                          -----------------------------------------------------------------------------------
      Total income taxes                  $ 359,043   $  94,943   $  63,244    $ 117,114   $   34,877   $  20,467  $   75,493
                                          ===================================================================================
Effective Income Tax Rate                     37.5%       35.5%       34.0%        36.7%        33.7%       37.3%       44.8%

</TABLE>


      Significant components of Entergy and its registrant subsidiaries'
net  deferred  tax  liabilities as of December 31, 1997 and  1996,  are  as
follows (in thousands):

<TABLE>
<CAPTION>

                  1997                            Entergy      Entergy     Entergy      Entergy     Entergy    System       Entergy
                                      Entergy     Arkansas   Gulf States  Louisiana   Mississippi New Orleans  Energy       London
<S>                                 <C>          <C>          <C>          <C>          <C>         <C>        <C>        <C>
Deferred Tax Liabilities:                                    
    Net regulatory assets/
      (liabilities)                 (1,378,858)  $(293,433)  $ (437,397)  $ (329,903)  $ (32,140)  $ (4,642) $(281,343)  $        -
    Plant-related basis differences (3,574,260)   (475,950)    (991,253)    (716,512)   (192,402)   (52,295)  (494,564)    (572,896)
    Rate deferrals                    (177,609)    (26,164)     (33,665)           -     (74,427)   (43,353)         -            -
    Pension-related items              (74,777)          -            -            -           -          -          -      (74,777)
    Distribution License              (411,467)          -            -            -           -          -          -     (411,467)
    Other                             (181,306)    (53,666)     (66,995)     (32,101)     (7,494)    (4,336)   (16,714)           -
                                   ------------------------------------------------------------------------------------------------
        Total                      $(5,798,277)  $(849,213)  (1,529,310) $(1,078,516)  $(306,463) $(104,626) $(792,621) $(1,059,140)
                                   ================================================================================================
Deferred Tax Assets:                                            
    Accumulated deferred investment                               
        tax credit                     204,414      40,721       61,122       51,669       9,147      3,440     38,315            -
    Investment tax credit 
      carryforwards                     83,080           -       83,080            -           -          -          -            -
    NOL carryforwards                    2,137           -        2,137            -           -          -          -            -
    Foreign tax credits (including
     foreign tax on unremitted
     earnings)                         248,897           -            -            -           -          -          -            -
    Alternative minimum tax credit      40,658           -       40,658            -           -          -          -            -
    Sale and leaseback                 235,668           -            -      108,944           -          -    126,724            -
    Removal cost                       105,477       1,198       27,027       63,759       2,590     10,903          -            -
    Unbilled revenues                   45,505           -       23,848       16,970      (1,195)     5,882          -            -
    Pension-related items               33,724           -       12,897        9,653       1,801      6,097      3,276            -
    Rate refund                        195,484       6,504      154,153            -           -          -     34,827            -
    FERC Settlement                     17,193           -            -            -           -          -     17,193            -
    Other                              211,361       9,062       21,837       24,767       5,379      5,760     10,235       75,676
    Valuation Allowance               (248,897)          -            -            -           -          -          -            -
                                   ------------------------------------------------------------------------------------------------
        Total                      $ 1,174,701  $   57,485  $   426,759    $ 275,762  $   17,722  $  32,082  $ 230,570    $  75,676
                                   ================================================================================================
                                                                 
   Net deferred tax liability      $(4,623,576) $ (791,728) $(1,102,551)   $(802,754) $ (288,741)  $(72,544) $(562,051)   $(983,464)
                                   ================================================================================================
</TABLE>


<TABLE>
<CAPTION>

                1996                                  Entergy      Entergy       Entergy       Entergy      Entergy     System
                                         Entergy     Arkansas    Gulf States    Louisiana    Mississippi  New Orleans   Energy
<S>                                    <C>           <C>         <C>            <C>          <C>           <C>         <C>
Deferred Tax Liabilities:                                                                                                        
    Net regulatory assets/             $(1,406,921)  $(287,217)  $  (434,380)    $(349,667)  $   (21,537)  $  (9,717)  $(304,403)
     (liabilities)
    Plant-related basis differences     (2,976,724)   (476,364)   (1,006,347)     (716,974)     (185,038)    (50,435)   (512,519)
    Rate deferrals                        (322,530)    (84,826)      (68,282)       (2,839)     (113,669)    (52,914)          -
    Other                                 (143,792)    (59,592)       (9,243)      (31,433)       (7,604)     (6,193)    (24,917)
                                       -----------------------------------------------------------------------------------------
        Total                          $(4,849,967)  $(907,999)  $(1,518,252)  $(1,100,913)   $ (327,848)  $(119,259)  $(841,839)
                                       =========================================================================================
Deferred Tax Assets:                                                                                                             
    Accumulated deferred investment                                                                                              
        tax credit                          210,879      42,450        61,563        53,831         9,724       3,666      39,645
    Investment tax credit                   138,779           -       138,779             -             -           -           -
        carryforwards
    NOL carryforwards                        24,990           -        24,990             -             -           -           -
    Alternative minimum tax credit           40,658           -        40,658             -             -           -           -
    Sale and leaseback                      233,823           -             -       108,390             -           -     125,433
    Removal cost                            102,268           -        27,391        61,716         2,454      10,707           -
    Unbilled revenues                        37,692           -        17,824        14,965          (343)      5,246           -
    Pension-related items                    30,869           -        11,291         8,838         2,008       5,987       2,745
    Rate refund                              25,409           -             -             -             -       7,077      18,332
    FERC Settlement                          19,079           -             -             -             -           -      19,079
    Other                                   147,020       9,049        61,804        23,545         5,849       8,097      12,585
                                       -----------------------------------------------------------------------------------------
        Total                           $ 1,011,466  $   51,499   $   384,300   $   271,285  $     19,692  $   40,780  $  217,819
                                       =========================================================================================
                                                                                                                                 
        Net deferred tax liability      $(3,838,501)  $(856,500)  $(1,133,952)  $  (829,628)   $ (308,156)  $ (78,479)  $(624,020)
                                       =========================================================================================

      As  of  December  31, 1997, Entergy has investment tax  credit  (ITC)
carryforward of $83.1 million and state net operating loss carryforward  of
$26.7  million,  all  related to Entergy Gulf States operations.   The  ITC
carryforwards include the 35% reduction required by the Tax Reform  Act  of
1986  and  may  be applied solely against federal income tax  liability  of
Entergy  Gulf  States and, if not utilized, will expire  between  1998  and
2002.   The  alternative  minimum  tax (AMT)  credit  carryforwards  as  of
December  31, 1997 were $40.7 million, all related to Entergy  Gulf  States
operations.  This AMT credit can be carried forward indefinitely and may be
applied  solely  against the federal income tax liability of  Entergy  Gulf
States.

      The valuation allowance is  provided  primarily  against  foreign tax 
credit carryforwards and foreign  tax  credits on unremitted earnings which
can be utilized against future taxable income in the United States.


NOTE  4.    LINES  OF  CREDIT AND RELATED SHORT-TERM  BORROWINGS   (Entergy
Corporation,  Entergy  Arkansas, Entergy Gulf  States,  Entergy  Louisiana,
Entergy  Mississippi,  Entergy  New Orleans,  System  Energy,  and  Entergy
London)

      In November 1996, SEC authorization was received by Entergy Arkansas,
Entergy  Gulf States, Entergy Louisiana, Entergy Mississippi,  Entergy  New
Orleans, and System Energy increasing short-term borrowing limits  to  $235
million,  $340 million, $225 million, $103 million, $35 million,  and  $140
million, respectively (for a total of $1.078 billion). These authorizations
are  effective through November 30, 2001.  Of these companies, only Entergy
Mississippi  had  borrowings outstanding as of December 31,  1997.  Entergy
Mississippi  had  $47.2 million of borrowings outstanding under  the  money
pool,  an  inter-company  borrowing  arrangement  designed  to  reduce  the
domestic  utility companies' dependence on external short-term  borrowings.
Entergy  Arkansas, Entergy Louisiana, and Entergy Mississippi  had  undrawn
lines of credit as of December 31, 1997, of $18 million, $64.2 million, and
$24 million, respectively.

      In July 1995, Entergy Corporation obtained a $300 million bank credit
facility.   Thereafter, a three-year credit agreement  was  signed  with  a
group  of  banks in October 1995 to provide up to $300 million of loans  to
Entergy  Corporation.  As of December 31, 1997, $75 million was outstanding
against this facility.  In January 1997, the SEC authorized an increase  in
borrowings  under Entergy's bank credit facilities from $300 million  to  a
maximum of $500 million.

      On  September 13, 1996 Entergy Corporation and ETHC obtained a three-
year  $100 million bank line of credit which was increased to $250  million
in  1997, and that can be drawn by either Entergy Corporation or ETHC (with
a  guarantee  from  Entergy Corporation).  The  proceeds  are  to  be  used
exclusively  for exempt telecommunication investments.  As of December  31,
1997,  $111  million borrowed by Entergy Corporation was outstanding  under
this facility.

      Other Entergy companies have SEC authorization to borrow through  the
money  pool,  from Entergy Corporation, and from commercial  banks  in  the
aggregate principal amounts up to $265 million, of which $98.2 million  was
outstanding  as  of  December  31, 1997.   Some  of  these  borrowings  are
restricted as to use, and are secured by certain assets.

     In total, Entergy had short-term commitments in the amount of $1,029.7
million  as of December 31, 1997, of which $745.2 million was unused.   The
weighted-average interest rate on the outstanding borrowings of Entergy  as
of December 31, 1997 and 1996, was 7.09% and 6.10%, respectively.  Included
in  these  short-term commitments is $452.5 million of London Electricity's
commitments,  which had an outstanding balance of $82.3  million  of short-
term borrowings through committed facilities as of December 31, 1997.   The
weighted  average  interest  rate incurred on Entergy  London's  short-term
borrowings  was 7.64% for the period from February 1, 1997 to December  31,
1997.  Commitment fees on the lines of credit for Entergy Arkansas, Entergy
Louisiana,  and Entergy Mississippi are .125% of the undrawn amounts.   The
commitment fees for Entergy Corporation's $300 million credit facility  and
ETHC's  $250 million credit facility are currently .17%, but can  fluctuate
depending  on  the  senior debt ratings of the domestic utility  companies.
The  commitment  fees for Entergy London's $452.5 million  credit  facility
range  from  .03%  to  .125%  of the undrawn balance.  See  Note  7  for  a
discussion of commitments for long-term financing arrangements.


NOTE  5.    PREFERRED,  PREFERENCE, AND COMMON STOCK (Entergy  Corporation,
Entergy   Arkansas,   Entergy  Gulf  States,  Entergy  Louisiana,   Entergy
Mississippi, and Entergy New Orleans)

      The number of shares, authorized and outstanding, and dollar value of
preferred  and preference stock for Entergy Corporation, Entergy  Arkansas,
Entergy  Gulf States, Entergy Louisiana, Entergy Mississippi,  and  Entergy
New Orleans as of December 31, 1997, and 1996 were:

</TABLE>


<TABLE>
<CAPTION>

                                           Shares                                 Call Price Per
                                         Authorized                Total           Share as of
                                      and Outstanding          Dollar Value        December 31,
                                      1997       1996        1997        1996          1997 
<S>                                 <C>         <C>        <C>        <C>            <C>
Entergy Arkansas Preferred Stock
 Without sinking fund:
  Cumulative, $100 par value
   4.32% Series                      70,000      70,000    $  7,000   $  7,000       $103.65
   4.72% Series                      93,500      93,500       9,350      9,350       $107.00
   4.56% Series                      75,000      75,000       7,500      7,500       $102.83
   4.56% 1965 Series                 75,000      75,000       7,500      7,500       $102.50
   6.08% Series                     100,000     100,000      10,000     10,000       $102.83
   7.32% Series                     100,000     100,000      10,000     10,000       $103.17
   7.80% Series                     150,000     150,000      15,000     15,000       $103.25
   7.40% Series                     200,000     200,000      20,000     20,000       $102.80
   7.88% Series                     150,000     150,000      15,000     15,000       $103.00
  Cumulative, $0.01 par value:
   $1.96 Series (a)(b)              600,000     600,000      15,000     15,000          -
                                  ---------   ---------    --------   --------
     Total without sinking fund   1,613,500   1,613,500    $116,350   $116,350
                                  =========   =========    ========   ========
 With sinking fund:
  Cumulative, $100 par value
   8.52% Series                     250,000     300,000    $ 25,000   $ 30,000       $104.26
  Cumulative, $25 par value
   9.92% Series                     241,085     401,085       6,027     10,027        $26.32
                                  ---------   ---------    --------   --------
     Total with sinking fund        491,085     701,085    $ 31,027   $ 40,027
                                  =========   =========    ========   ========
Fair Value of Preferred Stock with sinking fund (d)        $ 32,018   $ 41,835
                                                           ========   ========
</TABLE>


<TABLE>
<CAPTION>

                                           Shares                                 Call Price Per
                                         Authorized                Total           Share as of
                                      and Outstanding          Dollar Value        December 31,
                                      1997       1996        1997        1996          1997 
<S>                                 <C>         <C>        <C>        <C>            <C>
Entergy Gulf States Preferred and Preference Stock
 Preference Stock
  Cumulative, without par value
   7% Series (a)(b)               6,000,000   6,000,000    $150,000   $150,000          -
                                  =========   =========    ========   ========
 Preferred Stock
  Authorized 6,000,000, $100 par
   value, cumulative
    Without sinking fund:
     4.40% Series                    51,173      51,173    $  5,117   $  5,117       $108.00
     4.50% Series                     5,830       5,830         583        583       $105.00
     4.40%-1949 Series                1,655       1,655         166        166       $103.00
     4.20% Series                     9,745       9,745         975        975       $102.82
     4.44% Series                    14,804      14,804       1,480      1,480       $103.75
     5.00% Series                    10,993      10,993       1,099      1,099       $104.25
     5.08% Series                    26,845      26,845       2,685      2,685       $104.63
     4.52% Series                    10,564      10,564       1,056      1,056       $103.57
     6.08% Series                    32,829      32,829       3,283      3,283       $103.34
     7.56% Series                   350,000     350,000      35,000     35,000       $101.80
     8.52% Series                         -     500,000           -     50,000          -   
     9.96% Series                         -     350,000           -     35,000          -   
                                  ---------   ---------    --------   --------
     Total without sinking fund     514,438   1,364,438    $ 51,444   $136,444
                                  =========   =========    ========   ========
 With sinking fund:
   8.80% Series                     162,283     184,595    $ 16,228   $ 18,459       $100.00
   8.64% Series                     112,000     140,000      11,200     14,000       $101.00
   Adjustable Rate - A, 7.42%(c)    168,000     180,000      16,800     18,000       $100.00
   Adjustable Rate - B, 7.47%(c)    247,500     270,000      24,750     27,000       $100.00
                                  ---------   ---------    --------   --------
     Total with sinking fund        689,783     774,595    $ 68,978   $ 77,459
                                  =========   =========    ========   ========
Fair Value of Preference Stock and
 Preferred Stock with sinking fund (d)                     $220,413   $214,475
                                                           ========   ========
</TABLE>


<TABLE>
<CAPTION>

                                           Shares                                 Call Price Per
                                         Authorized                Total           Share as of
                                      and Outstanding          Dollar Value        December 31,
                                      1997       1996        1997        1996          1997 
<S>                                 <C>         <C>        <C>        <C>            <C>
Entergy Louisiana Preferred Stock
 Without sinking fund:
  Cumulative, $100 par value
   4.96% Series                      60,000      60,000    $  6,000   $  6,000       $104.25
   4.16% Series                      70,000      70,000       7,000      7,000       $104.21
   4.44% Series                      70,000      70,000       7,000      7,000       $104.06
   5.16% Series                      75,000      75,000       7,500      7,500       $104.18
   5.40% Series                      80,000      80,000       8,000      8,000       $103.00
   6.44% Series                      80,000      80,000       8,000      8,000       $102.92
   7.84% Series                     100,000     100,000      10,000     10,000       $103.78
   7.36% Series                     100,000     100,000      10,000     10,000       $103.36
  Cumulative, $25 par value:
   8.00% Series (b)               1,480,000   1,480,000      37,000     37,000          -
                                  ---------   ---------    --------   --------
     Total without sinking fund   2,115,000   2,115,000    $100,500   $100,500
                                  =========   =========    ========   ========
 With sinking fund:
  Cumulative, $100 par value
   7.00% Series (b)                 500,000     500,000    $ 50,000   $ 50,000          -
   8.00% Series (b)                 350,000     350,000      35,000     35,000          -   
  Cumulative, $25 par value
   12.64% Series                          -     300,000           -      7,500          -   
                                  ---------   ---------    --------   --------
     Total with sinking fund        850,000   1,150,000    $ 85,000   $ 92,500
                                  =========   =========    ========   ========
Fair Value of Preferred Stock with sinking fund (d)        $ 87,288   $ 93,825
                                                           ========   ========
</TABLE>


<TABLE>
<CAPTION>

                                           Shares                                 Call Price Per
                                         Authorized                Total           Share as of
                                      and Outstanding          Dollar Value        December 31,
                                      1997       1996        1997        1996          1997 
<S>                                 <C>         <C>        <C>        <C>            <C>
Entergy Mississippi Preferred Stock
 Without sinking fund:
  Cumulative, $100 par value
   4.36% Series                      59,920      59,920    $  5,992   $  5,992       $103.86
   4.56% Series                      43,888      43,888       4,389      4,389       $107.00
   4.92% Series                     100,000     100,000      10,000     10,000       $102.88
   7.44% Series                     100,000     100,000      10,000     10,000       $102.81
   8.36% Series(b)                  200,000     200,000      20,000     20,000          -
   9.16% Series                           -      75,000           -      7,500          -   
                                  ---------   ---------    --------   --------
     Total without sinking fund     503,808     578,808    $ 50,381   $ 57,881
                                  =========   =========    ========   ========
 With sinking fund:
  Cumulative, $100 par value
   9.76% Series                           -      70,000    $      -   $  7,000          -
                                  ---------   ---------    --------   --------
     Total with sinking fund              -      70,000    $      -   $  7,000
                                  =========   =========    ========   ========
Fair Value of Preferred Stock with sinking fund (d)                   $  7,000
                                                                      ========
</TABLE>


<TABLE>
<CAPTION>

                                           Shares                                 Call Price Per
                                         Authorized                Total           Share as of
                                      and Outstanding          Dollar Value        December 31,
                                      1997       1996        1997        1996          1997 
<S>                                 <C>         <C>        <C>        <C>            <C>
Entergy New Orleans Preferred Stock
 Without sinking fund:
  Cumulative, $100 par value
   4.75% Series                      77,798      77,798    $  7,780   $  7,780       $105.00
   4.36% Series                      60,000      60,000       6,000      6,000       $104.57
   5.56% Series                      60,000      60,000       6,000      6,000       $102.59
                                  ---------   ---------    --------   --------
     Total without sinking fund     197,798     197,798    $ 19,780   $ 19,780
                                  =========   =========    ========   ========
</TABLE>


<TABLE>
<CAPTION>

                                           Shares                                 Call Price Per
                                         Authorized                Total           Share as of
                                      and Outstanding          Dollar Value        December 31,
                                      1997       1996        1997        1996          1997 
<S>                                 <C>         <C>        <C>        <C>            <C>
Entergy Corporation
 Subsidiary's Preference Stock
  (a)(b)                          6,000,000   6,000,000    $150,000   $150,000          -
                                  =========   =========    ========   ========

Subsidiaries' Preferred Stock
  Without sinking fund            4,944,544   5,869,544    $338,455   $430,955
                                  =========   =========    ========   ========
  With sinking fund               2,030,868   2,695,680    $185,005   $216,986
                                  =========   =========    ========   ========
Fair Value of Preference Stock
 and Preferred Stock with
 sinking fund (d)                                          $339,719   $357,135
                                                           ========   ========

(a)  The total dollar value represents the involuntary liquidation value of
     $25 per share.
(b)  These series are not redeemable as of December 31, 1997.
(c)  Represents weighted-average annualized rates for 1997.
(d)  Fair  values  were  determined using bid  prices  reported  by  dealer
     markets  and by nationally recognized investment banking  firms.   See
     Note   1   for  additional  disclosure  of  fair  value  of  financial
     instruments.

      Changes  in  the  preferred  stock, with and  without  sinking  fund,
preference  stock,  and  common  stock of Entergy  Arkansas,  Entergy  Gulf
States,  Entergy  Louisiana, Entergy Mississippi, and Entergy  New  Orleans
during the last three years were:

                                        Number of Shares
                                  1997        1996        1995
   Preferred stock retirements
     Entergy Arkansas                                 
       $100 par value           (50,000)     (50,000)    (25,000)
       $25 par value           (160,000)    (560,000)   (280,000)
       $0.01 par value                -   (2,000,000)          -
     Entergy Gulf States                              
       $100 par value          (934,812)    (101,943)    (72,834)
     Entergy Louisiana                                
       $100 par value                 -     (100,000)          -
       $25 par value           (300,000)  (2,300,370)   (450,211)
     Entergy Mississippi                              
       $100 par value          (145,000)     (97,700)   (150,000)
     Entergy New Orleans                              
       $100 par value                 -            -     (34,495)
      
      Cash sinking fund requirements and mandatory redemptions for the next
five  years for preferred and preference stock, outstanding as of  December
31, 1997, are:

                                       Entergy  
                            Entergy     Gulf      Entergy
                 Entergy   Arkansas    States    Louisiana
                             (In Thousands)
                                             
         1998    $14,225    $4,500     $5,966     $3,759
         1999     60,466     4,500      5,966     50,000
         2000    160,466     4,500    155,966          -
         2001     45,466     4,500      5,966     35,000
         2002     10,466     4,500      5,966          -
      
      Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana have the
annual  noncumulative  option  to redeem, at  par,  additional  amounts  of
certain series of their outstanding preferred stock.

     Entergy Corporation from time to time reissues treasury shares to meet
the requirements of the Stock Plan for Outside Directors (Directors' Plan),
the  Equity Ownership Plan of Entergy Corporation and Subsidiaries  (Equity
Plan),  and certain other stock benefit plans.  The Directors' Plan  awards
to  nonemployee directors a portion of their compensation in the form of  a
fixed number of shares of Entergy Corporation common stock.  Shares awarded
under  the Directors' Plan were 9,104, 6,750, and 9,251 during 1997,  1996,
and 1995, respectively.

      During  1997,  Entergy  Corporation issued 1,189,266  shares  of  its
previously  repurchased common stock, reducing the amount held as  treasury
stock  by $34.8 million.  Included in the foregoing were 813,161 shares  of
common  stock  issued  at a value of $21.5 million in connection  with  the
acquisition  of  the security monitoring company, Ranger  American,  during
1997.   Entergy  Corporation  issued  the  remaining  shares  to  meet  the
requirements of its various stock plans.  In addition, Entergy  Corporation
received proceeds of $297 million from the issuance of 11,692,741 shares of
common stock under its dividend reinvestment and stock purchase plan during
1997.

      The  Equity  Plan grants stock options, equity awards, and  incentive
awards  to key employees of the domestic utility companies.  The  costs  of
awards  are  charged to income over the period of the grant  or  restricted
period,  as appropriate.  Amounts charged to compensation expense  in  1997
were  immaterial.  Stock options, which comprise 50% of the shares targeted
for  distribution under the Equity Plan, are granted at exercise prices not
less  than  market value on the date of grant.  The options  are  generally
exercisable  six  months  from the date of grant,  with  the  exception  of
250,000 options granted on March 31, 1995, which are not exercisable  until
March 31, 1998, but not more than 10 years after the date of grant.

      Entergy  applies  APB Opinion 25, "Accounting  for  Stock  Issued  to
Employees,"  and related interpretations in accounting for  stock  options.
Accordingly, no compensation cost is required to be recognized  until  such
options are exercised because the exercise prices are not less than  market
price on the date of grant.  The impact on Entergy's net income would  have
been   $296,000,   $166,000,  and  $374,000  in  1997,  1996,   and   1995,
respectively,  had compensation cost for the stock options been  determined
based on the fair value at the grant date for awards under the option  plan
consistent with the method prescribed by SFAS 123.

      In applying the disclosure provisions of SFAS 123, the fair value  of
each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with expected stock price volatility of  19%  in  1997
and   1996  and 18% in 1995 and additional assumptions  for each  of  those
years as  follows:   risk-free  interest rates of 6.3%,  5.4%, and  7.2% in 
1997,  1996, and 1995, respectively, average expected lives  of five years, 
and dividends of $1.80 per share.

     Nonstatutory stock option transactions are summarized as follows:


</TABLE>


<TABLE>
<CAPTION>                                1997                  1996                  1995
                                            Average                Average                Average
                                  Number     Option     Number      Option     Number      Option
                                of Options   Price    of Options    Price    of Options    Price
<S>                               <C>       <C>         <C>         <C>        <C>         <C>
Beginning-of-year balance         527,909   $26.42      457,909     $25.94     170,409     $34.86

Options granted                   255,000    25.84       82,500      29.38     315,000      21.39
Options exercised                  (2,500)   23.38       (7,500)     23.38     (12,500)     23.38
Options forfeited                (107,500)   25.43       (5,000)     35.88     (15,000)     33.79
                                  -------               -------                -------
End-of-year balance               672,909   $26.37      527,909     $26.42     457,909     $25.94
                                  =======               =======                =======
Options exercisable at year-end   422,909               277,909                207,909

Weighted average fair value of    $  4.49               $  3.51                $  2.48
  options granted

</TABLE>

     The   following  table  summarizes  information  about  stock  options
outstanding as of December 31, 1997:

<TABLE>
<CAPTION>
                             Options Outstanding                 Options Exercisable
                    --------------------------------------    ------------------------
                              Weighted-Avg
                                Remaining       Weighted-                  Weighted
   Range of           As of    Contractual    Avg. Exercise    As of     Avg. Exercise
Exercise Prices     12/31/97    Life-Yrs.        Price        12/31/97       Price
<S>                 <C>           <C>            <C>          <C>            <C>
$20 - $30           554,302       7.7            $24.29       304,302        $27.09

$30 - $40           118,607       5.6            $36.10       118,607        $36.10
                    -------                                   -------
$20 - $40           672,909       7.3            $26.37       422,909        $29.62
                    =======                                   =======
</TABLE>


     To meet the requirements of the Employee Stock Investment Plan (ESIP),
Entergy  Corporation was authorized to issue or acquire, through March  31,
1997,  up  to  2,000,000 shares of its common stock to be held as  treasury
shares.  In  February 1997,  Entergy  received  authority  from  the SEC to  
extend the  ESIP  for  an  additional three years ending on March 31, 2000.  
Under the  extended  plan,  Entergy  Corporation may issue either  treasury
shares  or  previously  authorized but unissued shares.  Under the terms of 
the ESIP, employees  can choose  each  year  to have  up  to  10%  of their 
regular annual  salary (not  to  exceed  $25,000) withheld  to purchase the 
Company's common stock at a  purchase price  equal to  85%  of the lower of
the market  value on the first  or last business day  of the plan year. The 
1997 plan year runs from April 1, 1997, to March  31, 1998. Under the plan,
the  number  of  subscribed  shares  was  319,457,  327,017, and 247,122 in 
1997, 1996, and 1995, respectively.

      The  fair  value of shares granted was estimated on the date  of  the
grant  using  the  Black-Scholes option-pricing model with  expected  stock
price  volatility  of 19% in 1997 and  1995 and 18% in 1996 and  additional 
assumptions for each of those years as follows:   risk-free interest  rates
of  6.1%,  5.4%,  and  6.3%  in  1997,  1996,  and   1995, respectively, an
average expected life of one year,  and  dividends  of $1.80 per share. The
weighted-average  fair  value  of  those purchase rights granted was $4.75, 
$5.41,  and  $4.02,  in 1997,  1996, and 1995, respectively.  The impact on  
Entergy's net  income would  have been $48,000, $894,000, and ($315,000) in  
1997, 1996,  and 1995, respectively,  had  compensation  cost for  the ESIP 
been determined based on the fair value at the  grant date for awards under
the ESIP consistent with the method prescribed by SFAS 123.

      Entergy  sponsors  the   Employee Stock  Ownership  Plan  of  Entergy
Corporation  and  Subsidiaries  (ESOP) and  the  Savings  Plan  of  Entergy
Corporation  and  Subsidiaries  (Savings Plan).   Both  plans  are  defined
contribution  plans  covering  eligible  employees  of  Entergy   and   its
subsidiaries  who  have completed certain service requirements.   Entergy's
subsidiaries'  contributions to the ESOP and  the  Savings  Plan,  and  any
income  thereon,  are  invested  in shares of  Entergy  Corporation  common
stock.   The  allowed contributions to the ESOP are accrued  based  on  the
expected utilization of additional investment tax credits in the applicable
federal  income tax return of Entergy and its subsidiaries, and on expected
voluntary  participant  contributions.  Entergy's subsidiaries  contributed
$22.8 million to the ESOP for the year ended December 31, 1995.  There were
no contributions in the years ended December 31, 1996 and 1997.

      The  Savings Plan provides that the employing Entergy subsidiary  may
make  matching contributions to the plan in an amount equal to 50%  of  the
participant's basic contribution up to 6% of their salary.  In 1997,  1996,
and  1995, Entergy's subsidiaries contributed $13.2 million annually to the
Entergy Savings Plan.

      Entergy  Gulf  States  sponsors  the Gulf  States  Utilities  Company
Employee  Stock  Ownership Plan (GSU ESOP) and the  Gulf  States  Utilities
Company  Employees' Thrift Plan (GSU Thrift Plan), which are  both  defined
contribution plans.  The GSU ESOP is available to all Entergy  Gulf  States
employees,  pre-Merger  Entergy  Gulf  States  employees,  and  post-Merger
employees of Entergy Operations, whose primary work location is River Bend,
upon completion of certain eligibility requirements.  All contributions  to
the  plan  are  invested  in  shares of Entergy Corporation  common  stock.
Entergy  Gulf States makes contributions to the GSU ESOP based on  expected
utilization of additional investment tax credits in the Entergy Gulf States
federal  tax  return  and  on  expected  participants'  contributions.   No
additional contributions were made to the GSU ESOP during 1997,  1996,  and
1995.   The  GSU  Thrift  Plan is available to certain  Entergy  Operations
employees  whose primary work location is River Bend.  Entergy Gulf  States
makes  matching  contributions to the GSU Thrift Plan equal  to  50%  of  a
participant's   basic   contribution  which  may  be   invested,   at   the
participant's  discretion, in shares of Entergy Corporation  common  stock.
Entergy  Gulf  States' contributions to the GSU Thrift Plan for  the  years
ended December  31, 1997, 1996, and 1995 were $306,000, $300,000,  and $1.1 
million, respectively.


NOTE 6.   COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES

 (Entergy Arkansas, Entergy Louisiana, Entergy Gulf States)

      Entergy Arkansas Capital I, Entergy Louisiana Capital I, and  Entergy
Gulf  States  Capital I (Trusts) were established as financing subsidiaries
of   Entergy   Arkansas,  Entergy  Louisiana,  and  Entergy  Gulf   States,
respectively,  for the purpose of issuing common and preferred  securities.
The   Trusts   issued  Cumulative  Quarterly  Income  Preferred  Securities
(Preferred  Securities)   to  the public and  common  securities  to  their
respective  parent  companies  and used  the  proceeds  from  the  sale  to
purchase,   from  their  respective  parent  company,  junior  subordinated
deferrable interest debentures (Debentures).  The Debentures held  by  each
Trust  are  its  only  assets  and each Trust will  use  interest  payments
received  on the Debentures owned by it to make cash distributions  on  the
Preferred Securities.       

<TABLE>
<CAPTION>
                                                                                  Fair Market  
                                                        Interest      Trust's       Value of
                                 Preferred    Common       Rate     Investment     Preferred
                        Date    Securities  Securities  Securities      in       Securities at
    Trusts            of Issue    Issued      Issued    Debentures  Debentures      12/31/97                             
<S>                    <C>         <C>         <C>         <C>         <C>           <C>
Arkansas Capital I     8-14-96     $60.0       $1.9        8.50%       $61.9         $62.0
Louisiana Capital I    7-16-96     $70.0       $2.2        9.00%       $72.2         $74.0
Gulf States Capital I  1-28-97     $85.0       $2.6        8.75%       $87.6         $88.6
</TABLE>


     The Preferred Securities of the Trusts of Entergy Arkansas and Entergy
Louisiana  will mature on September 30, 2045 and will mature on  March  31,
2046  for Entergy Gulf States.  The Preferred Securities are redeemable  at
100%  of  their  principal  amount at the option of  Entergy  Arkansas  and
Entergy  Louisiana  beginning in 2001, and at the option  of  Entergy  Gulf
States  beginning in 2002, or earlier under certain limited  circumstances,
including the loss of the tax deduction arising out of the interest paid on
the  Debentures.   Entergy Arkansas, Entergy Louisiana,  and  Entergy  Gulf
States  have,  pursuant  to certain agreements, fully  and  unconditionally
guaranteed payment of distributions on the Preferred Securities  issued  by
their  respective trusts.  Entergy Arkansas, Entergy Louisiana, and Entergy
Gulf  States  are  the  owners  of all of the common  securities  of  their
individual Trusts, which constitute 3% of each Trust's total capital.

(Entergy London)

      Entergy  London  Capital,  L.P. (Entergy London Capital),  a  limited
partnership,  was established as a financing subsidiary of  Entergy  London
for the purpose of issuing preferred securities.  On November 19, 1997, the
limited partnership issued $300 million in aggregate liquidation preference
amount  of  8.625% Cumulative Quarterly Income Preferred  Securities  in  a
public  offering.   All of the proceeds from the sale  of  these  preferred
securities were  invested by Entergy London Capital in the Perpetual Junior
Subordinated Debentures issued by Entergy London to Entergy London Capital.
Entergy  London used the net proceeds from such investment,  together  with
other   funds  available  to  Entergy  London,  to  repay   a  portion   of
indebtedness  incurred  in  connection  with  the  acquisition  of   London
Electricity.    These  debentures  will  be  payable   in   U.S.   dollars.
Management's estimate of the fair value of these preferred securities as of
December  31, 1997, was $303 million, based on the New York Stock  Exchange
closing price.

     Entergy London has entered into currency exchange rate swap agreements
to hedge the risk associated with exchange rate fluctuations.  The exchange
rate  swap agreements hedging this risk involve the exchange of fixed  rate
U.S.  dollars and BPS interest  payments  periodically  over  seven  years.
Management's estimate of the fair  value of the currency  swaps outstanding 
as of December 31, 1997,  based  on  quoted interest and  currency exchange 
rates, is a net asset of approximately $2.0 million.

       The  preferred  securities  of  the  partnership,  as  well  as  the
debentures, have no stated date of maturity.  The preferred securities  are
redeemable at the option of Entergy London on or after November  19,  2002,
at  100%  of  their  principal  amount, or earlier  under  certain  limited
circumstances, including the loss of the tax deduction arising out  of  the
interest  paid  on  the debentures.  Entergy London  is  the  sole  General
Partner in Entergy London Capital, and has agreed to maintain ownership  of
1% of all capital of Entergy London Capital.


NOTE  7.    LONG  - TERM DEBT  (Entergy Corporation, Entergy  Arkansas,
Entergy  Gulf  States, Entergy Louisiana, Entergy Mississippi,  Entergy
New Orleans, System Energy, and Entergy London)

      The long-term debt of Entergy Corporation's subsidiaries, Entergy
Arkansas,  Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy  New Orleans, System Energy,  and Entergy London as of December
31, 1997, was:


<TABLE>
<CAPTION>

<S>           <C>                           <C>        <C>       <C>          <C>        <C>         <C>          <C>       <C>
Maturities    Interest                                 Entergy   Entergy      Entergy    Entergy       Entergy    System    Entergy
From    To    From     To                   Entergy    Arkansas  Gulf States  Louisiana  Mississippi New Orleans  Energy     London
                                                                          (In Thousands)
First Mortgage Bonds
1998   1999   6.000%  11.375%                $491,000    $15,000   $211,000    $35,000                         $230,000      
2000   2004   6.000%  8.250%                1,435,270    265,000    603,750    361,520                          205,000
2005   2009   6.650%  7.500%                  313,000    215,000     98,000
2010   2019   9.750%                           75,000     75,000
2020   2026   7.000%  10.000%                 939,011    289,061    444,950    205,000
                                                                                                                    
G&R Bonds
2000   2023   6.625%  8.800%                  590,000                                   $420,000   $170,000 
                                                                                                                    
Governmental Obligations(a)
1998   2008   5.900%  8.750%                  104,617     47,190     45,010     11,532       885
2009   2026   5.600%  9.875%                1,596,735    286,200    435,735    412,170    46,030                416,600
                                                                                                                    
Debentures
1998   2000   7.380%  9.720%                  125,000                50,000                                      75,000
                                                                                                                       
Eurobonds
2003   2005   8.000%  8.625%                  325,940                                                                     $325,940
                                                                                                                       
Loan Notes Due 2003(b)                         33,814                                                                       33,814
Revolving Bank Debt Facility:
Facility A, avg rate 8.789% due 2002        1,332,774                                                                    1,332,774
Facility B,(Entergy International Ltd LLC)    117,000                                                                            
EPDC Revolving Credit Facility due 2000        70,307                                                                           
Saltend Project Senior Credit Facility/2014    39,610                                                                           
Long-Term DOE Obligation (Note 9)             123,506    123,506
Waterford 3 Lease Obligation 8.09% (Note 10)  353,600                          353,600
Grand Gulf Lease Obligation 7.02% (Note 10)   489,162                                                           489,162
EP Edegel, Inc. Note Payable, due 2000         67,000                                                                           
CitiPower Crt Line avg rate 8.31% due 2000    715,330                                                                          
Other Long-Term Debt                          149,201                 9,937                                                 47,382
Unamortized Premium and Discount - Net        (27,878)   (10,447)    (4,773)    (5,058)   (2,739)    (1,047)     (3,814)
                                            --------------------------------------------------------------------------------------
Total Long-Term Debt                        9,458,999  1,305,510  1,893,609  1,373,764   464,176    168,953   1,411,948  1,739,910
Less Amount Due Within One Year               390,674     60,650    190,890     35,300        20       -         70,000     33,814
                                            --------------------------------------------------------------------------------------
Long-Term Debt Excluding Amount Due
 Within One Year                           $9,068,325 $1,244,860 $1,702,719 $1,338,464  $464,156   $168,953  $1,341,948 $1,706,096
                                           =======================================================================================
Fair Value of Long-Term Debt (c)           $8,635,583 $1,223,591 $1,990,881 $1,074,053  $488,145   $171,199    $969,724 $1,708,743
                                           =======================================================================================

</TABLE>


      The long-term debt of Entergy Corporation's subsidiaries, Entergy
Arkansas,  Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy, as of December 31, 1996, was:


<TABLE>
<CAPTION>
<S>           <C>                     <C>      <C>        <C>          <C>          <C>           <C>           <C>  
Maturities    Interest                                      Entergy     Entergy       Entergy     Entergy       System      
From    To    From     To             Entergy  Arkansas   Gulf States   Louisiana   Mississippi   New Orleans   Energy   
                                        (In Thousands)
First Mortgage Bonds
1997  1999   5.375% 11.375%          $687,000    $45,000    $321,000      $69,000                   $12,000      $240,000
2000  2004   6.000% 8.250%          1,355,270    180,000     608,750      361,520                                 205,000
2005  2009   6.650% 7.500%            325,000    215,000     110,000                                             
2010  2019   9.750%                    75,000     75,000                                                      
2020  2026   7.000% 10.000%         1,031,648    376,648     450,000      205,000                                 
                                                                                                      
G&R Bonds
1997  1999   6.950% 11.2%              96,000                                          $ 96,000                     
2000  2023   6.625% 8.800%            525,000                                           355,000      170,000           
                                                                                                        
Governmental Obligations (a)
1997  2008   5.900% 10.000%           108,267     49,655      45,875       11,837           900
2009  2026   5.950% 9.875%          1,551,235    240,700     435,735      412,170        46,030                   416,600
                                                                                                        
Debentures
1997  2000   7.380% 9.720%            175,000                100,000                                               75,000
                                                                                                         
Long-Term DOE Obligation (Note9)      117,270    117,270   
Waterford 3 Lease Obligation 
  8.76% (Note 10)                     353,600                             353,600                                 
Grand Gulf Lease Obligation                                                                   
  7.02% (Note 10)                     496,480                                                                     496,480
Line of Credit, variable rate                          
  due 1998                             65,000
CitiPower Credit Line 
  avg.rate 8.31% due 2000             921,553                                                                   
Other Long-Term Debt                   83,411                  9,938
Unamortized Premium and Discount-Net  (30,310)   (11,420)     (5,087)      (5,619)       (2,861)      (1,112)      (4,211)
                                    -------------------------------------------------------------------------------------
Total Long-Term Debt                7,936,424  1,287,853   2,076,211    1,407,508       495,069      180,888    1,428,869
Less Amount Within One Year           345,620     32,465     160,865       34,275        96,015       12,000       10,000
                                    -------------------------------------------------------------------------------------
Long-Term Debt Excluding Amount                                                                                                  
 Due Within One Year               $7,590,804 $1,255,388  $1,915,346   $1,373,233      $399,054     $168,888   $1,418,869
                                   ======================================================================================
Fair Value of Long-Term Debt (c)   $7,087,027 $1,160,377  $2,142,389   $1,104,891      $503,461     $175,566   $  982,423
                                   ======================================================================================

</TABLE>


(a)  Consists  of pollution control bonds, certain series of which  are
     secured by non-interest bearing first mortgage bonds.

(b)  Loan  notes  are included as current maturities of long-term  debt
     based  on the option of the holders to redeem such notes on  March
     31 of each year until their final maturity on March 31, 2003.

(c)  The   fair   value  excludes  lease  obligations,  long-term   DOE
     obligations, and other long-term debt and includes debt due within
     one  year.   It is determined using bid prices reported by  dealer
     markets  and  by  nationally recognized investment banking  firms.
     See Note 1 for additional information.

     The annual long-term debt maturities (excluding lease obligations)
and  annual cash sinking fund requirements for debt outstanding  as  of
December 31, 1997, for the next five years are as follows:


<TABLE>
<CAPTION>

<S>    <C>         <C>         <C>              <C>          <C>          <C>       <C>
                   Entergy     Entergy          Entergy      Entergy      System    Entergy
       Entergy(a) Arkansas(b)  Gulf States(c)  Louisiana(d)  Mississippi  Energy    London
                                             (In Thousands)
                                                                                     
 1998  $ 390,674  $60,650      $190,890        $35,300         $ 20        $70,000    $33,814
 1999    232,538      365        71,915            238           20        160,000       -
 2000  1,029,047      220           945        100,225           20         75,000       -
 2001    277,710       35       123,725         18,925           25        135,000       -
 2002  1,946,328  110,135       151,010        217,484       65,025         70,000  1,332,774

</TABLE>


(a)  Not  included are other sinking fund requirements of approximately
     $15.8  million  annually, which may be satisfied  by  cash  or  by
     certification of property additions at the rate of  167%  of  such
     requirements.

(b)  Not  included are other sinking fund requirements of approximately
     $0.79  million  annually, which may be satisfied  by  cash  or  by
     certification of property additions at the rate of  167%  of  such
     requirements.

(c)  Not  included are other sinking fund requirements of approximately
     $11.6  million  annually, which may be satisfied  by  cash  or  by
     certification of property additions at the rate of  167%  of  such
     requirements.

(d)  Not  included are other sinking fund requirements of approximately
     $3.41  million  annually, which may be satisfied  by  cash  or  by
     certification of property additions at the rate of  167%  of  such
     requirements.

      Entergy  Gulf  States  has two outstanding  series  of  pollution
control  bonds  collateralized by irrevocable letters of credit,  which
are  scheduled  to expire before the scheduled maturity of  the  bonds.
The  letter  of  credit collateralizing the $28.4 million variable-rate
series, due December 1, 2015, expires in September 1999 and the  letter
of  credit  collateralizing the $20 million variable-rate  series,  due
April 1, 2016, expires in February 1999.

      Entergy's  subsidiary,  CitiPower, established  a  variable  rate
revolving  credit  facility  in the aggregate  amount  of  1.2  billion
Australian dollars ($780 million) on January 5, 1996.  The facility  is
fully  collateralized by all of CitiPower's assets and is  non-recourse
to  Entergy.   Borrowings have maturities of 30 to 185  days,  and  are
continuously renewable for 30 to 185 day periods at CitiPower's  option
until  the facility matures on June 30, 2000.  As of December 31, 1997,
the  facility was drawn down to 1.1 billion Australian dollars  ($715.3
million)  at  an  average interest rate of 5.30%.   Credit  support  is
provided  to  facility  banks in the form of a subordinated  letter  of
credit  supplied by the Commonwealth Bank of Australia.  The letter  of
credit  matures on January 21, 1999, and is for an amount of 70 million
Australian  dollars  ($45.5 million).  The letter of  credit  is  fully
collateralized  by  a  second-ranking  security  interest  in  all   of
CitiPower's assets and is non-recourse to Entergy.

      CitiPower entered into several interest rate swaps to reduce  the
impact  of  interest rate changes on the borrowings under its  variable
rate  line  of credit.  The interest rate swap agreements  which  hedge
this  debt  involve  the exchange of fixed and floating  rate  interest
payments  periodically  over the life of the agreements.   Interest  is
recognized currently based on the fixed rate of interest resulting from
use of these swap agreements.  Market risks arise from the movements in
interest  rates.   If  the  counterparties to  an  interest  rate  swap
agreement were to default on contractual payments, the subsidiary could
be  exposed  to  increased  costs related  to  replacing  the  original
agreement.   However, CitiPower does not anticipate  nonperformance  by
any counterparty to any interest rate swap in effect as of December 31,
1997.  As of December 31, 1997, CitiPower was a party to interest  rate
swaps  having a notional amount of 900 million Australian dollars  with
maturity  dates  ranging  from February 1999 to  December  2000,  which
effectively fixed the rate of interest on the CitiPower credit line  at
7.70%.  CitiPower is also a party to an additional swap with a notional
amount of 32 million Australian dollars and a maturity date of December
2009.   The  estimated  fair value of the interest  rate  swaps,  which
represents  the estimated amount CitiPower would pay to  terminate  the
swaps  at December 31, 1997, based on quoted interest rates, is  a  net
liability  of  $28  million.  See Note 1 for a  discussion  of  Entergy
accounting policies regarding interest rate swaps.

      Entergy  London executed a credit facility with several banks  on
December 17, 1996, to obtain credit facilities in the aggregate  amount
of  approximately  BPS1.25  billion ($2.1 billion).  Proceeds  of  this
facility,  which were in three tranches, were used, together with  $392
million of cash provided by Entergy, to fund the acquisition of, and to
provide  working capital for, London Electricity.  The facilities  were
refinanced in November 1997.  New or restated borrowing facilities were
negotiated  and  Cumulative Quarterly Income Preferred Securities  were
issued  (see Note 6 for more information) to partially replace  one  of
the  tranches.  The restated credit facility is non-recourse to Entergy
and  is  collateralized by certain assets of Entergy London, consisting
of  65% of the shares of London Electricity.  The maturity dates of the
various  tranches of the credit facility range from December 17,  2001,
to  October  31,  2002.  The interest rate on these facilities  is  the
London  Interbank  Offered  Rate plus up to  1.00%,  depending  on  the
capitalization ratio of Entergy London and its subsidiaries.

     A portion of the amended and restated facility ($1.3 billion), and
related interest rate swaps, are now obligations of Entergy UK Limited,
an  indirect,  wholly-owned subsidiary of Entergy  Corporation.   These
obligations are still reflected in the financial statements of  Entergy
London,  however, because the facility is guaranteed by Entergy London,
Entergy UK Limited's indirect, wholly-owned subsidiary.  Entergy London
recognizes  the  interest expense associated  with  this  debt  in  its
financial  statements, with a credit to shareholder's  equity  for  the
same amount.  This credit to shareholder's equity offsets dividends  as
they  are  declared from Entergy London to Entergy UK  Limited.   These
dividends  are the funding mechanism for Entergy UK Limited to  service
this debt.  Management intends to declare future dividends from Entergy
London to enable Entergy UK Limited to continue to service this debt.

      Entergy  London entered into interest rate swaps  to  reduce  the
impact  of  interest  rate changes on its debt related  to  the  London
Electricity acquisition.  The interest rate swap agreements involve the
exchange  of  floating rate interest payments for fixed  rate  interest
payments  over  the life of the agreements.  Entergy London  recognizes
interest  expense  currently  based  on  the  fixed  rate  of  interest
resulting from use of these swap agreements.  If the counterparties  to
an  interest  rate  swap  agreement  were  to  default  on  contractual
payments, Entergy London could be exposed to increased costs related to
replacing  the  original  agreement.   However,  management  does   not
anticipate nonperformance by any counterparty to any interest rate swap
in  effect  as of December 31, 1997.  As of December 31, 1997,  Entergy
London  was  party to interest rate swaps having a notional  amount  of
BPS600 million with maturity dates ranging from March 1999 to September
2001,  which  effectively fixed the rate of  interest  at  7.48%.   The
estimated  fair value of the interest rate swaps, which represents  the
estimated amount Entergy London would pay to terminate the swaps as  of
December  31, 1997, based on quoted interest rates, is a net  liability
of  $11  million.  See Note 1 for a discussion of Entergy's  accounting
policies regarding interest rate swaps.

      In August 1997, EPDC entered into a BPS50 million ($82.5 million)
credit  facility  to  finance  the acquisition  of  the  Damhead  Creek
project.   In  December  1997, EPDC amended  the  credit  facility  and
increased  the amount of the revolver to BPS100 million ($165 million).
As of December 31, 1997, approximately BPS97.4 million ($160.2 million)
was  outstanding  under  this  facility.   The  interest  rate  on  the
outstanding borrowings was 7.84% at December 31, 1997.

      In  December  1997,  Saltend   Cogeneration   Company  (SCC),  an
indirect wholly-owned subsidiary of EPDC, entered into a BPS646 million
($1.07  billion)  non-recourse senior credit  facility  (Senior  Credit
Facility)  to  finance  the construction of a 1200 MW  gas-fired  power
plant  in  Hull, England.   Borrowings under the Senior Credit Facility
are  payable  after completion of construction over  a  15-year  period
beginning  December 31, 2000.  SCC also entered into  a  BPS72  million
($118 million) Subordinated Credit Facility that provides funding  upon
the  earlier  of  completion of construction or  July  31,  2000.   The
proceeds  of  borrowings under this facility will be used  to  repay  a
portion  of  the  Senior  Credit  Facility.   The  Subordinated  Credit
Facility is payable over a 10-year period beginning December 31, 2000.

      The Senior Credit Facility is collateralized by all of the assets
of  SCC.  Furthermore, the credit facilities require SCC to enter  into
interest  rate  hedges for a significant portion of the  project  debt.
Certain  cash  balances, primarily related to SCC, are restricted  from
being  used to make loans and advances or to pay dividends to  EPDC  by
the  amount required for debt payments, letter of credit expenses,  and
permitted project costs.  The total restricted cash was $2.6 million as
of December 31, 1997.

      On  January 16, 1998, Entergy Arkansas redeemed, in full at  par,
prior  to  its  maturity,  $45.5 million of  its  1977  6  1/8%  Series
Jefferson County pollution control revenue bonds due October  1,  2007,
with  proceeds of 5.6% pollution control revenue bonds, due October  1,
2017, issued in December 1997.


NOTE 8.   DIVIDEND RESTRICTIONS (Entergy Corporation, Entergy Arkansas,
Entergy  Gulf  States, Entergy Louisiana, Entergy Mississippi,  Entergy
New Orleans, System Energy, and Entergy London)

      Provisions  within  the  Articles of Incorporation  or  pertinent
indentures and various other agreements relating to the long-term  debt
and  preferred  stock of certain of Entergy Corporation's  subsidiaries
restrict the payment of cash dividends or other distributions on  their
common  and  preferred  stock.  Additionally, PUHCA  prohibits  Entergy
Corporation's  subsidiaries from making loans or  advances  to  Entergy
Corporation.   Detailed  below  are the  restricted  retained  earnings
unavailable for distribution to Entergy Corporation by subsidiary.

                                        Restricted
                                         Earnings
                                       (in millions)
                                      
                  Entergy Arkansas        $291.3
                  Entergy Mississippi       15.8

      During  1997, cash dividends paid to Entergy Corporation  by  its
subsidiaries  totaled  $550.2  million.   In  February  1998,   Entergy
Corporation   received  common  stock  dividend   payments   from   its
subsidiaries totaling $103.9 million.


NOTE 9.   COMMITMENTS AND CONTINGENCIES

Cajun  -  River Bend Litigation (Entergy Corporation and  Entergy  Gulf
States)

      Entergy  Gulf States and Cajun, respectively, owned 70%  and  30%
undivided  interests in River Bend (operated by Entergy  Gulf  States),
and  own  42%  and  58%  undivided interests in Big  Cajun  2,  Unit  3
(operated  by  Cajun).  These relationships spawned a number  of  long-
standing disputes and claims between the parties.  An agreement setting
forth  terms  for the resolution of all such disputes  was  reached  by
Entergy Gulf States, the Cajun bankruptcy trustee, and the RUS, and was
approved by the United States District Court for the Middle District of
Louisiana (District Court) on August 26, 1996 (Cajun Settlement).   The
Cajun Settlement was consummated on December 23, 1997.

      The  Cajun  Settlement  includes, but  is  not  limited  to,  the
following  elements:  (i)  Cajun's  30%  interest  in  River  Bend  was
transferred,  at  the  behest  of the  RUS,   by   Cajun's  Trustee  in
Bankruptcy  to  Entergy Gulf States; (ii) Cajun set aside  in  trust  a
total  of  $132 million for its share of the decommissioning  costs  of
River  Bend;  (iii)  Cajun transferred certain transmission  assets  to
Entergy  Gulf  States;  (iv)  Cajun and  Entergy  Gulf  States  settled
transmission disputes and released each other from claims  for  payment
under  transmission arrangements; (v) all funds paid  by  Entergy  Gulf
States into the registry of the District Court, which totaled over $102
million  on  December 23, 1997, were returned to Entergy  Gulf  States;
(vi)  Cajun  was  released from its unpaid past,  present,  and  future
liability to Entergy Gulf States for River Bend costs and expenses; and
(vii)  all  remaining litigation between Cajun and Entergy Gulf  States
was  dismissed.  Based on the District Court's approval  of  the  Cajun
Settlement,  a  litigation accrual established  in  1994  for  possible
losses associated with the Cajun-River Bend litigation was reversed  in
September  1996.  The consummation of the Cajun Settlement resulted  in
an  addition to net income for Entergy Gulf States of $146  million  in
1997.

      Proponents of all of the plans of reorganization submitted to the
Bankruptcy  Court  in the Cajun bankruptcy case have  incorporated  the
Cajun Settlement as an integral condition to the effectiveness of their
plans.   The  Bankruptcy Court has approved proposals by  three  groups
seeking  to acquire the non-nuclear assets of Cajun and has  signed  an
order that establishes rules for how Cajun's creditors will vote on the
three plans.  On December 16, 1996, the Bankruptcy Court began hearings
on the balloting and the plan that will be adopted. Additional hearings
are scheduled for 1998.

Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)

      On  January  13,  1997, Entergy Gulf States filed  a  declaratory
judgment  action  in  the  U.S. Bankruptcy Court  in  which  the  Cajun
bankruptcy is pending, seeking a ruling that Entergy Gulf States  would
not  be  liable for damages to certain coal suppliers for Big Cajun  2,
Unit  3,  if  the  Cajun bankruptcy trustee were to reject  their  coal
contracts  as  a  part of a plan of reorganization  in  the  bankruptcy
proceeding.   In  its pleading, Entergy Gulf States took  the  position
that  it  was  not a party to, and had no liability under,  those  coal
contracts.   On  February 12, 1997, the coal suppliers  and  the  Cajun
bankruptcy trustee filed a response in the declaratory judgment  action
and  made  certain counterclaims and crossclaims.  The  coal  suppliers
contended that Entergy Gulf States' declaratory judgment action  should
be  dismissed  and, in the alternative, argued that Cajun  was  Entergy
Gulf States' agent in the procurement of coal for Big Cajun 2, Unit  3,
and that Entergy Gulf States was a party to and had liability under the
coal supply contracts.  On September 4, 1997, the U.S. Bankruptcy Court
ruled  that  Entergy  Gulf States was not liable  for  the  Cajun  coal
contracts.  The coal suppliers have subsequently appealed this decision
to the District Court, and oral argument on the appeal is set for April
1998.

Capital   Requirements  and  Financing  (Entergy  Corporation,  Entergy
Arkansas,  Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, Entergy London, and System Energy)

       Construction  expenditures  (excluding  nuclear  fuel)  for  the
domestic utility companies, System Energy, and Entergy London  for  the
years  1998,  1999, and 2000 are estimated to total $734 million,  $644
million,  and  $680 million, respectively.  Entergy will  also  require
$1.887  billion during the period 1998-2000 to meet long-term debt  and
preferred stock maturities and cash sinking fund requirements.  Entergy
plans  to  meet these requirements primarily with internally  generated
funds  and  cash on hand, supplemented by proceeds of the  issuance  of
debt  and company-obligated mandatorily redeemable preferred securities
and  from  outstanding  credit facilities.   Certain  domestic  utility
companies  and System Energy may also continue with the acquisition  or
refinancing  of  all  or  a portion of certain  outstanding  series  of
preferred stock and long-term debt.  See Notes 5, 6, and 7 for  further
information.

Grand Gulf 1-Related Agreements

Capital Funds Agreement (Entergy Corporation and System Energy)

      Entergy  Corporation  has  agreed to supply  System  Energy  with
sufficient capital to (i) maintain System Energy's equity capital at an
amount equal to a minimum of 35% of its total capitalization (excluding
short-term debt), and (ii) permit the continued commercial operation of
Grand  Gulf  1 and pay in full all indebtedness for borrowed  money  of
System  Energy when due.  In addition, under supplements to the Capital
Funds  Agreement  assigning  System Energy's  rights  as  security  for
specific debt of System Energy, Entergy Corporation has agreed to  make
cash capital contributions to enable System Energy to make payments  on
such debt when due.

      System  Energy has entered into agreements with Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby
they  are  obligated  to  purchase  their  respective  entitlements  of
capacity  and  energy from System Energy's 90% ownership and  leasehold
interest  in  Grand  Gulf 1, and to make payments that,  together  with
other  available funds, are adequate to cover System Energy's operating
expenses.  System Energy would have to secure funds from other sources,
including  Entergy  Corporation's obligations under the  Capital  Funds
Agreement, to cover any shortfalls from payments received from  Entergy
Arkansas,  Entergy  Louisiana,  Entergy Mississippi,  and  Entergy  New
Orleans under these agreements.

Unit  Power  Sales  Agreement  (Entergy  Arkansas,  Entergy  Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)

      System Energy has agreed to sell all of its 90% owned and  leased
share  of  capacity  and energy from Grand Gulf 1 to Entergy  Arkansas,
Entergy  Louisiana,  Entergy Mississippi, and Entergy  New  Orleans  in
accordance  with  specified percentages (Entergy Arkansas-36%,  Entergy
Louisiana-14%, Entergy Mississippi-33%, and Entergy New Orleans-17%) as
ordered   by   FERC.   Charges  under  this  agreement  are   paid   in
consideration  for the purchasing companies' respective entitlement  to
receive  capacity  and  energy  and are  payable  irrespective  of  the
quantity  of energy delivered so long as the unit remains in commercial
operation.  The agreement will remain in effect until terminated by the
parties  and  approved  by  FERC,  most  likely  upon  Grand  Gulf  1's
retirement  from  service. Monthly obligations for payments,  including
the rate increase that was placed into effect in December 1995, subject
to  refund,  under  the  agreement are approximately  $21  million,  $8
million,  $19  million, and $10 million for Entergy  Arkansas,  Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans, respectively.

Availability Agreement    (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)

      Entergy  Arkansas,  Entergy Louisiana, Entergy  Mississippi,  and
Entergy  New  Orleans are individually obligated to  make  payments  or
subordinated  advances  to  System Energy  in  accordance  with  stated
percentages  (Entergy Arkansas-17.1%, Entergy Louisiana-26.9%,  Entergy
Mississippi-31.3%, and Entergy New Orleans-24.7%) in amounts that, when
added  to  amounts  received under the Unit Power  Sales  Agreement  or
otherwise,  are  adequate  to cover all of  System  Energy's  operating
expenses  as  defined, including an amount sufficient to  amortize  the
cost  of Grand Gulf 2 over 27 years. (See Reallocation Agreement  terms
below.)  System Energy has assigned its rights to payments and advances
to  certain  creditors  as  security for  certain  obligations.   Since
commercial  operation of Grand Gulf 1, payments under  the  Unit  Power
Sales   Agreement   have  exceeded  the  amounts  payable   under   the
Availability   Agreement.    Accordingly,   no   payments   under   the
Availability Agreement have ever been required.  If Entergy Arkansas or
Entergy  Mississippi  fails  to make its  Unit  Power  Sales  Agreement
payments,  and  System  Energy is unable to  obtain  funds  from  other
sources, Entergy Louisiana and Entergy New Orleans could become subject
to  claims or demands by System Energy or its creditors for payments or
advances  under the Availability Agreement (or the assignments thereof)
equal  to  the  difference  between their  required  Unit  Power  Sales
Agreement payments and their required Availability Agreement payments.

Reallocation  Agreement (Entergy Arkansas, Entergy  Louisiana,  Entergy
Mississippi, Entergy New Orleans, and System Energy)

      System  Energy,  Entergy  Arkansas,  Entergy  Louisiana,  Entergy
Mississippi,  and  Entergy New Orleans entered  into  the  Reallocation
Agreement  relating to the sale of capacity and energy from Grand  Gulf
and the related costs, in which Entergy Louisiana, Entergy Mississippi,
and  Entergy  New  Orleans agreed to assume all  of  Entergy  Arkansas'
responsibilities and obligations with respect to Grand Gulf  under  the
Availability Agreement.  FERC's decision allocating a portion of  Grand
Gulf  1  capacity  and  energy  to  Entergy  Arkansas  supersedes   the
Reallocation  Agreement as it relates to Grand Gulf 1.   Responsibility
for  any  Grand  Gulf  2  amortization amounts  has  been  individually
allocated  (Entergy  Louisiana-26.23%, Entergy Mississippi-43.97%,  and
Entergy  New  Orleans-29.80%)  under  the  terms  of  the  Reallocation
Agreement.  However, the Reallocation Agreement does not affect Entergy
Arkansas'  obligation to System Energy's lenders under the  assignments
referred  to  in  the preceding paragraph.  Entergy Arkansas  would  be
liable  for  its  share of such amounts if Entergy  Louisiana,  Entergy
Mississippi,  and  Entergy  New  Orleans  were  unable  to  meet  their
contractual obligations.  No payments of any amortization amounts  will
be  required  so long as amounts paid to System Energy under  the  Unit
Power  Sales  Agreement,  including other  funds  available  to  System
Energy, exceed amounts required under the Availability Agreement, which
is expected to be the case for the foreseeable future.

Reimbursement Agreement (System Energy)

      In  December  1988,  System  Energy  entered  into  two  entirely
separate, but identical, arrangements for the sale and leaseback of  an
approximate  aggregate 11.5% ownership interest in Grand  Gulf  1  (see
Note  10).   In  connection with the equity funding  of  the  sale  and
leaseback arrangements, letters of credit are required to be maintained
to  secure  certain  amounts  payable for the  benefit  of  the  equity
investors  by System Energy under the leases.  The current  letters  of
credit are effective until January 15, 2000.

      Under  the  provisions of a bank letter of  credit  reimbursement
agreement,  System Energy has agreed to a number of covenants  relating
to  the maintenance of certain capitalization and fixed charge coverage
ratios.   System  Energy agreed, during the term of  the  reimbursement
agreement, to maintain its equity at not less than 33% of its  adjusted
capitalization  (defined  in  the reimbursement  agreement  to  include
certain  amounts not included in capitalization for financial statement
purposes).   In addition, System Energy must maintain, with respect  to
each  fiscal quarter during the term of the reimbursement agreement,  a
ratio  of adjusted net income to interest expense (calculated, in  each
case,  as  specified in the reimbursement agreement) of at  least  1.60
times  earnings.   As  of  December 31, 1997,  System  Energy's  equity
approximated  34.80%  of  its adjusted capitalization,  and  its  fixed
charge coverage ratio was 2.43.

Fuel Purchase Agreements

(Entergy Arkansas and Entergy Mississippi)

      Entergy Arkansas has long-term contracts with mines in the  State
of  Wyoming  for  the  supply of low-sulfur coal for  White  Bluff  and
Independence  (which  is  25%  owned by  Entergy  Mississippi).   These
contracts, which expire in 2002 and 2011, provide for approximately 85%
of  Entergy  Arkansas'  expected annual coal requirements.   Additional
requirements are satisfied by spot market purchases.

(Entergy Gulf States)

      Entergy  Gulf  States has a contract for a supply  of  low-sulfur
Wyoming  coal for Nelson Unit 6, which should be sufficient to  satisfy
the fuel requirements at Nelson Unit 6 through 2010.  Cajun has advised
Entergy  Gulf  States that Cajun has contracts that should  provide  an
adequate  supply of coal until 1999 for the operation of Big  Cajun  2,
Unit 3.

     Entergy Gulf States has long-term gas contracts which will satisfy
approximately  21%  of its annual requirements, which  is  the  minimum
volume Entergy Gulf States is required to purchase under the contracts.
Additional  gas requirements are satisfied under less expensive  short-
term  contracts.   Entergy  Gulf States has  a  transportation  service
agreement  with  a  gas  supplier that provides  flexible  natural  gas
service  to  the  Sabine  and  Lewis Creek generating  stations.   This
service  is  provided  by the supplier's pipeline  and  salt  dome  gas
storage  facility, which has a present capacity of 12.7  billion  cubic
feet.

(Entergy Louisiana)

      In  June 1992, Entergy Louisiana agreed to a renegotiated 20-year
natural  gas  supply  contract.  Entergy Louisiana agreed  to  purchase
natural gas in annual amounts equal to approximately one-third  of  its
projected  annual  fuel  requirements  for  certain  generating  units.
Annual demand charges associated with this contract are estimated to be
$8.6  million through 1997, and a total of $116.6 million for the years
1998  through  2012.   Entergy Louisiana  recovers  the  cost  of  fuel
consumed  during  the  generation  of  electricity  through  its   fuel
adjustment clause.

Sales Agreements/Power Purchases

(Entergy Gulf States)

      In 1988, Entergy Gulf States entered into a joint venture with  a
primary   term   of  20  years  with  Conoco,  Inc.,  Citgo   Petroleum
Corporation,  and Vista Chemical Company (collectively  the  Industrial
Participants), whereby Entergy Gulf States' Nelson Units 1 and  2  were
sold to a partnership (NISCO) consisting of the Industrial Participants
and  Entergy Gulf States.  The Industrial Participants supply the  fuel
for  the  units, while Entergy Gulf States operates the  units  at  the
discretion of the Industrial Participants and purchases the electricity
produced  by  the  units.  Entergy Gulf States is  continuing  to  sell
electricity  to  the  Industrial Participants.   For  the  years  ended
December 31, 1997, 1996, and 1995, the purchases by Entergy Gulf States
of  electricity  from  the joint venture totaled $70.7  million,  $62.0
million, and $58.5 million, respectively.

(Entergy Louisiana)

     Entergy Louisiana has an agreement extending through the year 2031
to purchase energy generated by a hydroelectric facility.  During 1997,
1996,  and 1995, Entergy Louisiana made payments under the contract  of
approximately   $64.6  million,  $56.3  million,  and  $55.7   million,
respectively.   If the maximum percentage (94%) of the energy  is  made
available  to  Entergy Louisiana, current production projections  would
require estimated payments of approximately $61.0 million in 1998,  and
a  total  of  $3.7  billion for the years 1999 through  2031.   Entergy
Louisiana  recovers  the  costs of purchased energy  through  its  fuel
adjustment clause.

(Entergy London)

      London  Electricity uses CFDs and power purchase  contracts  with
certain  UK generators to fix the price of electricity for a contracted
quantity  over  a  specific period of time.  As of December  31,  1997,
London  Electricity  has outstanding CFDs and power purchase  contracts
for  approximately 40,000 GWH of electricity. These include a long term
power  purchase contract with an affiliate which is based on  27.5%  of
the  affiliate's  capacity from its 1000 MW facility through  the  year
2010. London Electricity's sales volume was approximately 18,000 GWH in
the year ended 1997.  Management's estimate of the fair value of London
Electricity's CFDs outstanding as of December 31, 1997,  is  that  fair
value approximates contract value.

(Entergy Corporation)

      In  accordance with the debt covenants included in the  financing
provisions of the CitiPower acquisition, CitiPower must hedge at  least
80%  of its energy purchases.  CitiPower's current strategy is to hedge
approximately  100% of its forecasted energy purchases  through  energy
trading swaps entered into with certain generators.  As of December 31,
1997,  CitiPower  has  outstanding  energy  trading  swaps  totaling  a 
notional amount  of 38,372 MW  of  average daily load  of  electricity.
These contracts mature through the year 2000.  Management's estimate of
the fair value of such swaps outstanding at December 31, 1997, is a net
liability of approximately $86.1 million.

System   Fuels     (Entergy   Arkansas,  Entergy   Louisiana,   Entergy
Mississippi, Entergy New Orleans, and System Energy)

      Entergy  Arkansas,  Entergy Louisiana, Entergy  Mississippi,  and
Entergy  New Orleans have interests in System Fuels of 35%,  33%,  19%,
and  13%,  respectively.  The parent companies  of  System  Fuels  have
agreed  to  make loans to System Fuels to finance its fuel procurement,
delivery,  and  storage activities.  As of December 31,  1997,  Entergy
Arkansas,  Entergy  Louisiana,  Entergy Mississippi,  and  Entergy  New
Orleans  had,  respectively, approximately $11 million, $14.2  million,
$5.5  million,  and $3.3 million in loans outstanding to System  Fuels,
which loans mature in 2008.

Nuclear Insurance  (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States,  Entergy Louisiana, Entergy Mississippi, Entergy  New  Orleans,
and System Energy)

      The  Price-Anderson  Act limits public  liability  for  a  single
nuclear  incident to approximately $8.92 billion.  Protection for  this
liability  is  provided  through  a combination  of  private  insurance
(currently $200 million each for Entergy Arkansas, Entergy Gulf States,
Entergy  Louisiana,  and  System Energy)  and  an  industry  assessment
program.  Under the assessment program, the maximum payment requirement
for  each nuclear incident would be $79.3 million per reactor,  payable
at  a  rate of $10 million per licensed reactor per incident per  year.
Entergy  has five licensed reactors.  As a co-licensee of Grand Gulf  1
with  System  Energy,  SMEPA would share 10% of  this  obligation.   In
addition,   each  owner/licensee  of  Entergy's  five   nuclear   units
participates in a private insurance program that provides coverage  for
worker  tort  claims  filed  for  bodily  injury  caused  by  radiation
exposure.    The   program  provides  for  a  maximum   assessment   of
approximately  $16  million for the five nuclear  units  in  the  event
losses exceed accumulated reserve funds.

     Entergy  Arkansas,  Entergy Gulf States,  Entergy  Louisiana,  and
System  Energy  are  also  members of certain insurance  programs  that
provide  coverage  for property damage, including  decontamination  and
premature  decommissioning  expense,  to  members'  nuclear  generating
plants.   As  of  December  31, 1997, Entergy  Arkansas,  Entergy  Gulf
States,  Entergy Louisiana, and System Energy each was insured  against
such  losses  up  to   $2.3  billion.  In addition,  Entergy  Arkansas,
Entergy  Gulf  States,  Entergy  Louisiana,  Entergy  Mississippi,  and
Entergy  New  Orleans are members of an insurance program  that  covers
certain replacement power and business interruption costs incurred  due
to  prolonged  nuclear  unit outages.  Under the  property  damage  and
replacement  power/business  interruption  insurance  programs,   these
Entergy  subsidiaries could be subject to assessments if losses  exceed
the  accumulated funds available to the insurers.  As of  December  31,
1997,  the  maximum amounts of such possible assessments were:  Entergy
Arkansas  - $25.3 million; Entergy Gulf States - $8.8 million;  Entergy
Louisiana - $19.9 million; Entergy Mississippi - $1.0 million;  Entergy
New  Orleans - $0.5 million; and System Energy - $17.0 million.   Under
its  agreement with System Energy, SMEPA would share in System Energy's
obligation.

      The  amount  of  property insurance maintained for  each  Entergy
nuclear  unit  exceeds the NRC's minimum requirement for nuclear  power
plant  licensees  of  $1.06 billion per site.  NRC regulations  provide
that  the proceeds of this insurance must be used, first, to place  and
maintain  the  reactor in a safe and stable condition and,  second,  to
complete decontamination operations.  Only after proceeds are dedicated
for  such  use  and regulatory approval is secured would any  remaining
proceeds  be  made available for the benefit of plant owners  or  their
creditors.

Spent  Nuclear  Fuel  and Decommissioning Costs  (Entergy  Corporation,
Entergy  Arkansas, Entergy Gulf States, Entergy Louisiana,  and  System
Energy)

      Entergy  Arkansas,  Entergy Gulf States, Entergy  Louisiana,  and
System  Energy  provide for estimated future disposal costs  for  spent
nuclear  fuel in accordance with the Nuclear Waste Policy Act of  1982.
The  affected  Entergy companies entered into contracts with  the  DOE,
whereby the DOE will furnish disposal service at a cost of one mill per
net KWH generated and sold after April 7, 1983, plus a one time fee for
generation  prior  to that date.  Entergy Arkansas,  the  only  Entergy
company  that  generated electricity with nuclear fuel  prior  to  that
date, elected to pay the one-time fee plus accrued interest, no earlier
than  1998,  and has recorded a liability as of December 31,  1997,  of
approximately  $122 million for generation prior  to  1983.   The  fees
payable  to  the  DOE  may be adjusted in the  future  to  assure  full
recovery.   Entergy  considers all costs incurred or  to  be  incurred,
except accrued interest, for the disposal of spent nuclear fuel  to  be
proper  components of nuclear fuel expense, and provisions  to  recover
such  costs  have  been or will be made in applications  to  regulatory
authorities.

      Delays have occurred in the DOE's program for the acceptance  and
disposal  of  spent  nuclear  fuel at a  permanent  repository.   In  a
statement released February 17, 1993, the DOE asserted that it did  not
have  a  legal  obligation  to accept spent  nuclear  fuel  without  an
operational  repository  for which it has not  yet  arranged.   Entergy
Operations and System Fuels joined in lawsuits against the DOE, seeking
clarification of the DOE's responsibility to receive spent nuclear fuel
beginning in 1998.  The original suits, filed June 20, 1994, asked  for
a  ruling stating that the Nuclear Waste Policy Act requires the DOE to
begin  taking  title to the spent fuel and to start  removing  it  from
nuclear  power  plants in 1998, a mandate for the DOE's  nuclear  waste
management  program  to  begin accepting fuel in  1998  and  for  court
monitoring of the program, and the potential for escrow of payments  to
a  nuclear waste fund instead of directly to the DOE.  Argument in  the
case  before a three-judge panel of the U.S. Court of Appeals was  made
on  January 17, 1996.  On July 23, 1996, the court reversed  the  DOE's
interpretation  of the 1998 obligation and unanimously ruled  that  the
Nuclear  Waste Policy Act creates an unconditional obligation to  begin
acceptance  of  spent fuel by 1998, but did not make a  ruling  on  the
remedies.

      On  December 17, 1996, the DOE notified contract holders that  it
anticipated  it would not be able to begin such acceptance until  after
that date. Subsequently, on January 31, 1997, Entergy Operations and  a
coalition of 36 electric utilities and 46 state agencies filed lawsuits
to  suspend  payments to the Nuclear Waste Fund. The lawsuits  ask  the
court  to  (i) find that the December 17, 1996, DOE letter demonstrates
breach  of  contract  on the part of the DOE; (ii) order  utilities  to
place  the  Nuclear Waste Fund payments in an escrow  account  and  not
provide  the  funds to the DOE until it fulfills its obligation,  (iii)
prevent  the  DOE  from  taking adverse action against  utilities  that
withhold payments; and (iv) order the DOE to submit a plan to the court
describing  how  the  agency intends to fulfill its  obligation  on  an
ongoing  basis.  On November 14, 1997, the court reaffirmed  the  DOE's
unconditional obligation to begin accepting spent fuel by  January  31,
1998,  and  ordered  the  DOE  to  proceed  with  contractual  remedies
consistent with the DOE's unconditional obligation.  Nevertheless,  the
ruling  did  not  address  the plaintiffs'  request  for  authority  to
withhold payments to the DOE.  Therefore, on December 11, 1997, Entergy
Operations  and  a  coalition of 27 utilities  petitioned  the  DOE  to
suspend  and  escrow future payments to the DOE's waste fund  beginning
February  1,  1998.   On  January  12,  1998,  the  DOE  rejected   the
coalition's petition.  On February 19, 1998, Entergy Operations and the
coalition  of  36  electric utilities filed a  motion  with  the  court
seeking enforcement of its November 14, 1997 order and other relief.

      In  the meantime, all Entergy companies are responsible for their
spent  fuel  storage.  Current on-site spent fuel storage  capacity  at
River Bend, Waterford 3, and Grand Gulf 1 is estimated to be sufficient
until  2003,  2000, and 2004, respectively.  Thereafter,  the  affected
companies will provide additional storage.  Current on-site spent  fuel
storage  capacity at ANO is estimated to be sufficient until 2000.   An
ANO  storage  facility using dry casks began operation in  1996.   This
facility  may  be  expanded further as required.  The initial  cost  of
providing the additional on-site spent fuel storage capability required
at  ANO,  River Bend, Waterford 3, and Grand Gulf 1 is expected  to  be
approximately  $5 million to $10 million per unit.  In addition,  about
$3  million to $5 million per unit will be required every two to  three
years  subsequent  to  2000  for  ANO and  every  four  to  five  years
subsequent  to  2003, 2000, and 2004 for River Bend, Waterford  3,  and
Grand  Gulf  1,  respectively, until the DOE's  repository  or  storage
facility begins accepting such units' spent fuel.

   Total decommissioning costs as of December 31, 1997, for the Entergy
nuclear power plants, excluding co-owner shares, have been estimated as
follows:


                                                             Total Estimated  
                                                         Decommissioning Costs
                                                              (In Millions)   
                                                                            
ANO 1 and ANO 2 (based on a 1994 interim update to the           $  806.3  
 1992 cost study)
River Bend (based on a 1996 cost study reflecting 1996 dollars)     419.0
Waterford 3 (based on a 1994 updated study in 1993 dollars)         320.1
Grand Gulf 1 (based on a 1994 cost study using 1993 dollars)        365.9
                                                                 --------
                                                                 $1,911.3  
                                                                 ========

     The  estimate  for  River Bend includes the decommissioning  costs
related  to  the 30% share of River Bend formerly owned by Cajun.   The
30%  share was acquired by Entergy Gulf States in connection  with  the
Cajun  Settlement.  As a part of the Cajun Settlement, Cajun placed  in
trust  a  total  of  $132 million for its share of the  decommissioning
costs  of  River Bend.  See "Cajun - River Bend Litigation"  above  for
further discussion regarding the Cajun Settlement.

      Entergy Arkansas and Entergy Louisiana are authorized to  recover
in  rates  amounts  that,  when added to estimated  investment  income,
should be sufficient to meet the above estimated decommissioning  costs
for   ANO   and  Waterford  3,  respectively.   In  the  Texas   retail
jurisdiction,  Entergy Gulf States is recovering in  rates  River  Bend
decommissioning costs (based on the 1991 cost study that totaled $267.8
million)  that, with adjustments, total $204.9 million.   Entergy  Gulf
States  included decommissioning costs based on the 1996 study  in  the
PUCT  rate review filed in November 1996.  That review is ongoing.   In
the  Louisiana  retail jurisdiction, Entergy Gulf States  is  currently
recovering in rates decommissioning costs (based on a 1985 cost  study)
which total $141 million.  Entergy Gulf States included decommissioning
costs  (based on the 1991 study) in the LPSC rate review filed  in  May
1995.   In  October 1996, the LPSC approved Entergy Gulf  States  rates
that  include  decommissioning costs based  on  the  1991  study.   The
October 1996 LPSC order has been appealed and the decommissioning costs
based  on  the 1991 study have not yet been implemented.  Entergy  Gulf
States included decommissioning costs, based on the 1996 study, in  the
LPSC  rate  review  filed in May 1996.  The LPSC's review  is  ongoing.
However, in June of 1996, a rate decrease was implemented that included
decommissioning revenue requirements based on the 1996  study.   System
Energy  was previously recovering in rates amounts sufficient  to  fund
$198  million  (in  1989 dollars) of its Grand Gulf  1  decommissioning
costs.  System Energy included decommissioning costs (based on the 1994
study) in its rate increase filing with FERC.  Rates requested in  this
proceeding were placed into effect in December 1995, subject to refund.
FERC has not yet issued an order in the System Energy rate case.

      Entergy  Arkansas,  Entergy Gulf States, Entergy  Louisiana,  and
System  Energy periodically review and update estimated decommissioning
costs.   Although Entergy is presently underrecovering for  Grand  Gulf
and River Bend based on the above estimates, applications have been and
will  continue to be made to the appropriate regulatory authorities  to
reflect in rates any future change in projected decommissioning  costs.
The  amounts  recovered  in  rates are deposited  in  trust  funds  and
reported at market value as quoted on nationally traded markets  or  as
determined  by widely used pricing services.  These trust  fund  assets
largely  offset  the  accumulated  decommissioning  liability  that  is
recorded as accumulated depreciation for Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana, and as other deferred credits for System
Energy  and  the trust funds received with the transfer of Cajun's  30%
share of River Bend.

      The  cumulative  liabilities and actual decommissioning  expenses
recorded in 1997 by Entergy were as follows:


<TABLE>                                            
<CAPTION>
                                          
                   Cumulative                       1997                    Cumulative
               Liabilities as of   1997 Trust  Decommissioning           Liabilities as of
               December 31, 1996    Earnings      Expenses        Other  December 31, 1997
                                         (In Millions)
<S>                <C>              <C>            <C>            <C>         <C>
ANO 1 and ANO 2    $  200.6         $   9.1        $  17.3        $    -      $  227.0
River Bend             39.2             2.0            7.5         132.0      $  180.7
Waterford 3            49.0             2.4            8.8             -      $   60.2
Grand Gulf 1           60.7             3.5           19.0             -      $   83.2
                   --------         -------        -------        ------      --------
                   $  349.5         $  17.0        $  52.6        $132.0      $  551.1
                   ========         =======        =======        ======      ========

</TABLE>


      In 1996 and 1995, ANO's decommissioning expense was $20.1 million
and  $17.7 million, respectively; River Bend's decommissioning  expense
was   $6.0  million  and  $8.1  million,  respectively;  Waterford  3's
decommissioning   expense   was  $8.8   million   and   $7.5   million,
respectively;  and  Grand Gulf 1's decommissioning  expense  was  $19.0
million  and  $5.4  million, respectively.  The actual  decommissioning
costs  may  vary from the estimates because of regulatory requirements,
changes  in  technology, and increased costs of labor,  materials,  and
equipment.  Management believes that actual decommissioning  costs  are
likely to be higher than the estimated amounts presented above.

      The  SEC  has  questioned  certain of  the  financial  accounting
practices  of  the electric utility industry regarding the recognition,
measurement,  and classification of decommissioning costs  for  nuclear
plants  in the financial statements of electric utilities.  In response
to  these  questions, the FASB has been reviewing  the  accounting  for
decommissioning  and has expanded the scope of its  review  to  include
liabilities  related  to  the closure and  removal  of  all  long-lived
assets.  If current electric utility industry accounting practices with
respect to nuclear decommissioning and other closure costs are changed,
annual provisions for such costs could increase, the estimated cost for
decommissioning  and closure could be recorded as  a  liability  rather
than   as   accumulated  depreciation,  and  trust  fund  income   from
decommissioning  trusts could be reported as investment  income  rather
than as a reduction to decommissioning expense.

     The EPAct has a provision that assesses domestic nuclear utilities
with fees for the decontamination and decommissioning of the DOE's past
uranium enrichment operations.  The decontamination and decommissioning
assessments  are  being used to set up a fund into which  contributions
from  utilities  and  the federal government will be  placed.   Entergy
Arkansas,  Entergy Gulf States, Entergy Louisiana, and System  Energy's
annual assessments, which will be adjusted annually for inflation,  are
approximately  $3.7  million,  $0.9 million,  $1.4  million,  and  $1.5
million  (in 1997 dollars), respectively, for approximately  15  years.
As of December 31, 1997, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and System Energy had recorded liabilities of $33.4 million,
$5.8  million,  $12.7  million, and $12.5  million,  respectively,  for
decontamination  and decommissioning fees in other current  liabilities
and other noncurrent liabilities, and these liabilities were offset  in
the  consolidated  financial  statements by  regulatory  assets.   FERC
requires  that utilities treat these assessments as costs  of  fuel  as
they  are  amortized and recover these costs through rates in the  same
manner as other fuel costs.

ANO Matters  (Entergy Corporation and Entergy Arkansas)

      Cracks  in certain steam generator tubes at ANO 2 were discovered
and  repaired during an outage in March 1992.  Further inspections  and
repairs  were conducted at subsequent refueling and mid-cycle  outages,
including  the  most  recent refueling outage  in  May  1997.   Turbine
modifications were installed in May 1997 to restore most of the  output
lost due to steam generator fouling and tube plugging.  The unit may be
approaching  the current limit for the number of steam generator  tubes
that  can  be  plugged with the unit in operation.  If the  established
limit is reached during a future outage, it could become necessary  for
Entergy Operations to insert sleeves in steam generator tubes that were
previously  plugged.  On October 25, 1996, Entergy Corporation's  Board
of  Directors  authorized Entergy Arkansas and  Entergy  Operations  to
negotiate  a contract for the fabrication and replacement of the  steam
generators  at  ANO 2.  Entergy estimates the cost of  fabrication  and
replacement  of the steam generators to be approximately $150  million.
Entergy   Operations  has  entered  into  a  contract,   with   certain
cancellation provisions, for the design and fabrication of  replacement
steam  generators.   A  letter  of  intent  has  been  issued  for  the
installation  of the replacement steam generators.  It  is  anticipated
that  the steam generators will be installed during a planned refueling
outage in 2000.  Entergy Operations periodically meets with the NRC  to
discuss  the  results of inspections of the steam generator  tubes,  as
well as the timing of future inspections.

Environmental Issues

(Entergy Gulf States)

      Entergy Gulf States has been designated as a PRP for the clean-up
of  certain  hazardous waste disposal sites.  Entergy  Gulf  States  is
currently negotiating with the EPA and state authorities regarding  the
clean-up  of  these sites.  Several class action and other  suits  have
been filed in state and federal courts seeking relief from Entergy Gulf
States and others for damages caused by the disposal of hazardous waste
and  for asbestos-related disease allegedly resulting from exposure  on
Entergy Gulf States premises.  While the amounts at issue in the clean-
up  efforts and suits may be substantial, Entergy Gulf States  believes
that  its  results of operations and financial condition  will  not  be
materially  adversely affected by the outcome  of  the  suits.   As  of
December  31,  1997, a remaining recorded provision  of  $23.8  million
existed  relating to the clean-up of seven sites at which Entergy  Gulf
States has been designated a PRP.

(Entergy Louisiana)

     During 1993, the LDEQ issued new rules for solid waste regulation,
including  regulation of waste water impoundments.   Entergy  Louisiana
has determined that certain of its power plant waste water impoundments
were  affected by these regulations and has chosen to upgrade or  close
them.   As  a result, a remaining recorded liability in the  amount  of
$6.7  million existed as of December 31, 1997, for waste water upgrades
and  closures.   Completion  of this work  is  pending  LDEQ  approval.
Cumulative expenditures relating to the upgrades and closures of  waste
water impoundments are $7.1 million as of  December 31, 1997.

City Franchise Ordinances (Entergy New Orleans)

      Entergy New Orleans provides electric and gas service in the City
of  New Orleans pursuant to City franchise ordinances that state, among
other things, the City has a continuing option to purchase Entergy  New
Orleans' electric and gas utility properties.

Waterford 3 Lease Obligations  (Entergy Louisiana)

      On  September  28,  1989, Entergy Louisiana  entered  into  three
identical   transactions  for  the  sale  and  leaseback  of  undivided
interests  (aggregating approximately 9.3%) in Waterford  3.   In  July
1997,  Entergy  Louisiana  caused the  lessors  to  issue  $307,632,000
aggregate  principal  amount of Waterford 3  Secured  Lease  Obligation
Bonds,  8.09%  Series  due  2017, to refinance  the  outstanding  bonds
originally issued to finance the purchase of the undivided interests by
the  lessors.  The lease payments will be reduced to reflect the  lower
interest  costs.   Upon  the  occurrence  of  certain  events,  Entergy
Louisiana  may  be obligated to pay amounts sufficient  to  permit  the
Owner Participants to withdraw from the lease transactions, and Entergy
Louisiana may be required to assume the outstanding bonds issued by the
Owner  Trustee  to finance, in part, its acquisition of  the  undivided
interests in Waterford 3.  See Note 10 for further information.

Employment Litigation

(Entergy  Corporation, Entergy Arkansas, Entergy Gulf  States,  Entergy
Louisiana, and Entergy New Orleans)

      Entergy  Corporation,  Entergy  Arkansas,  Entergy  Gulf  States,
Entergy  Louisiana, and Entergy New Orleans are defendants in  numerous
lawsuits  described  below  that have been filed  by  former  employees
asserting  that  they  were wrongfully terminated and/or  discriminated
against  due  to  age, race, and/or sex.  Entergy Corporation,  Entergy
Arkansas,  Entergy  Gulf  States, Entergy Louisiana,  and  Entergy  New
Orleans are vigorously defending these suits and deny any liability  to
the  plaintiffs.  However, no assurance can be given as to the  outcome
of these cases.

(Entergy Corporation, Entergy Louisiana, and Entergy New Orleans)

      Entergy  Corporation, Entergy Louisiana, and Entergy New  Orleans
are  defendants in numerous lawsuits filed in Louisiana state court  on
behalf  of  approximately  147 plaintiffs  who  claim  that  they  were
illegally terminated from their jobs due to discrimination on the basis
of  age.   The  plaintiffs have requested that the  court  certify  the
matter as a class action.  On August 13, 1997, the court certified  the
case  as a class action.  The court decision to certify a class  action
has  been appealed to the Louisiana Fifth Circuit Court of Appeal.   No
assurance  can  be  given  as  to  the  timing  or  outcome  of   these
proceedings.

(Entergy Corporation and Entergy Arkansas)

      Entergy  Corporation and Entergy Arkansas  are  defendants  in  a
number  of  lawsuits filed in federal court on behalf  of  a  total  of
approximately  60  plaintiffs who claim they were illegally  terminated
from their jobs due to discrimination on the basis of age or race.

      The  first of these lawsuits, originally involving 29 plaintiffs,
was  tried  before  a jury beginning in April 1997.   Settlements  were
reached  with two of the plaintiffs prior to the trial.  In  May  1997,
the  jury rendered findings as to 22 of the plaintiffs indicating  that
Entergy had no liability to them for discrimination.  However, the jury
also  found  that Entergy had intentionally discriminated  against  the
remaining five plaintiffs on the basis of age.  As a result, these five
plaintiffs are entitled to damages equal to twice their back  pay  plus
lost  future  wages,  and they will be awarded attorneys'  fees  in  an
amount which has not yet been determined by the court.

      A trial date for another suit involving 18 plaintiffs, originally
scheduled for May 1997, has been continued until April 1998.  A  motion
for  summary  judgment in favor of the defendants is  pending  in  this
suit.   Another suit, involving a single plaintiff, which had been  set
for  trial in February 1998, has been continued with no new trial  date
set.   Another of the suits, involving a single plaintiff, was  settled
for  an  immaterial amount prior to trial in November 1997. Another  of
the  suits, involving nine plaintiffs, has been set for trial  in  June
1998.   The last of these suits is in the discovery stage and has  been
set for trial in July 1998.

(Entergy Corporation and Entergy Gulf States)

      Entergy Corporation and Entergy Gulf States were defendants in  a
lawsuit involving approximately 176 plaintiffs filed in state court  in
Texas  by  former employees who claim that they lost their  jobs  as  a
result  of the Merger.  The plaintiffs in these cases asserted  various
claims, including discrimination on the basis of age, race, and/or sex.
The  court made a preliminary ruling that each plaintiff's claim should
be tried separately.  However, all of  these claims were settled before
reaching trial in June 1997.

(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)

      Entergy  Corporation, Entergy Gulf States, and Entergy  Louisiana
were  defendants  in  a  suit filed in federal court  in  Louisiana  by
approximately 57 plaintiffs who claimed, among other things, they  were
wrongfully discharged from their employment on the basis of their  age.
However,  all  of  these claims were settled before reaching  trial  in
September 1997.

Entergy London Agreements and Contracts (Entergy London)

      Entergy  London  is  subject  to  an  agreement  whereby  the  UK
government  is  entitled  to  a proportion of  certain  property  gains
realized  by  London  Electricity as a result of  disposals  or  events
treated as disposals occurring after March 31, 1990, of properties held
at that date.  This commitment is effective until March 31, 2000.

     Entergy London has recorded approximately $165 million in reserves
as  of  December 31, 1997, related to unfavorable long-term  contracts.
These  reserves  will  be  amortized over the remaining  lives  of  the
contracts  which range from 14 to 18 years.  The reserves recorded  are
based  on  the excess of estimated fair market value of these contracts
over the present value of the future cash flows under the contracts  at
the applicable discount rate and prices.


NOTE 10.  LEASES

General

       As  of  December  31,  1997,  Entergy  had  capital  leases  and
noncancelable operating leases for equipment, buildings, vehicles,  and
fuel storage facilities (excluding nuclear fuel leases and the sale and
leaseback transactions) with minimum lease payments as follows:
                                                                      
                                        Capital Leases
                                                                     
                                            Entergy      Entergy     
Year                          Entergy      Arkansas    Gulf States   
                                       (In Thousands)
                                                                     
1998                         $   27,369     $   10,953      $   12,480 
1999                             27,343         10,953          12,480 
2000                             25,534          9,646          11,983 
2001                             23,452          9,646          11,628 
2002                             19,574          9,646           9,879 
Years thereafter                 80,512         42,211          38,101 
                             ----------     ----------      ----------
Minimum lease payments          203,784         93,055          96,551 
Less:  Amount                                                         
  representing interest          68,074         37,311          29,073 

Present value of net         ----------     ----------      ----------
 minimum lease payments      $  135,710     $   55,744      $   67,478 
                             ==========     ==========      ==========


<TABLE>
<CAPTION>
                                                  Operating Leases
                                                                                             
                                            Entergy      Entergy       Entergy       Entergy   
Year                          Entergy       Arkansas    Gulf States    Louisiana      London    
                                                   (In Thousands)
<S>                           <C>           <C>          <C>            <C>          <C>
1998                          $67,748       $17,946      $14,429        $5,108       $10,780 
1999                           65,557        17,913       14,408         4,702         9,831 
2000                           62,645        17,913       13,801         4,644         9,707 
2001                           56,473        17,995       11,546         1,178         9,707 
2002                           55,011        17,772       11,292         1,163         9,589 
Years thereafter              334,155        55,886       56,528             -       119,956 
                             --------      --------     --------       -------      --------
Minimum lease payments       $641,589      $145,425     $122,004       $16,795      $169,570
                             ========      ========     ========       =======      ========
</TABLE>
       
       Rental  expense  for  Entergy's leases (excluding  nuclear  fuel
leases   and   the  sale  and  leaseback  transactions)   amounted   to
approximately $70.7 million, $62.1 million, and $61.1 million in  1997,
1996,  and  1995, respectively.  These amounts include  $19.7  million,
$26.0  million, and $26.0 million, respectively, for Entergy  Arkansas;
$17.6  million,  $11.8  million, and $13.0 million,  respectively,  for
Entergy  Gulf States; $12.8 million, $13.7 million, and $13.6  million,
respectively,  for  Entergy Louisiana; and $11.4 million  in  1997  for
Entergy London.

Nuclear  Fuel  Leases  (Entergy Arkansas, Entergy Gulf States,  Entergy
Louisiana, System Energy)

      Entergy  Arkansas,  Entergy Gulf States, Entergy  Louisiana,  and
System  Energy  each  has  arrangements to lease  nuclear  fuel  in  an
aggregate amount up to $140 million, $70 million, $80 million, and  $90
million  respectively.  As of December 31, 1997, the  unrecovered  cost
base  of  Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's,
and System Energy's nuclear fuel leases amounted to approximately $92.6
million, $54.4 million, $57.8 million, and $64.2 million, respectively.
The  lessors  finance  the acquisition and ownership  of  nuclear  fuel
through  credit agreements and the issuance of notes.  These agreements
are  subject to annual renewal with, in Entergy Louisiana's and Entergy
Gulf  States' case, the consent of the lenders.  The credit  agreements
for  Entergy  Arkansas,  Entergy Gulf States,  Entergy  Louisiana,  and
System  Energy  have  been extended and now have termination  dates  of
December  2000,  December  2000,  January  2001,  and  February   2001,
respectively.  The debt securities issued pursuant to these fuel  lease
arrangements have varying maturities through December 15, 2000.  It  is
expected  that  the credit agreements will be extended  or  alternative
financing  will  be  secured by each lessor upon the  maturity  of  the
current arrangements.  If extensions or alternative financing cannot be
arranged, the lessee in each case must purchase sufficient nuclear fuel
to allow the lessor to retire such borrowings.

      Lease payments are based on nuclear fuel use.  Nuclear fuel lease
expense  charged  to  operations by the domestic utility  companies  in
1997,  1996, and 1995 was $149.7 million (including interest  of  $18.7
million),  $158.5  million (including interest of $21.7  million),  and
$153.5  million  (including interest of $22.1  million),  respectively.
Specifically,  in 1997, 1996, and 1995, Entergy Arkansas'  expense  was
$53.7 million, $53.9 million, and $46.8 million (including interest  of
$6.4  million,  $7.1 million, and $6.7 million), respectively;  Entergy
Gulf  States'  expense  was  $25.5 million, $27.1  million,  and  $41.4
million  (including interest of $3.2 million, $4.2  million,  and  $6.0
million), respectively; Entergy Louisiana's expense was $29.4  million,
$39.8  million, and $30.8 million (including interest of $3.7  million,
$4.9  million, and $3.7 million), respectively; System Energy's expense
was $41.1 million, $37.7 million, and $34.5 million (including interest
of $5.4 million, $5.5 million, and $5.7 million), respectively.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations  (Entergy Louisiana)

      Entergy  Louisiana  is  the lessee of  three  separate  undivided
interests  in  Waterford  3  under three  separate,  but  substantially
identical,  long-term  net  leases.   The  lessors  under  such  leases
acquired  the undivided interests (aggregating approximately  9.3%)  in
Waterford  3  from  Entergy Louisiana in three separate  sale-leaseback
transactions  that  occurred  in  1989.   Entergy  Louisiana is leasing
back the interests on a net lease  basis over  an  approximate  28-year
basic lease term.  Approximately  87.7% of the aggregate  consideration
paid  by  the  lessors  for  their  respective undivided  interests was 
provided to the lessors from the issuance of Waterford  3 Secured Lease
Obligation  Bonds  (Initial  Series  Bonds)  in 1989.   Interests  were  
acquired  from  Entergy  Louisiana  with   funds   obtained   from  the 
issuance and sale by the purchasers of intermediate-term  and long-term 
secured  lease  obligation  bonds.  The lease payments to  be  made  by 
Entergy Louisiana will be sufficient to service such debt.

      Entergy  Louisiana did not exercise its option to repurchase  the
undivided  interests in Waterford 3 in September 1994.   As  a  result,
Entergy  Louisiana was required to provide collateral  for  the  equity
portion  of  certain  amounts payable by Entergy  Louisiana  under  the
leases.   Such  collateral was in the form of  a  new  series  of  non-
interest-bearing first mortgage bonds in the aggregate principal amount
of $208.2 million issued by Entergy Louisiana in September 1994.

      In July 1997, Entergy Louisiana caused the Waterford 3 lessors to
issue  $307,632,000 aggregate principal amount of Waterford  3  Secured
Lease  Obligation  Bonds,  8.09% Series  due  2017,  to  refinance  the
outstanding  bonds  originally issued to finance the  purchase  of  the
undivided  interests  by  the lessors.  The lease  payments  have  been
reduced to reflect the lower interest costs.

      Upon the occurrence of certain events (including lease events  of
default,  events  of  loss,  deemed  loss  events  or  certain  adverse
"Financial   Events"  with  respect  to  Entergy  Louisiana),   Entergy
Louisiana  may  be obligated to pay amounts sufficient  to  permit  the
Owner Participants to withdraw from the lease transactions, and Entergy
Louisiana may be required to assume the outstanding bonds issued by the
Owner  Trustee  to finance, in part, its acquisition of  the  undivided
interests  in  Waterford 3.  "Financial Events"  include,  among  other
things, failure by Entergy Louisiana, following the expiration  of  any
applicable grace or cure periods, to maintain (1) as of the end of  any
fiscal  quarter,  total equity capital (including preferred  stock)  at
least equal to 30% of adjusted capitalization, or (2) in respect of the
12-month period ending on the last day of any fiscal quarter,  a  fixed
charge  coverage  ratio  of at least 1.50.  As of  December  31,  1997,
Entergy  Louisiana's total equity capital (including  preferred  stock)
was  46.8%  of  adjusted capitalization and its fixed  charge  coverage
ratio was 2.79.

      As  of  December 31, 1997, Entergy Louisiana had  future  minimum
lease  payments  (reflecting  an overall implicit  rate  of  7.45%)  in
connection with the Waterford 3 sale and leaseback transactions,  which
are recorded as long-term debt, as follows (in thousands):


1998                                                   $   23,850
1999                                                       49,108
2000                                                       42,573
2001                                                       40,909
2002                                                       39,246
Years thereafter                                          532,137
                                                       ----------
Total                                                     727,823
Less: Amount representing interest                        374,223
                                                       ----------
Present value of net minimum lease payments            $  353,600
                                                       ==========

        
Grand Gulf 1 Lease Obligations (System Energy)

      On December 28, 1988, System Energy entered into two arrangements
for  the  sale and leaseback of an aggregate 11.5% undivided  ownership
interest  in Grand Gulf 1 for an aggregate cash consideration  of  $500
million.  System Energy is leasing back the undivided interest on a net
lease  basis  over a 26 1/2-year basic lease term.  System  Energy  has
options  to  terminate  the  leases and  to  repurchase  the  undivided
interest  in  Grand Gulf 1 at certain intervals during the basic  lease
term.   Further, at the end of the basic lease term, System Energy  has
an  option to renew the leases or to repurchase the undivided  interest
in Grand Gulf 1.  See Note 9 with respect to certain other terms of the
transactions.

      In  accordance  with  SFAS 98, "Accounting for  Leases,"  due  to
"continuing  involvement"  by System Energy,  the  sale  and  leaseback
arrangements  of the undivided portions of Grand Gulf 1,  as  described
above, are required to be reflected for financial reporting purposes as
financing  transactions in System Energy's financial  statements.   The
amounts charged to expense for financial reporting purposes include the
interest  portion  of  the lease obligations and  depreciation  of  the
plant.   However, operating revenues include the recovery of the  lease
payments  because  the  transactions are accounted  for  as  sales  and
leasebacks  for  rate-making  purposes.   The  total  of  interest  and
depreciation expense exceeds the corresponding revenues realized during
the  early  part  of the lease term.  Consistent with a  recommendation
contained in a FERC audit report, System Energy recorded as a  deferred
asset the difference between the recovery of the lease payments and the
amounts  expensed for interest and depreciation and is  recording  such
difference as a deferred asset on an ongoing basis.  The amount of this
deferred  asset was $84.0 million and $93.2 million as of December  31,
1997, and 1996, respectively.

      As  of December 31, 1997, System Energy had future minimum  lease
payments (reflecting an implicit rate of 7.02%), which are recorded  as
long-term debt as follows (in thousands):

1998                                                   $   42,753
1999                                                       42,753
2000                                                       42,753
2001                                                       46,803
2002                                                       53,827
Years thereafter                                          659,437
                                                       ----------
Total                                                     888,326
Less: Amount representing interest                        399,164
                                                       ----------
Present value of net minimum lease payments            $  489,162
                                                       ==========

             
NOTE   11.   POSTRETIREMENT  BENEFITS  (Entergy  Corporation,   Entergy
Arkansas,  Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, System Energy, and Entergy London)

Pension Plans

     Entergy has two postretirement benefit plans, "Entergy Corporation
Retirement  Plan for Non-Bargaining Employees" and "Entergy Corporation
Retirement  Plan for Bargaining Employees", covering substantially  all
of  its domestic employees.  The pension plans are noncontributory  and
provide  pension benefits that are based on employees' credited service
and  compensation  during the final years before  retirement.   Entergy
Corporation and its subsidiaries fund pension costs in accordance  with
contribution  guidelines established by the Employee Retirement  Income
Security  Act  of  1974, as amended, and the Internal Revenue  Code  of
1986, as amended.  The assets of the plans include common and preferred
stocks,  fixed income securities, interest in a money market fund,  and
insurance contracts.

      Entergy  London participates in a defined benefit  pension  plan,
which  provides  pension and other related defined benefits,  based  on
final  pensionable pay, to substantially all employees  throughout  the
electricity  supply  industry  in the  UK.   Entergy  London  uses  the
projected  unit  credit actuarial method for funding purposes.  Amounts
funded to the pension are primarily invested in equity and fixed income
securities.

     Total 1997, 1996, and 1995 pension cost of Entergy Corporation and
its subsidiaries, including amounts capitalized, included the following
components (in thousands):

<TABLE>
<CAPTION>

             1997                           Entergy    Entergy   Entergy    Entergy     Entergy     System   Entergy
                                  Entergy  Arkansas Gulf States Louisiana Mississippi New Orleans   Energy    London
<S>                               <C>        <C>        <C>       <C>         <C>            <C>    <C>      <C> 
Service cost - benefits earned                                                                                      
  during the period               $48,908    $6,937     $5,365    $3,762      $1,893         $763   $2,389   $16,615
Interest cost on projected                                                                                          
  benefit obligation              193,930    26,472     23,684    15,778      10,011        2,783    2,942    99,358
Actual return on plan assets     (306,613)  (46,065)   (53,729)  (49,438)    (19,577)      (1,914)  (6,052) (118,465)
Net amortization and deferral      86,486    16,906     23,657    27,200       7,549           63    2,055         -
                                  ----------------------------------------------------------------------------------
Net pension cost (income)         $22,711    $4,250    ($1,023)  ($2,698)      ($124)      $1,695   $1,334   ($2,492)
                                  ==================================================================================
</TABLE>


<TABLE>
<CAPTION>
             1996                          Entergy     Entergy    Entergy    Entergy     Entergy    System
                                 Entergy  Arkansas   Gulf States Louisiana Mississippi New Orleans  Energy
<S>                               <C>        <C>          <C>       <C>         <C>         <C>      <C> 
Service cost - benefits earned                                                                             
  during the period               $31,584    $7,605       $5,852    $4,684      $2,157      $1,147   $2,658
Interest cost on projected                                                                                 
  benefit obligation               84,303    24,540       20,952    15,735       9,462       2,973    2,645
Actual return on plan assets     (163,520)  (41,183)     (47,416)  (41,219)    (17,767)     (1,826)  (4,146)
Net amortization and deferral      71,260    14,015       18,732    20,313       6,382          88      526
                                  -------------------------------------------------------------------------
Net pension cost (income)         $23,627    $4,977      ($1,880)    ($487)       $234      $2,382   $1,683
                                  =========================================================================

</TABLE>


<TABLE>
<CAPTION>
             1995                          Entergy   Entergy     Entergy    Entergy       Entergy     System
                                 Entergy  Arkansas Gulf States  Louisiana  Mississippi  New Orleans   Energy
                                                                               
<S>                               <C>       <C>         <C>        <C>        <C>          <C>        <C>                     
Service cost - benefits earned    $29,282    $7,786     $6,686      $4,143     $2,152       $1,158    $2,260
  during the period                                                                                         
Interest cost on projected         80,794    24,372     21,098      15,111      9,240        2,680     2,230
  benefit obligation                                                                                        
Actual return on plan assets     (261,864)  (71,807)   (82,624)    (53,348)   (30,443)      (1,614)   (8,827)
Net amortization and deferral     178,345    47,766     53,921      34,902     20,081           64     5,510
                                  --------------------------------------------------------------------------
Net pension cost (income)         $26,557    $8,117      ($919)       $808     $1,030       $2,288    $1,173
                                  ==========================================================================
</TABLE>

      The  funded  status  of Entergy's various  pension  plans  as  of
December 31, 1997, and 1996 was (in thousands):

<TABLE>
<CAPTION>

              1997                            Entergy   Entergy     Entergy    Entergy     Entergy    System   Entergy
                                    Entergy  Arkansas Gulf States  Louisiana Mississippi New Orleans  Energy    London
<S>                               <C>        <C>         <C>        <C>        <C>          <C>      <C>     <C>
Actuarial present value of                                                                                             
  accumulated pension                                                                                                  
  plan obligation:                                                                                                     
    Vested                        $2,189,915 $333,343    $294,552   $201,454   $126,882     $34,616  $31,774 $1,026,071
    Nonvested                          9,882    3,295         883      2,318        682         357      543          -
                                  -------------------------------------------------------------------------------------
Accumulated benefit obligation     2,199,797  336,638     295,435    203,772    127,564      34,973   32,317  1,026,071
                                  -------------------------------------------------------------------------------------
                                                                                                                       
Plan assets at fair value          3,144,498  427,175     454,912    328,381    174,651      23,043   53,105  1,537,297
Projected benefit obligation       2,496,086  381,581     327,842    226,254    140,317      40,568   46,433  1,134,174
                                  -------------------------------------------------------------------------------------
Plan assets in excess of             648,412   45,594     127,070    102,127     34,334     (17,525)   6,672    403,123
  (less than) projected benefit                                                                                        
  obligation                                                                                                           
Unrecognized prior service cost       35,500   13,656      12,649      5,353      4,414       1,706    1,021          -
Unrecognized transition asset        (32,151)  (9,343)     (7,162)   (11,230)    (5,001)       (572)  (4,694)         -
Unrecognized net loss (gain)        (431,178) (69,076)   (179,742)   (96,391)   (34,699)      7,209   (7,211)  (161,907)
                                  -------------------------------------------------------------------------------------
Accrued pension asset (liability)   $220,583 ($19,169)   ($47,185)     ($141)     ($952)    ($9,182) ($4,212)  $241,216
                                  =====================================================================================
</TABLE>


<TABLE>
<CAPTION>
             1996                          Entergy    Entergy     Entergy    Entergy      Entergy    System
                                 Entergy  Arkansas  Gulf States  Louisiana Mississippi  New Orleans  Energy
<S>                            <C>         <C>         <C>        <C>         <C>           <C>      <C>
Actuarial present value of                                                                                  
  accumulated pension                                                                                       
  plan obligation:                                                                                          
    Vested                     $1,027,307  $296,181    $287,201   $193,183    $117,142      $34,466  $25,195
    Nonvested                       4,775     1,345         748        697         154           29      655
                               -----------------------------------------------------------------------------
Accumulated benefit obligation  1,032,082   297,526     287,949    193,880     117,296       34,495   25,850
                               -----------------------------------------------------------------------------
                                                                                                            
Plan assets at fair value       1,359,614   374,849     397,749    282,470     150,616       22,017   43,943
Projected benefit obligation    1,196,925   338,307     315,781    217,711     129,578       41,511   38,401
                               -----------------------------------------------------------------------------
Plan assets in excess of          162,689    36,542      81,968     64,759      21,038      (19,494)   5,542
  (less than) projected benefit                                                                             
  obligation                                                                                                
Unrecognized prior service cost    36,131    14,882      11,964      5,911       4,894        1,965    1,100
Unrecognized transition asset     (39,504)  (11,679)     (9,550)   (14,037)     (6,252)        (767)  (5,291)
Unrecognized net loss (gain)     (180,525)  (55,536)   (132,832)   (61,130)    (23,769)       9,897   (4,502)
                               -----------------------------------------------------------------------------
Accrued pension liability        ($21,209) ($15,791)   ($48,450)   ($4,497)    ($4,089)     ($8,399) ($3,151)
                               =============================================================================
</TABLE>


      The  significant  actuarial assumptions  used  in  computing  the
information above for the domestic utility companies and System  Energy
for  1997,  1996, and 1995 were as follows:  weighted-average  discount
rate,   7.25%  for  1997, 7.75% for 1996, and 7.5% for 1995,  weighted-
average rate of increase in future compensation levels, 4.6% for  1997,
1996, and  1995; and expected long-term rate of return on plan  assets,
9.0%  for  1997  and  1996, and 8.5% for 1995.   Transition  assets  of
Entergy  are being amortized over the greater of the remaining  service
period of active participants or 15 years.

      The  significant  actuarial assumptions  used  in  computing  the
information  above  for  Entergy  London  for  1997  were  as  follows:
weighted-average  discount  rate  of  9.0%,  weighted-average  rate  of
increase  in future compensation levels of 6.5%, and expected long-term
rate of return on plan assets of 9.0%.

Other Postretirement Benefits

      Entergy  also  provides certain health care  and  life  insurance
benefits  for retired employees.  Substantially all domestic  employees
may  become  eligible for these benefits if they reach  retirement  age
while still working for Entergy.

     Effective January 1, 1993, Entergy adopted SFAS 106 which required
a  change  from  a cash method to an accrual method of  accounting  for
postretirement  benefits  other  than pensions.  The  domestic  utility
companies   have  sought  approval,  in  their  respective   regulatory
jurisdictions,  to  implement the appropriate  accounting  requirements
related to SFAS 106 for ratemaking purposes.  Entergy Arkansas received
an  order permitting deferral, as a regulatory asset, of the difference
between its annual cash expenditures for postretirement benefits  other
than  pensions  and the SFAS 106 accrual, for a five-year  period  that
began  January  1, 1993.  In December 1997, the APSC  issued  an  order
allowing the 15 year amortization of this regulatory asset.   Beginning 
in 1998,  Entergy  Arkansas  will  be allowed to  recover its  SFAS 106 
expenses in rates. Entergy Mississippi is expensing its SFAS 106 costs, 
which  are  reflected  in rates pursuant to an order from the  MPSC  in 
connection  with  Entergy Mississippi's formulary incentive rate  plan.   
Entergy  New  Orleans is expensing  its  SFAS  106  costs.  Pursuant to 
the PUCT's May 26, 1995, amended order, Entergy Gulf States is currently
collecting the Texas portion of its SFAS 106 costs in rates.  The  LPSC 
ordered Entergy Gulf States and Entergy Louisiana  to continue  the use
of the pay-as-you-go method for ratemaking purposes for  postretirement 
benefits other than pensions, but the LPSC  retains the flexibility  to
examine  individual  companies'  accounting for postretirement benefits
to determine if special  exceptions  to  this order are warranted.

      In  December 1997, Entergy Arkansas was allowed to begin  funding
its  SFAS  106  costs  commencing  in  1998.   Pursuant  to  regulatory
directives,  Entergy Mississippi, Entergy New Orleans, the  portion  of
Entergy  Gulf  States  regulated by the PUCT, and System  Energy,  fund
postretirement benefit obligations collected in rates.   System  Energy
is  funding  on  behalf  of Entergy Operations postretirement  benefits
associated  with  Grand  Gulf 1.  Entergy Louisiana  and  Entergy  Gulf
States  continue to fund a portion of these benefits regulated  by  the
LPSC  and  FERC  on a pay-as-you-go basis.  The assets of  the  various
postretirement benefit plans other than pensions include common stocks,
fixed-income securities, and a money market fund.  At January 1,  1993,
the   actuarially   determined   accumulated   postretirement   benefit
obligation (APBO) earned by retirees and active employees was estimated
to  be approximately $241.4 million and $128 million for Entergy (other
than  Entergy  Gulf States) and for Entergy Gulf States,  respectively.
Such obligations are being amortized over a 20-year period beginning in
1993.

      Total 1997, 1996, and 1995 postretirement benefit cost of Entergy
Corporation  and  its subsidiaries, including amounts  capitalized  and
deferred, included the following components (in thousands):

<TABLE>
<CAPTION>

              1997                        Entergy    Entergy    Entergy    Entergy      Entergy      System
                                 Entergy  Arkansas Gulf States Louisiana Mississippi  New Orleans    Energy
<S>                               <C>      <C>         <C>       <C>          <C>           <C>        <C>
Service cost - benefits earned                                                                              
  during the period               $13,991   $3,204      $3,227    $2,081      $1,092          $618       $939
Interest cost on APBO              29,317    6,232       9,466     4,490       2,278         3,106        648
Actual return on plan assets       (3,386)       -      (1,637)        -        (695)         (840)      (214)
Net amortization and deferral      15,864    3,716       6,519     2,623       1,399         1,936        262
                                  ---------------------------------------------------------------------------
Net postretirement benefit cost   $55,786  $13,152     $17,575    $9,194      $4,074        $4,820     $1,635
                                  ===========================================================================
</TABLE>
             

<TABLE>
<CAPTION>
             1996                        Entergy     Entergy     Entergy    Entergy     Entergy    System
                                Entergy Arkansas   Gulf States  Louisiana Mississippi New Orleans  Energy
<S>                             <C>       <C>          <C>         <C>         <C>         <C>       <C>
Service cost - benefits earned                                                                             
  during the period             $14,351    $3,128       $3,476     $2,155      $1,081        $661      $890
Interest cost on APBO            26,133     5,580        8,164      4,283       2,171       3,085       512
Actual return on plan assets     (1,654)        -         (388)         -        (479)       (681)     (106)
Net amortization and deferral    14,214     3,397        5,370      2,694       1,458       1,977       209
                                ---------------------------------------------------------------------------
Net postretirement benefit cost $53,044   $12,105      $16,622     $9,132      $4,231      $5,042    $1,505
                                ===========================================================================
</TABLE>


<TABLE>
<CAPTION>
              1995                          Entergy   Entergy     Entergy    Entergy     Entergy    System
                                  Entergy  Arkansas Gulf States  Louisiana Mississippi New Orleans  Energy
<S>                               <C>        <C>         <C>       <C>          <C>         <C>       <C>
Service cost - benefits earned     $10,797   $2,777       $1,864    $2,047        $909        $650     $687
  during the period                                                                                        
Interest cost on APBO               25,629    5,398        8,526     4,215       1,969       3,258      603
Actual return on plan assets          (759)       -            -         -        (245)       (514)       -
Net amortization and deferral       11,023    2,702        4,477     2,121         988       1,876      262
                                  -------------------------------------------------------------------------
Net postretirement benefit cost    $46,690  $10,877      $14,867    $8,383      $3,621      $5,270   $1,552
                                  =========================================================================
</TABLE>


     The funded status of Entergy's postretirement plans as of December
31, 1997, and 1996, was (in thousands):

<TABLE>
<CAPTION>
                 1997                                          Entergy    Entergy    Entergy     Entergy      Entergy     System
                                                   Entergy    Arkansas  Gulf States Louisiana  Mississippi  New Orleans   Energy
<S>                                                <C>        <C>         <C>         <C>          <C>         <C>         <C>
Actuarial present value of accumulated                                                                                            
  postretirement benefit obligation:                                                                                              
    Retirees                                        $313,243    $66,279   $112,150     $47,774      $23,062     $37,890     $3,264
    Other fully eligible participants                 32,530      6,151      6,203       4,713        3,543       1,974      1,936
    Other active participants                         82,189     18,667     17,875      12,898        6,668       3,969      5,264
                                                   -------------------------------------------------------------------------------
Accumulated benefit obligation                       427,962     91,097    136,228      65,385       33,273      43,833     10,464
Plan assets at fair value                             63,930          -     28,390           -       12,140      18,565      4,835
                                                   -------------------------------------------------------------------------------
Plan assets less than APBO                          (364,032)   (91,097)  (107,838)    (65,385)     (21,133)    (25,268)    (5,629)
Unrecognized transition obligation                   172,085     59,298     87,050      44,575       22,529      40,183      3,932
Unrecognized net loss (gain)/other                    21,819     (4,104)    (3,886)     (4,338)      (3,038)    (12,737)      (559)
                                                   -------------------------------------------------------------------------------
Accrued postretirement benefit asset (liability)   ($170,128)  ($35,903)  ($24,674)   ($25,148)     ($1,642)     $2,178    ($2,256)
                                                   ===============================================================================
</TABLE>


<TABLE>
<CAPTION>
                      1996                                   Entergy    Entergy      Entergy    Entergy      Entergy    System
                                                   Entergy  Arkansas  Gulf States   Louisiana Mississippi  New Orleans  Energy
<S>                                                <C>        <C>         <C>         <C>          <C>         <C>         <C>
Actuarial present value of accumulated                                                                                         
  postretirement benefit obligation:                                                                                           
    Retirees                                       $263,504   $56,945      $90,450    $44,083      $21,639     $36,613   $1,401
    Other fully eligible participants                28,507     5,599        5,728      4,063        2,753       1,694    1,861
    Other active participants                        73,188    15,505       16,623     11,553        5,837       3,630    4,587
                                                   ----------------------------------------------------------------------------
Accumulated benefit obligation                      365,199    78,049      112,801     59,699       30,229      41,937    7,849
Plan assets at fair value                            37,970         -       15,528          -        7,517      12,647    2,278
                                                   ----------------------------------------------------------------------------
Plan assets less than APBO                         (327,229)  (78,049)     (97,273)   (59,699)     (22,712)    (29,290)  (5,571)
Unrecognized transition obligation                  183,557    63,252       92,853     47,546       24,031      42,861    4,194
Unrecognized net loss (gain)/other                  (5,032)   (13,414)     (13,859)    (7,726)      (3,221)    (11,704)  (1,476)
                                                  -----------------------------------------------------------------------------
Accrued postretirement benefit asset (liability)  ($148,704) ($28,211)    ($18,279)  ($19,879)     ($1,902)     $1,867  ($2,853)
                                                  =============================================================================
</TABLE>


     The assumed health care cost trend rate used in measuring the APBO
of Entergy was 6.8% for 1998, gradually decreasing each successive year
until it reaches 5.0% in 2005.  A one percentage-point increase in  the
assumed  health care cost trend rate for each year would have increased
the  APBO  of  Entergy,  as  of December 31, 1997,  by  11.3%  (Entergy
Arkansas-11.5%,  Entergy  Gulf States-10.3%,  Entergy  Louisiana-11.4%,
Entergy Mississippi-11.9%, Entergy New Orleans-10.0%, and System Energy-
15.4%),  and  the  sum  of  the  service  cost  and  interest  cost  by
approximately 14.7% (Entergy Arkansas-14.7%, Entergy Gulf States-13.9%,
Entergy Louisiana-14.2%, Entergy Mississippi-14.9%, Entergy New Orleans-
11.5%, and System Energy-18.9%).  The assumed discount rate and rate of
increase in future compensation used in determining the APBO were 7.25%
for  1997, 7.75% for 1996, and 7.5% for 1995, and 4.6% for 1997,  1996,
and  1995, respectively.  The expected long-term rate of return on plan
assets was 9.0% for 1997 and 1996, and 8.5% for 1995.


NOTE 12.  RESTRUCTURING CHARGES (Entergy London)

      In  1995 and 1996, London Electricity implemented a restructuring
program  to  reduce  the number of employees in the  Network  Services,
Customer  Services,  Corporate and Information  Technology  groups.  An
initial  plan was approved by the Board of Directors in September  1994
and  was  based  on a business plan developed subsequent  to  the  1994
Regulatory Review of Distribution (the Distribution Review).

      Following the reopening of the Distribution Review during 1995, a
further plan was proposed leading to further reduction of employees  in
the same areas. This plan was approved by the Board of Directors in May
1996. The balance as of December 31, 1997, for restructuring charges is
shown  below along with the actual termination benefits paid under  the
restructuring plan for the year ended December 31, 1997 (in millions).

                                                           
Provision for restructuring as of January 31,             $ 41.7
   1997 (date of acquisition)    
Adjustments to restructuring provision in 1997              13.3
Payments made in 1997                                      (29.7)
Cumulative translation adjustment                            1.0
                                                          ------
       Balance December 31, 1997                          $ 26.3
                                                          ======

      The restructuring charges shown above primarily included employee
severance  costs  related to the expected termination of  approximately
1,372  employees  in  various groups.  As of  December  31,  1997,  895
employees  had either been terminated or accepted voluntary  separation
packages under the restructuring plan.


NOTE 13.  ACQUISITIONS (Entergy Corporation and Entergy London)

      On  December 18, 1996, Entergy Corporation, through  its  wholly-
owned  subsidiary Entergy London, made a formal cash offer  to  acquire
London  Electricity for $2.1 billion.  London Electricity is a regional
electric  company  serving approximately two million customers  in  the
metropolitan  area  of  London, England.  The  offer  was  approved  by
authorities in the UK, and, as of February 7, 1997, the offer was  made
unconditional.   Entergy  Corporation,  through  Entergy  London,   now
controls 100% of the common shares of London Electricity.  Entergy  has
included the results of operations of London Electricity in its results
of  operations  beginning  February  1,  1997,  based  on  management's
determination  that effective control was achieved on that  date.   The
acquisition was financed by Entergy London with $1.7 billion  of  debt,
which  is  non-recourse to Entergy Corporation,  and  $392  million  of
equity  provided  by  Entergy  Corporation  from  available  cash   and
borrowings  under Entergy Corporation's $300 million  line  of  credit.
The debt has since been refinanced (see Note 7).

     The cost of the London Electricity license is being amortized on a
straight-line basis over a 40-year period beginning February  1,  1997.
As  of  December 31, 1997, the unamortized balance of the  license  was
approximately $1.3 billion.

      In accordance with the purchase method of accounting, the results
of  operations  for Entergy Corporation reported in its  Statements  of
Consolidated  Income and Cash Flows do not reflect London Electricity's
results  of operations for any period prior to February 1,  1997.   The
pro  forma combined revenues, net income, and earnings per common share
of  Entergy  Corporation presented below give effect to the acquisition
as  if it had occurred on January 1, 1997 and 1996, respectively.  This
pro  forma information is not necessarily indicative of the results  of
operations   that   would  have  occurred  had  the  acquisition   been
consummated for the period for which it is being given effect.

                                      For the Twelve Months Ending:
                                December 31, 1997(a)    December 31, 1996(b)
                            (In Millions of U.S. Dollars, Except Share Data)
                                                          
 Operating revenues                    $9,783                  $9,288
 Net income                              $304                    $488
 Earnings per average common share                               
     Basic and diluted                  $1.04                   $1.82

(a)On  July  31, 1997, the British government enacted into law  a  one-
   time  windfall  profits  tax  on  privatized  industries,  including
   regional  electric  utilities such as  London  Electricity.   London
   Electricity's  liability  for  this  tax  is  approximately   BPS140
   million  (approximately $234 million), which will not be  deductible
   for UK corporation tax purposes.  Payment of the tax is required  in
   two  equal installments, the first was paid on December 1, 1997, and
   the  second  of  which is due one year later.  The  government  also
   decreased the corporate income tax rate in the UK from 33%  to  31%,
   effective  as  of  April  1,  1997.  In accordance  with  SFAS  109,
   "Accounting  for Income Taxes," this reduction in UK  corporate  tax
   rates  resulted  in a one-time reduction in income tax  expense  for
   London  Electricity of approximately $65 million during the  quarter
   ended September 30, 1997.

(b)Net  Income  in 1996 includes the $174 million net of tax  write-off
   of River Bend rate deferrals pursuant to SFAS 121.


NOTE 14.  TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
System Energy, and Entergy London)

      The  various domestic utility companies purchase electricity from
and/or  sell  electricity to other domestic utility  companies,  System
Energy, and Entergy Power (in the case of Entergy Arkansas) under  rate
schedules filed with FERC.  In addition, the domestic utility companies
and  System Energy purchase fuel from System Fuels; receive management,
technical,  advisory,  operating,  and  administrative  services   from
Entergy  Services;  and  receive management, technical,  and  operating
services  from Entergy Operations.  Entergy London receives  technical,
advisory, and administrative services from Entergy Services and Entergy
Enterprises.

      As described in Note 1, all of System Energy's operating revenues
consist  of  billings to Entergy Arkansas, Entergy  Louisiana,  Entergy
Mississippi, and Entergy New Orleans.

      The tables below contain the various affiliate transactions among
the domestic utility companies and System Entergy (in millions).

                         Intercompany Revenues
                                   
       Entergy    Entergy      Entergy      Entergy      Entergy     System
      Arkansas  Gulf States   Louisiana   Mississippi  New Orleans   Energy
                                                                               
1997   $229.7      $14.6        $2.0         $84.9        $10.8      $633.7
1996   $282.7      $21.2        $5.6         $65.9        $ 2.6      $623.6
1995   $195.5      $62.7        $1.6         $43.3        $ 3.2      $605.6


<TABLE>
<CAPTION>
                    Intercompany Operating Expenses
                                   
       Entergy        Entergy     Entergy     Entergy       Entergy     System  Entergy
      Arkansas(1)  Gulf States   Louisiana   Mississippi  New Orleans   Energy  London
<S>    <C>            <C>         <C>          <C>          <C>         <C>      <C>
1997   $335.0         $416.4      $326.7       $316.1       $177.1      $36.5    $5.3
1996   $346.7         $395.7      $331.3       $294.6       $185.9      $ 8.6      -
1995   $316.0         $266.5      $335.5       $262.6       $164.4      $ 6.5      -

</TABLE>


(1)Includes  $16.5  million in 1997, $38.8 million in 1996,  and  $31.0
   million in 1995 for power purchased from Entergy Power.
                                   
      Operating Expenses Paid or Reimbursed to Entergy Operations
                                   
                  Entergy     Entergy    Entergy      System
                 Arkansas   Gulf States  Louisiana    Energy
                                                      
           1997  $162.1     $135.7       $133.3       $ 64.7
           1996  $163.3     $133.7       $ 97.7       $ 98.1
           1995  $189.8     $129.1       $122.6       $116.9

       In   addition,  certain  materials  and  services  required  for
fabrication  of nuclear fuel are acquired and financed by System  Fuels
and  then sold to System Energy as needed.  Charges for these materials
and  services, which represent additions to nuclear fuel,  amounted  to
approximately $16.5 million in 1997, $44.7 million in 1996,  and  $51.5
million in 1995.


NOTE  15.   BUSINESS  SEGMENT INFORMATION   (Entergy  New  Orleans  and
Entergy London)

      Entergy New Orleans supplies electric and natural gas services in
the City. Entergy New Orleans' segment information follows:

<TABLE>
<CAPTION>
                                  1997                   1996                 1995
                           Electric     Gas      Electric      Gas      Electric    Gas
                                     (In Thousands)
<S>                        <C>        <C>        <C>           <C>         <C>        <C>
Operating revenues         $410,131   $94,691    $403,254      $101,023    $390,002   $80,276
Revenue from sales to                                                                 
unaffiliated customers (1)  399,789    94,691     400,605       101,023     386,785    80,276
Operating income                                                                      
 before income taxes         38,752     3,539      51,937         5,641      61,092     9,638
Net utility plant           212,648    62,144     214,106        63,865     204,407    65,236
Depreciation expense         17,157     3,638      16,525         3,342      15,858     3,290
Construction expenditures    14,988     1,149      23,411         4,545      21,729     6,107
</TABLE>


(1)  Entergy New Orleans' intersegment transactions are not material
     (less than 1% of sales to unaffiliated customers).

      Entergy  London  is  engaged in two electric  industry  segments:
distribution,  which involves the transfer and delivery of  electricity
across  its  network to its customers, and supply, which involves  bulk
purchases of electricity from the Electricity Pool for delivery to  the
distribution networks.  Other consists principally of Entergy  London's
investment  in  private distribution networks, electricity  contracting
services,  and  investments  in generating assets.   Information  about
Entergy  London's operations in these individual segments for the  year
ended December 31, 1997 is as follows (in thousands):


<TABLE>
<CAPTION>
                                     Distribution   Supply      Other    Eliminations  Consolidated
<S>                                  <C>          <C>          <C>       <C>            <C>
Operating revenues                   $498,801     $1,689,034   $102,550  $(443,343)     $1,847,042
Operating income                      140,713         15,095     37,082     (6,080)        186,810
Depreciation and amortization         111,028          7,219      3,118          -         121,365
Total assets employed at period end 3,628,954        537,973    236,698          -       4,403,625
Capital expenditures                  143,936         16,069     21,160          -         181,165

</TABLE>


NOTE 16.  QUARTERLY FINANCIAL DATA (UNAUDITED) (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Energy, and Entergy London)

     The business of the domestic utility companies, System  Energy, and
Entergy London is subject to seasonal fluctuations with the peak periods
occurring  during  the third  quarter for the domestic utility companies 
and  System  Energy  and  occurring during the first quarter for Entergy
London.  Operating results for the four quarters  of 1997 and 1996 were:

<TABLE>
<CAPTION>
Operating Revenue

                             Entergy    Entergy       Entergy     Entergy      Entergy     System   Entergy
                  Entergy   Arkansas  Gulf States    Louisiana  Mississippi  New Orleans   Energy    London
                                               (In Thousands)
<S>              <C>         <C>        <C>          <C>         <C>          <C>          <C>         <C>
1997:                                                                                               
First Quarter    $2,045,753  $374,731   $ 481,328    $433,983    $ 200,328    $124,956     $155,662    $379,519
Second Quarter    2,178,090   423,619     476,421     412,263      212,892     109,803      161,021     450,405
Third Quarter     2,797,587   545,849     599,974     554,486      294,983     139,940      160,573     443,975
Fourth Quarter    2,540,291   371,515     590,106     402,540      229,192     130,123      156,442     573,143
1996:                                                                                                  
First Quarter    $1,598,992  $383,081   $ 456,631    $417,767    $ 203,902    $127,280     $156,424      N/A
Second Quarter    1,853,677   467,990     525,567     457,847      247,479     127,829      160,369      N/A
Third Quarter     2,148,332   529,276     592,130     549,295      297,118     150,937      154,467      N/A
Fourth Quarter    1,576,656   363,086     444,853     403,958      209,931      98,231      152,360      N/A
</TABLE>


<TABLE>
<CAPTION>
Operating Income (Loss)

                             Entergy    Entergy       Entergy     Entergy      Entergy     System   Entergy
                  Entergy   Arkansas  Gulf States    Louisiana  Mississippi  New Orleans   Energy    London
                                               (In Thousands)
<S>              <C>        <C>       <C>           <C>         <C>          <C>          <C>       <C>
1997:                                                                                               
  First Quarter  $372,218   $30,890   $ 93,014      $    77,880 $    22,694  $ 8,755      $74,316   $37,135
  Second Quarter  433,887    80,873     75,643           87,911      40,395    9,400       73,568    47,704
  Third Quarter   672,617   148,688    158,365          147,976      52,832   18,096       72,813    58,673
  Fourth Quarter  378,436     6,424    203,524           53,813      20,827    6,040       72,496    43,298
1996:                                                                                               
  First Quarter  $342,403   $41,955   $ 77,058      $    95,166 $    30,470  $15,752      $82,938    N/A
  Second Quarter  501,169   105,237    118,420          119,736      57,283   19,608       82,894    N/A
  Third Quarter   609,763   131,319    152,022          155,755      54,696   28,319       75,270    N/A
  Fourth Quarter  239,517    31,639     64,398           65,789      22,147   (6,101)      75,937    N/A

</TABLE>


<TABLE>
<CAPTION>
Net Income (Loss)

                          Entergy    Entergy       Entergy      Entergy      Entergy      System   Entergy
               Entergy   Arkansas  Gulf States    Louisiana   Mississippi  New Orleans    Energy    London
                                               (In Thousands)
<S>            <C>        <C>       <C>           <C>          <C>          <C>          <C>       <C>
1997:                                                                                               
First Quarter  $126,485   $ 9,848   $ 32,535      $26,172      $    8,352   $    2,818    $24,345   $15,639
Second Quarter  158,579    38,085     27,028       32,607          19,399        3,038     24,093     9,320
Third Quarter    93,321    78,251     70,740       70,681          27,335        8,590     24,449  (172,268)
Fourth Quarter  (77,486)    1,793    (70,327)      12,297          11,575        1,005     29,408       (26)
1996:                                                                                               
First Quarter  $(68,990)  $19,268   $(152,257)    $40,530      $   12,924   $    8,035    $23,530      N/A
Second Quarter  206,701    55,712     47,140       55,385          29,818       10,360     23,382      N/A
Third Quarter   299,166    70,791     90,965       77,302          28,205       15,221     24,749      N/A
Fourth Quarter   53,686    12,027     10,265       17,545           8,264       (6,840)    27,007      N/A
</TABLE>
                                             

Earnings (Loss) per Average Common Share (Entergy Corporation)

                             1997                      1996
                        Basic       Diluted       Basic      Diluted
                                                           
  First Quarter         $ 0.47       $ 0.47       $ (0.38)    $(0.38)
  Second  Quarter       $ 0.61       $ 0.61       $  0.83     $ 0.83
  Third Quarter         $ 0.33       $ 0.33       $  1.22     $ 1.22
  Fourth Quarter        $(0.36)      $(0.36)      $  0.16     $ 0.16




<PAGE>

 
                    REPORT OF INDEPENDENT ACCOUNTANTS
                                     
To the Board of Directors and Shareholders of London Electricity plc

      We have audited the accompanying consolidated balance sheet of London
Electricity  plc  as  of  March  31,  1996  and  the  related  consolidated
statements  of  operations, cash flows and changes in shareholders'  equity
for  the period from April 1, 1996 to January 31, 1997, and the year  ended
March 31, 1996.  These  financial  statements are the responsibility of the 
Company's  management.  Our  responsibility  is  to express an  opinion  on
these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement. An audit includes examining, on a  test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements. An audit also includes assessing the accounting principles used
and  significant  estimates made by management, as well as  evaluating  the
overall  financial  statement presentation.  We  believe  that  our  audits
provide a reasonable basis for our opinion.

      In  our  opinion, the consolidated financial statements  referred  to
above  present fairly, in all material respects, the financial position  of
London  Electricity  plc  as  of March 31, 1996  and  the  results  of  its
operations and its cash flows for the period from April 1, 1996 to  January
31,  1997  and  the year ended March 31, 1996 in conformity with  generally
accepted accounting principles.


COOPERS & LYBRAND L.L.P.

New Orleans, Louisiana
July 31, 1997



<PAGE>
                          LONDON ELECTRICITY PLC
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


Results of Operations - Predecessor Company

       The  following  discussion  of  results  of  operations  for  London
Electricity relates to periods prior to its acquisition by Entergy  London.
Such  periods  do  not  include  acquisition  adjustments  described  under
"Accounting  for  the  Acquisition"in "ENTERGY LONDON INVESTMENTS  plc  AND
SUBSIDIARY  -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND  RESULTS  OF  OPERATIONS."  This analysis is included based  on  London
Electricity constituting a predecessor of Entergy London.  Entergy London's
results  of operations do not include results for London Electricity  prior
to February 1, 1997.

National Grid Group Transactions

      During  the fiscal year ended March 31, 1996, London Electricity,  as
well  as  each of the other 11 REC businesses in the UK, reorganized  their
interests in the National Grid Group (NGG).  London Electricity distributed
the  majority  of its shares in NGG to its shareholders.  As part  of  this
distribution, London Electricity revalued these shares to fair market value
and  recognized  a gain of approximately $417 million and received  special
dividends  of  $205 million and rights dividends of $4.7 million  from  NGG
which  were  also  recognized as income.  Additionally, London  Electricity
received  approximately $109.8 million as a result of  NGG's  sale  of  its
pumped storage business which was also recognized as a gain in fiscal  year
1996.   London  Electricity has retained shares of NGG for the  purpose  of
establishing  an employee stock ownership plan ("ESOP") for  its  employees
who  were  participants in London Electricity stock  option  and  sharesave
plans  to compensate them for any dimunition in value in London Electricity
shares as a result of NGG distributions.  The cost of such ESOP shares  has
been  reflected as expense of $27.1 million in the fiscal year 1996 results
of  operations.   As  a  result  of all of the  above,  London  Electricity
recognized  a  total nonrecurring gain of $709 million ($573 million  after
tax  effect) in the fiscal year ended March 31, 1996 results of operations.
As  part  of the agreement among the shareholders of NGG, each of the  RECs
agreed  to provide a discount to each of their respective Franchise  Supply
Customers which, together with the associated reduction in the Fossil  Fuel
Levy  (a reimbursement to non-fossil fuel generators for the extra cost  of
such  generation),  produced a credit on each Franchise  Supply  Customer's
bill  of  just over $78.  The cost to London Electricity of providing  this
discount amounted to $130 million (net of the reduction in the Fossil  Fuel
Levy of $13 million) which was credited to customers in the last quarter of
the  fiscal  year ended March 31, 1996.  The effect of the  refund  was  to
reduce  operating revenues, cost of sales, gross profit, and net income  by
$143  million,  $13  million, $130 million, and $88 million,  respectively.
The net dividends received from NGG and the net after tax proceeds from the
sale  of NGG's pumped storage business were sufficient to offset the  after
tax  cash  cost of providing the $78 per customer discount to its Franchise
Supply  Customers and taxation cost of distributing its NGG  investment  to
its shareholders.

Income from Operations

      Income from operations was $169 million for the ten-month period from
April  1,  1996  to January 31, 1997, an increase of $10 million  from  the
fiscal  year  which ended March 31, 1996.  The increase was due principally
to  lower  selling,  general and administrative expenses  and  lower  other
operation  and  maintenance costs in the latter period due to  there  being
only  ten  months  in  that period.  Revenues were  lower  by  $95  million
(including the impact of the NGG refund) in the period from April  1,  1996
to  January 31, 1997, when compared to the revenues in fiscal year 1996  of
$1,860  million.   Largely  offsetting this  decrease  was  a  $92  million
decrease  in cost of sales from the $1,307 million incurred in fiscal  year
1996.  Both decreases were principally due to the shorter time period  from
April 1, 1996 to January 31, 1997.


<PAGE>

                          LONDON ELECTRICITY PLC
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


      Income  (loss)  from operations by segments for the ten-month  period
ended January 31, 1997, was $159 million, $(1) million, and $11 million for
the  distribution, supply, and other segments, respectively.  Income (loss)
from  those segments in fiscal year 1996 was $247 million, $(110)  million,
and $22 million, respectively.

      The  decrease  in distribution operating income of  $88  million  was
principally  due  to: (i) reductions in distribution revenue  from  an  11%
allowed   distribution  revenues  reduction  announced  by  the   Regulator
effective  at the beginning of fiscal year 1997 and a decrease  of  15%  in
distribution  sales  volume due to the shorter  time  period  and  (ii)  an
increase  in  distribution operating expenses due to restructuring  charges
during the ten-month period ended January 31, 1997.

     The reduction in supply operating loss of $109 million was principally
due  to  the  $130  million customer refund (net of the  Fossil  Fuel  Levy
reduction) in 1996 from the NGG transactions.  Such increase was  partially
offset by a 5% decrease in number of electricity units supplied.

Net Income

      Net income decreased by $48 million, from $146 million in fiscal year
1996  (excluding the after tax effect of NGG transactions of $573  million)
to  $98  million  in  the ten-month period ended January  31,  1997.   This
decrease  was  primarily  due to the reduction  in  distribution  operating
revenues due to the factors discussed below in "Revenues."

Revenues

      Operating revenues, excluding the impact of the NGG refund, decreased
by  $238  million (12%) from $2,003 million in fiscal year 1996  to  $1,765
million in the ten-month period ended January 31, 1997, as follows:

                                                Operating Revenues
                                               Increase (Decrease)
                                                 from Fiscal Year
                                           1996 to the ten-month Period
                                              ended January 31, 1997
                                                  (In millions)
                                                  
     Electricity distribution                        $ (124)
     Electricity supply                                (199)
     Other                                               14
     Intra-business                                      71
                                                     ------
          Total operating revenues                   $ (238)
                                                     ======       
      The  factors  affecting distribution revenues are the same  as  those
described  in "ENTERGY LONDON INVESTMENTS plc AND SUBSIDIARY - MANAGEMENT'S
DISCUSSION  AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF  OPERATIONS"
comparing the year ended December 31, 1997 with the ten-month period  ended
January 31, 1997 above.


<PAGE>
                          LONDON ELECTRICITY PLC
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


      Revenues  from  the distribution business decreased by  $124  million
(22%)  from $559 million for fiscal year 1996 to $435 million for the  ten-
month  period  ended January 31, 1997, principally due  to  two  additional
months  of  operation  in the earlier time period.   An  additional  factor
contributing  to  the  decrease was a reduction in  the  maximum  allowable
average  price of units distributed as a result of the application  of  the
revised Distribution Price Control Formula.

     Two principal factors determine the amount of revenues produced by the
supply business: the unit price of electricity supplied (which, in the case
of  franchise  supply customers, is controlled by the Supply Price  Control
Formula)  and the number of electricity units supplied. London  Electricity
is  expected  to  have the exclusive right to supply all  franchise  supply
customers in its Franchise Area until at least April 1, 1998.

      Franchise supply customers, who are generally residential  and  small
commercial customers, comprised 54% of total sales volume in the  ten-month
period ended January 31, 1997.  The volume of unit sales of electricity for
franchise supply customers is influenced largely by the number of customers
in  London  Electricity's Franchise Area, weather conditions and prevailing
economic conditions. Unit sales to non-franchise supply customers, who  are
typically  large commercial and industrial businesses, constituted  46%  of
total  sales  volume during the ten-month period ended  January  31,  1997.
Volume in this segment is determined primarily by the success of the supply
business  in  contracting  to supply customers  with  electricity  who  are
located both inside and outside London Electricity's Franchise Area.

      During  the  ten-month period ended January 31, 1997, the  number  of
electricity units supplied decreased by 5% while total revenues produced by
the supply business decreased by $199 million (11%), to $1,663 million from
$1,862 million (excluding the impact of the NGG refund of $143 million) for
fiscal  year 1996.  Units supplied to franchise supply customers  decreased
by 16%, while units supplied to non-franchise supply customers increased by
12%.

     Other revenues for the ten-month period ended January 31, 1997 totaled
$107  million,  an  increase of $14 million over fiscal  year  1996.   Such
increase  was  primarily  a  result  of  increased  electrical  contracting
services  to  the  distribution segment by London  Electricity  Contracting
Limited  ("LEC"), the revenues for which were eliminated in  intra-business
eliminations.  Intra-business eliminations decreased slightly  from  fiscal
year  1996  to the ten-month period ended January 31, 1997, notwithstanding
the  LEC increase due principally to the reductions (due to a shorter  time
period)  in  electricity distribution revenues (the majority of  which  are
charged to the supply segment) as discussed above.

Cost of Sales

      Cost  of  sales  decreased by $105 million (8%) from  $1,320  million
(excluding  the NGG-related Fossil Fuel Levy reduction of $13  million)  in
fiscal  year  1996 to $1,215 million in the ten-month period ended  January
31,  1997.   This  decrease was principally due to  two  additional  months
results of operations in the earlier period.

Expenses

      Operating expenses decreased by $13 million (3%) from $394 million in
fiscal year 1996 to $381 million for the ten-month period ended January 31,
1997.   This  decrease  was  primarily due to lower  selling,  general  and
administrative   expenses  and  other  operation  and  maintenance   costs,
partially  offset by one-time restructuring charges of $19 million  in  the
later period.


<PAGE>
                          LONDON ELECTRICITY PLC
                                     
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                     
                         AND RESULTS OF OPERATIONS


Other

Other Income (Expense)

      Other income (expense) decreased by $733 million from $740 million in
fiscal  year  1996 to $7 million in the ten-month period ended January  31,
1997.   This  decrease was primarily attributable to other income  of  $709
million  from the NGG transaction in fiscal year 1996.  See "National  Grid
Group Transactions" above.

Interest Expense, Net

      Interest  expense, net increased by $19 million from  $8  million  in
fiscal  year 1996 to $27 million in the ten-month period ended January  31,
1997, principally as a result of the financing costs associated with the 8-
5/8%,  BPS100 million Eurobond issue in October 1995 which was  outstanding
for  five  months of fiscal year 1996 and the entire period from  April  1,
1996 through January 31, 1997.

Income Taxes

      Entergy London's effective income tax rate of 19% in fiscal year 1996
increased  to  34% for the ten-month period ended January 31,  1997.   This
increase  was  due  principally  to  book/tax  differences  from  the   NGG
transaction in fiscal year 1996.




<PAGE>

<TABLE>
<CAPTION>

                          LONDON ELECTRICITY PLC
                   CONSOLIDATED STATEMENTS OF OPERATIONS
 for the period from April 1, 1996 to January 31, 1997 and the year ended
                              March 31, 1996
                               (in thousands)
                                     
                                                        Period from           
                                                     April 1, 1996 to    Year Ended
                                                     January 31, 1997  March 31, 1996
     <S>                                               <C>             <C>             
     Operating revenues                                $1,765,605      $1,859,938
     Cost of sales                                      1,215,455       1,306,827
                                                       ----------      ----------
     Gross profit                                         550,150         553,111
     Depreciation and amortization                         62,165          66,085
     Property taxes                                        30,687          31,790
     Restructuring charges                                 18,507               _
     Selling, general and administrative                  211,961         229,889
     Other operation and maintenance costs                 58,052          66,242
                                                       ----------      ----------
         Income from operations                           168,778         159,105
     Other income:                                                     
       National Grid Transaction                                       
         Gain on revaluation of National Grid investment        _         416,869
         Gain on sale of pumped storage business                _         109,777
         Special dividends                                      _         205,146
         Contribution to Employee Stock Ownership Plan          _         (27,092)
       Dividend income                                      6,011          38,837
       Equity in earnings (loss) of affiliate               3,796          (3,445)
       Other, net                                          (2,531)            157
                                                       ----------      ----------
         Total other income                                 7,276         740,249
     Interest expense, net                                 27,049           7,673
                                                       ----------      ----------
         Income before income taxes                       149,005         891,681
     Income taxes                                          50,776         172,260
                                                       ----------      ----------
         Net income                                    $   98,229      $  719,421
                                                       ==========      ==========
                                                                           
See Notes to Financial Statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          LONDON ELECTRICITY PLC
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
 for the period from April 1, 1996 to January 31, 1997 and the year ended
                              March 31, 1996
                              (in thousands)
                                                                   Period from            
                                                                April 1, 1996 to     Year Ended
                                                                January 31, 1997   March 31, 1996
     <S>                                                        <C>                <C>      
     Cash flows from operating activities:                                         
       Net income                                               $  98,229          $  719,421
       Adjustments to reconcile net income to net cash                             
       provided by operating activities:
         Depreciation and amortization                             62,165              66,085
         Deferred income taxes                                     22,778              27,248
         Gain on revaluation of National Grid investment                _            (416,869)
         Change in assets and liabilities:                                         
           Inventory                                               (3,164)             (4,855)
           Accounts receivable and unbilled revenue               (21,354)            (24,743)
           Income tax receivable                                  182,065            (124,184)
           Other receivables                                        4,904             (50,738)
           Prepayments and other                                    3,164              (6,890)
           Long-term receivables and other                         (9,491)            (27,248)
           Accounts payable                                        41,127               8,456
           Income taxes payable                                  (200,098)            117,450
           Deferred revenue and other current liabilities         (17,242)             23,647
           Other long-term liabilities                             (2,215)             (7,673)
                                                                ---------          ----------
            Net cash provided by operating activities             160,868             299,107
                                                                ---------          ----------
                                                                                   
     Cash flows from investing activities:                                         
       Capital expenditures                                      (182,856)           (173,201)
       Proceeds from sale of fixed assets                             791               1,879
       Receipt of consumer contributions                           26,574              23,334
       Purchase of investments                                     (6,169)            (37,114)
       Sales of investments                                        10,282              57,785
                                                                ---------          ----------
         Net cash used in investing activities                   (151,378)           (127,317)
                                                                ---------          ----------
                                                                                   
     Cash flows from financing activities:                                         
       Proceeds from bond issue                                       316             155,191
       Proceeds from issuance of common stock                       1,740              15,033
       Repayments on bond issue                                         _                   _
       Net proceeds from available lines of credit                103,669              57,785
       Dividends paid                                            (108,215)           (397,717)
       Repurchase of common stock                                       _              (1,253)
                                                                ---------          ----------
         Net cash used in financing activities                     (2,490)           (170,961)
                                                                ---------          ----------
                                                                                   
     Effect of exchange rates on cash and cash equivalents          8,880             (11,301)
                                                                ---------          ----------
     Increase (decrease) in cash and cash equivalents              15,880             (10,472)
     Beginning of period cash and cash equivalents                 19,851              30,323
                                                                ---------          ----------
     End of period cash and cash equivalents                    $  35,731          $   19,851
                                                                =========          ==========         
     SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                             
       Cash paid for interest                                   $  44,290          $   19,418
       Cash paid for income taxes                               $ 267,324          $  120,582
                                                                           
See Notes to Financial Statements.

</TABLE>


<PAGE>

                          LONDON ELECTRICITY PLC
                        CONSOLIDATED BALANCE SHEET
                              March 31, 1996
             (in thousands, except share and per share amounts)
                                     
                            ASSETS                         
     Current assets:                                       
       Cash and cash equivalents                           $  19,851
       Accounts receivable:                                
         Customer receivable net of reserve of $13.3         173,315
           million
         Unbilled revenue                                    117,884
       Deferred income tax asset                              24,127
       Income tax receivable                                 191,028
       Other receivables                                      82,304
       Prepayments and other                                  12,369
       Inventory                                              11,300
       Investments                                            25,501
                                                          ----------
         Total current assets                                657,679
                                                          ----------
     Property, plant and equipment, net of accumulated     1,070,885
       depreciation of $710.5 million
     Construction work in progress                           125,672
     Goodwill, net of accumulated amortization of $3.4        63,065
       million
     Investments, long-term                                   16,186
     Long-term receivables                                    15,270
     Prepaid pension asset                                   111,624
                                                          ----------
     Total assets                                         $2,060,381
                                                          ==========
                                                           
                                     
                                     
See Notes to Financial Statements.


<PAGE>
                          LONDON ELECTRICITY PLC
                        CONSOLIDATED BALANCE SHEET
                              March 31, 1996
             (in thousands, except share and per share amounts)


              LIABILITIES AND SHAREHOLDERS' EQUITY          
     Current liabilities:                                   
       Notes payable                                        $  146,745

       Accounts payable                                        179,423
       Income taxes payable                                    236,838
       Deferred revenue                                         30,693
       Other liabilities                                        74,058
                                                            ----------
         Total current liabilities                             667,757
                                                            ----------
     Long-term debt                                            301,888
     Deferred income tax liability                             317,769
     Other                                                      89,634
                                                            ----------
         Total liabilities                                   1,377,048
                                                            ----------
                                                            
     Commitments and Contingencies                          
                                                            
     Shareholders' equity:                                  
       Common stock, BPS .583 par value per share,          
         257,142,857 shares authorized,                        203,153
         174,290,836 shares issued and outstanding
       Additional paid-in capital                               14,960
       Retained earnings                                       499,536
       Cumulative translation adjustment                       (34,316)
                                                            ----------
         Total shareholders' equity                            683,333
                                                            ----------
     Total liabilities and shareholders' equity             $2,060,381
                                                            ==========
See Notes to Financial Statements.



<PAGE>

<TABLE>
<CAPTION>
                           LONDON ELECTRICITY PLC
        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
 for the period from April 1, 1996 to January 31, 1997 and the year ended
                              March 31, 1996
                    (in thousands, except share amounts)
                                     
                                                                                   
                                                                                   
                                                       Additional            Cumulative       
                                     Common Stock       Paid-In   Retained  Translation   Shareholders'
                                   Shares      Amount   Capital   Earnings   Adjustment      Equity
     <S>                        <C>           <C>        <C>      <C>         <C>           <C>
     Balance, March 31, 1995    197,695,699   $198,612   $4,468   $722,724    $30,719       $956,523
     Common stock issued          4,956,992      4,541   10,492          _          _         15,033
     Reduction in shares from                                                                  
      reverse stock split       (27,522,282)         _        _          _          _              _
     Treasury shares acquired      (839,573)         _        _     (1,253)         _         (1,253)
     Revaluation of National                                                                   
      Grid investment                     _          _        _          _          _        274,254
     Realized gain on                                                                          
      distribution of National
      Grid investment                     _          _        _          _          _       (274,254)
     Net income                           _          _        _    719,421          _        719,421
     Dividends declared:                                                                       
      Cash dividends                      _          _        _   (402,686)         _       (402,686)
      National Grid Distribution          _          _        _   (538,670)         _       (538,670)
     Cumulative translation                                                                    
      adjustment                          _          _        _          -    (65,035)       (65,035)
                                -----------   --------  -------   --------    -------       --------
     Balance, March 31, 1996    174,290,836    203,153   14,960    499,536    (34,316)       683,333
     Common stock issued            390,712        158        _      1,582          _          1,740
     Net income                           _          _        _     98,229          _         98,229
     Dividends declared                   _          _        _   (113,833)         _       (113,833)
     Cumulative translation                                                                    
      adjustment                          _          _        _          -     32,178         32,178
                                -----------   --------  -------   --------    -------       --------
     Balance, January 31, 1997  174,681,548   $203,311  $14,960   $485,514    $(2,138)      $701,647
                                ===========   ========  =======   ========    =======       ========
                                                                           
                                                                           
                                                                           
See Notes to Financial Statements.

</TABLE>


<PAGE>
                                     
                                     
                          LONDON ELECTRICITY PLC
                                     
              SELECTED FINANCIAL DATA - FOUR-YEAR COMPARISON


                       Period from
                     April 1, 1996 to           Year Ended March 31,
                     January 31, 1997     1996         1995       1994 (1)
                                       (In Thousands)

Operating revenues      $1,765,605     $ 1,859,938  $1,898,976   $1,970,830
Net income                 $98,229     $   719,421    $189,269     $213,795
Total assets                   N/A     $ 2,060,381  $2,007,417   $1,813,448
Long-term obligations (2)      N/A     $   301,888    $159,879     $281,960
                                       


(1)  Amounts  as of and for the year ended March 31, 1994 are derived  from
     financial statements prepared in accordance with UK generally accepted
     accounting  principles (GAAP).  The principal differences  between  US
     GAAP  and  UK  GAAP  financial statements relate to the  treatment  of
     goodwill,  pension costs, deferred income taxes, timing of recognition
     of restructuring accruals, and timing of recognition of dividends.

(2)  Includes long-term debt (excluding currently maturing debt).




<PAGE>
                          LONDON ELECTRICITY PLC
                                     
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     
NOTE 1.   DESCRIPTION OF BUSINESS:

      London  Electricity plc ("London Electricity") is one of  the  twelve
regional  electricity companies ("RECs") in England and Wales  licensed  to
supply,  distribute, and, to a limited extent, generate  electricity.   The
RECs  were  created as a result of the privatization of the United  Kingdom
("UK")  electric  industry  in  1990  after  the  state-owned  low  voltage
distribution  networks were allocated to the then existing twelve  regional
boards.  London Electricity's main business, the distribution and supply of
electricity to customers in London, England, is regulated under  the  terms
of London Electricity's PES license by the Office of Electricity Regulation
(the "Regulator").


NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

     In accordance with SFAS 52, "Foreign Currency Translation", all assets
and  liabilities of London Electricity are translated into U.S. dollars  at
the  exchange  rate in effect at the end of the period,  and  revenues  and
expenses  are  translated at average exchange rates prevailing  during  the
period.   The resulting translation adjustments are reflected in a separate
component  of  shareholders' equity.  Current exchange rates are  used  for
U.S.  dollar disclosure of future obligations.  No representation  is  made
that the foreign currency denominated amounts have been, could have been or
could be converted into U.S. dollars at the rates indicated or at any other
rates.

      The  financial  statements  of London Electricity  are  presented  in
conformity  with  accounting principles generally accepted  in  the  United
States  ("US  GAAP").   The consolidated financial statements  include  the
accounts  of  London  Electricity and its wholly-owned  and  majority-owned
subsidiaries  and  have  been prepared from records  maintained  by  London
Electricity   in  the  UK.   All  significant  intercompany  accounts   and
transactions have been eliminated in consolidation.  London Electricity  is
not  subject  to  rate  regulation, but rather, is  subject  to  price  cap
regulation  and,  therefore,  the  provisions  of  Statement  of  Financial
Accounting  Standards No. 71, "Accounting for the Effects of Certain  Types
of Regulation" ("SFAS 71") do not apply.

      London  Electricity was acquired by Entergy London  Investments  plc,
formerly  Entergy Power UK plc, effective February 1, 1997.  The  financial
statements include the results of operations of London Electricity  through
the date of acquisition.

Use of Estimates in the Preparation of Financial Statements

      The  preparation  of  London Electricity's financial  statements,  in
conformity   with   generally  accepted  accounting  principles,   requires
management  to  make  estimates and assumptions that  affect  the  reported
amounts of assets and liabilities, the disclosure of contingent assets  and
liabilities  and the reported amounts of revenues and expenses  during  the
reporting  period.   Adjustments  to the reported  amounts  of  assets  and
liabilities  may  be  necessary in the future to  the  extent  that  future
estimates  or actual results are different from the estimates used  in  the
financial statements.

Revenue Recognition

      London Electricity distributes electricity to commercial, residential
and  industrial  customers  within  the London  area.   London  Electricity
records  revenue  net  of value added tax ("VAT") and accrues  revenue  for
services provided but unbilled at the end of each reporting period.  London
Electricity purchases power primarily from the wholesale trading market for
electricity  in  England and Wales (the "Pool").  The Pool monitors  supply
and demand between generators and suppliers, sets prices for generation and
provides  centralized  settlement of amounts  due  between  generators  and
suppliers.

Cash and Cash Equivalents

      London  Electricity  considers  all short-term  investments  with  an
original maturity of three months or less to be cash and cash equivalents.

Property, Plant and Equipment

      Property, plant and equipment is stated at original cost and includes
materials,  labor  and appropriate overhead costs.  London  Electricity  is
entitled,  under  certain  conditions, to collect cash  contributions  from
consumers   to  fund  improvements  to  London  Electricity's  distribution
networks.  These consumer contributions are credited against the historical
cost of the asset.

     Depreciation is computed by the straight-line method at rates based on
the  estimated  service lives of each of the various classes  of  property.
Consumer  contributions  are amortized into  income  at  a  rate  of  2.5%.
Depreciation rates on average depreciable property are shown below:

        Distribution network assets                     2.5%
        Buildings                                       1.7%
        Vehicles and mobile plant                      10%-20%
        Furniture and equipment, including computer    20%-33%
          hardware and software
                                     
Income Taxes

      London  Electricity  accounts for income  taxes  in  accordance  with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109").  This standard requires that deferred income taxes  be
recorded  for  all  temporary differences between the  financial  statement
basis  and tax basis of assets and liabilities and loss carryforwards,  and
that  deferred tax balances be based on enacted tax laws at rates that  are
expected to be in effect when the temporary differences reverse.

Goodwill

      Goodwill  represents the excess of cost over the fair  value  of  net
assets acquired and is being amortized over forty years using the straight-
line method.

Financial Instruments

      London Electricity enters into interest rate swaps as a part  of  its
overall  risk  management  strategy and does not  hold  or  issue  material
amounts  of derivative financial instruments for trading purposes.   London
Electricity  accounts for its interest rate swaps in  accordance  with  the
concepts established in Statement of Financial Accounting Standards No. 80,
"Accounting  for Futures Contracts" ("SFAS 80") and various Emerging  Issue
Task  Force pronouncements.  If the interest rate swaps were to be sold  or
terminated,  any  gain  or loss would be deferred and  amortized  over  the
remaining  life  of the debt instrument being hedged by the  interest  rate
swap.  If the debt instrument being hedged by the interest rate swaps  were
to  be  extinguished, any gain or loss attributable to the  swap  would  be
recognized in the period of the transaction.

      London  Electricity  considers  the  carrying  amounts  of  financial
instruments classified as current assets and liabilities to be a reasonable
estimate  of  their  fair  value because of the  short  maturity  of  these
instruments.

Price Control

     Charges for distribution of electricity and supply to customers with a
maximum  demand under 100kW are subject to a price control formula set  out
in  London Electricity's PES license which allows a maximum charge per unit
of electricity.

      Differences  in the charges, or in the purchase cost of  electricity,
can result in the under or overrecovery of revenues in a particular year.

      Where  there  is  an overrecovery of supply of distribution  business
revenues  against  the  regulated maximum allowable  amount,  revenues  are
deferred in an amount equivalent to the overrecovered amount.  The deferred
amount   is  deducted  from  operating  revenues  and  included  in   other
liabilities.   Where  there is an underrecovery,  no  anticipation  of  any
potential future recovery is made.

      London  Electricity  enters into contracts for  differences  ("CFDs")
primarily  to  hedge  its  supply  business  against  the  price  risk   of
electricity  purchases from the Pool.  Use of these  CFDs  is  carried  out
within  the  framework  of  London Electricity's  purchasing  strategy  and
hedging  guidelines.   Risk of loss is monitored through  establishment  of
approved counterparties and maximum counterparty limits and minimum  credit
ratings.   London  Electricity  recognizes  gains  (losses)  on  CFDs  when
settlement  is made.  Gains (losses) on CFDs are recognized as  a  decrease
(increase) to cost of sales based upon the difference between fixed  prices
in  the  CFD  compared to variable prices paid to the Pool for the  period.
Gains  (losses) based upon the difference between fixed prices in  the  CFD
compared  to  variable  prices  paid to the  Pool  for  future  electricity
purchases are not recognized until the period of such settlements.

      Pursuant  to  Statement of Financial Accounting  Standards  No.  121,
"Accounting  for  the Impairment of Long-Lived Assets  and  for  Long-Lived
Assets  to  Be  Disposed  of" ("SFAS 121") London Electricity  periodically
reviews  its  long-lived assets whenever events or changes in circumstances
indicate that recoverability of these assets is uncertain.  Generally,  the
determination of recoverability is based on the undiscounted net cash flows
expected to result from such assets.  Projected undiscounted net cash flows
depend  on the future operating costs associated with the assets and future
market  prices  over the remaining life of the assets.   Based  on  current
estimates  of future undiscounted cash flows as prescribed under SFAS  121,
management  anticipates that future revenues from such  assets  will  fully
recover all related costs.

NOTE 3.   REGULATORY MATTERS:

     The distribution business of London Electricity is regulated under its
PES  license,  pursuant  to which revenue of the distribution  business  is
controlled  by  the Distribution Price Control Formula  (DPCF).   The  DPCF
determines the maximum average price per unit of electricity (expressed  in
kilowatt hours, a "unit") that a REC may charge.  The elements used in  the
DPCF  are  established for a five-year period and are subject to review  by
the Regulator at the end of each five-year period and at other times at the
discretion  of the Regulator.  At each review the Regulator can adjust  the
value of certain elements in the DPCF.  Following a review by the Regulator
in  August  1994,  a  14% price reduction was set for  London  Electricity,
effective  April  1, 1995.  In July 1995, a further review of  distribution
prices was concluded by the Regulator for fiscal years 1997 to 2000.  As  a
result  of  this  further review, London Electricity's distribution  prices
were reduced an additional 11%, effective April 1, 1996, 3% effective April
1, 1997 and will be reduced by a further 3% on both April 1, 1998 and 1999.

      The  supply business of London Electricity is also regulated  by  the
Regulator  and  prices are established based upon the Supply Price  Control
Formula  which is similar to the DPCF; however, it allows full pass through
for  all properly incurred costs and is set for a four-year period  by  the
Regulator.

      The  non-franchise  supply  market, which typically  includes  larger
commercial  and  industrial customers was opened  to  competition  for  all
customers with usage above 1MW upon privatization of the industry in  1990.
The  non-franchise  supply markets of 100 kW or more were  opened  to  full
competition starting in April 1994.

     Currently London Electricity, under its PES license, has the exclusive
right  to  supply residential and small industrial and commercial customers
within  its franchise area.  It is anticipated that the supply market  will
be fully competitive over a six month period starting in April 1998.


NOTE 4.   INVESTMENTS:

     London Electricity accounts for investments whose fair market value is
readily  determinable in accordance with Statement of Financial  Accounting
Standards No. 115, "Accounting for Investments for Certain Debt and  Equity
Securities"  ("SFAS 115").  These securities are considered  available-for-
sale  securities  under  SFAS 115 and their fair values  approximate  cost.
Other securities whose fair market values are not readily determinable  and
in  which  London  Electricity does not have  a  significant  interest  are
recorded at cost.

      Investments  in  companies  in which London  Electricity's  ownership
interests   range  from  20%  to  50%  and  investments  in  which   London
Electricity's ownership is less than 20% but over which London  Electricity
exercises  significant influence over operating and financial policies  are
accounted   for  using  the  equity  method.   The  following  are   London
Electricity's equity method investments as of March 31, 1996:

       Investment                         Percentage Ownership
                                                      
       London Total Gas Ltd                         50%
       Combined Power Systems Ltd        32% combined ownership in
                                        common and preferred shares
       Thames Valley Power Ltd                      50%
       London Total Energy Ltd                      50%
       Barking Power Ltd                           13.5%
                                     
                                     
NOTE 5.   PROPERTY, PLANT AND EQUIPMENT:

      Property, plant and equipment, at cost, consists of the following (in
thousands):

                                                     March 31, 1996
                                                       
     Distribution network assets                       $1,769,946
     Land and buildings                                   117,579
     Vehicles and mobile plant                             24,279
     Furniture, fixtures and equipment, including         181,407
     computer hardware and software
     Consumer contributions to construction              (311,813)
                                                       ----------
                                                        1,781,398
     Less accumulated depreciation and amortization      (710,513)
                                                       ----------
                                                       $1,070,885
                                                       ==========

NOTE 6.   INCOME TAXES:

      London Electricity's income tax expense for the period from April  1,
1996  to  January 31, 1997, and the year ended March 31, 1996, consists  of
the following (in thousands):

                                             Period from           
                                           April 1, 1996 to    Year ended
                                           January 31, 1997  March 31, 1996
                                                                          
Current                                         $ 27,998         $64,206
Deferred                                          22,778          27,248
Current taxes on National Grid transactions:                   
   Tax on special dividend                             _          35,705
   Tax on distribution in kind                         _          93,490
   Tax on ESOP contribution                            _          (5,637)
   Tax reduction related to customer discount          _         (42,752)
                                                --------        --------
      Total                                     $ 50,776        $172,260
                                                ========        ========

      London  Electricity's  total income taxes  differ  from  the  amounts
computed by applying the statutory income tax rate to income before  taxes.
The reasons for the differences in the period from April 1, 1996 to January
31, 1997 and the year ended March 31, 1996 are (in thousands):

<TABLE>
<CAPTION>
                                                        Period from           
                                                     April 1, 1996 to    Year ended
                                                     January 31, 1997  March 31, 1996
<S>                                                        <C>              <C>               
Pre-tax income                                             $149,005         $891,681
Income taxes computed at statutory rate                      49,194          294,252
National Grid transactions:                                                 
  Revaluation of investment excluded from taxable income          _          (44,005)
  Gain on sale of pumped storage business excluded from                      
   taxable income                                                 _          (36,175)
  Tax credit on contribution to ESOP                              _           (5,638)
  Special dividends not taxable                                   _          (10,805)
Effect of difference between statutory rate (33%) and                       
 rate on dividends received (20%)                              (791)         (31,163)
Amortization of goodwill                                        475              626
Other                                                         1,898            5,168
                                                           --------         --------
   Total income tax expense                                $ 50,776         $172,260
                                                           ========         ========
</TABLE>


      Significant  components  of  London Electricity's  net  deferred  tax
liability as of March 31, 1996 are as follows (in thousands):

           Deferred tax liability                  
           Property-related basis differences       $(280,968)
           Prepaid pension asset                      (36,801)
                                                    ---------
               Total                                 (317,769)
                                                    
           Deferred tax asset                       
           Restructuring and other provisions          24,127
                                                    ---------
               Net deferred tax liability           $(293,642)
                                                    =========

     As a result of Parliamentary elections held on May 1, 1997, the Labour
Party  gained  control of the UK Government.  On July 31, 1997  legislation
establishing  a  windfall  profits tax, which affects  regulated  companies
privatized  since  1979  including  London  Electricity,  was  enacted.  In
accordance  with SFAS 109 under US GAAP, London Electricity will  record  a
charge  to  income for the windfall profits tax during the  quarter  ending
September 30, 1997.  A change in the UK statutory rate from 33% to 31%  was
also  included  in  the legislation.  The impact of such  changes  will  be
recognition  in the quarter ending September 30, 1997 of the  $224  million
expense  for  the  windfall profits tax and approximately  $61  million  of
income tax benefit as a result of the change in the UK statutory income tax
rate in London Electricity's results of operations.

     The tax years since fiscal year 1990 are currently under review by the
Inland  Revenue in the UK.  London Electricity believes that  there  is  no
additional liability related to the tax years under review.


NOTE 7.   LONG-TERM DEBT:

     The long-term debt of London Electricity as of March 31, 1996 consists
of the following (in thousands):

        8% Eurobonds repayable March 28, 2003         $ 151,020
        8 5/8% Eurobonds repayable October 26, 2005     150,868
                                                      ---------
            Total                                     $ 301,888
                                                      =========

      The  8%  and  8 5/8% Eurobonds may become due prior to  their  stated
maturity  only  upon  the occurrence of certain events  including  default,
liquidation  or bankruptcy of London Electricity.  London Electricity  does
not anticipate default under the agreements.

      London  Electricity entered into an interest rate swap  agreement  to
reduce  the  impact of interest rate changes on its outstanding  debt.  The
interest rate swap agreement involves the exchange of a fixed interest rate
for  a  floating interest rate periodically over the life of the agreement.
If the counterparty to the interest rate swap was to default on contractual
payments, London Electricity could be exposed to increased cost related  to
replacing  the  original agreement. However, London  Electricity  does  not
anticipate non-performance. At March 31, 1996, London Electricity was party
to  a  notional  amount of $12 million for an interest rate swap  agreement
with a maturity date of May 6, 2003.

NOTE 8.   COMMON STOCK:

      During 1996, London Electricity effected a reverse stock split of six
for every seven shares of common stock held. This reduced, by approximately
28  million, the number of common shares outstanding and increased the  par
value of the stock from BPS0.50 to BPS0.583 per share.


NOTE 9.   NOTES PAYABLE:

      Other  facilities  available  to London  Electricity  are  short-term
unsecured,  uncommitted facilities of BPS228 million and a  BPS150  million
Sterling   Commercial  Paper  Program  ("Sterling  Program").   Uncommitted
facilities  are  unsecured  facilities  which  are  available   at   London
Electricity's  request,  however  there  is  no  obligation  by  the   bank
counterparty  to make funds available to London Electricity.  The  Sterling
Program is a negotiable promissory note with short term maturities  (up  to
364  days)  issued at a discount to face value. London Electricity  had  an
outstanding  balance  of $146.7 million on all of these  facilities  as  of
March  31,  1996.  The  weighted average interest rate  incurred  on  these
borrowings  was 6.3% and 6.1% for the period from April 1, 1996 to  January
31, 1997 and for the year ended March 31, 1996, respectively.

NOTE 10.  COMMITMENTS AND CONTINGENCIES:

     London Electricity has entered into operating lease agreements for the
use  of  buildings and vehicles. Minimum future rental payments  under  all
operating leases as of March 31, 1996 are as follows (in thousands):

                 1997                      $10,842
                 1998                       10,536
                 1999                       10,078
                 2000                       10,078
                 2001                        9,773
                 Thereafter                127,810
                                          --------
                   Total                  $179,117
                                          ========

     Rental expense incurred under these lease agreements was $10.6 million
and $12.4 million for the period from April 1, 1996 to January 31, 1997 and
for the year ended March 31, 1996, respectively.

      London  Electricity  is  subject  to  an  agreement  whereby  the  UK
government  is entitled to a proportion of certain property gains  accruing
to  London  Electricity  as  a result of disposals  or  events  treated  as
disposals  occurring after March 31, 1990 of properties held at that  date.
This commitment is effective until March 31, 2000.

      London Electricity has utilized a portion of the pension plan surplus
to   increase  benefits  to  members  and  reduce  employer  and   employee
contributions. A recent court ruling in the UK upheld such uses of  pension
surpluses.  However,  should  the decision be reversed  on  appeal,  London
Electricity  could  be  required  to  repay  pension  surpluses   utilized.
Management is unable to predict the likely outcome of this matter  at  this
time.

      The  UK  Environmental Protection Act 1990 addresses waste management
issues  and  imposes  certain  obligations on companies  which  handle  and
dispose  of  waste.  Some  of London Electricity's distribution  activities
produce  waste  but  London Electricity believes  that  it  has  taken  and
continues  to  take  measures  to  comply  with  the  applicable  laws  and
governmental regulations for the protection of the environment.  There  are
no  material  legal  or administrative proceedings pending  against  London
Electricity with respect to any environmental matter.

      London Electricity is required to file five-year projections with the
Regulator  for  capital expenditures related to its regulated  distribution
network  and updates of such projections annually. The most recent  updated
projection was for the five-year period ended March 31, 2000 and was  filed
in July 1997. This filing indicated London Electricity's current projection
of  approximately  $772.3 million for the five-year  period.  Approximately
$294.2 million has already been spent in fiscal years 1996 and 1997 related
to this five-year projection.

     London Electricity uses CFDs and power purchase contracts with certain
UK  generators  to  fix the price of electricity for a contracted  quantity
over  a specific period of time. At March 31, 1996, London Electricity  has
outstanding CFDs and power purchase contracts for approximately 52,000  GWH
of  electricity. These include a long term power purchase contract with  an
affiliate which is based on 27.5% of the affiliate's capacity from its 1000
MW  facility through the year 2010. London Electricity's sales volumes were
approximately 17,000 GWH and 18,000 GWH in the period from April 1, 1996 to
January 31, 1997, and the year ended March 31, 1996, respectively.


NOTE 11.  PENSION BENEFITS:

      London  Electricity participates in a defined benefit  pension  plan,
which  provides pension and other related defined benefits, based on  final
pensionable  pay,  to substantially all employees throughout  the  electric
supply industry in the UK.  Contributions to the plan by London Electricity
on  behalf of its employees were $16.0 million for the year ended March 31,
1996.   London  Electricity made no contributions to the  plan  during  the
period April 1, 1996 to January 31, 1997.

     London Electricity uses the projected unit credit actuarial method for
funding purposes.  Amounts funded to the pension are primarily invested  in
equity and fixed income securities.

       Statement  of  Financial  Accounting  Standards  No.  87  "Employees
Accounting  for Pensions" ("SFAS 87") was issued in 1988 and  is  effective
for fiscal years beginning after December 15, 1988.  The provisions of SFAS
87  were  initially  adopted  by  London  Electricity  on  April  1,  1994.
Accordingly, the unrecognized net transition asset at the date  of  initial
application of SFAS 87 is being amortized over 15 years beginning April  1,
1989.   The  amount  of the unrecognized net transition asset  credited  to
equity on April 1, 1994 was $42.9 million.

      The  following table sets forth the plan's funded status and  amounts
recognized  in  London Electricity's balance sheet at March  31,  1996  (in
thousands):

        Accumulated benefit obligation:          
          Vested                                 $ 900,625
                                                 =========
        Projected benefit obligation             1,029,962
        Plan assets at fair value                1,231,831
                                                 ---------
        Assets  in excess of projected benefit     201,869
        obligation
        Unrecognized net gain                      (18,782)
        Unrecognized net transition asset          (71,463)
                                                 ---------
            Prepaid pension asset                $ 111,624
                                                 =========

      The  weighted  average discount rate and rate of increase  in  future
compensation levels used in determining the actuarial present value of  the
projected benefit obligation, and the expected long-term rate of return  on
assets was 9%, 6.5% and 9%, respectively, for the period from April 1, 1996
to January 31, 1997 and for the year ended March 31, 1996.

     The components of the plan's net pension income during the periods are
shown below (in thousands):

                                               Period from           
                                             April 1, 1996 to    Year ended
                                             January 31, 1997  March 31, 1996
                                                                           
Service cost (benefits earned during the period)   $10,440          $ 13,311
  Interest cost on projected benefit obligations    70,232            85,347
  Actual return on plan assets                     (92,377)         (227,227)
  Net amortization and deferral                      3,955           115,258
                                                   -------          --------
    Net pension benefit                            $(7,750)         $(13,311)
                                                   =======          ========

NOTE 12.  DISTRIBUTION OF NATIONAL GRID INVESTMENT:

      In  December 1995, each of the RECs distributed their investments  in
the National Grid Holding Company plc ("National Grid"). London Electricity
distributed  its  ownership shares in National Grid  to  its  shareholders.
Prior  to  the  distribution, the National Grid shares were listed  on  the
London  Stock  Exchange and revalued to reflect the  market  value  of  the
common  stock  of  National  Grid, whose shares  had  not  previously  been
publicly traded and for which there was no readily determinable fair market
value.   London  Electricity recorded a gain on the revaluation  of  $416.9
million  in the Statement of Operations for the year ended March 31,  1996.
National  Grid  also effected a rights issue at $3.12 per  share  to  raise
additional equity capital.  London Electricity invested an additional $27.5
million  in  National Grid as a result of the rights issue.   Approximately
96% of the total National Grid shares owned by London Electricity were then
distributed in kind to the shareholders of London Electricity.

      The  remaining  shares owned by London Electricity were  retained  to
establish   an  Employee  Stock  Ownership  Plan  ("ESOP")  to   compensate
participants of the Employee and Executive Sharesave Plans (employee  stock
option plans) for any diminution in value of London Electricity shares as a
result of the demerger.  Approximately 5.1 million shares of National  Grid
were  reserved  for contributions to the ESOP.  The actual shares  will  be
contributed  to the ESOP upon exercise of options under the employee  stock
option  plans.  The contributed shares related to the establishment of  the
ESOP plus expenses and cash contributions due to the ESOP to compensate the
participants for taxes payable related to this distribution were charged to
expense  during  the  fiscal year ended March  31,  1996.   The  difference
between  actual  National  Grid shares contributed  and  the  total  amount
charged to expense is included in other liabilities in London Electricity's
balance sheet as of March 31, 1996.

      National  Grid also distributed to London Electricity  its  ownership
shares  in PSB Holding Limited ("PSB"), the holding company of First  Hydro
Limited  which had been transferred to National Grid in 1990.  As  part  of
the  demerger,  PSB  was  sold  to Mission Energy  and  London  Electricity
recorded a $109.8 million gain on the sale.

      Finally, as part of the demerger, the Regulator ordered a $78  refund
to  each  of  London Electricity's supply customers which was offset  by  a
reduction  in  the  fossil  fuel levy charged to London  Electricity.   The
effect of the refund, which was recorded in the year ended March 31,  1996,
was  to reduce operating revenues, cost of sales and gross profit by $142.3
million , $13.0 million and $129.4 million, respectively.

      The  investment  in National Grid has been accounted  for  by  London
Electricity  as  a  cost  method investment.  The consolidated  results  of
operations  of  London  Electricity therefore do not  include  any  of  the
results of operations of National Grid.


NOTE 13.  EMPLOYEE OPTIONS:

      London  Electricity was acquired by Entergy London  Investments  plc,
formerly  Entergy Power UK plc, effective February 1, 1997.  In conjunction
with  the  purchase of London Electricity, the holders of  any  outstanding
options  under  the  employee option plans were given  the  opportunity  to
exercise  their options and sell their shares to Entergy London Investments
plc  at  a price of BPS7.05 per share which then entitled the owner of  the
shares to the interim dividend of BPS.179 per share.  If the holders of the
options did not exercise their options, such options were cash canceled and
the holders were paid BPS7.05 per share.

      Under  the Employee Sharesave Plan, London Electricity was authorized
to  issue  shares  of  common stock pursuant to stock  options  granted  to
officers, key employees and directors.  Under the Executive Sharesave Plan,
London  Electricity was authorized to issue shares of common stock pursuant
to stock options granted to directors.

     The stock options had an exercise price equal to the fair market value
of  the  common  stock on the date of grant and a contractual  term  of  10
years.   The  stock options became exercisable on the third anniversary  of
the date of grant under the Executive Sharesave Plan.

      A summary of the status of London Electricity's stock options for the
period from April 1, 1996 to January 31, 1997 and for the year ended  March
31,  1996 and the changes during the years ended on such dates is presented
below:

<TABLE>
<CAPTION>
                                    Period from                
                                  April 1, 1996 to             
                                  January 31, 1997    Years ended March 31, 1996
                                # Shares of              # Shares of      
                                Underlying   Exercise    Underlying   Exercise
                                  Options     Prices       Options     Prices
<S>                               <C>         <C>        <C>           <C>
Outstanding at beginning of year  1,873,505   BPS3.56     6,985,705    BPS2.26
Granted                           3,625,911      4.82        89,628       5.94
Exercised                          (390,712)     3.33    (4,956,992)      1.89
Forfeited                                 _         _      (244,836)      2.09
Expired                                   _         _             _          _
                                  ---------               ---------
Outstanding at end of year        5,108,704               1,873,505
                                  =========               =========
</TABLE


NOTE 14.  RESTRUCTURING CHARGES:

      In  1995  and  1996, London Electricity implemented  a  restructuring
program to reduce the number of employees in the Network Services, Customer
Services, Corporate and Information Technology groups.  An initial plan was
approved by the Board of Directors of London Electricity in September  1994
and  was  based  on  a  business  plan developed  subsequent  to  the  1994
Regulatory Review of Distribution (the "Distribution Review").

      Following  the  reopening of the Distribution Review during  1995,  a
further  plan  was proposed leading to a further reduction of employees  in
the  same areas.  This plan was approved by the Board of Directors  in  May
1996, and approximately $18.5 million in restructuring charges was recorded
for  the  period from April 1, 1996 to January 31, 1997.  The balances  for
restructuring  charges and the actual termination benefits paid  under  the
program for the period from April 1, 1996 to January 31, 1997 and the  year
ended March 31, 1996 are as follows (in thousands):

      Provision for restructuring as of March 31, 1995    $30,322
      Restructuring charges in 1996                             _
      Payments made in 1996                                     _
      Translation adjustment                               (1,767)
                                                          -------
      Balance March 31, 1996                               28,555
      Restructuring charges in 1997                        18,507
      Payments made in 1997                               (16,609)
      Translation adjustment                                1,433
                                                          -------
      Provision for restructuring as of January 31, 1997  $31,886
                                                          =======
      The number of employees terminated under these plans was 250 and  308
for  the  period from April 1, 1996 to January 31, 1997 and the year  ended
March 31, 1996, respectively.


NOTE 15.  SEGMENT INFORMATION:

      London  Electricity  is  engaged in two electric  industry  segments:
distribution,  which  involves the transfer  and  delivery  of  electricity
across  London  Electricity's network to its customers, and  supply,  which
involves bulk purchases of electricity from the Pool for delivery of supply
to  the  distribution  networks.   Other  consists  principally  of  London
Electricity's  investment  in  private distribution  networks,  electricity
contracting  services  and investments in generating  assets.   Information
about  London Electricity's operations in these individual segments  during
the  period  from April 1, 1996 to January 31, 1997 and for the year  ended
March 31, 1996 is as follows (in thousands):

</TABLE>


<TABLE>
<CAPTION>
                                           
                                      Period from April 1, 1996 to January 31, 1997
                             Distribution    Supply      Other    Eliminations Consolidated
<S>                            <C>         <C>          <C>        <C>          <C>
Operating revenues              $435,470   $1,662,788   $106,772   $(439,425)   $1,765,605
Operating income                 159,129       (1,265)    10,914           _       168,778
Depreciation and amortization     51,092        6,485      4,588           _        62,165
Total assets employed at       1,363,077      446,560    287,453           _     2,097,090
 period end
Capital expenditures             153,118       15,027     14,711           _       182,856

</TABLE>


<TABLE>
<CAPTION>
                                           
                                      Year Ended March 31, 1996
                            Distribution    Supply         Other    Eliminations  Consolidated
<S>                          <C>          <C>        <C>  <C>        <C>           <C>
Operating revenues            $559,219    $1,719,468 (a)  $92,550    $(511,299)    $1,859,938
Operating income               247,428      (110,246)(b)   24,272       (2,349)       159,105
Depreciation and amortization   54,967         3,915        7,203            _         66,085
Total assets employed at     1,211,827       376,710      471,844            _      2,060,381
 period end
Capital expenditures           151,590         7,047       14,564            _        173,201
</TABLE>
                 

(a)   Includes $142.3 million refund to customers related to National  Grid
      transaction.

(b)   Includes  net effect of $142.3 million refund and $13.0 reduction  of
      fossil fuel levy related to National Grid transaction.  See Note 12.


<PAGE>


I
tem 9.  Changes In and Disagreements With Accountants On Accounting
and Financial Disclosure.

     No event that would be described in response to this item has
occurred with respect to Entergy, System Energy, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or
Entergy New Orleans.


PART III


Item 10.  Directors and Executive Officers of the Registrants (Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, System Energy and Entergy London)

     All officers and directors listed below held the specified
positions with their respective companies as of the date of filing
this report.


<PAGE>

<TABLE>
<CAPTION>

<S>                       <C>   <C>                                                          <C>

	 Name             Age                          Position                              Period
											     
ENTERGY ARKANSAS, INC.                                                                       
													   
Directors                                                                                                  

R. Drake Keith             62   President and Director of Entergy Arkansas                   1989-Present
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
											     
Officers                                                                                    

Michael R. Niggli          48   Senior Vice President - Customer Accounts of Entergy         1996-1998
				Arkansas, Entergy Gulf States, Entergy Louisiana,
				Entergy Mississippi, Entergy New Orleans, and Entergy
				Services
				Senior Vice President - Marketing of Entergy Arkansas,       1993-1996
				Entergy Gulf States, Entergy Louisiana, Entergy
				Mississippi, Entergy New Orleans, and Entergy Services
				Vice President - Customer Services of Entergy                1993-1993
				Louisiana, Entergy New Orleans, and Entergy Services
C. Gary Clary              53   Vice President - Human Resources and Administration of       1997-Present
				Entergy Arkansas, Entergy Gulf States, Entergy
				Louisiana, Entergy Mississippi, Entergy New Orleans,
				and Entergy Operations
				Vice President - Human Resources and Administration of       1996-Present
				Entergy Services
				Director-System Human Resources of Entergy Services          1993-1996
Cecil L. Alexander         62   Vice President - Governmental Affairs of Entergy             1991-Present
				Arkansas
James S. Pilgrim           62   Vice President - Customer Service of Entergy Arkansas        1994-Present
				Director, Central Region, TDCS Customer Service              1993-1994
				Central Division Manager of Mississippi                      1991-1993
C. Hiram Walters           61   Vice President - Customer Service of Entergy Arkansas        1993-Present
				Vice President - Customer Service of Entergy Louisiana       1994-Present
				Vice President - Customer Service of Entergy Services        1997-Present
				Vice President - Customer Service, Central Region of         1993-1997
				Entergy Services
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
R. Drake Keith                  See information under the Entergy Arkansas Directors
				Section above.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
Michael G. Thompson             See information under the Entergy Corporation Officers       
				Section in Part I.
William J. Regan, Jr.           See information under the Entergy Corporation Officers       
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers       
				Section in Part I.

											     
ENTERGY GULF STATES, INC.                                                                    
											     
Directors                                                                                    

Karen R. Johnson           53   President - Texas                                            1997-Present
				Director of Entergy Gulf States                              1996-Present
				State President - Texas                                      1996-1997
				Vice President - Governmental Affairs of Entergy Gulf        1994-1996
				States - Texas
				Executive Director of State Bar of Texas (state agency)      1990-1994
John J. Cordaro            64   President - Louisiana                                        1997-Present
				Director of Entergy Gulf States and Entergy Louisiana        1996-Present
				State President - Louisiana                                  1996-1997
				President and Director of Entergy Louisiana and Entergy      1992-1996
				New Orleans
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
											     
Officers                                                                                    

William E. Colston         62   Vice President - Customer Service of Entergy Gulf            1994-Present
				States
				Vice President - Customer Service of Entergy Louisiana       1993-Present
				Vice President - Customer Service of Southern Region of      1993-Present
				Entergy Services
				Regional Director of Entergy Louisiana                       1992-1993
S. G. Cunningham, Jr.      57   Vice President - Regulatory and Governmental Affairs of      1996-Present
				Entergy Louisiana and Entergy Gulf States
				Vice President - State Regulatory Affairs of Entergy         1994-1996
				Services
				Vice President - Entergy Corporation, Entergy Gulf           1993-1994
				States Transition, and Regulatory Affairs of Entergy
				Services
				Vice President - Rates and Regulatory Affairs of             1991-1994
				Entergy Louisiana and Entergy New Orleans
				Vice President - Regulatory Affairs of Entergy Services      1992-1993
J. Parker McCollough       47   Vice President - State Governmental Affairs of Entergy       1996-Present
				Gulf States
				Vice President - Governmental Affairs, Texas                 1993-1996
				Association of Realtors (trade association)
				Member- Texas House of Representatives                       1989-1993
				Wright & Greenhill, PC (law firm)                            1991-1993
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
C. Gary Clary                   See information under the Entergy Arkansas Officers          
				Section above.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
Michael G. Thompson             See information under the Entergy Corporation Officers       
				Section in Part I.
Michael R. Niggli               See information under the Entergy Arkansas Officers          
				Section above.
Karen Johnson                   See information under the Entergy Gulf States Directors      
				Section above.
John J. Cordaro                 See information under the Entergy Gulf States Directors      
				Section above.
William J. Regan, Jr.           See information under the Entergy Corporation Officers       
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers       
				Section in Part I.

											     
ENTERGY LOUISIANA, INC.                                                                      
											     
Directors                                                                                    

Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
John J. Cordaro                 See information under the Entergy Gulf States Directors      
				Section above.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
											    
Officers                                                                                    

James D. Bruno             58   Vice President - Customer Service of Entergy Louisiana       1994-Present
				and Entergy New Orleans
				Vice President - Metro Region of Entergy Services            1993-Present
				Region Director - Metro Region of Entergy Services           1991-1993
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
John J. Cordaro                 See information under the Entergy Gulf States Directors      
				Section above.
C. Gary Clary                   See information under the Entergy Arkansas Officers          
				Section above.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
Michael G. Thompson             See information under the Entergy Corporation Officers       
				Section in Part I.
Michael R. Niggli               See information under the Entergy Arkansas Officers          
				Section above.
William E. Colston              See information under the Entergy Gulf States Officers       
				Section above.
William J. Regan, Jr.           See information under the Entergy Corporation Officers       
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers       
				Section in Part I.
C. Hiram Walters                See information under the Entergy Arkansas Officers          
				Section above.
S. G. Cunningham, Jr.           See information under the Entergy Gulf States Officers       
				Section above.

											     
ENTERGY MISSISSIPPI, INC.                                                                    
											     
Directors                                                                                    

Donald E. Meiners (a)      62   President and Director of Entergy Mississippi                1992-Present
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
											     
Officers                                                                                     

Bill F. Cossar             59   Vice President - Governmental Affairs of Entergy             1987-Present
				Mississippi
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Donald E. Meiners               See information under the Entergy Mississippi Directors      
				Section above.
C. Gary Clary                   See information under the Entergy Arkansas Officers          
				Section above.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
Michael G. Thompson             See information under the Entergy Corporation Officers       
				Section in Part I.
Michael R. Niggli               See information under the Entergy Arkansas Officers          
				Section above.
William J. Regan, Jr.           See information under the Entergy Corporation Officers       
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers       
				Section in Part I.

											     
ENTERGY NEW ORLEANS, INC.                                                                    
											     
Directors                                                                                    

Daniel F. Packer           50   President and Director of Entergy New Orleans                1997-Present
				State President - City of New Orleans                        1996-1997
				Vice President - Regulatory and Governmental Affairs of      1994-1996
				Entergy New Orleans
				General Manager - Plant Operations at Waterford 3            1991-1994
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
											     
Officers                                                                                     

Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
C. Gary Clary                   See information under the Entergy Arkansas Officers          
				Section above.
Jerry D. Jackson                See information under the Entergy Corporation Officers       
				Section in Part I.
Frank F. Gallaher               See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
Michael G. Thompson             See information under the Entergy Corporation Officers       
				Section in Part I.
Michael R. Niggli               See information under the Entergy Arkansas Officers          
				Section above.
Daniel F. Packer                See information under the Entergy New Orleans Directors              
				Section above.
James D. Bruno                  See information under the Entergy Louisiana Officers         
				Section above.
William J. Regan, Jr.           See information under the Entergy Corporation Officers               
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers               
				Section in Part I.

											     
SYSTEM ENERGY RESOURCES, INC.                                                                
											     
Directors                                                                                    

Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Jerry L. Maulden                See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
											    
Officers                                                                                    

Joseph  L. Blount          51   Secretary of System Energy and Entergy Operations            1991-Present
				Vice President Legal and External Affairs of Entergy         1990-1993
				Operations
Edwin Lupberger                 See information under the Entergy Corporation Officers       
				Section in Part I.
Donald C. Hintz                 See information under the Entergy Corporation Officers       
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers       
				Section in Part I.
William J. Regan, Jr.           See information under the Entergy Corporation Officers       
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers       
				Section in Part I.


ENTERGY LONDON INVESTMENTS PLC                                                              
											    
Directors                                                                                   

Edwin  Lupberger                See information under the Entergy Corporation Officers      
				Section in Part I.
Michael B. Bemis                See information under the Entergy Corporation Officers      
				Section in Part I.
											   
Officers                                                                                   

Edwin Lupberger                 See information under the Entergy Corporation Officers      
				Section in Part I.
Michael B. Bemis                See information under the Entergy Corporation Officers      
				Section in Part I.
Michael G. Thompson             See information under the Entergy Corporation Officers      
				Section in Part I.
William J. Regan, Jr.           See information under the Entergy Corporation Officers      
				Section in Part I.
Louis E. Buck, Jr.              See information under the Entergy Corporation Officers      
				Section in Part I.
Gerald D. McInvale              See information under the Entergy Corporation Officers      
				Section in Part I.

</TABLE>

											    

(a)    Mr. Meiners is a director of Trustmark National Bank, Jackson,
       MS, and Trustmark Corporation, Jackson, MS.

     Each director and officer of the applicable Entergy company is
elected yearly to serve by the unanimous consent of the sole
stockholder, Entergy Corporation, at its annual meeting.

     Directorships shown in footnote (a) above are generally limited
to entities subject to Section 12 or 15(d) of the Securities and
Exchange Act of 1934 or to the Investment Company Act of 1940.

Section 16(a) Beneficial Ownership Reporting Compliance

     Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement of
Entergy Corporation to be filed in connection with its Annual Meeting
of Stockholders to be held on May 15, 1998, under the heading "Section
16(a) Beneficial Ownership Reporting Compliance", which information is
incorporated herein by reference.


Item 11.  Executive Compensation

			  ENTERGY CORPORATION
				   
     Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement
under the headings "Executive Compensation Tables", "General
Information About Nominees", and "Director Compensation", which
information is incorporated herein by reference.

   ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY
  MISSISSIPPI, ENTERGY NEW ORLEANS, SYSTEM ENERGY AND ENTERGY LONDON
				   
		      Summary Compensation Table
				   
     The following table includes the Chief Executive Officer and the
four other most highly compensated executive officers in office as of
December 31, 1997 at Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy and
Entergy London, (collectively, the "Named Executive Officers") as well
as Gerald D. McInvale who would have been included as one of the four
most highly compensated officers but for the fact that he was not
serving as an executive officer at the end of the fiscal year.  This
determination was based on total annual base salary and bonuses from
all Entergy sources earned by each officer for the year 1997.  See

Item 10, "Directors and Executive Officers of the Registrants," for
information on the principal positions of the Named Executive Officers
in the table below.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, System Entergy and Entergy London

     As shown in Item 10, most Named Executive Officers are employed
by several Entergy companies.  Because it would be impracticable to
allocate such officers' salaries among the various companies, the
table below includes the aggregate compensation paid by all Entergy
companies.


<PAGE>

<TABLE>
<CAPTION>
															      
<S>                         <C>    <C>         <C>        <C>                <C>     <C>               <C>             <C>    
										      Long-Term Compensation   
					Annual Compensation                        Awards               Payouts 
									  Restricted     Securities       (b)           (c)
						 (a)      Other Annual      Stock        Underlying      LTIP        All Other
	  Name              Year    Salary      Bonus     Compensation      Awards        Options       Payouts     Compensation
														 
Michael B. Bemis            1997   $314,154    $      0   $ 734,368 (f)      (d)      5,000 shares     $      0        $11,736
			    1996    297,115     168,125      43,884          (d)      5,000                   0         12,813
			    1995    290,000     216,909      22,844          (d)     27,500             294,282         12,063
															      
Joseph L. Blount            1997   $126,288    $      0   $     291          (d)          0 shares     $      0         $3,789
			    1996    124,904      38,471      10,147          (d)          0                   0          6,177
			    1995    119,185      43,645      15,842          (d)          0                   0         15,705
															      
Louis E. Buck, Jr.          1997   $159,954     $29,882   $   9,105          (d)      2,500 shares     $       0       $ 4,799
			    1996    153,558      66,187      26,132          (d)          0                    0        20,683
			    1995     49,039      21,280       9,151          (d)          0                    0         7,529
															      
Frank F. Gallaher           1997   $327,385    $      0   $  11,132          (d)      5,000 shares     $       0       $ 9,822
			    1996    276,538     130,150      35,641          (d)      5,000                    0        10,321
			    1995    240,000     198,360      61,360          (d)     27,500              324,398         7,638
															      
Donald C. Hintz*            1997   $365,077    $      0   $  18,245          (d)      5,000 shares     $       0       $10,952
			    1996    343,269     231,299      12,516          (d)      5,000                    0        14,197
			    1995    325,000     265,049      13,394          (d)     30,000              409,414         9,750
															      
Jerry D. Jackson            1997   $342,077    $      0   $  56,359          (d)      5,000 shares     $       0        $10,262
			    1996    332,115     209,489      37,928          (d)      5,000                    0         13,862
			    1995    325,000     256,838      43,054          (d)     30,000              422,438          9,750
															      
Edwin Lupberger**           1997   $785,385    $      0   $ 271,422          (d)     10,000 shares     $       0        $23,562
			    1996    735,577     448,794     123,601          (d)     10,000                    0         23,567
			    1995    700,000     568,400      89,163          (d)     60,000              781,337         21,000
															      
Jerry L. Maulden            1997   $445,615    $      0   $  67,485          (d)      5,000 shares     $       0        $13,369
			    1996    435,000     260,301      27,056          (d)      5,000                    0         14,550
			    1995    435,000     353,220      26,248          (d)     30,000              422,438         13,050
															      
Gerald D. McInvale (e)      1997   $331,154    $      0   $  17,389          (d)      5,000 shares     $       0        $ 9,923
			    1996    271,730     179,576      13,995          (d)      5,000                    0         12,051
			    1995    255,481     186,739      12,525          (d)     27,500              294,282          7,664
															      
William J. Regan, Jr.       1997   $195,379     $36,448   $  13,740          (d)      2,500 shares     $       0        $ 5,861
			    1996    190,000      81,132      20,684          (d)          0                    0          8,852
			    1995    120,577      54,727      21,141          (d)      2,000                    0          7,821
															      
Michael G. Thompson         1997   $259,315    $      0   $  12,856          (d)      5,000 shares     $       0        $ 7,729
			    1996    245,960     132,620      20,640          (d)      5,000                    0         11,278
			    1995    236,546     163,612      57,600          (d)      2,500              211,219          7,096

</TABLE>


 *   Chief Executive Officer of System Energy.

**   Chief Executive Officer of Entergy Arkansas, Entergy Gulf States,
     Entergy Louisiana, Entergy Mississippi,  Entergy New Orleans, and
     Entergy London.

(a)  Includes bonuses earned pursuant to the Annual Incentive Plan.

(b)  Amounts include the value of restricted shares that vested in
     1997, 1996, and 1995 (see note (d) below)  under Entergy's Equity
     Ownership Plan.

(c)  Includes the following:

     (1)  1997 benefit accruals under the Defined Contribution
	  Restoration Plan as follows: Mr. Bemis $4,625;  Mr. Gallaher
	  $5,022;  Mr. Hintz $6,152;  Mr. Jackson $5,462;  Mr.
	  Lupberger $18,762;  Mr. Maulden $8,969;  Mr. McInvale
	  $5,123;  Mr. Regan $1,061; and Mr. Thompson $2,979.

     (2)  1997 employer contributions to the System Savings Plan
	  as follows: Mr. Bemis $4,800; Mr. Blount $3,789; Mr. Buck
	  $4,799;  Mr. Gallaher $4,800;  Mr. Hintz $4,800;  Mr.
	  Jackson $4,800;  Mr. Lupberger $4,800;  Mr. Maulden $4,400;
	  Mr. McInvale $4,800;  Mr. Regan $4,800; and Mr. Thompson
	  $4,750.

     (3)  1997 reimbursements for moving expenses as follows:
	  Mr. Bemis $2,311.

(d)  There were no restricted stock awards in 1997 under the Equity
     Ownership Plan.  At December 31, 1997, the number and value of
     the aggregate restricted stock holdings were as follows:  Mr.
     Bemis 30,000 shares, $898,125; Mr. Blount 2,250 shares, $67,359;
     Mr. Buck 4,500 shares, $134,719; Mr. Gallaher 30,000 shares,
     $898,125; Mr. Hintz 30,000 shares, $898,125; Mr. Jackson 30,000
     shares, $898,125; Mr. Lupberger 60,000 shares, $1,796,250; Mr.
     Maulden 37,500 shares, $1,122,656; Mr. McInvale 30,000 shares,
     $898,125; Mr. Regan 4,500 shares, $134,719; and Mr. Thompson
     22,500 shares, $673,594.  Accumulated dividends are paid on
     restricted stock when vested.  The value of stock for which
     restrictions were lifted in 1997, 1996, and 1995, and the
     applicable portion of accumulated cash dividends, are reported in
     the LTIP Payouts column in the above table.  The value of
     restricted stock awards as of December 31, 1997 are determined by
     multiplying the total number of shares awarded by the closing
     market price of Entergy Corporation common stock on the New York
     Stock Exchange Composite Transactions on December 31, 1997
     ($29.9375 per share).

(e)  Gerald D. McInvale is a former officer of Entergy Corporation,
     Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
     Mississippi, Entergy New Orleans, System Energy and Entergy
     London.

(f)  Includes approximately $670,000 related to various overseas
     living expenses, including UK taxes and housing, associated with
     Mr. Bemis' overseas assignment in London.

			 Option Grants in 1997

     The following table summarizes option grants during 1997 to the
Named Executive Officers.  The absence, in the table below, of any
Named Executive Officer indicates that no options were granted to such
officer.

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,  System Entergy and Entergy London


<PAGE>

<TABLE>
<CAPTION>

<S>                      <C>              <C>           <C>           <C>       <C>          <C> 

					Individual Grants                       Potential Realizable
				       % of Total                                       Value
			Number of       Options                                  at Assumed Annual
		       Securities      Granted to      Exercise                    Rates of Stock
		       Underlying       Employees        Price                   Price Appreciation
			 Options           in         (per share)   Expiration   for Option Term (b)
	  Name           Granted (a)      1997            (a)          Date         5%         10%
												     
Michael B. Bemis          5,000           2.0%          $ 26.5        1/30/07   $ 83,329     $211,171
Louis E. Buck, Jr.        2,500           1.0%            26.5        1/30/07     41,664      105,585
Frank F. Gallaher         5,000           2.0%            26.5        1/30/07     83,329      211,171
Donald C. Hintz           5,000           2.0%            26.5        1/30/07     83,329      211,171
Jerry D. Jackson          5,000           2.0%            26.5        1/30/07     83,329      211,171
Edwin Lupberger          10,000           3.9%            26.5        1/30/07    166,657      422,342
Jerry L. Maulden          5,000           2.0%            26.5        1/30/07     83,329      211,171
Gerald D. McInvale        5,000           2.0%            26.5        1/30/07     83,329      211,171
William J. Regan, Jr.     2,500           1.0%            26.5        1/30/07     41,664      105,585
Michael G. Thompson       5,000           2.0%            26.5        1/30/07     83,329      211,171

</TABLE>


(a)  Options were granted on January 30, 1997, pursuant to the Equity
     Ownership Plan.  All options granted on this date have an
     exercise price equal to the closing price of Entergy Corporation
     common stock on the New York Stock Exchange Composite
     Transactions on January 30, 1997.  These options became
     exercisable on July 30, 1997.

(b)  Calculation based on the market price of the underlying
     securities assuming the market price increases over a ten-year
     option period and assuming annual compounding. The column
     presents estimates of potential values based on simple
     mathematical assumptions.  The actual value, if any, a Named
     Executive Officer may realize is dependent upon the market price
     on the date of option exercise.

   Aggregated Option Exercises in 1997 and December 31, 1997 Option
				Values

     The following table summarizes the number and value of all
unexercised options held by the Named Executive Officers.  The
absence, in the table below, of any Named Executive Officer indicates
that no options are held by such officer.  In 1997, no options were
exercised by any Named Executive Officer.


<PAGE>

<TABLE>
<CAPTION>

  <S>                             <C>            <C>          <C>             <C>  


				 Number of Securities          Value of Unexercised                                
			     Underlying Unexercised Options     In-the-Money Options
				as of December 31, 1997       as of December 31, 1997(a)

	Name                   Exercisable   Unexercisable   Exercisable     Unexercisable
									    
   Michael B. Bemis               20,000         25,000       $ 37,188        $ 226,563
   Louis E. Buck, Jr.              2,500              -          8,594                -
   Frank F. Gallaher              17,500         25,000         36,406          226,563
   Donald C. Hintz                27,500         25,000         53,594          226,563
   Jerry D. Jackson               24,411         25,000         20,841          226,563
   Edwin Lupberger                58,824         50,000        107,308          453,125
   Jerry L. Maulden               30,000         25,000         54,375          226,563
   Gerald D. McInvale             20,000         25,000         37,188          226,563
   William J. Regan, Jr.           2,500          2,000          8,594           12,875
   Michael G. Thompson            17,500              -         36,406                -

</TABLE>


(a) Based on the difference between the closing price of Entergy
    Corporation's common stock on the New York Stock Exchange
    Composite Transactions on December 31, 1997, and the option
    exercise price.

			  Pension Plan Tables

Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy

			  Retirement Income Plan Table
				   
       Annual                                       
      Covered                     Years of Service
				   
     Compensation    15           20         25        30         35
      $100,000    $ 22,500    $ 30,000    $37,500   $45,000    $52,000
       200,000      45,000      60,000     75,000    90,000    105,000
       300,000      67,500      90,000    112,500   135,000    157,500
       400,000      90,000     120,000    150,000   180,000    210,000
       500,000     112,500     150,000    187,500   225,000    262,500
       650,000     146,250     195,000    243,750   292,500    341,250
       950,000     213,750     285,000    356,250   427,500    498,750

     All of the Named Executive Officers participate in a Retirement
Income Plan, a defined benefit plan, that provides a benefit for
employees at retirement from Entergy based upon (1) generally all
years of service beginning at age 21 through termination, with a
forty-year maximum, multiplied by (2) 1.5%, multiplied by (3) the
final average compensation.  Final average compensation is based on
the highest consecutive 60 months of covered compensation in the last
120 months of service.  The normal form of benefit for a single
employee is a lifetime annuity and for a married employee is a 50%
joint and survivor annuity.  Other actuarially equivalent options are
available to each retiree.  Retirement benefits are not subject to any
deduction for Social Security or other offset amounts. The amount of
the Named Executive Officers' annual compensation covered by the plan
as of December 31, 1997, is represented by the salary column in the
Summary Compensation Table above.

     The credited years of service under the Retirement Income Plan,
as of December 31, 1997, for the Named Executive Officers is as
follows:  Mr. Bemis 15; Mr. Blount 13; Mr. Buck 2; Mr. Gallaher 28;
Mr. Maulden 32; and Mr. Regan 2.  The credited years of service under
the respective Retirement Income Plan, as of December 31, 1997 for the
following Named Executive Officers, as a result of entering into
supplemental retirement agreements, is as follows: Mr. Hintz 26;
Mr. Jackson 18; Mr. Lupberger 34; Mr. McInvale 25; and Mr. Thompson
21.

     The maximum benefit under the Retirement Income Plan is limited
by Sections 401 and 415 of the Internal Revenue Code of 1986, as
amended; however, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
have elected to participate in the Pension Equalization Plan sponsored
by Entergy Corporation.  Under this plan, certain executives,
including the Named Executive Officers, would receive an additional
amount equal to the benefit that would have been payable under the
Retirement Income Plan, except for the Sections 401 and 415
limitations discussed above.

     In addition to the Retirement Income Plan discussed above,
Entergy Arkansas, Louisiana, Mississippi, New Orleans, and System
Energy participate in the Supplemental Retirement Plan of Entergy
Corporation and Subsidiaries and the Post-Retirement Plan of Entergy
Corporation and Subsidiaries. Participation is limited to one of these
two plans and is at the invitation of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy.  The participant may receive from the appropriate Entergy
company a monthly benefit payment not in excess of .025 (under the
Supplemental Retirement Plan) or .0333 (under the Post-Retirement
Plan) times the participant's average basic annual salary (as defined
in the plans) for a maximum of 120 months.  Mr. Hintz has entered into
a Supplemental Retirement Plan participation contract, and all of the
other Named Executive Officers, (except for Mr. Blount, Mr. Buck,
Mr. McInvale, Mr. Regan, and Mr. Thompson) have entered into Post-
Retirement Plan participation contracts.  Current estimates indicate
that the annual payments to the Named Executive Officers under the
above plans would be less than the payments to that officer under the
System Executive Retirement Plan discussed below.

	      System Executive Retirement Plan Table (1)
				   
       Annual                                         
      Covered                      Years of Service
    Compensation        15           20           25           30+
     $  200,000     $ 90,000    $100,000     $110,000      $120,000
	300,000      135,000     150,000      165,000       180,000
	400,000      180,000     200,000      220,000       240,000
	500,000      225,000     250,000      275,000       300,000
	600,000      270,000     300,000      330,000       360,000
	700,000      315,000     350,000      385,000       420,000
      1,000,000      450,000     500,000      550,000       600,000
___________

(1) Benefits shown are based on a target replacement ratio of 50%
    based on the years of service and covered compensation shown.  The
    benefits for 10, 15, and 20 or more years of service at the 45%
    and 55% replacement levels would decrease (in the case of 45%) or
    increase (in the case of 55%) by the following percentages:  3.0%,
    4.5%, and 5.0%, respectively.

     In 1993, Entergy Corporation adopted the System Executive
Retirement Plan (SERP).  Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy are participating employers in the SERP.  The SERP is an
unfunded defined benefit plan offered at retirement to certain senior
executives, which would currently include all the Named Executive
Officers (except for Mr. Blount).  Participating executives choose, at
retirement, between the retirement benefits paid under provisions of
the SERP or those payable under the Supplemental Retirement Plan or
the Post-Retirement Plan discussed above.  Covered pay under the SERP
includes final annual base salary (see the Summary Compensation Table
above for the base salary covered by the SERP as of December 31, 1997)
plus the Target Incentive Award (i.e., a percentage of final annual
base salary) for the participant in effect at retirement. Benefits
paid under the SERP are calculated by multiplying the covered pay
times target pay replacement ratios (45%, 50%, or 55%, dependent on
job rating at retirement) that are attained, according to plan design,
at 20 years of credited service.  The target ratios are increased by
1% for each year of service over 20 years, up to a maximum of 30 years
of service.  In accordance with the SERP formula, the target ratios
are reduced for each year of service below 20 years.  The credited
years of service under this plan are identical to the years of service
for Named Executive Officers (other than Mr. Bemis, Mr. Jackson, Mr.
McInvale, and Mr. Thompson) disclosed above in the section entitled
"Pension Plan Tables-Retirement Income Plan Table".  Mr. Bemis, Mr.
Jackson, Mr. McInvale, and Mr. Thompson  have 25 years, 24 years, 16
years, and 16 years, respectively, of credited service under this
plan.

     The normal form of benefit for a single employee is a lifetime
annuity and for a married employee is a 50% joint and survivor
annuity.  All SERP payments are guaranteed for ten years.  Other
actuarially equivalent options are available to each retiree.  SERP
benefits are offset by any and all defined benefit plan payments from
Entergy and from prior employers.  SERP benefits are not subject to
Social Security offsets.

     Eligibility for and receipt of benefits under any of the
executive plans described above are contingent upon several factors.
The participant must agree, without the specific consent of the
Entergy company for which such participant was las