Entergy officials say customers will not notice much difference in their bills or service initially.
Because the two states have different regulatory schemes, the move will allow each new company to better focus the management of buying and selling electricity more efficiently, said T. Michael Twomey, Entergy's vice president in charge of regulatory affairs.
The PSC's decision means that only Louisiana's regulators will have a say in any new nuclear plant built at St. Francisville.
Entergy Gulf States serves 356,860 customers from Baton Rouge to the Texas state line near Lake Charles.
Entergy Gulf States also has 382,904 customers in 24 east Texas counties near Beaumont and Houston.
The split issue has been debated for 11 years. The PSC approved the separation without objection after the five commissioners voted 3-2 to side with Entergy's lawyers over PSC staff lawyers on the remaining sticking points.
The most contentious issue was how to handle the River Bend nuclear power plant near St. Francisville, owned by Entergy Gulf States.
Entergy proposed that the Louisiana offspring of the split company own the entire nuclear power plant but that it continue to sell some of the power it generates to Texas.
Michael Fontham, the New Orleans lawyer hired by the PSC to handle the case, urged caution.
He said that, if the plant has a catastrophic accident, then Entergy Gulf State's Louisiana customers would have to pay the costs of cleanup. He wanted Entergy's shareholders to shoulder more of the responsibility.
Entergy disagreed with Fontham's analysis.
"Louisiana ratepayers will not be responsible for one dime of costs that are different than what they are responsible for right now," Twomey said.
Twomey said that customers and shareholders are protected by the federal Price Anderson Act, which provides $10 billion to cover nuclear accidents. Only $151 million has been paid out of that fund over the past 43 years, he said.