Reuters: Regulatory News: Arkansas puts many conditions on Entergy move to Midwest grid

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Arkansas puts many conditions on Entergy move to Midwest grid Aug 6th 2012, 18:48 HOUSTON | Mon Aug 6, 2012 2:48pm EDT HOUSTON Aug 6 (Reuters) - Entergy Corp's Arkansas utility has more work to do to convince Arkansas regulators that it should be allowed to join the Midwest Independent Transmission System Operator (MISO), according to a order issued late Friday by the Arkansas Public Service Commission. The Arkansas order is being watched closely by state regulators in Louisiana, Texas and Mississippi as Entergy seeks to gain approval in each state to transfer control of its high-voltage transmission assets to MISO. New Orleans-based Entergy, which has been unwilling - despite a number of attempts - to relinquish control of its transmission grid, is now working to join the 11-state MISO by December 2013. Membership in MISO or another regional transmission organization (RTO) is a prerequisite to Entergy's plan to spin off its transmission operation to ITC Holdings Corp. Entergy needs approval from each state to join an RTO to advance the ITC deal, according to ITC officials. Overall, Entergy said MISO membership will lead to savings of up to $1.4 billion over a decade for its 2.8 million customers in four states. The Arkansas PSC said it was "unable" to decide that Entergy's move to MISO would be the best option for Arkansas customers and outlined 20 conditions the parties must meet for approval. "Given the separate and collective failure of (Entergy Arkansas) and MISO to effectively address and satisfy the commission's concerns, we are unable, at this time, to reach a finding that (Entergy's) application is in the public interest," the Arkansas commission said in a 33-page ruling. Louisiana regulators approved Entergy's request to join MISO in May, but retained the right to re-examine its decision based on action by other states. If Entergy and MISO are able to meet the PSC's conditions, regulators want Entergy Arkansas to join MISO on its own as the commission seeks to ensure the Arkansas utility functions independently from Entergy's other units after it exits a long-term agreement to share resources, a pact that has cost Arkansas customers $4.5 billion over the last 27 years, the PSC said. MISO described the PSC order as a "roadmap" for the utility. "We appreciate the guidance from the (PSC)," said John R. Bear, MISO president. The Arkansas commission remains concerned about its legal authority regarding rate changes to be decided at the federal level, rejecting MISO's offer of "shared rights" under Section 205 of the Federal Power Act. The PSC also instructed Entergy Arkansas to evaluate membership in the Southwest Power Pool or another RTO if the MISO conditions aren't met. If approved by state regulators and the Federal Energy Regulatory Commission (FERC), MISO would assume control of Entergy's transmission planning, dispatch of the generation offered into MISO's markets and manage grid congestion. Entergy's move to join MISO came in the last three years at the growing insistence of state regulators and FERC. The agencies had received complaints over the years from independent power producers trying to sell power outside Entergy's transmission area and smaller utilities seeking to import cheaper power using the Entergy grid. The move also follows the October 2010 disclosure that Entergy was cooperating with a U.S. Department of Justice civil investigation of its competitive practices, including its transmission system practices. Entergy Chief Executive Officer J. Wayne Leonard said last week the DOJ review is ongoing. Link this Share this Digg this Email Reprints

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