Reuters: Regulatory News: Texas regulators put conditions on Entergy's move to Midwest ISO

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Texas regulators put conditions on Entergy's move to Midwest ISO Oct 19th 2012, 21:46 Fri Oct 19, 2012 5:46pm EDT * Texas wants Entergy out of generation pact with sister utilities * Entergy's move to MISO a precursor to grid spin-off By Eileen O'Grady HOUSTON, Oct 19 (Reuters) - Texas utility regulators on Friday tentatively agreed to allow Entergy Corp to join the Midwest Independent Transmission System Operator (MISO), but only if Entergy meets several strict conditions. New Orleans-based Entergy is working to gain regulatory approval to transfer control of its high-voltage transmission system to MISO as a prerequisite to its plan to spin off its transmission business to ITC Holdings Corp in a $1.78 billion transaction. Overall, Entergy said MISO membership will lead to savings of up to $1.4 billion over a decade for its 2.8 million customers, but it is having a tough time convincing regulators in four states and the City Council of New Orleans to go along. If approved by those regulators and the Federal Energy Regulatory Commission (FERC), MISO will take control of Entergy's transmission planning, dispatch of generation offered into MISO's markets and manage grid congestion in late 2013. In Texas, Entergy's utility reached a settlement with several parties, but Public Utility Commissioner Kenneth Anderson was not satisfied with several provisions in the agreement. Anderson, who said he favors utility membership in an independent regional transmission organization (RTO), said the savings expected under MISO might not reach Entergy Texas customers while the utility remains subject to a long-term agreement to share generation resources with other Entergy utilities. The "Entergy System Agreement" has been a point of contention for years in Louisiana and Arkansas. Entergy Arkansas and Entergy Mississippi are dropping out of the agreement. Citing confidential filings in the case, Anderson said expenses under the system agreement "are really big numbers." The settlement "falls way short of giving Entergy Texas the benefits of today's market," Anderson said. "There is plenty of information in the record that going to MISO while part of the system agreement is not in the public interest." Before giving Entergy a green light to join MISO, the commission will require Entergy Corp. officials to commit to work to remove Entergy Texas from the system agreement and to speed up the exit process which now takes eight years. Texas will also condition its approval on a final resolution between MISO and FERC on the allocation of transmission revenue rights, an issue Anderson said is critical due to existing congestion on the Entergy grid. Anderson said that while MISO has been working with stakeholders on the issue, he wants to make sure the outcome satisfies parties that signed the Texas settlement. "This is a major stumbling block," said Anderson, recently re-elected president of the Entergy Regional State Committee which represents state commissions that regulate Entergy's utilities. Without the conditions, Anderson said he was prepared to convince his colleagues to reject the settlement and deny Entergy's move to MISO. The commission is expected to take final action by the end of the month. Entergy's move to join an RTO came in the last three years at the growing insistence of its many regulators who 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. Louisiana regulators approved Entergy's move to MISO in May, but retained the right to re-examine its decision based on action by other states. Arkansas regulators have also put conditions on Entergy's application which is still under review. Meanwhile, Entergy and ITC are moving forward to gain regulatory approval of the spin off. Parties signing the settlement in Texas included a trade group for large industrial companies, the East Texas Electric Cooperatives, NRG Energy, which operates power plants in Louisiana; Southwestern Public Service Co, a unit of Xcel Energy , and a coalition of cities served by Entergy Texas. Link this Share this Digg this Email Reprints

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