Reuters: Regulatory News: UPDATE 1-Arkansas grants conditional OK for Entergy to join MISO

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UPDATE 1-Arkansas grants conditional OK for Entergy to join MISO Oct 26th 2012, 23:35 Fri Oct 26, 2012 7:35pm EDT * Three states have approved Entergy's membership in MISO * MISO move a precursor for transfer to ITC Holdings HOUSTON Oct 26 (Reuters) - Arkansas regulators gave conditional approval on Friday to allow Entergy Corp to join the Midwest Independent Transmission System Operator (MISO), a key decision being watched by other states that oversee its utility operations. The order from the Arkansas Public Service Commission came a day after Texas regulators gave Entergy the go-ahead to transfer control of its 15,000-mile, 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. Entergy Chief Executive Wayne Leonard has said he wants to divest the transmission business because the significant investment needed in coming years will be a drain on Entergy's finances as it bolsters its generation business. The Arkansas commission said Entergy and MISO "either complied or substantially complied" with 19 conditions outlined in an August order. "Today is a major step forward for electric customers throughout Arkansas and all of the Entergy service area," MISO President John R. Bear said in a release. The commission said Entergy Arkansas can move forward to integrate its grid into MISO, but withheld final approval until MISO confirms governance rule changes that give state regulators additional authority. The ability of state regulators to act on rate changes made at the federal level was a key sticking point. Entergy still needs approval from federal regulators along with the Mississippi utility commission and the City Council of New Orleans to join MISO by late 2013. Membership in MISO will lead to savings of up to $1.4 billion over 10 years for Entergy's 2.8 million customers in Louisiana, Arkansas, Mississippi and Texas, Entergy has said. Because access to Entergy's power grid in Arkansas is critical to passing savings from MISO's "Day 2" market to all Entergy utilities, state regulators have watched the long-running Arkansas proceeding carefully. Louisiana regulators approved Entergy's request in May, but retained the right to re-examine its decision based on action by other states. An official with the Southwest Power Pool, another regional grid organization that competed with MISO to attract Entergy, said he was "surprised and disappointed" by the PSC's action. The agency's conditional approval "appears to set a lesser standard than that placed upon other Arkansas utilities when they joined SPP, specifically the required governance that ensures ratepayers are protected through express authority delegated to state commissioners," SPP President Nick Brown said in a release. Brown also warned that Entergy's move to MISO "will create a seam that will be difficult to manage and ripe for litigation as has been the case with MISO's eastern seams." Entergy's move to join an RTO came at the insistence of regulators, who received complaints over the years from independent power producers trying to sell energy outside Entergy's transmission area, and from 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 into its competitive practices, including its transmission system practices. Meanwhile, Entergy and ITC are moving forward to gain regulatory approval of the spin off and merger. Link this Share this Digg this Email Reprints

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