HOUSTON Feb 19 Entergy Corp and ITC
Holdings Corp have asked Texas regulators to approve
Entergy's $1.78 billion plan to spin off its electric
transmission business, the companies said on Tuesday.
New Orleans-based Entergy and Michigan-based ITC filed a
request with the Texas Public Utility Commission (PUC) to allow
Entergy Texas to spin off and merge its high-voltage power
delivery assets into a subsidiary of ITC called ITC Midsouth
The Texas filing is the last of the local, state and federal
applications needed to advance the deal to transfer Entergy's
15,400-miles transmission network to ITC. Applications are
pending in Arkansas, Louisiana, Mississippi, Missouri and at the
Federal Energy Regulatory Commission.
If approved, Entergy said the ITC deal will address
"challenges facing the entire electric industry - challenges
driven by the need to upgrade infrastructure, modernize
equipment and meet growing environmental and compliance
requirements," according to a release.
Entergy has said its four-state network in Louisiana,
Mississippi, Arkansas and Texas might require up to $2 billion
in upgrades over the next few years.
As a prerequisite to the ITC deal, Entergy plans to complete
by year-end its integration into the Midwest Independent System
Operator (MISO), an independent regional transmission
organization where ITC already operates.
Membership in an RTO and divestiture of its grid network
comes at the insistence of Entergy's regulators following a
decade of complaints from independent power producers and
others. The action also is necessary to resolve an ongoing civil
investigation by the U.S. Department of Justice of Entergy's
competitive practices, the agency said.
However, Entergy has run into a snag in Texas over its MISO
An Entergy Texas filing raised PUC concern over what
information Entergy may have had, but not disclosed, when it
negotiated a settlement approved by the PUC last October.
The PUC wants an independent evaluation of how Entergy's
plan to cancel some purchased power contracts will impact $133
million in savings expected to flow from MISO membership.
Entergy Chief Executive Leo Denault told investors earlier
this month that the PUC issue was a "misunderstanding that we
wish had not happened."
"But we are working to resolve the issue and move forward so
that all of our customers can realize the benefits of joining
MISO," Denault said.
Denault said the contracts Entergy wants to cancel relate to
natural gas and oil-fired power plants in Texas and Louisiana
dating back five years when Entergy Gulf States was split into
two companies, one operating in Louisiana and one operating in
Denault said Entergy's analysis shows that "Entergy Texas
will be in essentially the same position with or without" (the
For ITC, the Entergy transaction would double the
high-voltage lines it controls to more than 30,000 miles across
11 states from the Great Lakes to the Gulf Coast.
Entergy and ITC announced the deal in December 2011 and want
to complete it this year.