June 20 The Federal Energy Regulatory Commission
(FERC) on Thursday approved Entergy Corp's $1.78 billion
plan to spin off and then merge its electric transmission
business with ITC Holdings Corp.
FERC said in a statement that the transfer of assets is
consistent with the public interest and meets the commission's
New Orleans-based Entergy and Michigan-based ITC are working
to gain approval in several states to divest Entergy's
high-voltage power delivery assets into an ITC subsidiary called
ITC Midsouth LLC.
On completion of the deal, Entergy shareholders would own
50.1 percent of the newly enlarged ITC and existing ITC
shareholders would own the remaining 49.9 percent. Entergy would
receive gross cash proceeds of $1.78 billion from indebtedness
incurred in connection with the transaction, while the new ITC
would assume responsibility for the debt.
Entergy operates a 15,400-mile transmission network serving
parts of Arkansas, Louisiana, Mississippi and Texas.
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," Entergy has said.
Entergy has said its four-state network might require up to
$2 billion in upgrades over the next few years.
As a prerequisite to the ITC deal, Entergy has joined the
Midcontinent Independent System Operator (MISO), an independent
regional transmission organization where ITC already operates.
Membership in an RTO and divestiture of its grid network
come 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.
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 the transaction this year.