* Midwest grid agency market expands by four states
* Grid divestiture to ITC Holdings advances
* Entergy takes first step to resolve DOJ investigation
HOUSTON, Dec 13 Directors of the Midwest
Independent Transmission System Operator (MISO) on Thursday
added Entergy's six utility units and a Mississippi cooperative
as new members, expanding the grid agency's market reach to the
Gulf coast and advancing Entergy's plan to divest its
Entergy said its membership in MISO will lead to savings of
up to $1.4 billion over 10 years for its 2.8 million customers
in Arkansas, Louisiana, Texas and Mississippi. The integration
of its 15,000-mile transmission network into the 11-state MISO
system is expected to be completed by the end of 2013.
After months of study, Entergy chose MISO over a rival power
grid operator, the Southwest Power Pool, because of MISO's Day 2
wholesale market, which dispatches the most efficient and
cost-effective power plants first.
ITC Holdings Corp also made membership in an
independent regional transmission organization (RTO) a
prerequisite to move ahead with a plan for New Orleans-based
Entergy to spin off its transmission operation and merge it into
ITC in a transaction valued at $1.78 billion.
Joining MISO is also a first step to resolve an
investigation by the U.S. Department of Justice which has been
looking into Entergy's competitive practices since 2010.
Last month, the DOJ said if Entergy joins an RTO and divests
its grid operation, it will resolve the antitrust division's
concerns "by eliminating Entergy's ability to maintain barriers
to wholesale power markets, ensuring that all Entergy service
area generation is dispatched independently and at lowest cost,
increasing market transparency and oversight, and properly
aligning incentives for the construction of transmission,"
according to a DOJ statement.
The ongoing DOJ investigation will keep pressure on Entergy
and ITC to obtain approval of the grid proposal, which is likely
to face "as much or more scrutiny" from state regulators as
Entergy's move to MISO, said David Cruthirds, a Houston-based
attorney who tracks utility regulation and is a long-time
Should Entergy not move forward to sell its grid operation,
the DOJ's antitrust division "can and will take appropriate
enforcement action, if warranted," the agency warned.
In a report to clients, Cruthirds said it is unclear how the
pressure will affect state consideration of the ITC proposal,
"but the DOJ's threat clearly puts the states in a stronger
negotiating position than Entergy."
Entergy's grid practices are also under scrutiny from the
Federal Energy Regulatory Commission for possible violations of
Separately, the MISO board Thursday approved the South
Mississippi Electric Power Association (SME) as a member.
The cooperative generates and sells wholesale electric
energy to 11 member coops serving 410,000 homes and businesses
in 56 Mississippi counties and its transmission system is linked
with the Entergy Mississippi system.
"A portion of our load is served by the Entergy transmission
system which means that any changes to the operation of their
transmission system impact us," said Jim Compton, SME's chief
"After conducting several studies, we determined that
joining MISO would bring greater value to our member systems
than we could as a stand-alone utility," Compton said.
Due to its proximity to the Entergy grid, Pineville,
Louisiana-based Cleco Corp also plans to join MISO and
filed for approval from the Louisiana Public Service Commission