* MISO membership needed for ITC Holdings transaction
* Texas regulators want time to analyze contract changes
* Entergy seeks alternate resolution
By Eileen O'Grady
HOUSTON, Jan 10 Texas regulators said Thursday
that a plan by Entergy Corp to end certain power
contracts may undermine economic benefits for Texas customers
that regulators relied on to approve the firm's move to the
Midwest Independent Transmission System Operator (MISO).
Depending on Entergy's action later this month, the Texas
Public Utility Commission may seek to revoke its October vote to
approve Entergy's integration into MISO set to be completed by
the end of this year, said Texas Commissioner Ken Anderson.
A lot is riding on Entergy's effort to transfer control of
its 15,000-mile, high-voltage grid network to MISO.
MISO membership is a key requirement in Entergy's plan to
spin off its transmission business to ITC Holdings Corp
in a $1.78 billion transaction.
Entergy's divestiture of its transmission business is also a
requirement to resolve an ongoing civil investigation by the
U.S. Department of Justice of Entergy's competitive practices.
The controversy over Entergy's transition to MISO was
sparked by a Texas filing which raised commission concern over
what information Entergy may have had, but did not disclose,
when it negotiated the settlement with other companies that the
PUC eventually approved.
Anderson said a new economic analysis by Entergy indicates
that $133 million in savings to Texas customers could be wiped
out if Entergy moves forward with a filing at the Federal Energy
Regulatory Commission (FERC) seeking to end certain purchased
Anderson chastised Entergy's behavior in the case, saying it
was "unacceptable conduct for a regulated utility" and
describing it as part of Entergy's "long history of hiding the
"It will not be tolerated any further," Anderson said.
"Phrasing their words in such a way to give them loopholes and
exceptions just won't work."
Commission Chairman Donna Nelson said if Entergy seeks to
change the power contracts at FERC, "it will be contrary to the
facts we relied on" to approve the MISO transition.
"If you reform these contracts, the contracts upon which
this commission relied when we approved the transition to MISO,
we lose the benefits that were shown to us for the transition,"
Commissioners advised Entergy to delay a FERC filing until
an independent analysis can determine how ending the purchased
power contracts will impact MISO's allocation of transmission
revenue rights to Entergy Texas, which is important to creating
John F. Williams, an attorney representing Entergy, told the
commission that the FERC filing needs to be made by the end of
January, but that the company is working to find another
"We're going to live up to our obligations to our customers
and our regulators," Entergy spokesman David Caplan said in a
"We are already working with PUC staff to come up with a
solution that satisfies everyone, so that our Entergy Texas
customers get the benefits of joining MISO," Caplan said. "We
intend to continue to work through this with the staff, clear up
any misunderstandings and make sure we are on the same page
Entergy cites several reports that show that MISO membership
will lead to savings of up to $1.4 billion over a decade for
Entergy's 2.8 million customers in Louisiana, Arkansas,
Mississippi and Texas.
Meanwhile, ITC and Entergy continue to work on regulatory
approval of the spin off and merger which will double ITC's
size. Filings have been made in Louisiana, Arkansas,
Mississippi, the New Orleans City Council and with FERC,
according to the company's website.
"We continue to remain focused on obtaining the necessary
approvals in our transaction, and we are hopeful this recent
issue can be resolved quickly among the parties," said Bob
Doetsch, an ITC spokesman.
MISO officials declined to comment.