* Entergy to relinquish grid control to MISO this month
* Utilities, coops and munis prepared for new market
* Region may see big bump in industrial power demand
By Eileen O'Grady
HOUSTON, Dec 10 The U.S. Gulf Coast region may
see a rebirth in power trading as Entergy Corp and
utilities in four states join the Midcontinent Independent
System Operator (MISO), one of the world's largest grid
operators and wholesale energy markets, later this month.
After more than 15 years of wrangling, New Orleans-based
Entergy will give up day-to-day control of its 15,000-mile
(24,000-km) transmission network when it joins the Midwest power
grid that currently spans nearly 50,000 miles of high-voltage
The move is designed to improve efficiency of the
high-voltage grid and help resolve a U.S. Justice Department
inquiry into alleged anti-competitive behavior by Entergy that
merchant generators said hindered their ability to move power to
Utilities and power generators across Louisiana, Arkansas,
southeast Texas and western Mississippi will follow Entergy's
lead, expanding MISO's footprint from 11 to 15 U.S. states to in
a region that stretches from the Gulf of Mexico to the Canadian
province of Manitoba.
The timing could not be better. Soaring U.S. natural gas
production from shale formations is translating into a frenzy of
proposed industrial facilities, including chemical plants and
liquefied natural gas export terminals along the Gulf Coast.
Companies have announced some $54 billion in industrial
projects since 2008 that will create 83,000 jobs in Louisiana
alone, according to the state's economic development agency.
Entergy Chairman Leo Denault has said the industrial
renaissance could add 2,000 megawatts of demand, which has
lagged in the region since Hurricane Katrina. Entergy's
territory, he told investors last month, is "the hotbed of where
this kind of activity is getting ready to occur."
COMPANIES FOLLOW ENTERGY
Following Entergy into the non-profit MISO are Pineville,
Louisiana-based Cleco, NRG Energy's Louisiana
Generating unit along with municipal utilities and electric
cooperatives concentrated in Louisiana and Mississippi.
Regional transmission organizations, or RTOs, were created
to fulfill the Federal Energy Regulatory Commission's (FERC)
policy issued in 1996 to encourage competition between power
generators by requiring open access to transmission.
MISO, the nation's first RTO, currently oversees in excess
of $18.4 billion in annual energy transactions. The new region,
dubbed MISO South, will have trading hubs in Texas, Arkansas and
While the switch to MISO will not add new power lines or
generation overnight, MISO's ability to coordinate power-plant
operation across a larger footprint will make better use of the
"We have long believed joining an RTO would be in the best
interests of our customers," Entergy spokesman Michael Burns
said. Customers will save $1.4 billion in the next decade.
Entergy has denied claims raised by the DOJ investigation.
MISO's day-ahead and real-time energy markets will allow
participants to buy and sell power at specific locations through
open, competitive bidding.
"It's amazing how far the region has come," said Jennifer
Vosburg, president of Louisiana Generating which operates 4,400
MW in Louisiana and Texas. "We are going so far, so fast (from)
where we've been - from a challenging physical market - to a
true nodal market overnight. We are all excited about the
opportunity," she said.
Vosburg said it will take some time for participants to
understand the new wholesale environment. "For the first year,
you'd expect to see some volatility," she said.
More than 175 companies participated in the integration
process, said Todd Hillman, MISO regional vice president.
"We...are looking forward to expanding the value MISO provides
to our new members," he said.
Entergy relinquishing control of its transmission network
comes after years of resistance and false starts that took a
heavy toll on the region's wholesale generators. For a timeline,
Few of the dozen or more natural gas-fired power plants
built by independent power producers in the Entergy region in
the early 2000s have survived.
Attracted by access to gas pipelines and FERC's vision for
competition, merchant generators often were unable to sell power
because of congestion on Entergy's grid. Smaller municipalities
and co-ops complained they were unable to import cheaper power.
Many independent generators went bankrupt; Entergy utilities
bought seven failing plants for bargain prices.
In an interview before he retired earlier this year, former
Entergy Chairman J. Wayne Leonard said grid independence had
been his long-held goal, but said Entergy had made mistakes.
"The first attempt we made at it, we didn't get very far,"
Leonard said. "It wasn't structured well enough - I'll openly
admit that. It wasn't independent enough."