HOUSTON Dec 10 The Mississippi Public Service
Commission on Tuesday rejected Entergy Corp's deal to
divest its transmission operation to ITC Holdings in a
transaction valued at $1.78 billion.
In a 3-0 vote, the Mississippi commission said the
transaction was not in the public interest and would raise
transmission rates for Entergy Mississippi customers
The transaction is a spin-off and merger of Entergy's
15,400-mile transmission network serving parts of Arkansas,
Louisiana, Mississippi and Texas.
The deal, which would double the size of ITC's operation,
has been approved by federal regulators and ITC shareholders,
but faced growing opposition from state regulators in several
The Mississippi commission is the first state to deny the
The commission's order said testimony indicated customers
would pay $348 million more over 30 years under ITC ownership
because ITC can earn a higher rate of return allowed under
federal regulation compared to state regulation.
The transaction "offers with certainty only significant cost
to rate payers and complete loss of this commission's rate
jurisdiction over the transmission assets at issue," the
"We are disappointed that the Mississippi commission took
action today and found that the transaction is not in the public
interest," said Entergy spokesman Michael Burns. "We will
evaluate the Mississippi commission's 99-page order and work
with ITC to determine next steps."
"It is not a surprise given the opposition we have seen,"
said Paul Patterson, an analyst at Glenrock Associates in New
Entergy and ITC sought to address state concerns by offering
a total of $453 million in rate mitigation over five years to
Entergy customers to offset ITC's higher rate of return.
In Mississippi, Entergy and ITC offered $77.5 million in
The Texas Public Utility Commission was preparing to reject
the deal in August, but allowed Entergy and ITC to withdraw and
resubmit the proposal to include details of the mitigation plan
A second hearing on the deal was held in Texas in late
November, but the commission has not ruled.
Other utility regulators in Louisiana, Arkansas and the City
of New Orleans are still considering the deal.