December 10, 2013 / 7:05 PM / 4 years ago

Entergy's rocky road to MISO may revive Gulf Coast power trading

* 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 (Reuters) - 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 lines.

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 buyers.

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.”


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 Louisiana.

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 existing grid.

“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, see

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.”

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