Entergy evaluating impact of FERC Order 1000 on RTO entry

Entergy (NYSE:ETR) is still digesting FERC Order 1000 but does not foresee it having a significant impact on its participation in a regional transmission organization, the company told this news service.

The New Orleans, La.- based utility in May submitted to regulators its application to join the Midwest Independent System Operator (MISO). The Southwest Power Pool (SPP) currently serves as Entergy’s Independent Coordinator of Transmission (ICT).

Order 1000, issued at the end of July, amends transmission planning and cost allocation requirements established earlier in Order 890. It also removes incumbent utilities’ right of first refusal (ROFR) to build new transmission lines. The Coalition for Fair Transmission Policy, among other entities, has issued a request for rehearing of the order.

Entergy does not expect its ROFR on projects currently planned to be affected by FERC Order 1000, Rick Riley, vice president of energy delivery for Entergy, said in an interview. The ROFR removal will have an impact on how the company plans transmission going forward, however.

“Local reliability projects aren’t impacted by the removal of ROFR, so that wouldn’t have an impact on the plans we have today, but it certainly might have an impact down the road on these larger projects that are out there,” Riley said.

Entergy plans to invest about $1.3bn in transmission for the 2011-2013 period.

“We’re evaluating what it would take to be in compliance with the new rule, if the rule were to stand as it is today,” Riley said. “Whether we’re in an RTO or not, we’ll be compliant with the rule, but we’re certainly talking about how a transition to the Midwest ISO, for example, would impact our compliance.”

Entergy’s decision to join MISO is primarily predicated on production cost savings related MISO’s Day-2 market, Riley said. For the 2013-2022 period, Entergy has identified $1.4bn to $1.6bn of savings in connection with joining MISO. Cost allocation methodology played a deciding but secondary role, he said.

FERC has approved both SPP’s and MISO’s cost allocation methodologies, Riley noted. MISO is a proponent of the “beneficiary pays” proposal, indicating that consumers who benefit from the construction of a transmission line should be among those who subsidize it.

In MISO, for new transmission lines operating at greater than 300 kV, 20% of the costs are allocated regionally, while the 80% remaining costs are run through a detailed analysis that determines who benefits from the new transmission, Riley said.

In SPP, by contrast, any new transmission line operated at a voltage greater than 300 kV is considered a benefit to everyone, spreading those costs across the entire SPP footprint.

“We’ve been a strong proponent of ‘beneficiary pays’ over the years and we felt the MISO proposal better aligned with those principles,” Riley said. He added that MISO regionally allocates costs of multivalue transmission lines, projects that provide multiple benefits or values for MISO members. 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.