Arkansas regulators have ordered Entergy Arkansas to make a change of control filing within the next 30 days related to the company’s plan to join the Midwest Independent Transmission System Operator.
That filing would essentially ask the Arkansas Public Service Commission to allow MISO to operate the Entergy (NYSE:ETR) subsidiary’s transmission system, a company spokesperson said Nov. 2.
“Entergy Arkansas realizes that the plan to join MISO involves technical subject matter and detailed issues,” the spokesperson said. “We will continue to work closely with the APSC and other stakeholders to answer questions and address concerns.”
The company will make the filing by Nov. 28.
According to the order, the PSC began the docket in February to determine whether Entergy Arkansas, independent of its parent company, was investigating all options when the current Entergy system agreement – which is a FERC-jurisdictional agreement that allocates certain costs among the Entergy operating companies – ends in December 2013, and whether the company is taking all necessary steps to protect its ratepayers against continued detrimental effects related to its participation in the agreement, as well as the operation and control of the Entergy transmission system.
Entergy Arkansas gave official written notice in December 2005 of its intent to exit the agreement effective December 2013.
According to the PSC, the remaining viable reorganization options for post-agreement operations are for Entergy Arkansas to be a stand-alone utility with third-party pooling and other service arrangements on a short-term basis, and for the company to be a stand-alone utility as its own member of an RTO, either MISO or Southwest Power Pool, the PSC said.
Joining an RTO should produce more efficient transmission planning and generator interconnection processes, increased production cost savings, increased price transparency and better market access for independent power producers, the PSC said.
The differences in overall cost reductions between MISO and SPP are small on a monthly basis given certain input and modeling forecasting uncertainties.
“[T]he commission finds no definitive basis upon which to conclude whether the MISO option or the SPP RTO option is in the best interest of [Entergy Arkansas] and its ratepayers,” the PSC said. “Considering all factors together, however, the commission finds that [Entergy Arkansas] joining an RTO is prudent.”
Therefore, the PSC will defer a determination regarding the company’s decision to join an RTO until such time as Entergy Arkansas files an application to transfer operational control of its transmission facilities to an RTO.
The PSC directed the company to file an integrated plan for its post-agreement reorganization, independent of the other Entergy operating companies, including generation planning, resource acquisition and other aspects of its utility operations, excluding transmission, by Jan. 11, 2012.
Entergy said in April that joining MISO “will provide meaningful long-term benefits for the customers of the Entergy operating companies.”
While Entergy Arkansas joining an RTO is generally a prudent course of action, according to the PSC, the details of RTO membership, including the timeline for the company’s transition into an RTO as well as the conditions of membership, have not been provided.
The PSC said it expects the details of Entergy Arkansas’s RTO membership proposal will be provided at the time the company files its request to transfer operational control of its transmission assets and become a member of an RTO. That filing should be made within 30 days of the order’s date.
The PSC said it recognizes that all post-agreement reorganization options have differing levels of risk that must be mitigated. Regardless of whether Entergy Arkansas joins an RTO or becomes a stand-alone entity with third-party arrangements with non-Entergy entities, the PSC said it expects the company to independently conduct its own utility operations, including generation planning.
Furthermore, given the need for transmission investment in the Entergy region in the future, it is key that Entergy Arkansas be insulated against any attempts to shift transmission costs from the other Entergy operating companies to Entergy Arkansas, as it can no longer participate in transmission equalization with the other operating companies.
Meanwhile, Entergy companies Entergy Louisiana and Entergy Gulf States Louisiana on Oct. 31 filed a joint application with Louisiana regulators seeking to join MISO.