Louisiana state regulators on May 23 unanimously approved the proposal by Entergy Louisiana and Entergy Gulf States Louisiana to join the Midwest ISO (MISO), the companies said.
Louisiana is the first state in which approval has been given to Entergy (NYSE:ETR) operating companies to transfer functional control of their transmission facilities to the RTO. Subject to conditions, the proposed integration into MISO is expected to take place in December 2013, the companies added.
Each of the six utility operating company subsidiaries of Entergy, which do business in Arkansas, Louisiana, Mississippi, Texas and New Orleans, has filed for similar approval with its respective regulator to join MISO, the companies said.
A May 2011 analysis showed that joining MISO is expected to result in net benefits to customers of Entergy Louisiana and Entergy Gulf States Louisiana, collectively, of $430m to $575m on a net present value basis based on a study period of 2013 to 2022, the companies said.
Bill Mohl, president and CEO of Entergy Louisiana and Entergy Gulf States Louisiana, told TransmissionHub May 23 that the Louisiana Public Service Commission’s (LPSC) approval is conditional and that there are various issues that will be handled in a subsequent phase.
“[W]e’ve got to take into consideration things like what happens if some of the Entergy operating companies may not join MISO, they may not obtain approval,” he said. “We’ve got issues around transmission allocations that have to be worked out among the stakeholders. We’ve also got issues about various governance-related matters associated with joining MISO, so for Louisiana, this is the first phase [and] we’ll immediately move into the second phase, working with stakeholders.”
In a parallel path, approval is also being sought of the other state jurisdictions, he said, noting that next in line is Arkansas, in which hearings involving state regulators will be held the week of May 28.
The other Entergy operating companies will have similar hearings during the summer or fall “and we hope to have all the state proceedings wrapped up by no later than the fourth quarter of this year,” Mohl said, adding that FERC approval is also needed.
In a separate May 23 statement, Todd Hillman, MISO executive director, Entergy integration and market development, said that the membership of Entergy Louisiana and Entergy Gulf States Louisiana in MISO will mean greater reliability and lower costs throughout the state.
Separately on May 23, he said that MISO continues to have productive discussions around the benefits MISO provides across the region, and the growing support for Entergy’s bid is an indication of that.
“MISO will continue to meet with stakeholders and customers throughout the Entergy region,” Hillman said. “It is important to provide education and training, and we will continue to conduct that throughout Louisiana.”
Mohl said that the importance of the LPSC decision is the fact that the companies were able to work with all the stakeholders in a collaborative process and obtain the LPSC’s approval based on the conditions.
“[W]e will be working with the stakeholders going forward to address each of the conditions specified…and we’ll work with them over the course of the next, probably, three to six months to resolve all those issues,” he said.
Those stakeholders include industrial customers, NRG Energy (NYSE:NRG), and other utilities like Cleco (NYSE:CNL), he said.
“NRG and Louisiana Generating believe joining MISO is in the public interest and we support the Entergy proposal,” Jennifer Vosburg, president of NRG’s wholly owned subsidiary Louisiana Generating, said May 23.
She said joining MISO can bring needed improvements to the transmission system through improved planning as well as through MISO’s Day 2 market. Vosberg also said this move is bigger than just Entergy as it will also impact utilities, cooperatives, municipalities and independent power producers that are dependent on the Entergy transmission system.
The public interest determination is just the start, she said, adding that it will be important that the integration process ensures all impacted parties are minimally impacted, are treated equitably with Entergy, and that the move benefits all the electrical consumers in Louisiana and the surrounding states.
Mohl said that as it relates to transmission, the move to MISO “will allow us to continue to enhance reliability by working with MISO, [which] will take more of a centralized planning approach – they will be the ones who are…looking at any proposed projects, dealing with the cost allocations with those projects, etc., and then operating that entire system on an integrated basis.”
A recent example of how Entergy is working on improving reliability, he said, is the joint Acadiana Load Pocket (ALP) project, which, according to a May 22 statement, is coordinated by Cleco Power, Entergy Gulf States Louisiana and Lafayette Utilities System (LUS).
The companies are building the estimated $193m transmission infrastructure ALP Reliability Project, which is on track to be substantially completed in June, according to a project fact sheet. The project includes upgrades to certain existing electric facilities as well as the construction of new substations, transmission lines and capacitor banks.
Entergy Gulf States Louisiana is completing a new transmission line from Sellers Road to LUS’ T.J. Labbé power generating station to wrap up its portion of the joint project, which is estimated to cost $50m, according to the statement.