JACKSON, Miss. and NOVI, Mich., Oct. 5, 2012 /PRNewswire via COMTEX/ — Entergy Mississippi, Inc., in conjunction with ITC Holdings Corp. (ITC) and ITC Midsouth LLC, filed a request today at the Mississippi Public Service Commission to spin off the Mississippi electric transmission business and merge it into a subsidiary of ITC. The Mississippi filing continues the multi-state and federal regulatory process seeking approval for the transaction announced last year by Entergy Corporation (ETR) and ITC.
The transaction is a significant step toward meeting the challenges facing the electric industry in Mississippi and across the country – challenges driven by the need to upgrade infrastructure, modernize equipment and meet growing environmental and compliance requirements.
“This proposal builds on years of hard work and aggressive investment to improve service to our customers,” said Haley Fisackerly, Entergy Mississippi president and CEO. “It paves the way for new investment, new expertise and an independent company singularly focused on transmission in the region.”
Entergy is seeking approval to transfer more than 15,800 miles of interconnected transmission lines at voltages of 69kV and above and the associated substations to ITC. ITC will then be one of the largest electric transmission companies in the U.S., with more than 30,000 miles of transmission lines spanning from the Great Lakes to the Gulf Coast. Meanwhile, Entergy’s operating companies will continue to own and operate their respective distribution and generation businesses and will provide customer service, billing, outage reporting and restoration services to homes and businesses in the region.
“We look forward to serving Mississippi and the entire region to meet future energy demands,” said Joseph L. Welch, ITC chairman, president and chief executive officer. “ITC’s new regional headquarters will be in Jackson, and we are excited about working with local stakeholders, customers and members of the business community. We will work to deliver the near-term and longer-term benefits to customers that result from our high-performing, reliable transmission system and a regional planning view that promotes the benefits of the competitive electric market, all of which is in the public interest.”
Rationale and Results
The need for more infrastructure investment is among the many challenges confronting the U.S. electric industry. The electric industry, including Entergy Mississippi, faces growing capital investment requirements to maintain and upgrade infrastructure, meet environmental regulations and serve an energy-intensive economy. The transaction addresses these challenges head-on and produces numerous benefits, including:
Independent model: Customers and other stakeholders will benefit from ITC’s proven independent business model for owning and operating transmission systems. ITC’s independence from all buyers and sellers of electric energy provides the highest level of confidence that improvements to the electric transmission grid are planned for the broadest public benefit.
Singular focus: The transaction results in two companies that are more specialized and focused – ITC on transmission and Entergy on generation and distribution. ITC has a demonstrated capability to operate transmission systems at industry-leading levels of safety and reliability. At the same time, Entergy Mississippi and the other operating companies will increase their focus on their respective generation fleets and distribution systems.
Wholesale markets and a regional planning view: The transaction enables infrastructure investment and builds upon the benefits of the wholesale market. By structurally separating the transmission business from generation and distribution businesses, the transaction encourages greater participation in the transmission planning process and disclosure of information by third parties – leading to an improved process. Further, the independent model aligns with national policy objectives to facilitate investment in local, regional and inter-regional transmission, and advances open access initiatives.
Financial strength and flexibility: Once completed, the transaction will yield separate companies with strong balance sheets and greater capability to finance the infrastructure investment requirements of today and in the future. Entergy Mississippi maintains financial flexibility – reducing debt and focusing capital expenditures on generation and distribution. ITC improves access to capital for the transmission business and focuses its financial resources solely on the performance of the transmission system.
Additional Transaction Facts and Next Steps
In addition to the miles of transmission lines and acres of substations involved in the transaction, approximately 750 Entergy employees, including key leadership personnel from Entergy’s transmission business, will become employees of ITC. ITC will establish a regional headquarters in Jackson, Miss., where the headquarters of Entergy’s transmission business currently is located. The company will have offices and warehouses throughout Mississippi and the rest of the Entergy service territory to ensure a local presence and timely response to stakeholder and system needs.
Integration efforts to ensure storm readiness and response are among the key operational matters being addressed by the two companies. Key ITC personnel were onsite at Entergy’s system command center in Jackson during Hurricane Isaac to observe storm response operations.
Entergy operating companies and ITC initiated the regulatory process on Sept. 5 with a joint application filing with the Louisiana Public Service Commission. Joint applications were subsequently filed with the New Orleans City Council on Sept. 12, the Federal Energy Regulatory Commission on Sept. 24, and the Arkansas Public Service Commission on Sept. 28. ITC filed a combined registration statement, proxy statement and prospectus on Form S-4 with the Securities and Exchange Commission on Sept. 25. The remaining regulatory filings for the transaction will be completed this year in Missouri and Texas. The companies target a transaction close in 2013 pending receipt of all required regulatory approvals and satisfaction of other closing conditions.