Entergy (NYSE: ETR) Chairman and CEO J. Wayne Leonard said on Nov. 5 that there has been “substantial progress” on Entergy’s proposed move to the Midwest ISO (MISO).
He noted that Texas and Arkansas state regulators have recently approved the move with conditions.
“With these two orders in place, plus the May conditional approval by the Louisiana Public Service Commission, we are well on our way [toward] the structure that will create up to $1.4bn of projected customer savings across all Entergy’s utilities jurisdictions,” he said during the company’s 3Q12 earnings call.
Indeed, the Public Utility Commission of Texas (PUCT) approved on Oct. 25 a proposed settlement that will allow Entergy Texas to join MISO. The PUCT issued a draft order for the application before its open meeting in support of an Oct. 1 proposal for decision, finding the transition to MISO to be in the public interest under the conditions of a non-unanimous amended stipulation and settlement agreement. The Southwest Power Pool (SPP) is the only party to the proceedings that opposed the amended agreement.
The next day, Arkansas state regulators conditionally approved Entergy Arkansas’ move to MISO. The Arkansas Public Service Commission (APSC) directed MISO to file proof that proposed changes to the MISO governance structure, intended to give state regulators more authority, have been implemented, MISO added, noting that once the MISO filing has been made, the PSC will issue a final approval.
On Oct. 31, Entergy Arkansas signed the MISO transmission owners agreement, which is a required document by all transmission-owning members, allowing MISO to work toward full integration of the Entergy Arkansas system by December 2013, a MISO spokesperson said on Nov. 1.
“We are pleased that in the Oct. 26 order, the APSC found that Entergy Arkansas and MISO had in fact either complied or substantially complied with [a previous order’s] conditions,” Leonard said. “There was one exception relating to the MISO governance proposals intending to formalize current practice regarding transmission planning and that gives state regulators more authority regarding transition cost allocation. Specifically, MISO must file proof that these proposals have been officially approved and adopted by the appropriate MISO entities. Evidence of that was provided to the APSC last Wednesday. The APSC can now issue its final conditional approval.”
The MISO change of control applications remain pending, but not stalled, in Mississippi and New Orleans, he said, noting that in mid-September, Entergy Mississippi reached a settlement with Mississippi Public Service Commission (PSC) staff that supports Entergy Mississippi’s proposal to join MISO. The PSC is scheduled to issue a decision at an open meeting on Nov. 15, he said.
Oct. 23 hearings in New Orleans were suspended to allow settlement discussions to proceed, Leonard said.
“Joining MISO marks a significant transformation of the Entergy system, providing greater independence, transparencies and efficiencies, and providing substantial benefits for customers, contributing to the ability to maintain affordable rates for Entergy’s utility customers,” he said.
Leonard also noted that approval to join MISO or another acceptable RTO is one requirement to close the pending spinoff of Entergy’s transmission assets to ITC Holdings (NYSE:ITC). Among other things, he noted that an ITC shareholder vote is anticipated in the first half of 2013.
According to a Nov. 5 company statement, Entergy began the approval process for the spin-off and merger of the transmission business with ITC, including filings in four retail jurisdictions and at FERC.
Entergy also reported earnings of $1.89 per share on an as-reported basis and $1.95 per share on an operational basis for 3Q12. The company’s utility earnings in 3Q12 were $296.2m, or $1.66 per share, on an as-reported basis and $306.8m, or $1.72 per share, on an operational basis, compared to $524.1m, or $2.95 per share, on both as-reported and operational bases in 3Q11.