ITC Holdings (NYSE:ITC) and Entergy (NYSE:ETR) are moving to the regulatory review phase of the proposed separation and merger of Entergy’s transmission business into an ITC subsidiary, ITC said on April 9.
All applications for the transaction are on file with retail and federal regulators, ITC said in a Form 425, adding that regulators in Louisiana, Texas, Arkansas, Mississippi and New Orleans have published procedural schedules, which generally call for hearings and decisions to be completed by the end of 3Q13.
The companies have responded to comments filed in the FERC proceedings, including comments related to the transmission rates, expected benefits and rationale for the transaction, as well as questions about integration into the Midwest ISO (MISO).
ITC also said that the companies have hosted technical conferences, exploring the transaction in detail and outlining the benefits to stakeholders in Arkansas, Louisiana, Mississippi and Texas, with a similar conference planned in New Orleans.
Entergy has filed separate rate cases in Louisiana and Arkansas. Also, within Entergy, regulatory leadership recently completed orientation meetings for more than 300 customer-facing employees, including customer service managers, ITC added.
Jeanne Kenney, transmission regulatory implementation team lead at Entergy, said in the statement that the regulatory efforts will intensify in the spring and summer as the transaction moves through the approval process for each of the retail and federal regulators.
Rick Riley, vice president of energy delivery at Entergy, noted that the 2012 SERC Reliability Corporation audit found the company’s transmission system fully compliant.
On next steps in the transaction, Jon Jipping, ITC executive vice president and COO, said an ITC shareholder meeting will be held on April 16. Hearings with public service commissions will begin in late May in Texas and conclude in early August in Mississippi.
As reported, ITC and Entergy announced in December 2011 that ITC would acquire Entergy’s transmission business in a reverse Morris trust transaction.
The transaction will add 28,000 MW of load to its existing 26,000 MW, making it the largest load-serving transmission company in the United States, and add 15,700 miles to its 15,100 miles of transmission lines, making it the second largest transmission company on a miles-served basis, according to ITC Chairman, President and CEO Joe Welch.
The terms of the transaction agreement calls for Entergy to divest its electric transmission business to a newly formed entity, Mid South TransCo, and distribute this newly formed entity to its shareholders in the form of a tax-free spin-off. Mid South TransCo will then merge with and into a newly created merger subsidiary of ITC in an all-stock transaction.