Arkansas state regulators on July 9 granted the Midcontinent Independent System Operator (MISO) a certificate of public convenience and necessity (CCN) to assume functional and operational control of Entergy Arkansas’ transmission facilities in the state.
The state Public Service Commission (PSC) said that it “finds that the public interest and necessity will be served by the granting of a [CCN] to MISO for” that purpose. Furthermore, the PSC found that MISO, as a wholesale transmission service provider subject to FERC’s ratemaking authority, should not be required to comply with the Arkansas public utility statutes dealing with regulation of retail rates.
The PSC also found that MISO should not be authorized to exercise the right of eminent domain in Arkansas.
Additionally, it should submit an annual “assessable revenues report” (ARR) by March 31 for the preceding calendar year ending Dec. 31. To comply with that requirement, MISO is required to provide the PSC with its FERC financial report FERC Form 1 and certain portions of the FERC Form 1 (Arkansas) Supplement.
MISO filed in November 2011 its application for a CCN in anticipation of the Entergy (NYSE:ETR) subsidiary becoming a MISO member and transferring control of its electric transmission facilities to MISO.
The PSC also noted that in orders issued respectively on Aug. 3, 2012 and April 8, it approved Entergy Arkansas’ application to transfer functional control of its transmission facilities to MISO and to become a MISO member.
As a FERC-certified RTO, MISO is responsible for administering its FERC-approved open access transmission, energy and operating reserve markets tariff and various rate schedules designated under the tariff. Administration of the tariff includes evaluating and approving all requests for electric transmission service as well as providing regional electric transmission planning, the PSC added.
According to the PSC, MISO said that if the CCN is granted, it will be used to assert “functional control over … [Entergy Arkansas’] transmission facilities that will be placed under MISO’s control upon this commission’s approval of the change of control.”
The PSC also noted that MISO said it “owns no generation, transmission or distribution facilities” and any Arkansas jurisdictional utilities that join MISO will “continue to own their transmission facilities.”
An evidentiary hearing on MISO’s application was scheduled to begin on July 17 but the parties to the proceeding, including Entergy Arkansas and the state Attorney General, filed a joint motion on June 13 requesting that the PSC cancel the hearing as there are no contested issues in the proceeding. The hearing was canceled through an order issued on June 19.
MISO witness Robert Berntsen, who is MISO’s vice president of government and regulatory affairs, testified that since MISO is a non-profit organization, its management of the transmission system as well as the operation of its energy and operating reserves markets is not profit-driven. As a result, he said, the transmission system can be “operated and managed in a manner designed to provide reliability and economic benefit, without concerns pertaining to profitability.”
Regarding MISO’s request that certain enumerated Arkansas public utility statutes be declared inapplicable to MISO, he noted that MISO, as an RTO, does not require the PSC’s determination of Arkansas retail rates and is not required to file rates for transmission service with the PSC.
Berntsen also noted that MISO “does not desire to exercise the power of eminent domain and waives any such right under” Arkansas laws. However, he also said that MISO’s waiver of this right is not intended to waive the right of any MISO transmission owner or other third party that would otherwise be eligible to exercise such right.
He further stated that Entergy Arkansas has signed the MISO transmission owners agreement (TOA), under which a transmission owning member “must authorize MISO to exercise functional control over the operation of the transmission system as necessary to effectuate transmission transactions administered by MISO.”
Therefore, given that MISO will assume functional control of Entergy Arkansas’ transmission facilities on Dec. 19, MISO requested that the PSC grant it a CCN for the limited purpose of managing and coordinating the use of certain transmission facilities located within Arkansas.
FERC on June 20 approved the spinoff of Entergy’s transmission assets to ITC Holdings (NYSE:ITC).