Entergy (NYSE:ETR) and ITC Holdings (NYSE:ITC) continue to assess the path forward following the companies’ decision to withdraw their initial filing to change ownership and control of Entergy Texas’ transmission facilities to an ITC subsidiary, Checky Herrington, director of utility system communications with Entergy, told TransmissionHub on Aug. 19.
“[W]e obviously continue to believe that the transaction is good for our customers and the region,” he said, later adding, “[O]ver the course of the last several months since we initially filed with the Texas commission, we have made revisions to the initial rate mitigation plan.”
The Public Utility Commission of Texas (PUCT), in an order of dismissal signed on Aug. 15, said it has found good cause for withdrawal of the application based on the discussion at the PUCT’s Aug. 9 open meeting, during which the companies jointly moved to withdraw the application without prejudice to refiling.
The withdrawal “gives us the opportunity to refile,” Herrington said, adding that at this point, there is no time frame as to when the refiling will occur.
He noted that FERC has approved the transaction. As to whether the Texas action affects the proceedings in other states, he said, “We’re still on track to move forward with the Dec. 31 close, nothing has changed there.”
The current merger agreement ends on Dec. 31, he added.
ITC spokesperson Bob Doetsch told TransmissionHub on Aug. 19: “We appreciate the commission’s decision to allow us to withdraw our application, with an opportunity to re-file so that all of the commitments that we have already indicated we are prepared to make can be included in the record for the commission to consider. We continue to believe that this transaction would deliver the near-term and longer-term benefits to customers that result from a high-performing, reliable transmission system and a regional planning view that promotes the benefits of the competitive electricity market.”
PUCT Commissioner Kenneth Anderson Jr., in an Aug. 9 memo to PUCT Chairman Donna Nelson, noted that in their proposal for decision (PFD), the administrative law judges (ALJs) recommended that the PUCT deny the proposed transaction because it is inconsistent with policy objectives of the Public Utility Regulatory Act (PURA) on the basis that it contemplates the divestment of a vertically integrated utility’s transmission assets in an area of the state where customer choice has not been introduced.
Also, the ALJs concluded that the record evidence does not support a finding that the transaction is in the public interest because its costs do not justify its benefits. The ALJs found the benefits speculative and difficult to quantify.
Anderson also said that he would adopt the PFD with respect to its determination that the PUCT may certify a transmission-only utility outside of the Electric Reliability Council of Texas (ERCOT).
However, Anderson added, he would reverse the PFD’s conclusion that Subchapter J of PURA Chapter 39 prohibits a vertically integrated utility from transferring its transmission assets in an area where customer choice has not been introduced.
He also noted that the evidentiary record closed on June 13 and that on July 2 and 12, the companies filed additional evidence regarding their commitments made in other retail jurisdictions in connection with the transaction.
If this were a typical case, the PUCT could delay the procedural schedule and refer the late filings back to the State Office of Administrative Hearings to provide all of the parties with an opportunity to consider and test fully the additional evidence. “However, we are not at liberty to do so here because this case is subject to a strict jurisdictional deadline of August 18, 2013,” Anderson added. “Simply put, we do not have the time to allow the parties to appraise and rebut the assertions provided in these or any late filings.”
Among other things, he said that with the record evidence as admitted by the ALJs, he is inclined to agree with their recommendation to deny the transaction application because the ALJs found that the companies had not met their burden of proof that the transaction is in the public interest.
Any order approving the transaction would have to impose certain conditions, including that all transmission-related cost increases by ITC that would ultimately flow through to Texas wholesale and retail customers through Entergy Texas as a result of the transaction are to be first approved by the PUCT upon a showing that the quantifiable transaction benefits equal or exceed such costs, he said.