NEW ORLEANS — If regulators don’t approve Entergy Corp.’s bid to join regional power group MISO, another regional transmission organization is waiting with open arms.
Southwest Power Pool, based in Little Rock, Ark., continues to press Entergy to join it instead. The Arkansas Public Service Commission, which says it won’t approve Entergy joining MISO unless a number of conditions are met, also has instructed Entergy to keep open the option to join Southwest Power Pool. Southwest Power Pool has provided some services to New Orleans-based Entergy for more than 70 years.
Entergy prefers MISO, based in Carmel, Ind., saying the group provides more services that will help customers.
Entergy operates electric utilities in Arkansas, Louisiana, Mississippi and Texas. It needs approval from regulators in those states — plus the city of New Orleans — to join a regional transmission group. So far, only Louisiana has approved.
Such groups direct the flow of power across broad areas and try to make sure the lights stay on. Some run markets to help power companies buy the cheapest electricity available.
For Entergy, joining could help alleviate longstanding concerns that the company has underinvested in its transmission grid and used its clogged lines to hurt the business of independent generators in its territory. Entergy plans to spin off its long-distance transmission system to Michigan-based ITC Holdings Corp. after it joins a regional group.
Entergy wants to join MISO, which runs the power grids in parts of 11 Midwestern states and the Canadian province of Manitoba. However, an order by the Arkansas Public Service Commission earlier this month put a list of conditions on Entergy going ahead. Most importantly, it demands that state regulators keep the powers they already have to direct how Entergy builds long-distance power lines and how it bills customers for such construction.
State regulators don’t have as many powers in MISO. Both MISO and Entergy say they’re trying to satisfy Arkansas regulators.
“Provided we address the underlying concerns, I cannot see why Arkansas would not give Entergy permission to join MISO,” said Kimberly Despeaux, Entergy’s senior vice president of federal policy, regulatory and governmental affairs.
Southwest Power Pool’s structure already gives state regulators the authority they’re demanding. Plus, SPP argues it would be a better fit for Entergy geographically. Other utilities serving parts of Arkansas, Louisiana and Texas already belong to SPP, which covers parts of nine states. SPP says there are 50 power connections between it and Entergy, versus just one between Entergy and MISO.
SPP spokesman Pete Hoelscher said the Arkansas ruling affirms “Southwest Power Pool’s long-standing view that SPP is a better option for Arkansas ratepayers and has a governance structure that better serves ratepayers.”
David Cruthirds, a Texas lawyer who formerly worked for an independent power generator and now publishes a utility regulation newsletter, says regulators in some Entergy states may feel more comfortable with Entergy joining SPP. Former Arkansas Public Service Commission Chairman Paul Suskie resigned in 2010 to join SPP as senior vice president of regulatory policy and general counsel.
Cruthirds said Arkansas regulators may have been trying to push Entergy, or at least its Arkansas unit, into SPP. “One could make a case that’s their position,” he said.
Despeaux disagrees. “I don’t know if I’d read the order that way,” she said.
Entergy and MISO say MISO is better, though, because MISO offers a “day 2″ market that allows utilities to buy power for the next day.
“The benefit of the day 2 market is it is so much better of a tool to address congestion,” Despeaux said.
She said MISO also offers a better method of parceling out transmission costs. MISO’s Todd Hillman said his group is bigger, giving Entergy more options to buy low-cost power.
It’s not clear whether Entergy has to join MISO to complete the spin-off of its transmission lines.
ITC Holdings spokeswoman Louise Belcher said the spin-off requires Entergy to join an “acceptable” regional transmission group. She didn’t respond to a request to clarify whether Southwest Power Pool might also be acceptable.