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State Denies Acquisition of Entergy Transmission by ITC Subsidiary (Another Opportunity for Texas to Go Back to Drawing Board on Future of Entergy Texas)
The Mississippi PSC has denied the application of ITC Holdings, through a subsidiary, to acquire the transmission assets of Entergy Mississippi.
"The Commission must view the proposed Transaction for what it is: an attempt by Entergy and its shareholders to monetize its transmission assets and extract the excess value of the assets under the more generous FERC rate construct available to ITC," the PSC said.
"While the Transaction would produce clear benefit to ITC, EMI and its shareholders, benefit to the Mississippi ratepayers is dubious. In fact, reasonable estimates place the value of the Transaction to Entergy shareholders at approximately $2.5 billion in net benefits, while Mississippi ratepayers, at a conservative estimate, would pay an additional $348 million over thirty years due to ITC's ownership of EMI's transmission asset," the PSC said.
The PSC also noted that the transaction would result in, "complete loss of this Commission's rate jurisdiction over the transmission assets at issue."
This conclusion is strikingly similar to the conclusions reached by two Texas ALJs in a proposed order (that was ultimately not adopted as the companies were allowed to withdraw their Texas application without prejudice), in which the Texas ALJs noted that the transaction would allow Entergy Texas, and ITC as the new transmission owner, to receive the benefits of electric restructuring without providing customers a choice in their electric provider, retaining monopoly status in the service area (click here for story).
As noted by the Texas ALJs, "Ratepayers would still have no customer choice, but the [Texas] Commission would lose jurisdiction over part of the rate-setting for those customers because the transmission rates would be subject to FERC authority."
Despite this clear inequity, certain ostensible advocates of "competition" have cheered the Entergy-ITC transaction, as such groups seem more concerned with getting transmission assets into RTOs and under federal control, rather than offering real choice and competition to customers.
It is increasingly clear that ITC ownership of Entergy Texas transmission would not benefit Texans, nor does continuation of the status quo (even as that now means MISO integration). Given the hazards associated with these various options, the previously rejected ERCOT integration for Entergy Texas, with introduction of customer choice, looks better and better, and would have the invaluable benefit of excising the service area from FERC regulation.
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December 11, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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