Entergy, MISO, SPP, and the LPSC: Is Bigger Better?

While there is no chance that it will be as wildly popular as the hit television series Swamp People, we have another version of a local reality show beginning to unfold at the Louisiana Public Service Commission.  What is at stake is control of Entergy’s 15,000 miles of high voltage Transmission lines located in Louisiana, Mississippi, Arkansas, and Texas. While the workings of the LPSC usually go unnoticed, considering that this issue will impact all electricity customers in Louisiana in their pocketbook, there is the chance that someone may be shouting “Choot-em” before it’s all said and done.

While the ultimate authority to regulate interstate Transmission lines lies with the Federal Energy Regulatory Commission, each state regulatory authority(the LPSC here in Louisiana) maintains jurisdiction over the retail sales of electricity in its area, which includes the construction, operation, and maintenance of Tranmission lines that are necessary to serve retail customers(residential, commercial, and industrial customers) in that state.

On Wednesday, August 10, 2011, the Louisiana Public Service Commission hosted a Technical Conference to begin the process of carefully weighing the facts, issues, and merits involved in deciding whether Entergy should join a Regional Transmission Organization (‘RTO”), specifically either the Midwest Independent Transmission System Operator (“MISO”), or the Southwest Power Pool (“SPP”), and whether doing so would benefit customers of Entergy Louisiana and Entergy Gulf States Louisiana. Representatives from MISO, SPP, and Entergy were on hand and provided testimony and information to the Commission and its staff on the topic.

According to representatives of Entergy, moving Entergy’s Transmission assets in Louisiana, Mississippi, Arkansas, and Texas to MISO would save customers between $1.4 and $1.6 Billion dollars over a 10 year period. Of this amount, Louisiana customers of Entergy are projected to save between $430 million to $575 million. Entergy stated that the benefits of joining MISO are about 25% greater than the savings offered by a relationship with SPP. As pointed out by Entergy’s John Hurstell in his presentation to Commissioners, “size matters”. MISO has a much larger operating footprint and operates in many more states than does SPP.

The main thing going for SPP is its location and its management structure. MISO is located in the Midwest, while SPP is located much closer to Entergy’s current service territory. SPP in its presentation agreed with Entergy that membership in a RTO would bring benefits to their customers, but disagreed that MISO was the best option. SPP highlighted its current relationship with Entergy and argued that the close physical proximity and current interconnection of Entergy’s and SPP’s grid networks would ultimately be better for customers from a cost, and operational standpoint. SPP also pointed out that due to its size in relation to SPP’s, Entergy will have a strong voice in SPP’s decision making process, and that, consequently, state regulators will have real and meaningful influence through SPP’s Regional State Committee.  

Another wrinkle in this drama is the impact that joining an RTO with a Day 2 market(such as MISO) will have on Entergy’s System Agreement. For those who are unfamiliar, the story and tortured history of Entergy’s System Agreement will need to wait for another day.   In the meantime, the LPSC is expected to rule this year on whether Entergy can join MISO. Like I said at the beginning, this won’t keep people glued to their television sets, but the call for “Choot em” may be coming out of the Galvez Bldg sooner rather than later. EB