The Mississippi Public Service Commission announced today its unanimous decision to deny a joint application request to transfer ownership and control of Entergy Mississippi's high-voltage transmission system to a subsidiary of ITC Holdings Corp. The commission's decision was rendered in a 99-page commission order, approved earlier today.
Central District Commissioner and Chairman Lynn Posey, speaking for the Commission, said, "We respect Entergy's desire to improve its organizational effectiveness, but the Commission was not persuaded the transfer of ownership would be in the best interest of Entergy Mississippi's customers."
According to Chairman Posey, the Commission's decision was based primarily on three negative aspects of the proposal: an increase in customer rates, a loss of PSC jurisdiction over transmission cost of service, and no clear quantitative and qualitative benefits to customers, particularly given that Entergy has yet to integrate and operate within the Midcontinent Independent System Operator, Inc., a regional transmission organization.
Entergy Mississippi and ITC first filed their joint application on Oct. 5, 2012. Similar filings were made in Louisiana, Arkansas and Texas, and in total, these filings comprised the entire transmission system of Entergy operating companies.
The proposed transaction was characterized as a "spin merge" or alternatively a "Reverse Morris Trust," in which Entergy Mississippi transmission assets, along with those of the other Entergy operating companies, would be first spun off to Entergy shareholders, and subsequently merged into a new ITC operating company, with Entergy shareholders compensated through receipt of just over half the outstanding common stock of ITC at closing.
ITC is a public utility holding company founded through the transfer of the transmission assets of Detroit Edison, related to electric industry restructuring in Michigan, and began operation as a fully independent transmission company in 2003. Following subsequent acquisitions, ITC's operating companies own and operate approximately 15,000 circuit miles of electric transmission lines in six states, serving a combined peak load of approximately 26,000 megawatts. ITC's transmission assets are comparable in size and extent to the combined transmission assets of the Entergy's operating companies, which total approximately 15,700 circuit miles, serving a combined peak of about 22,000 megawatts.
TC Holdings Corp. issued the following statement in response to the order:
"We strongly disagree with the commission's decision and its stated rationale for denying our application. ITC and Entergy have demonstrated that the transaction is in the public interest based on the significant benefits that would result from ITC's ownership of the transmission system, which is clearly in need of investment to improve reliability and facilitate the competitive electricity market. While we recognize the commission's perspectives on jurisdiction and rate issues, ITC and Entergy made commitments to hold customers harmless from possible negative impacts and we do not believe that jurisdictional concerns should stand in the way of customers realizing the benefits of this transaction. The commission's action today would deny Mississippi customers the near-term and longer-term economic and reliability benefits resulting from ITC's independent ownership with a singular focus on transmission.
"We will review the commission's full order and determine next steps."