Meridian Star

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August 10, 2013

Entergy, ITC to refile Texas merger application

(Continued)

Starkville —

Even if the companies get approval in Texas, they have to also get approval from Arkansas, Louisiana, Mississippi and the city of New Orleans. All those entities had received recommendations for rejection from their staffs before Entergy and ITC began offering incentives. The companies have offered to roll back more than $425 million of rate increases over five years, including $134.4 million in Arkansas, $129 million in Louisiana and $77.5 million in Mississippi. They've also pledged that they won't raise rates to collect the higher profits allowed by FERC until they can prove the benefits of the deal to customers.

Anderson set out a list of 25 conditions to approve the deal Friday, and while Entergy and ITC agreed to most of them, they were unable to agree to all of them Friday. But he indicated even current concessions may not be enough, saying ratepayers should benefit from the transfer in addition to Entergy stockholders.

"In the typical case where assets are sold, we require a large piece of the action to go back to ratepayers," he said.

ITC officials argued that because the transaction is a tax-free spin-off, the companies shouldn't be required to make further payments to ratepayers, but Anderson said he disagreed.

The merger proposal followed Entergy winning approval last year to join the Midcontinent Independent System Operator, a regional group that directs electricity movement. MISO is supposed to save Entergy customers $1.4 billion over 10 years, ensuring they get the cheapest possible electricity. Regulatory staffs say they think MISO membership will bring most of the same benefits ITC has promised, and fear losing control over transmission to FERC

Entergy, though, is being pushed by the U.S. Justice Department to sell its transmission system. After a long investigation into whether Entergy used its wires to block power sales by competing generators, federal prosecutors announced last November that they wouldn't sue if Entergy completed the MISO and ITC deals.

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