Entergy Arkansas, which is in the midst of separating from its system operating agreement, told the Arkansas Public Service Commission it will honor state regulators’ wishes – even if it means abandoning a possible option to work out a new arrangement with other Entergy companies.
In a letter filed Monday afternoon, Entergy Arkansas President Hugh McDonald reiterated the energy company’s options of separating from its present system agreement, which has been in place for more than 50 years.
The state’s largest electric utility started the 8-year separation process nearly 5 years ago after an unfavorable ruling from federal regulators was set to force Entergy Arkansas customers to pay considerably more for being a part of the long-standing system agreement. The options it is now exploring include:
- Becoming a stand-alone operating company
- Joining Southwest Power Pool or entering another grid system operator agreement
- Creating a new "successor arrangement" with other Entergy companies in Texas, Louisiana and Mississippi
That third option has been a source of contention with state regulators. In March, Arkansas PSC commissioners grilled McDonald on the independence of his decision-making in light of the current system agreement. Regulators raised concerns that decisions were being made in Arkansas ratepayers’ best interests, despite McDonald’s assurances.
In the new letter, McDonald says that in early April Entergy Corp. and its subsidiaries said they would "agree and commit" to not voluntarily enter into successor arrangements with other Entergy companies "if its retail regulator finds Successor Arrangements not in the public interest."
McDonald said it would not abandon the possibility of the option for now and his letter said that Entergy would not give regulators "the right to choose" its alternative.
He also warned that "any path we follow will likely involve litigation" – a belief that other states’ now benefiting from Entergy Arkansas’ subsidies will fight to keep those payments.
He added that no final decisions have been made at this time. You can read the full letter at this link.