On Monday, Entergy Arkansas announced that it and several other Entergy Corp. subsidiaries would join regional electricity grid operator Midwest ISO, but the local rival, Southwest Power Pool, is making its case.
Entergy Arkansas has been exploring its options for how it will coordinate its electricity transmission as it moves toward a 2013 date to separate from its system agreement with parent company, Entergy Corp.
Little Rock-based Southwest Power Pool (SPP) coordinates electricity transmission across parts of 9 states in the Mid-South, including Arkansas. MISO, based in Carmel, Indiana, is the regional transmission coordinator for 13 states. Entergy cited MISO’s larger size and its "mature" Day 2 market for its decision to join.
The Day 2 market is a market-driven system where electricity generators and users place orders through a transmission coordinator a day ahead of schedule in order to meet estimated customer demand the following day. The system aims to ensure electricity demand can be met while market prices are predictable. SPP is developing a Day 2 market program.
On the Southwest Power Pool web site, a document titled "Benefits of Entergy Joining SPP" doesn’t address the Day 2 issue, but it does lay out other positives for Entergy joining its grid operating system.
"There would be significant reliability and operational impacts to SPP’s and others’ systems if MISO uses them without limitation to move power to Entergy. Even with proper limitations in place, necessary coordination with SPP and other parties creates additional complexities that do not exist today with SPP acting as either the RTO [regional transmission operator] or ICT [independent coordinator of transmission]," the document states.
SPP also notes 41 physical ties between SPP members and Entergy and 9 physical ties between Entergy and SPP market participants. The document says that only one contract currently ties Entergy to MISO. Entergy officials argue that there are sufficient ties between its company and MISO.
You can access the Southwest Power Pool document at this link.
SPP also argues that Entergy "would save $1.07 billion in production costs due to access to lower cost generation." That savings was a point that Entergy Arkansas President Hugh McDonald made in a Talk Business interview on Tuesday.
McDonald said that the large savings could have resulted from joining SPP or MISO.
"The reasons we chose MISO was they have a Day 2 market that it is up and running and its been up and running since 2005. They are larger, so they have a larger scale to be able to spread costs over – larger than SPP – which reduces the overall costs for everybody. Finally, the transmission cost allocation policies, we believe in MISO, place our customers at lower risk from getting transmission costs allocated to them from transmission projects that are built many states away from us," he said.
SPP is building a $62 million regional headquarters in Little Rock as it has grown exponentially in recent years. The company announced plans to hire 200 new employees with an average salary in the $80,000 range.