Entergy, ITC Receive FERC Approval For Transmission Deal
by June 21, 2013 8:24 am 125 views
Entergy Corp. and ITC Holdings Corp. received approval on Thursday (June 20) from the Federal Energy Regulatory Commission (FERC) for a deal that would allow Entergy to spin off its transmission assets to ITC.
FERC approved the companies’ joint application for the transaction, under which Entergy will spin off its electric transmission business and merge it into an ITC subsidiary. In addition, FERC also approved new rate constructs for the transmission assets under ITC ownership.
The two companies announced the $1.775 billion divestiture and merger transaction in December 2011.
Under the deal, New Orleans-based Entergy Corp. is divesting its transmission assets, which will now include more than 15,000 miles of transmission lines, to Novi, Michigan-based ITC Holdings. A newly-formed entity, Mid South TransCo LLC, is being formed, and Entergy shareholders will own 50.1% of the stock in the new company.
Mid South TransCo will be headquartered in Michigan, but will maintain a regional office in Jackson, Mississippi, where Entergy has a significant presence. Approximately, 750 Entergy employees are still expected to transfer to ITC.
FERC’s order on Thursday effectively accepted the companies’ positions on the effects of the transaction on competition, rates and regulation.
“We are pleased with FERC’s ruling yesterday approving the change of control of Entergy’s transmission assets, acknowledging that this transaction is in the public interest,” said Joseph L. Welch, chairman, president and CEO of ITC.
“Although this is a positive step with respect to the transaction, we recognize that FERC’s action is just one aspect of the process. We will continue to work through the regulatory process at the federal, state and local levels to underscore the benefits to customers of an independent transmission company – whose sole focus is the strengthening of the transmission grid,” Welch said.
The transaction also requires approval from Entergy’s state and local jurisdictions, including the Arkansas Public Service Commission.
ITC and Entergy have targeted a transaction closing this year pending receipt of all required regulatory approvals and satisfaction of other closing conditions.
Entergy’s utility operating companies would continue to own and operate their respective distribution and generation businesses and provide customer service, billing, outage reporting and restoration services to homes and businesses throughout the region.