Psc Commissioners Grill Entergy, One Unconvinced On Miso Move

Entergy Arkansas officials learned the concerns of PSC commissioners about the electric company’s exit from its current system agreement, including one commissioner’s position best described as "unconvinced."

On Thursday, all 3 commissioners at the Arkansas Public Service Commission asked pointed questions and voiced strong opinions about moves being made by Entergy as it attempts to join regional transmission operator, Midwest Independent System Operator (MISO) by December 2013. But PSC Commissioner Olan "Butch" Reeves unloaded his criticism of the deal in a 20-minute grilling of top Entergy executives.

Challenging financial assumptions that showed millions of dollars in cost benefits if Entergy Arkansas moved to Carmel, Ind.-based MISO over Little Rock-based Southwest Power Pool (SPP), Reeves challenged Entergy’s analysis.

"You’re adding stuff to the SPP side that is not correct. Where did that number come from? Your hat?" Reeves asked. "You’re assigning costs that, frankly, I don’t think you have a clue… that’s a problem, that’s a big problem for me."

Reeves continued his charge that Entergy’s projections were questionable. "Nothing you’ve said in the last two days convinces me," he said. "It still does not convince me that the dollar amounts I see here are correct. If joining MISO does not turn out to be quite as good as you say, whose going to pay that costs?"

Entergy executives defended the numbers in analyses conducted by Charles River Associates (CRA). Entergy Services, Inc. vice-president John Hurstell explained that the CRA report was conducted independently and openly and all parties in the matter had the chance to raise concerns about data for the projections.

"No model can perfectly predict what costs will be," Hurstell told Reeves.

"That gives me no comfort," Reeves responded.

PSC Chairwoman Colette Honorable continued raising her concerns about Entergy Arkansas’ independence from its parent company and comparable sister state counterparts after the move to MISO. She also asked questions related to a "public interest" standard, an issue raised by SPP and others on Wednesday regarding the potential economic harm that could be done to other electric companies in Arkansas if Entergy joins MISO.

Describing testimony from Michael Schnitzer, a transmission consultant for Entergy, as "cavalier," Honorable said, "I’m taken aback that you’re not worried about costs to other electric companies if EAI (Entergy Arkansas) goes to MISO and there are costs for them."

Schnitzer replied that there may not be people better off by the MISO deal, but Entergy Arkansas shouldn’t be penalized either. "For parties to take a position that EAI should not be allowed to gain these concrete benefits for its customers against the harm it could cause the co-ops or others — that’s not a fair ask on that side either," he said.

Commissioner Elana Wills, as well as lawyers from Attorney General Dustin McDaniel’s office, asked questions about how Entergy Arkansas would calculate its return on earnings (ROE) under the new arrangement with MISO. ROE has been an important oversight function of the PSC for determining Entergy Arkansas’ rates and allowable costs to be recovered from Arkansas ratepayers while still allowing the company to make a reasonable profit.

The PSC would still maintain authority to determine Entergy Arkansas’ base rate ROE, while the Federal Energy Regulatory Commission (FERC) would have some jurisdiction over Entergy’s net revenue levels, Entergy officials explained.

The hearings continue Friday at the PSC.