Psc Preview: Entergy, Miso To Answer Questions

Later this week, the Arkansas Public Service Commission (PSC) will be abuzz with testimony from heavy hitters in the state’s electric utility industry.

From Wednesday through Friday, witnesses, panelists and lawyers will answer questions and cross-examinations from PSC regulators and each other in hearings that will guide Entergy Arkansas’ exit from its system agreement with its parent company to a potential new relationship with regional transmission operator, Midwest Independent System Operator (MISO), by 2013.

The hearings will focus on this new proposed alignment, which will have major ramifications on the reliability of your electricity and the cost of transmission to get it to you.

While Entergy and MISO officials will be on the hot seat with their perspectives, observers will also see and hear from representatives from other energy companies, industrial users, municipalities, PSC staff, and the Attorney General’s office.

Of course, witnesses from Little Rock-based Southwest Power Pool (SPP) will also be in attendance and have plenty of testimony to share and questions to raise regarding the Entergy-MISO deal.

A LITTLE HISTORY
Entergy filed notice in 2005 that it wanted out of its parent company contract after a federal regulatory ruling skewed multi-state costs onto Entergy Arkansas ratepayers’ bills. The 8-year exit path has seen Entergy Arkansas back off from an effort to reshape a system agreement with Entergy Corp. and it has resulted in Entergy’s present effort to join Carmel, Ind.-based MISO over the objections of Arkansas-based grid operator SPP.

Entergy Arkansas claims that the savings by joining MISO will be more significant for the next decade than entering SPP’s system, a premise to which SPP raises objections. Entergy also claims that MISO’s mature Day 2 market — a system that manages the flow and cost of electricity a day ahead of schedule — makes more sense financially and logistically.

Through the years, the Arkansas PSC has studied Entergy’s exit options and how any moves may affect the ratepayers of the state’s largest electric utility. The docket has led to controversial filings and testimony as well as public grillings that have shaped the direction of Entergy’s efforts to conduct its future business.

WHAT TO WATCH FOR
The PSC carries great weight, but is limited in its actions concerning whatever arrangement Entergy Arkansas may pursue, which currently is a partnership with MISO’s regional grid operations.

The utility regulator can highlight problematic areas where Entergy would have difficulty passing along "prudent" or "reasonable" costs to ratepayers when less expensive options may be presented.

The PSC could also raise areas of concern that could limit Entergy’s options, such as in April 2010 when it suggested the possibility of Entergy Arkansas reworking its system agreement with its parent company was not a viable option. Entergy Arkansas officials gave a written and verbal commitment to eliminate the option from its choices as a result of the PSC pressure.

This next week, expect a solid case to be presented for Entergy Arkansas and MISO to join forces. Opponents of Entergy’s move will raise tough questions about the Entergy-MISO partnership.

There was a preview of the line of questioning in a technical conference held at the commission’s Little Rock headquarters two weeks ago. At that conference, PSC Chairwoman Colette Honorable told Entergy and MISO officials that she and her fellow commissioners were "focused with laser vision" on the Entergy-MISO deal, especially since Entergy Arkansas will be the first Entergy subsidiary to depart from the parent company’s system agreement.

This week’s PSC hearings will be much more formal in its procedures and it may be one of the last forums for dramatic persuasion to occur that might alter Entergy Arkansas’ expressed move. When the hearings are complete, commissioners will pour over the reams of filings and testimonies from the docket and issue an important "opinion," which will serve as "guidance" for all parties in the case.

Ultimately, the PSC will evaluate a "change of control" order, a formality that will occur sometime before December 2013 when Entergy Arkansas transitions to its new transmission home — wherever that may be.