Louisiana regulators said Tuesday that they likely would complete their review but didn’t think the $1.8 billion transaction Entergy Corp. wants would come off now that Mississippi utility regulators rejected the merger proposal.
The regulators in all the states in which Entergy operates have to approve the merger with ITC Holdings Corp. for it to happen, said Louisiana Public Service Commissioner Scott Angelle, of Breaux Bridge. Now that Mississippi rejected the transaction, Louisiana regulators will have to wait to see if Entergy refiles in that state and continues to push for approvals in the other states.
“We’ll likely continue our review process. But I would have to say this deal is on life support after what happened today in Mississippi,” Angelle said.
PSC Commissioner Clyde Holloway, of Forest Hill, said the five elected utility regulators in Louisiana would probably wait until an opinion was issued by the PSC’s administrative law judge, who is collecting testimony and evidence about the impact of deal. It’s expected soon, he said.
“But I almost feel like it’s a moot issue,” Holloway said. “I was not the least bit shocked.”
In a unanimous vote Tuesday, the Mississippi Public Service Commission rejected the merger proposal by Entergy and ITC Holdings Corp. The Mississippi regulators said the deal could have meant a rate increase totaling $300 million for Mississippi customers over a 30-year period.
In 2011, Entergy began the process for transferring its 15,400-mile network of high voltage transmission lines and technology into a new company owned by both Entergy and ITC. ITC would issue Entergy shareholders enough stock to give them a majority of ITC shares worth more than $2 billion. ITC would assume $1.78 billion in debt.
Under the terms of the proposal, the new ITC company, based in Michigan, would have separately charged customers for moving electricity, costs that are now part of the rates Entergy charges on monthly electric bills. Generally, transmission lines move large amounts of electricity from generating plants to substations, where the volume of power is reduced to the point that it can be distributed locally to the consumer.
But the deal requires approval by regulators in Arkansas, Louisiana, Mississippi, Texas and the city of New Orleans, all jurisdictions in which Entergy operates transmission lines. Mississippi rejected the proposal.
Officials with the New Orleans-based Entergy Corp. would not agree to interviews Tuesday but released a prepared statement: “We are disappointed that the Mississippi commission took action today and found that the transaction is not in the public interest. We will evaluate the Mississippi commission’s 99-page order and work with ITC to determine next steps.”
ITC also issued a prepared statement disagreeing with the decision in Mississippi: “While we recognize the commission’s perspectives on jurisdiction and rate issues, ITC and Entergy made commitments to hold customers harmless from possible negative impacts and we do not believe that jurisdictional concerns should stand in the way of customers realizing the benefits of this transaction.”
Entergy and ITC had offered to lower rates a total of $453 million over five years for Entergy customers in order to answer concerns that the utility’s customers would ultimately have to pay more.