State regulators suspended consideration Wednesday of a $1.8 billion proposal for Entergy to spin off its transmission business, a move company officials say is important to the corporation’s financial future.
Louisiana Public Service Commissioner Eric Skrmetta, of Metairie, said Entergy Corp. and ITC Holding Corp. withdrew its application in Texas after two regulators said they would vote against the plan that would transfer Entergy’s 15,400-mile network of transmission lines and technology into a new company owned by Entergy and ITC. The transmission would be run by ITC, which is based in Michigan.
The deal requires action by regulators in Arkansas, Louisiana, Mississippi, Texas and the City of New Orleans. Texas was first.
“It gives me pause,” Skrmetta said, before ordering PSC staff to stop work on the application in Louisiana. He said PSC staff shouldn’t go to the expense of vetting the transaction, if it isn’t going forward.
Jim Ellis, representing ITC, told the five elected commissioners at their monthly meeting that he understands that the Texas application withdrawal created a great deal of uncertainty.
“Message delivered,” he said.
But Ellis said the Louisiana PSC should continue moving forward because the two firms likely would refile their application in Texas.
Skrmetta altered his motion, which created the order, to say that should application be refiled in Texas, then Louisiana would reconsider its suspension.
Entergy, of New Orleans, and ITC, of Michigan, are trying to merge by late December.
They asked Texas commissioners to reconsider a new application even faster than the 180-day schedule required there.
The companies asked for approval during the next few weeks so that the transaction could be completed by the end of the year. If approved, the new ITC company would separately charge 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 the generating plant to substations where the volume of power is reduced to the point that it can be distributed locally to the consumer. Utility companies that rely on Entergy’s system have long complained that the transmission system is too small and too old to handle the amounts of electricity Louisiana now needs.
Entergy Gulf States Louisiana LLC and Entergy Louisiana LLC, two of the subsidiaries that service most of this state, are spending now, and expect to spend by 2018, about $4.5 billion to upgrade and expand the transmission system, according to PSC filings.
Entergy’s customers are paying for much of that work.