LITTLE ROCK — The Arkansas Public Service Commission on Wednesday questioned whether Entergy Arkansas has made sufficient progress toward answering concerns the commission has about the utility joining a Midwestern transmission operator.
The commission is holding hearings this week addressing whether the utility, which has more than 700,000 customers in Arkansas, should be approved to join Carmel, Ind.-based Midwest Independent Transmission System Operator, which oversees the electricity grid in 13 Midwestern states.
The utility has not told the commission what its costs will be for planning and construction of electricity generation when it withdraws from the Entergy Corp. system agreement, an angry Commissioner Olan Reeves told Hugh Mc-Donald, Entergy Arkansas’ president.
The question of those costs was one of the primary issues concerning the commission when it opened its case with Entergy Arkansas in 2010, Reeves said. Those costs are among the most important issues in the case, Reeves said.He doesn’t want to wait until June 2013, for example, six months before Entergy Arkansas leaves the system agreement, to find out what the costs are, Reeves said.
The cost-sharing agreement among Entergy Corp.’s six subsidiary companies has cost Entergy Arkansas customers an additional $4.5 billion during more than 20 years of federally mandated charges. Entergy Arkansas told Entergy Corp. in December 2005 that it would no longer be part of the agreement beginning in December 2013.
About $1 billion of the $4.5 billion cost to Entergy Arkansas customers has been paid to equalize energy costs between Entergy Corp.’s customers in Louisiana and Arkansas. Louisiana’s public service commis- sion won a lawsuit claiming Entergy customers in Arkansas paid lower electricity fees than Louisiana customers did.
The other $3.5 billion has been paid since the mid-1980s for costs associated with the Grand Gulf Nuclear Station in Port Gibson, Miss.
McDonald said he was unsure of the exact costs Reeves referred to, but they would be less than $10 million a year, which is relatively small compared with other costs of the company.
Colette Honorable, chairman of the commission, told McDonald another large issue not addressed in detail in the case is the option of Entergy Arkansas joining Southwest Power Pool, a Little Rock-based coordinator of the electricity grid in nine states.
Honorable asked why Entergy Arkansas would decide to join Midwest and, if that didn’t work out, plan to operate independently instead of considering another electricity coordinator such as Southwest Power Pool.
The testimony has been devoid of consideration of Southwest Power Pool as an option, Honorable said.
The immediate fall-back if the arrangement with Midwest doesn’t work is for Entergy Arkansas to operate independently, but Southwest Power Pool still is an option, McDonald said.
The commission feels it is having to make a decision on whether Entergy Arkansas should join Midwest “without having all the information,” Honorable said.
“We’re going to make the very best decision for Arkansas ratepayers,” Honorable told McDonald. “But there are a lot of questions that are still unanswered.”
Southwest Power Pool believes it provides a better option as a transmission manager for Entergy Arkansas than Midwest does, said Phil Kaplan, an attorney for Southwest Power. For Entergy Arkansas to join Midwest is not in the public interest, Kaplan said. One reason for that is the Arkansas commission would have less governmental authority if Entergy Arkansas joins Midwest than if it joins Southwest Power Pool, Kaplan said.
Other parties to the case — including the state attorney general, other electric utilities in Arkansas, large industrial customers and city-owned utilities — generally support Entergy Arkansas’ proposal to join Midwest.
Last week, the Louisiana Public Service Commission approved Entergy Louisiana and Entergy Gulf States Louisiana’s request to join Midwest. It was the first state regulator to approve the transfer of an Entergy Corp. subsidiary to Midwest.
John Bethel, executive director of the Arkansas commission’s general staff, said the Louisiana commission’s approval of Entergy’s Louisiana subsidiaries joining Midwest should have no impact on the Arkansas commission’s decision.
The Arkansas commission’s decision on whether Entergy Arkansas can join Midwest is considered the key to whether Entergy Corp. can make the move.
The only physical connection that Entergy has with Midwest is in northeast Arkansas, so if the Arkansas commission opposes Entergy Arkansas from joining Midwest it would be difficult for the other Entergy subsidiaries to join, said David Cruthirds, a Houston regulatory lawyer and publisher of energy newsletter “The Cruthirds Report.”
The hearings will resume today. The Arkansas commission is likely to make a decision on Entergy Arkansas’ move to Midwest this summer, Bethel said.
Business, Pages 25 on 05/31/2012