LITTLE ROCK — Entergy Arkansas will continue to study the possibility of joining a new system agreement with its parent company for another 14 months, an executive of the electric utility said Monday.

The testimony by Hugh McDonald, Entergy Arkansas’ president, before the Arkansas Public Service Commission came four months after McDonald promised that Entergy Arkansas would not join a successor agreement with New Orleans-based EntergyCorp. if the commission or other states’ commissions rejected the idea.

In a three-page letter to the commission in May, Mc-Donald said Entergy Corp. and its six subsidiary utilities had agreed that no subsidiary would voluntarily make successor agreements with other subsidiaries if regulators in Arkansas, Louisiana, Mississippi or Texas decided it was “not in the public interest.”

Entergy Arkansas has been part of the system agreement with Entergy’s other utility subsidiaries since 1982. Legal decisions over the years have determined that the system agreement also requires that the subsidiaries share costs for electricity on a nearly equal basis.

That requirement in the system agreement has cost Arkansas consumers more than $4.5 billion since 1985, when Arkansas was forced to partially pay for the Grand Gulf nuclear power plant in Port Gibson, Miss.

In December 2005, Entergy Arkansas declared that it would exit Entergy’s system agreement in December 2013, providing the required eight year notice.

But now Entergy Arkansas says it will continue to study the feasibility of a successor agreement until October 2011. It wants to be sure it makes the best choice, McDonald said Monday.

Paul Suskie, chairman of the Public Service Commission, said he was concerned that Entergy Arkansas’ analysis would “drag out so long that the successor agreement would be the only option left.”

McDonald said that wouldn’t happen.

Other than a successor agreement with Entergy Corp. utilities, Entergy Arkansas also is considering becoming a stand-alone utility while remaining an Entergy subsidiary or forming a third-party arrangement in which it would pool electricity generation and transmission sharing with other utilities.

Entergy Arkansas wants to include analysis of a successor agreement in its study of all its alternatives “to keep as many options on the table for as long as possible as we can,” McDonald said.

“We don’t want to eliminate options that could be beneficial to customers,” he said.

Entergy Arkansas will present its analysis to the Public Service Commission in October 2011 and if the commission believes a successor agreement is not in the public interest, the utility will stand by its commitment to drop any successor agreement, McDonald said.

Entergy Arkansas must make a decision on which option it will choose by the end of next year so it will have two years to implement the necessary changes.

Commissioner Olan Reeves asked McDonald, “Can you get everything done between October 2011 and December 2013,” when the chosen option must be implemented?

“Yes, we think we can,” Mc-Donald said.

In a related matter, Mc-Donald stated in a filing made with the commission on Monday that Entergy Corp. has approved the purchase of four generating units totaling 2,800 megawatts of electric capacity, and one agreement to purchase another 500 megawatts of power from another source.

If all the transactions are completed, Entergy Corp. would add generating capacity in Arkansas, Mississippi, Louisiana and Texas.

McDonald’s filing didn’t elaborate on details of the purchase agreements, such as where the power plants are or what type of fuel they use. The acquisitions haven’t been announced beyond what was in the filing.

Entergy Arkansas provides electricity to almost 687,000 customers in 63 counties. Entergy Corp. utilities supply electricity to 2.7 million customers in Arkansas, Louisiana, Mississippi and Texas.

Business, Pages 21 on 08/03/2010