By Chris O’Malley
The Federal Energy Regulatory Commission last week conditionally accepted Entergy’s request to terminate the system agreement for its Gulf Coast operating companies beginning in 2018, but it ordered a hearing and settlement proceedings to consider the concerns of regulators in Texas and Louisiana (ER14-75 et al).
The system agreement among Entergy and its operating companies has been the basis for planning and operating its generation and transmission facilities as a single system since 1951.
After Entergy’s April 2011 announcement that it would join MISO, the Public Utility Commission of Texas said the benefits of joining the RTO would be diminished by Entergy Texas’ continued participation in the agreement and called for terminating it sooner than the eight-year notice period required by the pact. Texas regulators argued that Entergy would need no more than three years to achieve operational readiness to participate in MISO’s capacity markets.
Entergy responded by asking FERC permission for a five-year exit. For Entergy Texas that would be in October 2018; for Entergy Louisiana and Entergy Gulf States Louisiana, the withdrawal would be effective in February 2019. (Entergy Arkansas withdrew from the system agreement in December 2013; Entergy Mississippi’s withdrawal is effective in November 2015.)
The company said the original eight-year notice requirement was based on the time frame for constructing a new coal-fired generating plant. It said a five-year notice was now sufficient because that is enough time to plan and build a new gas combined-cycle unit and that the MISO capacity market provides a “backstop” for any shortfalls.
The New Orleans City Council balked, saying that it was uncertain whether all of Entergy’s operating companies would join MISO. It also said five years might not be enough to plan new generation, citing delays in the development of Entergy’s Ninemile Point Unit 6.
The Louisiana Public Service Commission, meanwhile, called for a new “modern, comprehensive tariff” addressing planning and operation of the Entergy system in the MISO market, saying it is improper for Entergy to continue operating under an “anachronistic” agreement developed before RTOs existed.
Louisiana asked FERC to consolidate proceedings concerning the notice question with dockets ER13-432 and ER14-73, which involve revisions to the system agreement related to Entergy’s entry into MISO.
The commission rejected the consolidation request, saying the factual and legal issues were too disparate to combine in a single docket.
FERC did agree to combine the six notice dockets, and it ordered appointment of a settlement judge within 15 days. If the parties cannot reach a settlement, FERC said, the case will go to a public hearing to resolve the factual disputes.
Entergy has more than 2.8 million customers in Arkansas, Louisiana, Mississippi and Texas.