NOVI – Mississippi utility regulators have rejected a merger proposal by Entergy Corp. and ITC Holdings Corp., saying the deal could’ve meant a $300 million rate increase for Mississippi customers over 30 years.
“We respect Entergy’s desire to improve its organizational effectiveness, but the commission was not persuaded the transfer of ownership would be in the best interest of Entergy Mississippi’s customers,” said Lynn Posey, chairman of the three-member Mississippi Public Service Commission.
Another commissioner, Brandon Presley, said: “The evidence in the case did not show any identifiable savings to customers.”
ITC, in a statement said: “We strongly disagree with the commission’s decision and its stated rationale for denying our application. ITC and Entergy have demonstrated that the transaction is in the public interest based on the significant benefits that would result from ITC’s ownership of the transmission system, which is clearly in need of investment to improve reliability and facilitate the competitive electricity market.
? 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. The commission’s action today would deny Mississippi customers the near-term and longer-term economic and reliability benefits resulting from ITC’s independent ownership with a singular focus on transmission. We will review the commission’s full order and determine next steps.”
In December 2011, New Orleans-based Entergy said it would transfer its high-voltage lines to Novi-based ITC.
The plan was for ITC to issue Entergy shareholders enough stock to give them a majority of ITC shares worth more than $2 billion. ITC would’ve assumed $1.78 billion in debt. Entergy and ITC won Federal Energy Regulatory Commission approval in June.
The merger request also was filed with regulators in the other areas that Entergy serves — the states of Arkansas, Louisiana and Texas and the city of New Orleans. Regulators in those areas have not acted yet, but rejection in Mississippi makes the deal’s success unlikely.
David Cruthirds, a Houston lawyer who publishes an energy newsletter, said the deal requires the approval of all five regulatory bodies, and all six Entergy operating companies must be part of the merger.
“I just don’t see the other jurisdictions going forward, given this,” Cruthirds said in a phone interview after the Mississippi vote.
Entergy has the option to request a rehearing in Mississippi, Cruthirds said.
