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Entergy to join regional transmission

22-07-02 Entergy will notify federal regulators how it plans to join a massive regional transmission organization that will control the electricity grid over much of the Southeast. Entergy, Cleco, Southern Co. of Atlanta and nine other utilities are forming an independent regional transmission organization called SeTrans. The new company, which will be collectively owned by the 12 utilities, will operate, maintain and plan upgrades for transmission lines in Louisiana, Mississippi, Alabama, Georgia and parts of Florida.

The SeTrans group will ask the Federal Energy Regulatory Commission to review its draft management structure, says Frank Gallaher, Entergy president of fossil operations and transmission. The group wants to see if its plans meet commission standards for a large regional transmission organization. It's a challenging process since no group in the industry has formed such a large transmission organization and federal regulators have given only general guidelines for the process.

" We will not be asking for final approval," Gallaher says. "It's too soon in the process."

The SeTrans move is part of a larger federal push to streamline the way power producers move electricity across state lines. While consumer deregulation efforts are stalled in most regulated states, federal officials are still pushing to further deregulate the wholesale electricity industry. The Federal Energy Regulatory Commission wants the nation's utilities to join one of four massive regional transmission organizations across the country. Transmission lines are the interstate highways of the electricity industry. They carry large amounts of electricity from generating plants across long distances and eventually connect to smaller power lines that link homes and businesses.

The federal commission is trying to take transmission out of the hands of utilities to create a more open market for utilities and energy producers to buy and sell wholesale electricity. Instead of a patchwork of utility-owned transmission networks, regulators want large independent organizations to operate the power grid so that no single utility is able to monopolize the transmission system in any region.

The process has state regulators concerned since no one has determined how it will affect consumer rates for electricity. Traditionally, transmission accounts for roughly 10 % of the cost of power.

Entergy is still working on a cost analysis to determine how joining SeTrans will affect rates. They submitted the first part of the analysis to state regulators.
The Louisiana Public Service Commission voted in February to oppose Entergy's initial plans to form an independent, for-profit company, called Transco, which would own Entergy's transmission lines. It would be managed by the large regional transmission organization. Entergy then revamped its proposal, but state consultant Paul Zimmering says many of the components opposed by the commission remain in the revised plan. "They still want an independent transmission company withinthe (regional transmission organization)," Zimmering says.

State regulators oppose that plan since rules now allow utilities to offset consumer rates with tariffs paid by other utilities to use their transmission lines. Under the new system, those tariffs would go directly to the utility, regulators say.

Entergy maintains that joining a regional transmission organization will benefit consumers in the long run. Proponents say it will force utilities to upgrade the nation's aging transmission grid. They also say it will reduce electricity rates by making it easier for more generators to sell power and increase supply. "We're going to have to overcome the (state) commission's presumption that it's not in the public's interest," Gallaher says.

Entergy needs permission from state and New Orleans regulators to join SeTrans. So far, New Orleans regulators haven't opposed the move. The state will likely decide the issue by the fall; the SeTrans group is hoping to be operational within a year. It will cost SeTrans members more than $ 100 mm to complete the process, Gallaher says.

Entergy alone plans to transfer 15,000 miles of transmission lines valued at almost $ 3 bn to the group. If approved, SeTrans will control 54,000 miles of transmission lines valued at more than $ 9 bn.

Source: New Orleans Publishing Group Inc.