Entergy Corp. and ITC Holdings Corp. announced Friday the companies have mutually agreed to discontinue a plan to spin off Entergy’s transmission business and merge it with a subsidiary of ITC. The merger had recently been rejected by the Mississippi Public Service Commission.
The companies formally terminated the merger agreement Friday morning and filed pleadings to withdraw the remaining transaction approval applications with Entergy’s retail regulators, the Missouri Public Service Commission and the Federal Energy Regulatory Commission.
The companies originally announced the deal on Dec. 5, 2011 and have been working to obtain the necessary approvals for the past two years. The merger had been approved by FERC last summer but also requried approval from Entergy’s state and local jurisdictions.
Entergy Chairman and CEO Leo Denault said that while the company believes the transaction would be in the best interest of its customers and stakeholders, it was clear the company did not “have the necessary regulatory support to close the transaction.”
MPSC Central District Commissioner and Chairman Lynn Posey said the commission “was not persuaded the transfer of ownership would be in the best interest of Entergy Mississippi’s customers.” Posey said the commission’s decision was based on three negative aspects of the proposal: an increase in customer rates; the commission losing jurisdiction over transmission cost of service; and no clear benefits to customers because Entergy has yet to integrate and operate within the Midcontinent Independent System Operator Inc. (MISO) grid.
Entergy is on track to transfer functional control of its transmission systems to MISO, which Entergy stated in a release would save customers around $1.4 billion over the next decade.
Entergy operates approximately 15,400 miles of interconnected transmission lines of 69kV and above and associated substations across its service territory in the mid-south. The company’s 2014-2016 capital plan includes $1.7 billion in transmission investment. Under the deal, the transmission lines and associated substations would have been transferred from Entergy to ITC, and around 750 Entergy employees would have become ITC employees. ITC would have also established a regional headquarters in Jackson, Miss., the location of Entergy’s transmission business.