NOVI — ITC Holdings Corp. (NYSE: ITC) Friday announced that its proposed buyout of the transmission lines of New Orleans-based Entergy Corp. (NYSE: ETR) has received approval from the Federal Energy Regulatory Commission.
FERC approved the companies’ joint application for the transaction, under which Entergy will spin off its electric transmission business and merge it into an ITC subsidiary.
In addition, FERC also approved new rate constructs for the transmission assets under ITC ownership.
This approval follows the FERC approval received in May by ITC and Entergy authorizing utility operating company financings associated with the transaction.
FERC’s order effectively accepted the companies’ positions on the effects of the transaction on competition, rates and regulation, with the Commission noting the benefits that stem from the independent ownership of transmission assets, over and above benefits that will result from Entergy’s integration into MISO.
The commission also largely approved the associated rate filings, including the requested allowed return on equity, authorized capital structures and the use of forward-looking test years, while certain other elements were set for hearing.
Said Joseph L. Welch, chairman, president and chief executive officer of ITC: “Although this is a positive step with respect to the transaction, we recognize that FERC’s action is just one aspect of the process. We will continue to work through the regulatory process at the federal, state and local levels to underscore the benefits to customers of an independent transmission company — whose sole focus is the strengthening of the transmission grid.”
The transaction also requires approval from Entergy’s state and local jurisdictions. Proceedings are underway before the Arkansas Public Service Commission, Louisiana Public Service Commission, New Orleans City Council, Mississippi Public Service Commission, Missouri Public Service Commission and the Public Utility Commission of Texas.
ITC and Entergy target a transaction closing this year pending receipt of all required regulatory approvals and satisfaction of other closing conditions.
Through several related orders, FERC would allow the transfer of approximately 15,400 circuit miles of interconnected transmission lines at voltages of 69,000 volts and above and the associated substations in Arkansas, Louisiana, Mississippi, Missouri and Texas from Entergy to ITC. Meanwhile, Entergy’s utility operating companies would continue to own and operate their respective distribution and generation businesses and provide customer service, billing, outage reporting and restoration services to homes and businesses throughout the region.
In addition to transmission facilities, approximately 750 Entergy employees, including key leadership personnel from Entergy’s transmission business, would become employees of ITC as a result of the transaction.
Upon closing of the transaction, ITC would establish and maintain a regional headquarters in Jackson, Miss., where the headquarters of Entergy’s transmission business currently is located. ITC also would have offices and warehouses throughout the existing Entergy service territory to ensure a local presence and timely response to stakeholder and system needs.
Details regarding the transaction are provided in the FERC filing.
ITC Holdings is the nation’s largest independent electric transmission company. Based in Novi, ITC invests in the electric transmission grid to improve reliability, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems. ITC’s regulated operating subsidiaries include ITCTransmission, Michigan Electric Transmission Co., ITC Midwest and ITC Great Plains. Through these subsidiaries, ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, serving a combined peak load exceeding 26,000 megawatts along 15,000 circuit miles of transmission line. Through ITC Grid Development and its subsidiaries, the company also focuses on expansion in areas where significant transmission system improvements are needed. For more information, visit www.itc-holdings.com.
Entergy, which celebrates its 100th birthday this year, is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including more than 10,000 megawatts of nuclear power, making it one of the nation’s leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $10 billion and approximately 15,000 employees. For more information, visit www.entergy.com.