On July 1, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order confirming the Midwest Independent Transmission System Operator, Inc.’s (“Midwest ISO”) interpretation of the Joint Operating Agreement (“JOA”) between it and the Southwest Power Pool (“SPP”).  FERC declared that the JOA allows for the sharing of available transmission capacity between the Midwest ISO, Entergy Arkansas, Inc. (“Entergy Arkansas”), and SPP in the event that Entergy Arkansas becomes a transmission-owning member of the Midwest ISO.

In April 2011, Entergy Corporation (“Entergy”) announced that it intended to join the Midwest ISO.  SPP has opposed Entergy’s plans, citing concerns about compensation for new SPP grid flows, economic consequences of the flows, and sharing of costs for SPP grid upgrades.  On April 8, 2011, the Midwest ISO filed a Petition for Declaratory Order asking FERC to confirm that the terms of Section 5.2 of the JOA regarding the sharing of transmission capacity on a common path will remain in effect and applicable to Entergy Arkansas, a subsidiary of Entergy, if it becomes a transmission owner of the Midwest ISO (see April 18, 2011 edition of the WER).  Section 5.2 of the JOA provides that where the Midwest ISO and SPP “have contract paths to the same entity, the combined contract path capacity will be made available for use by both Parties.”

The Midwest ISO argued that Section 5.2 of the JOA provides for the sharing of available transmission capacity on common paths when the entities using that capacity are transmission owners of either the Midwest ISO or SPP.  However, SPP’s interpretation of Section 5.2 was that capacity sharing is available to Entergy Arkansas only so long as it operates on a stand-alone basis, but not if it transfers its transmission facilities to either SPP or the Midwest ISO’s control.  FERC confirmed the Midwest ISO’s interpretation of the JOA with respect to transmission sharing among MISO, SPP, and Entergy.

FERC noted that the applicability of Section 5.2 regarding sharing of available contract path capacity with Entergy Arkansas is central to the resolution of any other issues that may need to be renegotiated as a result of Entergy’s plans to join the Midwest ISO instead of SPP.  FERC also stated that SPP and the Midwest ISO are required to negotiate in good faith on any future changes to the JOA proposed by either regional transmission organization.

A copy of FERC’s Order is available online under Docket No. EL11-34-000 and here.