On October 2, 2012, FERC approved Entergy Services, Inc.’s (“Entergy”) proposal to transfer its Independent Coordinator of Transmission (“ICT”) services from Southwest Power Pool, Inc. (“SPP”) to the Midwest Independent Transmission System Operator, Inc. (“MISO”).  Additionally, FERC granted an extension of Entergy’s current ICT agreement with SPP, which expires on November 17, 2012, to November 30, 2012.  This will allow transfer of ICT functions to MISO on December 1, 2012.

FERC initially approved Entergy’s proposal for SPP to serve as its ICT in 2006.  The ICT oversees the transmission service pursuant to Entergy’s Open Access Transmission Tariff.  Some of the ICT’s duties include granting or denying requests for transmission service or interconnection service, maintaining Entergy’s Open Access Same Transmission Information System, and performing regional planning.  In its most recent application to FERC, Entergy argued that as the new ICT, MISO would continue to provide direct and substantial oversight of the Entergy transmission system.  Entergy has previously announced plans to join MISO as a transmission owner in December 2013 (see April 29, 2011 edition of the WER).

In approving Entergy’s proposal to designate MISO as the new ICT, FERC addressed four areas of concern.  First, FERC rejected arguments that the transition of ICT functions to MISO is premature due to regulatory uncertainty regarding Entergy joining MISO as a transmission owning member.  FERC reasoned that the proposal to transfer ICT functions to MISO is ripe since the current ICT agreement is set to expire on November 17, 2012.  Furthermore, FERC noted that any regulatory uncertainty relating to Entergy and MISO is limited to Entergy’s proposal to transfer functional control of its transmission assets into MISO and thus, is not relevant to the ICT agreement.

Second, FERC dismissed concerns that SPP is better suited to serve as the ICT for Entergy.  FERC stated that an ICT agreement “is not based on which entity has the most experience, but rather, whether MISO is a capable provider of these services…[and] MISO is a capable provider of these services.”  FERC added that allowing MISO’s independent market monitor, Potomac Economics, to oversee the Entergy Weekly Procurement Process adds another level of expertise to MISO’s capability as serving as the ICT.

Third, FERC rejected the argument that having MISO act as the ICT will increases costs compared to an alternative offer from SPP.  In doing so, FERC emphasized that is not required to compare just and reasonable options against one another, but rather must ensure that the current proposal is just and reasonable.  FERC concluded that Entergy’s proposal provided savings in relation to the current ICT agreement with SPP, and any costs incurred from the transition of ICT functions from SPP to MISO should be minimal.

Finally, FERC noted that Entergy will transfer its Reliability Coordinator duties from SPP to MISO, and that during this transition Entergy will have two Reliability Coordinators.  FERC reminded both MISO and SPP of their NERC obligations regarding reliability coordination during this time. 

As requested by Entergy the ICT agreement with MISO is scheduled to terminate on the earlier of December 31, 2014, or the proposed date of transfer of Entergy’s transmission assets to MISO. 

A copy of the order is available here.