Entergy’s strategy related to its integration into MISO received another high hurdle this week. The Mississippi Public Service Commission (“MPSC”) denied the Joint Application to transfer ownership and control of Entergy Mississippi’s high voltage transmission system to a subsidiary of ITC Holding Corporation. In its joint application, Entergy and ITC provide several reasons for the transaction, including the need for major capital investment to modernize the transmission grid:

Utilities and their regulators are faced with the question of how best to manage the increasing and evolving requirements that will be imposed to modernize the transmission grid, particularly in the light of capital requirements also facing the generation and distribution functions. The  proposed ITC Transaction, for which approval is being sought in this Joint Application, is part of EMI’s solution to address these escalating requirements for new  capital investment.[1]

Entergy also said the transfer would facilitate and build on the benefits of the Day 2 wholesale market that will be available when Entergy joins MISO.

However, MPSC did not find those or other stated benefits compelling enough to approve the transaction. In fact, the Commission took 99 pages to opine on why the transfer of Entergy’s transmission assets to ITC is not in the best interest of Entergy Mississippi’s customers. A long and interesting read, this phrase from paragraph 5 of the Decision reflects the gist of the Commission’s sentiment regard the transaction,

…offers with certainty only significant cost to ratepayers and complete loss of this Commission’s rate jurisdiction over the transmission assets at issue.

Although the MPSC seems to think it can still happen[2], this decision, along with the SPP remand, places Entergy in an interesting position regarding the MISO integration.

[1] Joint Application, page 4.
[2] Paragraph 18 of the decision directs Entergy to work with staff and file an initial plan regarding transmission upgrades 90 days after Entergy’s integration into MISO.

Although it was not the primary focus, a recent Seventh Circuit Decision about allocation of transmission project costs could be a game changer for renewable energy. The main purpose of the appeal by the Illinois Commerce Commission (“ICC”), Michigan Public Service Commission (“MPSC”) and others was to contest FERC’s approval of the Midwest Independent Transmission System Operator, Inc.’s (MISO) tariff on its members to fund the construction of new high-voltage power lines that MISO calls “multi-value projects” (MVPs). Designed to finance the construction of transmission lines for electricity generated by remote wind farms, the tariff allocates MVP costs among all utilities drawing power from the grid according to the amount of electrical energy used, placing most of those costs on urban centers, where demand for energy is greatest.

The court addressed six major issues, including RTO departure fees. But what got my attention was the bench’s response to the Michigan Public Service Commission’s argument that its benefit from the MVP’s is limited because the law in Michigan prohibits its utilities from using out-of-state renewable energy to meet their renewable energy requirements.

Michigan’s first argument—that its law forbids it to credit wind power from out of state against the state’s required use of renewable energy by its utilities — trips over an insurmountable constitutional objection. Michigan cannot, without violating the commerce clause of Article I of the Constitution, discriminate against out-of-state renewable energy.

Order 15

Many states have geographical limitations on what qualifies to meet their renewable energy standards. And while the Seventh Circuit is not the US Supreme Court, this statement is a nice volley for renewable energy companies looking to expand their business. Regardless of your position, the beautifully written 26-page decision is a must read. I am impressed with the bench’s understanding of complex energy issues that many long timers in the business don’t know. In addition to a nice review of the RTO structure, you will learn what the 1810 German novella Michael Kohlhaas has to do with rate pancaking.

In an Order issued on January 7, 2013, the Maryland Public Service Commission (“MPSC” or “Commission”) concluded the public interest required the customers of Potomac Electric Power Company (“Pepco”), Baltimore Gas and Electric Company (“BGE”) and Delmarva Power and Light Company (“Delmarva”) (collectively “Companies”) be provided with an additional option related to the installation of smart meters in their homes. However, the order states additional proceedings are necessary to determine the preferred course. It appears the Commission is considering two options: (1) to allow customers the option of retaining their current analog meter, or (2) to require all customers to receive a smart meter but with the option to have that meter installed to operate in an “RF-free” or near RF-free manner. Sometimes options result in additional financial responsibility; the Commission made it clear customers that exercise the option will bear the appropriate costs.

The Order went on to state the MPSC did not believe the record was sufficient regarding the overall system, as well as the customer-specific, cost-differential between these two options, and would therefore conduct additional proceedings to resolve these remaining issues. In the meantime, the Companies were ordered to continue to a moratorium for those customers wanting to opt-out. Additionally, on or before July 1, 2013, the Companies were ordered to:

submit to the Commission their proposals regarding a) the overall additional costs associated with allowing customers to retain their current analog meter, b) their proposals regarding cost recovery of these additional costs from customers, and c) their proposals for recovery of costs related to offering customers different RF-free or RF-minimizing options related to the installation of their smart meters. Additionally, we ask the Companies to provide this information scaled for different levels of customer participation;

– Maryland Public Service Commission Order, page 10.

2013 is shaping up to be another interesting year for smart meter decisions.