New FERC could impact Entergy case | Arkansas Blog

Friday, August 11, 2006

New FERC could impact Entergy case

Posted By on Fri, Aug 11, 2006 at 9:06 AM

The appointment this month of three new members to the five-member Federal Energy Regulatory Commission may impact whether the commission decides to act on a complaint against Entergy filed by the Arkansas Public Service Commission.

A ruling against New Orleans-based Entergy could force it to retire high-cost natural gas plants and upgrade its transmission grid to make room for merchant competitors to sell cheaper electricity. FERC has not yet acted on the Arkansas filing.

Public power agencies, industrial customers and generation owners, including NRG Energy (NRG.N: Quote, Profile, Research) and LS Power Group, support the Arkansas commission's complaint. The arguments are not new, but the FERC panel that will decide to accept or dismiss the complaint is.

The U.S. Senate this month confirmed three new members to the five-member commission. ...

Complaints in the FERC case echo previous concerns of power-plant developers in Entergy's territory, but the issues remain unresolved, said Sparks. Many new plants are unable to sell power into the wholesale market because of transmission constraints. ...

The fact that Arkansas regulators are asking the questions may bolster the case at FERC, said David Cruthirds, a Houston attorney who tracks Entergy's regulatory cases. "If a state commission is making the same argument, it's going to be give more consideration," said Cruthirds. "It's not just a bunch of whining by merchants."

The complaint is an outgrowth of a 2005 FERC ruling that reallocates Entergy's power costs between its utility units in four states. That ruling adversely affects Entergy's 675,000 customers in Arkansas where Entergy runs its lowest-cost coal-fired generation.

Beginning next year, Arkansas ratepayers face the prospect of paying as much as $350 million more for electricity to cover the state's share of Entergy's power costs. That will benefit Entergy's nearly 1.2 million customers in Louisiana, where the company operates plants that burn more expensive natural gas.

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