Entergy Says Joining MISO Will Save Customers Over $1 Billion

Yesterday, Entergy announced plans to join the Midwest Independent System Operator (MISO). The New Orleans based utility had been evaluating its options regarding the best management structure for its transmission system, including proposals from the Southwest Power Pool (SPP) and MISO. The study done by Entergy included independent analysis of the savings and actual proposals from SPP and MISO on how certain costs would be shared. This evaluation summary shows that joining MISO could save customers more than $1 billion in power production costs for the 2013 to 2022 timeframe. While both MISO and SPP were assumed to have a Day 2 market, an advantage of joining MISO is that it has an operating Day 2 market today:

The analysis clearly shows there are compelling benefits to joining a regional transmission organization with substantial scale and a Day 2 market,” said J. Wayne Leonard, Entergy’s chairman and chief executive officer. He added, “An organized market design based upon centralized auction markets creates greater efficiencies than one that relies upon bilateral trading, particularly in electricity markets where some congestion is always present. We look forward to discussing in detail the benefits of joining MISO with regulators, their staffs and other stakeholders in the months ahead. As the analysis showed, MISO’s substantial scale and established market made it the clear choice for customer benefits.
Entergy Press Release, April 25, 2011

Given the anticipated departure of FirstEnergy and Duke Ohio, this decision by Entergy must have MISO execs doing the Second Line in Carmel. According to MISO’s news release, the integration of Entergy will create the largest RTO in the US. MISO is presenting to two half-day seminars on May 18 and 19, 2011, for those interested in meeting its leadership and learning more about the organization, its markets and its processes, including optional tours of its Carmel, IN control room. Given the concern about grid security, I question the appropriateness of an open invitation to view MISO’s control room. Hopefully the registration process is designed to carefully screen those allowed to tour the control room, although the invitation appears to be to any interested party.

Now that Entergy has made its decision, how hot will the battle between MISO and SPP over capacity sharing get? Initially, MISO requested expedited treatment to facilitate a decision by Entergy. Several parties opposed special treatment. FERC issued a notice stating that protests and motions are due May 9, 2011.