posted on Wednesday, April 26, 2006 6:07 PM
by
Andrea Kells
FERC Cautiously Approves Entergy ICT Plan
Making quiet retreat from its long insistence that transmission owners relinquish operational control of their systems to independent regional transmission organizations or RTOs, FERC acquiesced in Entergy's much less independent Independent Coordinator of Transmission ("ICT") concept, which the southern utility holding company first proposed nearly one year ago. [Duke Energy Asks FERC to Approve MISO as ICT for Duke Facilities; Entergy and SPP Come to Terms on ICT Agreement; [ER05-1065].
Under the plan, the Southwest Power Pool ("SPP") will act as the ICT for Entergy's transmission system. In that role, SPP will grant or deny requests for transmission service, calculate available flowgate capability, and administer Entergy's OASIS. In a notable break with past practice, the plan allows Entergy to demand that interconnecting customers pay to upgrade Entergy's transmission grid ("participant funding"). Until now, only RTOs were given this option and were required to reserve to funding participants the transmission capacity created or expanded as a result of the participants' investment.
As part of the ICT, FERC also authorized Entergy to price transmission service in a way that purports to protect customers from congestion costs. As approved, the ICT will oversee a Weekly Procurement Process that is intended to allow merchant generators to compete with Entergy plants to serve load within Entergy's service territory. These two latter elements have sparked some criticism, as independent power producers argue that Entergy's pricing proposal would not, in some cases, pay them for past upgrades to the grid, and that the weekly procurement process would not allow for capacity payments.
While FERC approved the ICT plan over these objections, the agency pointedly characterized the ICT as an "experiment" and established numerous metrics by which to monitor the ICT's progress. Entergy must submit periodic reports to FERC on the ICT's operations, as well as a comprehensive report once the ICT has been in place for a year. In addition, Entergy must provide annual updates to state regulators that document any savings customers receive from the ICT. FERC granted authorization for a four-year period, after which Entergy will need to file for extension should it wish to continue with the ICT. Other utilities, in particular Duke Energy and MidAmerican Energy, who have filed similar plans with FERC in recent months, will be paying close attention to the fate of Entergy's ICT to see whether it wins FERC's full confidence and survives its full four-year term.