Entergy cites $240mn in first-year MISO benefits

OREANDA-NEWS. April 29, 2015. Entergy's six utility units saw nearly \\$240mn in energy-related benefits in the first year following integration with the Midcontinent Independent System Operator (MISO) as Entergy's less-efficient power plants operated less frequently.

In addition, the utilities saw substantial capacity-related savings due to a lower reserve requirement within MISO's larger footprint, Entergy chief executive Leo Denault told investors on an earnings call today.

Entergy reported its seventh straight quarter of growth in industrial power sales, mostly in Louisiana. But the 2.9pc increase in industrial sales in the first quarter was lower than projected. The slower-than-expected growth was due to an increase in outages experienced by existing customers and some delays in expansion activity affecting new customers.

Entergy is working to modernize its aging generation fleet and to upgrade its transmission network to better serve about 1,600MW of new electric demand from industrial customers along the US Gulf coast seeking to take advantage of soaring natural gas production from shale formations.

The lower growth has not dampened the company's expectation for 4.4pc industrial sales growth this year, utility group president Theo Bunting said.

"We are seeing a shift in timing only," Bunting said. "The large majority of our growth is coming from projects that are in advanced development."

Denault said Entergy expects to invest \\$3.7bn to add six new plants by 2021, including the addition of three new combined-cycle plants. Two plants will be built to support Louisiana industrial growth and one will be built in southeast Texas. Entergy also plans to add two simple-cycle plants, one in Lake Charles and another in New Orleans.

The utilities will move forward to get state approval to build another \\$215mn in grid upgrades in Louisiana and Arkansas that were approved by the MISO board last week.

Entergy utilities submitted six projects for streamlined MISO review outside the normal year-long transmission planning process, saying the new lines, substations and other facilities are needed to serve 600MW of new industrial load before mid-2018.

MISO estimated 2014 net benefits to the MISO south region that includes Entergy, Cleco and other utilities of between \\$730mn and \\$954mn, or roughly 30pc of the grid agency's total 2014 benefit of \\$2.2bn to \\$3.1bn across 15 US states.

Entergy's move to join MISO came after the disclosure in 2010 that the US Justice Department had opened a civil investigation into alleged anti-competitive behavior in transmission and generation operations.

The US Justice Department has not responded to requests for information on the status of the civil investigation. Entergy says all its practices and policies satisfy regulations and are subject to review by federal energy regulators.