The Mississippi Public Service Commission is conducting an audit of Entergy’s participation in one of the nation’s largest regional transmission organizations in the wake of February’s ice storm.
The storm, which crippled the power grid of Texas and caused widespread outages, resulted in planned outages in the Midcontinent Independent System Operator’s South Region on February 16.
In April, the elected three-member commission initiated a docket as they investigate the benefits and possible downsides of Entergy’s membership in MISO, a non-profit RTO that delivers electricity to 15 states and the Canadian province of Manitoba.
A possible, but unlikely alternative could be the Southeast Energy Exchange Market, a power trading platform formed by the Southern Company (parent of Mississippi Power), Duke Energy (North and South Carolina), Dominion Energy (South Carolina) and the Tennessee Valley Authority and eight other utilities. This would allow the participating utilities to voluntarily buy and sell power in 15-minute increments.
Unlike a standard RTO, there would not be centralized dispatch for the conjoined grid like with MISO.
Entergy joined MISO in 2013 after it reached an agreement with the U.S. Securities and Exchange Commission to divest its transmission network after the federal agency commenced an investigation over Entergy’s alleged anticompetitive practices acquisition of two power plants owned by KGen, an independent power producer. The investigation remains open despite the agreement.
In 2012, the commission approved Entergy’s membership in MISO and the PSC required the company to submit annual reports about the benefits and drawbacks of membership in the RTO.
In its order initiating the docket, the commission questions whether RTO membership is worthwhile. While it admits in the order establishing the docket that there have cost savings for rate payers — $1.3 billion for Entergy as a whole and $207 million for the Mississippi subsidiary from 2014 to 2018 and $246 million through 2020 — it says it is less clear to the commission and other regulatory bodies nationwide whether the benefits of RTO membership outweigh the potential costs.
The company says in its filing that it anticipates the benefits from MISO membership to continue into the foreseeable future. It also says MISO is considering how to prevent future costs like the $90 million for MISO members from Hurricane Laura, which struck western Louisiana in 2020.
Entergy also said in its filing that it would cost about $89 million to leave MISO and re-establish dispatch control over its entire grid. It also said that SEEM wouldn’t be an acceptable alternative. The company said in its filing that this is unlikely since SEEM won’t replace the day-ahead or real-time energy markets and wouldn’t provide the savings or benefits enjoyed by MISO membership.
The Southern Renewable Energy Association recommended in its filing that the commission hire an independent third party to perform a multiple scenario analysis of Entergy’s RTO membership. The SREA also said that Entergy should remain in MISO, but that it isn’t maximizing its membership by promoting more interconnection with MISO.
The SREA also says in its filing that a weakness in the connection between the North and South regions of MISO are enabling Entergy to retain maximum control over the region, while reducing its exposure to competition. Entergy, according to the Clean Grid Alliance, has no direct connections with MISO North.
The organization also accused the PSC of using consultants at MISO stakeholder meetings to obstruct the expansion of transmission line projects that could allow more interconnection between MISO’s regions and possibly prevent the blackouts in February 2021.
MISO said in its filing that a 2020 study didn’t result in any interregional transmission projects. The RTO also said that the limitation between the North and South regions of MISO was largely contractual.
The Clean Grid Alliance, in its filing, estimated that Entergy leaving MISO for SEEM would result in rate increases for customers. Duke Energy (Ohio) recorded a cost of $97 million to withdraw from MISO in 2011, while the Louisville Gas and Electric and Kentucky Utilities companies paid $40 million in exit fees in 2006.
The organization said in its filing that MISO should expand its transmission system, especially from the North to South regions to allow the grid to move renewable energy (such as wind and solar) more easily through the grid where it is needed. The group also said in a high renewables scenario that it would be more expensive for Entergy to do so outside of an RTO.