Entergy 2009 Annual Report Download - page 46

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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
42
Agreement that prohibits sales to third parties by individual companies absent an offer of a right-of-first-refusal to
other Utility operating companies. The LPSC's complaint challenges sales made beginning in 2002 and requests
refunds. On July 20, 2009, the Utility operating companies filed a response to the complaint requesting that the
FERC dismiss the complaint on the merits without hearing because the LPSC has failed to meet its burden of
showing any violation of the System Agreement and failed to produce any evidence of imprudent action by the
Entergy System. In their response, the Utility operating companies explained that the System Agreement clearly
contemplates that the Utility operating companies may make sales to third parties for their own account, subject to
the requirement that those sales be included in the load (or load shape) for the applicable Utility operating company.
The response further explains that the FERC already has determined that Entergy Arkansas' short-term wholesale
sales did not trigger the "right-of-first-refusal" provision of the System Agreement. While the D.C. Circuit recently
determined that the "right-of-first-refusal" issue was not properly before the FERC at the time of its earlier decision
on the issue, the LPSC has raised no additional claims or facts that would warrant the FERC reaching a different
conclusion. On December 7, 2009, the FERC issued an order setting the matter for hearing and settlement
procedures. Settlement procedures were unsuccessful and a hearing in the matter is scheduled to begin in August
2010.
Independent Coordinator of Transmission
In 2000, the FERC issued an order encouraging utilities to voluntarily place their transmission facilities
under the control of independent RTOs (regional transmission organizations). Delays in implementing the FERC
RTO order occurred due to a variety of reasons, including the fact that utility companies, other stakeholders, and
federal and state regulators have had to work to resolve various issues related to the establishment of such RTOs.
In November 2006, after nearly a decade of effort, including filings, orders, technical conferences, and
proceedings at the FERC, the Utility operating companies installed the Southwest Power Pool (SPP) as their
Independent Coordinator of Transmission (ICT). The installation does not transfer control of Entergy's transmission
system to the ICT, but rather vests with the ICT responsibility for:
granting or denying transmission service on the Utility operating companies' transmission system.
administering the Utility operating companies' OASIS node for purposes of processing and evaluating
transmission service requests and ensuring compliance with the Utility operating companies' obligation to
post transmission-related information.
developing a base plan for the Utility operating companies' transmission system that will result in the ICT
making the determination on whether costs of transmission upgrades should be rolled into the Utility
operating companies' transmission rates or directly assigned to the customer requesting or causing an
upgrade to be constructed. This should result in a transmission pricing structure that ensures that the Utility
operating companies' retail native load customers are required to pay for only those upgrades necessary to
reliably serve their needs.
serving as the reliability coordinator for the Entergy transmission system.
overseeing the operation of the weekly procurement process (WPP).
evaluating interconnection-related investments already made on the Entergy System for purposes of
determining the future allocation of the uncredited portion of these investments, pursuant to a detailed
methodology. The ICT agreement also clarifies the rights that customers receive when they fund a
supplemental upgrade.
The initial term of the ICT is four years, and Entergy is precluded from terminating the ICT prior to the end of the
four-year period.
After the FERC issued its April 2006 order approving the ICT proposal, the Utility operating companies
made a series of compliance filings with the FERC that were protested by various parties. The FERC accepted the
compliance filings and denied various requests for rehearing. As stated above, SPP was installed as the ICT in
November 2006.
44