Entergy's MISO Move Finishes as Company Celebrates its 100th Anniversary

by Luke Jones  on Monday, Dec. 16, 2013 12:00 am  

On Thursday, Entergy Arkansas Inc. will celebrate its 100th birthday by switching on hundreds of LED lights adorning three of the bridges crossing the Arkansas River in Little Rock.

Just a few hours earlier, the company will add to its history by completing a two-year, $36.2 million transition into a regional transmission operator. It will also exit its system agreement, otherwise known as the glue holding all of the Entergy operating companies together.

This “cutover,” as Entergy terms it, will see MISO — the Midwest Independent Transmission System Operator Inc. of Carmel, Ind. — assume operation of all of Entergy’s transmission lines.

Entergy’s responsibilities will shift entirely to power generation and distribution. Also, thanks to exiting the system agreement, the company will not have to alter utility bills due to disparate energy costs between the other operating companies.

The change is projected to save Arkansas ratepayers $263 million over 10 years.

So what’s left for Entergy to do between now and Thursday?

“Well, frankly, not a whole lot,” said Kurt Castleberry, Entergy Arkansas’ director of resource planning and market operations. “We’re focused right now on the cutover.”

Castleberry said three meetings with MISO and other entities joining the system operator were being held last week and this week “where we’ll kind of do a rehearsal of the cutover plan…But we’ve accomplished a whole lot, and we don’t see any obstacles standing in our way to prevent the MISO cutover at 11 p.m. on Dec. 18.”

Video: Click to see a sneak peek of the new LED lights on the Arkansas River bridges.

But there have been obstacles during the past two years. Little Rock’s own Southwest Power Pool, for example, was originally considered to serve as Entergy’s transmission operator and objected when Entergy chose MISO, a larger and older but decidedly less local option.

Not to mention the approvals needed to allow the transition. The move had to be green-lighted by the Federal Energy Regulatory Commission and the Public Service Commissions of Arkansas, Louisiana, Mississippi and Texas, and it certainly wasn’t guaranteed to succeed. Another transmission-related move Entergy was attempting, for example, was recently shot down by the Mississippi Public Service Commission. (See Up With MISO, Down With ITC.)

“Each of the regulatory agencies had to approve it,” said Hugh McDonald, president and CEO of Entergy Arkansas. “In Arkansas, the commission was very thorough in their evaluation of our proposal. I think their final approval was last April and we had the other commissions’ approval prior to that.”

Even so, there was at least one roadblock, McDonald said, when Missouri’s commission required some conditions that Entergy couldn’t meet.

“We don’t have any customers in Missouri,” McDonald said. “But we have 87 miles of transmission lines.”

Entergy asked for a rehearing, McDonald said, and several weeks ago the commission granted Entergy’s request. “That removed the last major regulatory hurdle that we saw,” he said.

The rest of the cutover work was logistical.

“It’s involved a lot,” Castleberry said. “Moving data centers, building new office environments, re-engineering a lot of the company’s business processes, making investments of computer software and hardware. Then you could think about training people — this is a new world for us. We have participated in a lot of MISO training classes, over 1,800 at the last count, and we have made significant changes and investments in software systems needed for MISO. You’ve got to test all those software systems, and we’ve conducted over 2,500 test cases to make sure we can operate at MISO.”

Entergy had to participate in 23 MISO committees during the process. The transition involved constant testing: Castleberry said just the last couple of months have seen four simulations of MISO’s market system.

During the past two years, the company tracked the number of milestones it’s passed in getting to the integration goal. Castleberry said that number has reached 1,200.

“But we’re almost to the end,” he said.

McDonald said the integration effort involved about 600 Entergy employees.

The cutover also impacted other companies in the state. Arkansas Electric Cooperative Corp., for example, had to update all of its systems to accommodate the MISO markets, and will also have to integrate Southwest Power Pool’s new market systems in March.

“It’s been interesting in that it touches all parts of the company,” said Keith Sugg, vice president of integration at AECC. “It’s been a companywide effort. We put together teams for various functions like things related to communications to power plants, IT people, marketing people and several teams that cross departments. These groups have done the work they’ve needed to do to meet the market requirements and timelines that both MISO and SPP have set up.

“From the perspective of engaging, in essence, the entire company at once, it’s been interesting and a little bit unique.”

And like Entergy, the cost of integration for AECC was high. Sugg said calculations of the exact cost haven’t been made, but it’s certainly in the millions of dollars.

Post-Integration

Once the cutover is complete, the work of actually operating within MISO begins.

“The process of getting demand and our supply is different than how we’ve done it historically,” McDonald said. “We’ll be operating in a very different environment.”

Castleberry said the process will be fine-tuned over time and, it’s hoped, will ramp up ratepayer savings. And when can Arkansas ratepayers expect to see these savings?

“I would say that they start on Jan. 1,” Castleberry said. “That’s when the system agreement payments go away, so that’s one benefit. And the daily energy costs, you should start seeing that on Day One.”

“I think with our proposal, MISO savings on a typical customer will be between 0.5 to 2.5 percent compared to what they would have had,” McDonald said.

Also following the integration, MISO has stated that it would build a $5 million to $8 million operations center in Little Rock that will employ 35 to 50 workers.

McDonald said he’s looking forward to the integration being completed.

“It’s a historic cutover,” he said. “It’ll be the first time since 1951 that Entergy Arkansas is not part of the system agreement, and moving into an RTO simultaneously is really a big deal. So the decades of litigation we’ve gone through over the past 30 years, frankly, we hope, the vast majority is behind us. It certainly will reduce the risk for Arkansas customers going forward.”

 

 

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