ENTERGY REPLIES. In the Feb. 1, 1998 article "Reliability or Profit: Why Entergy Quit the Southwest Power Pool" (p. 30), authors David Dismukes and Fred Denny allege that they have uncovered a "subplot" in Entergy's transfer from the Southwest Power Pool to Southeastern Electric Reliability Council. The fact of the matter is Entergy's rationale for the transfer was clean and above-board. It simply made more sense for Entergy to join SERC for loop flow, reliability and security reasons.
Entergy agrees with Dismukes and Denny that it prefers to retain control of the operation and maintenance of its transmission system. Entergy has had an excellent record of operating and maintaining the transmission system in an efficient and reliable manner for decades. Entergy's knowledge of the operational and engineering characteristics of the system makes it the best qualified to continue to operate and maintain it. Entergy has put in place safeguards determined appropriate by FERC to ensure that non-affiliated wholesale entities obtain access to the transmission system on a comparable basis with Entergy Operating Companies and their affiliates.
With this in mind, if Entergy's regulators determine that someone else is better qualified to operate the transmission system, and that changes to the manner in which Entergy currently operates and maintains the transmission system are warranted as a result of the restructuring of the electric utility industry, Entergy has committed to work with regulators to facilitate such changes. To date, though, none of our regulators have determined such changes are warranted.
The authors claim that Entergy moved out of SPP because the cost-of-service cap in the proposed SPP tariff would have prevented Entergy from recovering the economic rents for use of its transmission facilities that it otherwise would have collected. The proposed SPP tariff has been roundly criticized by state regulators and other stakeholders alike. Entergy's open access transmission tariff under which Entergy currently operates is a cost-of-service based tariff. These rates are reassessed each year to reflect the prior year's actual costs for use of the system. Hence, regardless of whether Entergy is a member of SERC or SPP, Entergy is unable to collect monopoly rents from its transmission customers.
Contrary to the authors' implications, Entergy cannot arbitrarily decide which transactions to curtail in the event of transmission constraints. Entergy's tariff sets forth specific priorities and procedures for curtailing transactions, redispatching generation, and shedding load in the event of transmission constraints that impact the reliability of Entergy's system. Entergy is required to follow these tariff procedures when taking action to relieve a transmission constraint on its system. Entergy is also subject to the same NERC line loading relief criteria as a member of SERC, as it would be as a member of SPP. All NERC reliability councils, including SERC, are required to comply with the NERC transmission loading relief procedures and to establish standards and guidelines for implementation of those procedures. While Entergy will be the Security Coordinator for a subregion of SERC and, as such, will be responsible for implementing NERC's transmission line loading relief procedures for entities within its subregion, it must abide by NERC criteria and tariff requirements to determine which transactions will be cut in the event of congestion.
In conclusion, we wish to continue to work with all stakeholders on the future market structure that will benefit all consumers. We can only hope that Messrs. Dismukes and Denny share that objective.
Andrew M. Vesey
Vice President, Transmission Business
Entergy Services Inc., New Orleans
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