Entergy plans MITS Merger

Entergy Louisiana is planning a merger of operations with the Midwest Independent Transmission System in a move that would relinquish electric transmission activity to separate companies.

CEO Bill Mohl revealed corporate changes for Entergy Louisiana to members of the South Central Industrial Association as he spoke to that organizations final membership luncheon of 2011.

“When we look at the future we face challenges just like everyone else,” Mohl said. “We are working to keep focused and to keep your energy costs affordable.”

According to the utility boss, a merger with MITS, which is pending approval by regulators, would transfer dispatch operations through 2013 and create a savings of close to $1 billion.

Entergy is also considering a deal in which it would sell 15,700 miles of line and associated substations to ITC Holdings for $1.78 billion. Mohl said this could generate overall savings to existing customers.

“There are a number of things we are taking on as a company,” Mohl said. “When I came on [as CEO] a couple of years ago we thought we should be the ones recruiting companies to the area. That is not really our core competency. Our core competency is making sure we are a good service provider.”

Mohl credited SCIA with promoting economic development and attracting industry to the region. “Southeast Louisiana is doing very well, especially when you compare it to other areas of the state,” he said. “We want to be part of that expansion as a service provider.”

The use of natural gas has kept electrical production affordable according to Mohl. “We’ve seen a number of shale [gas] plates come up across the United States,” he said. “Since that time we have seen steady gas prices. When we look at the future people predict stable gas prices. I think over the next five years we will enjoy competitive gas prices which in turm means lower prices for our customers.”

The utility leader said that in 2010 Louisiana was 12th lowest in the nation in terms of residential energy costs and 14th in terms of industrial energy costs.

Entergy has seen greater growth in industrial demand while residential demand has held steady and commercial has dropped.

“Some people don’t realize the value of electricity when you compare it to other commodities or items that you buy,” Mohl said. “Unleaded gas[oline] over the last 10 years has gone up [in price] over 140 percent. Eggs about 90 percent. Oranges, 50 percent. The price for energy in the Gulf States has gone up about 7 percent. So when you compare that, it is not bad over a 10-year period. When you think about it, you power an average house for about $4.40 a day. It’s really not that bad of a deal.”

Mohl said that demand continues to grow in part because of technology. “Though we have seen things slump a little on the commercial side, demand has grown significantly. We are entering a phase in the power business where there is going to have to be substantial investment in generation, transmission and distribution resources.”

“Entergy has always played a role in getting us back to work during difficult times of hurricanes and outages,” Rig Chem President and SCIA board member Lori Davis said following Mohl’s presentation. “Personally, my business is powered by Entergy, so anything he said here is important to me. Sounds like there is a consolidation that in the long run I hope will make us a better energy efficient company. I don’t know. We can keep prices down and that is the main thing right now because everyone is looking at costs and bottom line dollars.”

SCIA Executive Director Jane Arnette said that after Hurricane Katrina the SCIA began Operation Rebuild and benefited from help offered by Entergy and AT&T to get businesses back up and running. “That is a critical issue for us,” she said. “The contributions that Entergy has made statewide is tremendous and important to the success of the community. We appreciate that partnership.”

Entergy has approximately 99,000 residential and commercial customers in Terrebonne and Lafourche parishes alone. Many Entergy power plants are more than 40-years-old and Mohl said much of the infrastructure needs updating to be more reliable and efficient.