Entergy Corp.’s $1.78 billion sale of high-voltage power lines across four states to ITC Holdings Corp. was rejected by Mississippi regulators, threatening to unravel the deal.
The transaction was rejected by a 3-0 vote because it would have raised customer rates and reduced state control with no clear benefit to customers, Mississippi Public Service Commission Chairman Lynn Posey said in a statement posted today on the agency’s website.
Mississippi is the first state to reject the deal, announced in 2011. Texas regulators voiced similar concerns in August. ITC, the only publicly traded company that exclusively operates high-voltage lines, said it would invest in the networks to reduce power failures. Opponents said rates would rise because the lines would fall under federal jurisdiction, which can allow for higher returns.
“This spells doom for the deal,” Paul Patterson, a New York-based analyst for Glenrock Associates LLC, said today in a telephone interview.
The companies said they’re reviewing the decision.
“The transaction is in the public interest,” Robert Doetsch, a spokesman for Novi, Michigan-based ITC, said in an e-mail. “We do not believe that jurisdictional concerns should stand in the way.”
Entergy will work with ITC to determine the next step, Mike Burns, a spokesman for the New Orleans-based company, said in a separate e-mail.
Entergy also needs approvals in Arkansas, Louisiana and Texas for the deal, according to an Oct. 29 statement. It’s also seeking approval in New Orleans, a separate jurisdiction, and Missouri, where it has assets, according to a Nov. 7 filing.
“The commission was not persuaded the transfer of ownership would be in the best interest of Entergy Mississippi’s customers,” Posey said in the statement.
The companies withdrew their application in Texas after regulators objected to aspects of the deal during an Aug. 9 meeting in Austin. They later resubmitted their application.
Entergy fell 1.8 percent to $61.30 at 4 p.m. in New York. ITC rose 1.3 percent to $93.30.
ITC agreed to pay $1.78 billion for Entergy’s networks in Texas, Arkansas, Louisiana and Mississippi in December 2011. The Federal Energy Regulatory Commission had approved the transaction.