Entergy Corp. scrapped its proposed $1.78 billion sale of high-voltage power lines across four states to ITC Holdings Corp. after failing to win over regulators in the two years since the deal was announced.
“While we strongly believe that the transaction would be in the best interest of our customers and all stakeholders, it is clear we don’t have the necessary regulatory support to close the transaction,” Entergy’s Chief Executive Officer Leo Denault said in a statement today.
Mississippi became the first state to reject the deal earlier this week after Texas regulators voiced concerns in August. ITC, the only publicly traded company that exclusively operates high-voltage lines, said it had planned to invest in the networks to reduce power failures. State regulators were worried rates would rise because the lines would fall under federal jurisdiction.
ITC, based in Novi, Michigan, will seek alternate acquisitions as it plans to build $4.2 billion of lines in the upper Midwest and Great Plains through 2016, ITC’s Chief Financial Officer Cameron Bready said today in a telephone interview.
Texas regulators, as well as those in Mississippi, complained they would lose jurisdiction over transmission to the Federal Energy Regulatory Commission under the proposed deal. The transaction also needed approval from Arkansas and Louisiana.
“It does highlight the tension that exists between federal regulation of interstate transmission and in-state regulation,” Bready said. “Notwithstanding that we were unsuccessful in this circumstance, by no means that suggests that there is no other state or no other region in the country where we would be unable to advance our independent model.”
Denault said last month that New Orleans-based Entergy’s annual utility earnings will rise 5 percent to 7 percent even if the deal isn’t completed because low natural gas prices are driving industrial expansion.