December 11, 2013 9:53:15 AM
JACKSON -- Mississippi utility regulators on Tuesday unanimously rejected a merger proposal by Entergy Corp. and ITC Holdings Corp., saying the deal could've meant a $300 million rate increase for Mississippi customers over 30 years.
"We respect Entergy's desire to improve its organizational effectiveness, but the commission was not persuaded the transfer of ownership would be in the best interest of Entergy Mississippi's customers," said Lynn Posey, chairman of the three-member Mississippi Public Service Commission.
Another commissioner, Brandon Presley, said: "The evidence in the case did not show any identifiable savings to customers."
Entergy executives said in a statement that they were disappointed that the Mississippi commission found the transaction is not in the public interest.
"We will evaluate the Mississippi commission's 99-page order and work with ITC to determine next steps," Entergy said in a statement.
In December 2011, New Orleans-based Entergy said it would transfer its high-voltage lines to Novi, Mich.-based ITC.
The plan was for ITC to issue Entergy shareholders enough stock to give them a majority of ITC shares worth more than $2 billion. ITC would've assumed $1.78 billion in debt. Entergy and ITC won Federal Energy Regulatory Commission approval in June.
The merger request also was filed with regulators in the other areas that Entergy serves -- the states of Arkansas, Louisiana and Texas and the city of New Orleans. Regulators in those areas have not acted yet, but rejection in Mississippi makes the deal's success unlikely.
David Cruthirds, a Houston lawyer who publishes an energy newsletter, said the deal requires the approval of all five regulatory bodies, and all six Entergy operating companies must be part of the merger.
"I just don't see the other jurisdictions going forward, given this," Cruthirds said in a phone interview after the Mississippi vote.
Entergy has the option to request a rehearing in Mississippi, Cruthirds said.