The companies formally terminated the merger agreement this morning and filed pleadings to withdraw the remaining transaction approval applications with Entergy’s retail regulators, as well as the Missouri Public Service Commission and the Federal Energy Regulatory Commission.
The companies originally announced the deal on Dec. 5, 2011, and have spent the past two years working to obtain the necessary approvals to complete the transaction. The agreement called for Entergy to spin off its electric transmission business to a newly formed entity and merge it with a subsidiary of ITC.
"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," Leo Denault, Entergy’s chairman and chief executive officer, said. "We sincerely thank all of our regulators, their staffs and participating parties for their hard work and diligent review of the transaction, and we look forward to working with them in the near future on how best to maintain and expand the transmission system going forward."
Entergy’s transmission business consists of approximately 15,400 miles of interconnected transmission lines at voltages of 69kV and above and associated substations across its Utility service territory in the Mid-South. The company’s preliminary 2014 – 2016 capital plan includes $1.7 billion for transmission investment. Additionally, the company is on track to transfer functional control of its transmission systems to the Midcontinent Independent System Operator, Inc., which Entergy estimates will save customers approximately $1.4 billion over the next decade.
"We have operated our transmission system for 100 years, and we’re ready and excited about continuing to do so well into the future," said Denault. "We believe it will be an integral part of the significant growth opportunities in the Utility and the backbone of reliable service at reasonable cost to our customers.
"Our service territory is primed for a historic level of economic development with over $50 billion of capital investment announced by third parties in the last 12 to 18 months that have the potential to add more than 2,000 megawatts of load."
In addition, predictions for this surge of investment indicate it could potentially create approximately 24,000 jobs, further increasing economic activity in Entergy’s region. Driven by this industrial expansion, Entergy currently forecasts 2 to 2.25 percent compound average sales growth for the Utility overall in the next three years, and with the potential to be higher if additional opportunities come to fruition and the Utility operating companies serve the new load.
"This economic development is part of our broader Utility growth strategy to bring value to our customers, employees, owners and communities," said Denault. "This strategy builds off the regional advantages from some of the lowest electricity rates in the nation and a favorable environmental profile, as well as cost management and investment to meet the needs of our customers. That has not changed. We remain focused on execution of these opportunities."
Entergy affirmed its 5 to 7 percent Utility net income compound average growth rate outlook through 2016, off 2013 base, driven by superior load growth, productive capital investment and cost-saving initiatives.
"We will work hard to ensure our grid safely and reliably meets the needs of our growing communities as we help position our region as a great place to do business," Denault said.
"I would like to personally thank our employees for their relentless pursuit of this transaction. I know they will be just as diligent as we work together to grow our Utility and provide safe, reliable service at reasonable cost to our customers. And thanks to the employees of ITC for partnering with us in this worthwhile endeavor."
