FERC expands Entergy, Southern market power probe

WASHINGTON, D.C. - The Federal Energy Regulatory Commission (FERC) said it will investigate possible improper self-dealing by units of Entergy Corp. and Southern Co., expanding a probe of whether the two U.S. utilities can quash power grid competitors.

FERC in December put Entergy, Southern and four other utilities on notice that they failed a new test that measures whether a utility controls too much generation in its service territory.

FERC is concerned that utilities can give favorable treatment to their affiliates or sister units, possibly in the form of preferential access to the transmission grid or non-public information on grid conditions.

Building on that probe, FERC on Wednesday said that Southern and Entergy - which own giant grids in the Southeast and Gulf Coast regions - also must show they meet new agency standards for transmission market power and self-dealing.

"We are considering whether there is evidence of affiliate abuse or reciprocal dealing," FERC Chairman Pat Wood said at the agency's monthly meeting.

If found in violation of the standards, the utilities could forfeit their right to sell electricity at market-based rates and face potential refunds.

"Market-based rates are a privilege and not a right," FERC Commissioner Joseph Kelliher said.

A spokesman for New Orleans-based Entergy, which operates five subsidiaries in Arkansas, Louisiana, Mississippi, and Texas, declined to comment.

Entergy's case will be held in abeyance until it finalizes a plan to have its grid coordinated by an independent operator, FERC said.

A spokesman for Atlanta-based Southern was not immediately available for comment. Southern operates five regulated utilities that span most of Georgia and Alabama, southeastern Mississippi and the Florida panhandle.

Each utility controls over 30,000 megawatts of generation, putting them among the nation's biggest operators.

In addition, FERC launched a separate probe into whether Southern Power Co. - the utility's affiliate merchant generator - unfairly benefits from its parent company relationship.

FERC said the wider probe into transmission and affiliate abuse will be delayed until an agency judge rules on the Southern Power affiliate case.

FERC is weighing allegations made by merchant competitors like Calpine Corp. that Southern Power may unfairly benefit from its access to reserve power supplies and grid information from other Southern affiliates.

FERC conditionally accepted a late filing on market power from a unit of Consolidated Edison Inc., but Kelliher upbraided the utility for filing more than a year late.

"I don't know why ConEd ignored the commission's deadline. Perhaps it's arrogance, perhaps it's indifference, perhaps it's sheer incompetence," Kelliher said.

A spokesman for New York-based ConEd said the utility regrets the late filing and has taken steps to ensure it won't happen again.

Utilities that file late should face financial penalties, Kelliher said.

More than 100 utility companies have filed incomplete market power analyses or haven't filed at all, Wood said.