LITTLE ROCK — The Department of Justice is continuing an antitrust investigation of Entergy Corp., it said late Wednesday, even as it approved the utility’s purchase of two natural gas power plants.
The department approved Entergy Arkansas’ $253 million purchase of a 620-megawatt natural gas power plant from Houston-based KGen Power Corp. The purchase of the plant, in Hot Spring County, should close by the end of the year.
Entergy Arkansas plans to use power from the plant near Malvern to supplement electricity already generated at the firm’s Nuclear One plant near Russellville and two Arkansas coal-fired power plants.
The department also approved the $206 million purchase by Entergy Mississippi of KGen’s 450-megawatt natural gas plant near Jackson, Miss.
Entergy initially disclosed in 2010 that the Justice Department was investigating the firm’s competitive practices in Arkansas, Louisiana, Mississippi and Texas.
Wednesday’s release from the Justice Department was its first acknowledgment that it had been conducting an investigation of Entergy, said David Cruthirds, a Houston regulatory lawyer and publisher of energy newsletter “The Cruthirds Report.”
The department’s investigation involves power procurement, dispatch and transmissionsystem practices and policies of Entergy’s utility units, Entergy said when the investigation was initiated.
The department also said Wednesday that it has examined whether Entergy has “engaged in exclusionary conduct” that would violate federal law.
“The division has been investigating the effect of several of Entergy’s practices on competition and barriers to entry,” the department said. It said that Entergy’s claims about efficiency and regulatory justifications for its actions “have not been persuasive.”
Entergy shares closed at $63, down 35 cents, in trading Thursday on the New York Stock Exchange.
Entergy disagrees with the department’s concerns, said Michael Burns, a spokesman for the corporation.
“We believe that our practices and policies, which have been subject to thorough review and regulation by the [Federal Energy Regulatory Commission] and our retail regulators have satisfied all applicable laws and regulations,” Burns said in a statement. “And importantly, the [department’s] press release does not indicate that [the department] has concluded that we have engaged in any inappropriate practices.
“Moreover, the [department] has concluded after two years of investigation that our acquisition of two additional generating plants will not harm competition and is consistent with the antitrust laws.”
Entergy Corp. said last December that it plans to sell its transmission lines in Arkansas, Louisiana, Mississippi and Texas to ITC Holdings of Novi, Mich. Entergy Arkansas also said last year that it wanted to join Midwest Independent Transmission System Operator of Carmel, Ind., which coordinates the electricity grid in parts of 11 Midwestern states and a Canadian province.
Entergy received final approval Thursday from regulators in Mississippi and New Orleans to join Midwest. Entergy and its six subsidiary utilities in Arkansas, Louisiana, Mississippi and Texas will join Midwest in December 2013, the same time as Entergy Arkansas withdraws from the corporation’s system agreement among the subsidiaries.
Cruthirds believes Entergy’s decision to sell its transmission lines and join Midwest were efforts to satisfy the Department of Justice’s investigation.
“There is no question in my mind that there was a connection” between the investigation and Entergy’s decision to sell its transmission system to ITC, he said.
Entergy also has opposed the idea of joining regional transmission organizations such as Midwest for years, Cruthirds said.
“I think the sudden, newfound [regional transmission organization] religion was directly related to the investigation,” Cruthirds said.
Entergy’s Burns disagreed.
“We have advocated these types of arrangements [with regional transmission organizations] for over a decade,” Burns said.
If Entergy follows through on its commitments to join Midwest and sell its transmission system to ITC, “the antitrust division’s concerns will be resolved” the Department of Justice said.
Business, Pages 27 on 11/16/2012