Entergy, the for-profit utility to Memphis' south and west, would love to sell Shelby County power

Samuel Hardiman
Memphis Commercial Appeal

Entergy, the for-profit utility that serves portions of Arkansas and Mississippi to Memphis' south and west, is interested in selling Memphis, Light, Gas and Water power and building power plants or other electricity generation that could serve customers in Shelby County as well as Mississippi and Arkansas. 

The heads of Entergy Arkansas and Entergy Mississippi, which are two utilities owned by the same parent company, wrote MLGW CEO J.T. Young, Memphis Mayor Jim Strickland and MLGW board chair Carlee McCullough a letter expressing interest in selling Memphis power.

They also opened the door in a partnership to develop power plants that the private utility and the city of Memphis-owned utility would mutually use. The letter revealed another, distinct suitor for Memphis' power.

If a partnership or customer-supplier relationship were to happen, it would mean that people in DeSoto County, Mississippi, Memphis and some of Memphis' Arkansas suburbs would be buying the same electricity. 

Entergy

At present, and for the past eight decades, MLGW receives all of its power from the Tennessee Valley Authority for which it pays $1 billion a year. 

"If you were interested, and should MLGW choose to join MISO, we would be happy to explore potential opportunities to partner with MLGW to develop new resources that could serve our collective customers at a lower cost than either of us could achieve on our own. We would also welcome a discussion of potential [power purchase agreement] options involving Entergy’s portfolio of efficient resources," Laura L. Landreaux, CEO of Entergy Arkansas, and Haley R. Fisackerly, CEO of Entergy Arkansas, wrote in the letter, which was also sent to all members of the Memphis City Council and MLGW board. 

The MISO referenced in the letter is the Midcontinent Independent System Operator, a transmission system and marketplace that serves customers in 15 U.S. states and the Canadian province of Manitoba. Entergy is among the for-profit utilities that belong to MISO and make up its generation and transmission network. 

The letter came the same week that Siemens, the company tasked with studying Memphis' power supply, showed that MLGW could save between $100 million to $150 million a year by joining MISO, receiving power from its network and building some of its own electricity generation. 

Some interest groups have argued that it's unnecessary for Memphis to build any electric generation at all. They argue it would cost too much and the savings would be greater without it.

The study released Friday showed some cost savings for the MISO-only option — different pieces of the report showed it was comparable to the preferred options that had $150 million in annual savings. Other parts of the study showed the MISO-only option had lesser savings, despite requiring less money to build out. It will be studied further. 

Memphis could see more than $100M in annual savings if it leaves TVA, draft of power supply report shows

 On eve of Memphis power supply report, what you need to understand about the TVA competitor — MISO

However, MLGW executives have cautioned against the risk of importing all its power along long transmission lines. The two Entergy CEOs, Fisackerly and Landreaux, expressed their own doubts about Memphis importing all of its power. 

"...It would not be practical or reliable for MLGW to meet 100% of its needs using the annual MISO capacity auction," they wrote. They also acknowledged what the Siemens study suggested — the three transmission lines MLGW would have to build if it left TVA would connect to their territory anyway. 

"Finally, we understand that any transition to MISO would entail substantial new facilities to establish transmission ties to Entergy in north Mississippi and across the Mississippi River into Arkansas," Fisackerly and Landreau said. "We have extensive experience developing large scale transmission facilities in this region and would be happy to discuss potential opportunities to ensure that the transmission projects required for MLGW to join MISO, if it should do so, are completed in a cost-effective and timely manner.

The existence of the letter was first reported by The Daily Memphian. 

Samuel Hardiman covers Memphis city government and politics for The Commercial Appeal. He can be reached by email at samuel.hardiman@commercialappeal.com or followed on Twitter at @samhardiman.