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Energy company Entergy Corp. and independent electric transmission organization ITC Holdings Corp. have mutually agreed to end their pursuit of a spin/merger of Entergy's transmission business with ITC.

On Dec. 10, the Mississippi Public Service Commission (PSC) announced its unanimous decision to deny the joint application request to transfer ownership and control of Entergy Mississippi's high-voltage transmission system to a subsidiary of ITC.

"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," says Lynn Posey, central district commissioner and chairman for the PSC.

The PSC cites three reasons for its decision: an increase in customer rates, loss of PSC jurisdiction over transmission cost of service, and no clear quantitative and qualitative benefits to customers, particularly given that Entergy has yet to integrate and operate within the Midcontinent Independent System Operator.

Entergy reports that the companies have formally terminated the merger agreement and filed pleadings to withdraw the remaining transaction approval applications with Entergy's retail regulators, as well as the PSC and 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," says Leo Denault, Entergy's chairman and CEO.


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