Entergy CEO says grid upgrades to cost $500 million

By Eileen O'Grady

FORT LAUDERDALE, Florida, Nov 4 (Reuters) - Entergy Corp (ETR.N: Quote, Profile, Research) will need to invest $500 million or more to meet regulators' expectations for its high-voltage transmission grid, said the company's chief executive.

And while that amount will improve the system's reliability, it won't be enough to satisfy merchant generators seeking more access to Entergy's grid to sell their power, CEO J. Wayne Leonard said on the sidelines of the Edison Electric Institute financial conference on Tuesday.

"They don't completely realize that elimination of Note B does not solve some of the other issues," Leonard said. "There must be some other things done for the (independent power producers) to get more throughput."

The company's interpretation of "Note B" -- an electric standard requiring utilities to upgrade a transmission element if its failure threatens the loss of service to more than 100 customers -- became a point of contention between Entergy and others who rely on Entergy's power lines to move power.

Federal and state utility regulators have turned up the heat on Entergy's grid expansion planning after years of complaints about congestion and lack of access from independent generating companies and smaller utilities seeking to import cheaper power from outside Entergy's network.

The issue surfaced after regulators pushed Entergy to work with an Independent Coordinator of Transmission (ICT) to bring a measure of third-party independence to its grid operation, a move Entergy resisted for years.

Regulators from Louisiana, Arkansas, Texas and Mississippi want to see if improved transmission access across Entergy's system will allow cheaper power into the region and allow Entergy to retire older, less efficient power plants.

State utility commissions are evaluating two options: pushing Entergy to become a full member of an independent regional grid operator called the Southwest Power Pool or giving the ICT some additional authority.