Louisiana Law Blog

This report was last updated on December 5, 2011

By J. Randy Young and Katherine W. King

The following is a report prepared by the Kean Miller LLP Utilities Regulation team on important topics affecting large consumers of electrical power in Louisiana.  For more information, please contact us at client_services@keanmiller.com

Entergy Application for Approval to Construct Nine Mile Generating Facility: Entergy filed an application with the Louisiana Public Service Commission (“LPSC”) in June 2011 seeking certification approval for Entergy Louisiana (“ELL”) to build a new 550 MW Combined Cycle Generating Turbine (“CCGT”) unit at its Nine Mile Point Station and for approval to sell part of the capacity and energy to Entergy Gulf States (“EGSL”) through a purchase power contract. Entergy New Orleans would also purchase a portion of the output from the new plant. Entergy reports that the construction cost will be approximately $721 million ($1,310/kW). The plant will be fueled primarily with natural gas, but have capability to run on ultra low sulfur fuel oil for short periods. Shaw Group has been selected as the contractor for the project. Proceedings are ongoing at the LPSC to consider Entergy’s certification request for the Nine Mile project.

Entergy Cancellation of Little Gypsy Repower: The Louisiana Public Service Commission (“LPSC”) approved cancellation of a Little Gypsy generation plant repower project and related cost recovery. The existing Little Gypsy gas-fired generation plant was to be repowered to run primarily on petroleum coke as a solid fuel source, but the project was suspended and ultimately cancelled due primarily to the decline in natural gas prices. Entergy Louisiana will recover $200 million in cancellation costs, after a $7 million disallowance. Securitization financing will be used to lower financing costs to ratepayers over a ten year payment term. The LPSC cancellation approval was decided in May 2011.

Entergy Fuel Adjustment Clause Audits: The Louisiana Public Service Commission (“LPSC”) approved a settlement of a Staff audit and related proceeding for the Fuel Adjustment Clause (“FAC”) filings for Entergy Gulf States Louisiana (“EGSL”) for the period 1995-2004, at its October 2011 meeting. An audit is currently being conducted by Louisiana Public Service Commission Staff on the Fuel Adjustment Clause (“FAC”) filings for Entergy Louisiana (“ELL”) for the period 2005-2009.

Entergy Application for Nuclear Certification: Entergy is requesting certification under the Louisiana Public Service Commission (“LPSC”) Nuclear Incentive Cost Recovery Rule to pursue activities to preserve the option to develop and construct new nuclear generation in Louisiana that could potentially provide service beginning in 2024. Entergy has identified $72 million in its certification request, including $63 million incurred prior to 2010, and $9 million to be incurred for 2010-2012. However, Entergy indicates that the economics of nuclear plant construction changed dramatically in the latter half of 2008 and into 2009 as natural gas prices declined sharply and expectations for long-term prices of natural gas also dropped. Thus, according to Entergy, new nuclear construction presently does not appear to be an economically compelling alternative to natural gas fired CCGT generation, and the potential long-term economics of new nuclear relative to other base load generation is uncertain. At this point in time, Entergy reportedly believes it is more prudent to engage in limited activities on new nuclear development and take a wait and see approach on how the proposed new nuclear initiatives of other utilities progress. Proceedings before the LPSC on Entergy’s certification application are ongoing.

Entergy Formula Rate Plans: The Louisiana Public Service Commission (“LPSC”) has extended the Formula Rate Plan (“FRP”) for Entergy Louisiana and for Entergy Gulf States through the 2011 Test Year review proceeding and rate change that will occur in 2012. The LPSC also provided for rate cases to begin following the extended FRP.

Entergy - ICT and RTO Options: While Entergy’s transmission system is currently operated with oversight pursuant to an Independent Coordinator of Transmission (“ICT”) arrangement, Entergy filed an application with the Louisiana Public Service Commission (“LPSC”) in November 2011 seeking approval to join the MISO Regional Transmission Organization (“RTO”). Entergy had previously submitted an informational filing on the MISO option to the LPSC, and it had presented the results of its analysis in support of the MISO option at an LPSC meeting. Entergy’s filing submits that joining MISO will provide $430 to $575 million net present value benefits to Entergy Louisiana and Entergy Gulf States customers over ten years. Proceedings at the LPSC will analyze the MISO option as well as alternative options such as joining the Southwest Power Pool (“SPP”) RTO and continuing some form of ICT arrangement.

Entergy System Agreement: Proceedings are ongoing at the Louisiana Public Service Commission (“LPSC”) to evaluate successor System Agreement options, as withdrawal notices are effective in December 2013 for Entergy Arkansas and December 2015 for Entergy Mississippi.

Louisiana Public Service Commission Net Metering Rule: The Louisiana Public Service Commission (“LPSC”) Net Metering Program allows residential generating capacity installations up to 25 kW and commercial and agricultural installations up to 300 kW. The Net Metering Program also allows for case-by-case consideration of individual projects above 300 kW. However, if net metering for a utility reaches .5% of retail peak load, then its program is suspended pending review by the Commission.

LPSC Rulemaking - Renewable Energy: The Louisiana Public Service Commission (“LPSC”) has implemented a Pilot Renewable Program that provides for a research component and a Request for Proposals (“RFP”) component for electric utilities in Louisiana. The Research Component provides a Standard Offer Tariff with pricing at Avoided Cost plus $30 per MWH for up to a five year term, and with each utility having a 30 MW limit. The RFP component allows utilities in Louisiana to seek up to 350 MW of renewable capacity, allocated as follows: Entergy Louisiana = 143 MW, Entergy Gulf States = 90 MW, Cleco = 43 MW, SWEPCO = 28 MW and Electric Cooperatives = 46 MW. Cleco is currently pursuing co-firing at its Madison petroleum coke fired generation unit rather than issuing an RFP. Entergy’s RFP in ongoing.  SWEPCO has filed an application for certification of renewable resources resulting from its RFP.  

LPSC Rulemaking - Energy Efficiency: The Louisiana Public Service Commission (“LPSC”) has a docket open and is pursuing comments on potential development of an Energy Efficiency program for Louisiana.

LPSC Rulemaking – Integrated Resource Planning: The Louisiana Public Service Commission (“LPSC”) has received comments and is working on a rule that would require electric utilities to develop Integrated Resource Plans (“IRP”) under a process that includes input from stakeholders.

Cross State Air Pollution Rule: The Louisiana Public Service Commission (“LPSC”) initiated proceedings to consider the EPA’s new Cross State Air Pollution Rule (“CSAPR”) and the impacts on electric service in Louisiana. A Technical Conference was held with stakeholders, and the LPSC has pursued a Request for Reconsideration filed with the EPA and a Petition for Review filed with the Court of Appeals for the District of Columbia. The LPSC has also filed comments with the EPA on proposed technical revisions to CSAPR.