By Katherine King, Randy Young, Carrie Tournillon, and Mallory McKnight Fuller

This report was last updated on February 22, 2019

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

(LPSC Rulemaking) New Generation Deactivation Transparency Rule:  In March 2017, the Louisiana Public Service Commission (“LPSC”) initiated a proceeding to consider (1) whether the LPSC should exercise its authority over future utility generation deactivation and retirement decisions and (2) the rules and procedures that could apply to the LPSC’s exercise of such authority.  In October 2018, the LPSC issued its final rule, which requires electric utilities to report generation unit deactivations and retirements 120 days prior to implementation, including support for the decisions and continuing reports on units that are placed in deactivation status for possible return in the future.  The final rule creates more transparency and accountability on the part of utilities.

Entergy Formula Rate Plan Extension:  In August 2017, Entergy Louisiana, LLC (“Entergy”) filed a request for an extension and modification of its Formula Rate Plan (“FRP”) for test years 2018, 2019, and 2020.  In May 2018, the LPSC approved an extension and modification of Entergy’s FRP subject to the settlement terms reached by Entergy, LPSC Staff, and intervenors.  The settlement terms included, among other things, the flow back to customers of all tax benefits created by the Tax Cuts and Jobs Act of 2017 (“TCJA”).

Entergy Integrated Resource Plan:  In October 2017, Entergy initiated proceedings at the LPSC to begin work on its Integrated Resource Plan (“IRP”) for the years 2018 through 2038.  The objective of the IRP process is generally to evaluate a set of potential resource options that offer the most economical and reliable approach to satisfy future load requirements of the utility.  Entergy’s draft IRP was filed at the LPSC in October 2018.  The final IRP is due in May 2019.  The IRP process does not result in the LPSC’s approval of a proposed resource plan or approval of construction or acquisition of any particular resources.

Louisiana Electric Rates, Industrial Customer Market Access / New Tariff Options:  In April 2017, the LPSC initiated a technical conference series entitled “Status of Electric Rates in Louisiana: Where Are We and Where Are We Going?”  Through this series, the LPSC hoped to achieve its goal of ensuring reliable electric service at the lowest reasonable cost.  The technical conference series invited stakeholders to provide input on the status of electric rates in Louisiana and recommendations of policies or other options the LPSC should consider for the future.  The technical conferences were held in 2017.  In December 2018, LPSC Staff issued a report and request for comments.  A final report from LPSC Staff is expected in early 2019, which will be presented to the Commissioners for a determination regarding steps forward.

(LPSC Rulemaking) MISO Demand Response/ Aggregators of Retail Customers:  In July 2018, the LPSC opened a rulemaking to study the implications of participation of Aggregators of Retail Customers (“ARC”) in the wholesale markets and to determine whether, and under what conditions, such activity should be allowed in the LPSC’s jurisdiction.  ARCs enter into agreements with, and combine the abilities of, multiple retail electric customers to participate in wholesale markets as a Demand Response or Load Modifying Resource.  In September 2018, Commissioner Skrmetta issued a directive that third-party ARCs are not allowed to register LPSC-jurisdictional customers or participate in wholesale markets with their loads pending the outcome of the rulemaking.  In November 2018, LPSC Staff issued a proposed rule and request for comments from stakeholders, the deadline for which was December 2018.  No final rule has been issued as yet.

Entergy Proposed Solar PPA and Experimental Renewal Option (“ERO”) Tariff:  In May 2018, Entergy filed an application with the LPSC seeking approval to enter into a Purchase Power Agreement (“PPA”) for 50 megawatts (“MW”) of unit-contingent, as-available capacity and energy from a solar facility to be constructed in Port Allen, Louisiana.  The PPA arises out of Entergy’s 2016 Request for Proposals (“RFP”) for 200 MW of renewable resources.  A settlement has been reached by participants in the proceeding and will be presented to the LPSC for approval.  In October 2018, in connection with the PPA, Entergy filed a related application with the LPSC seeking authorization to make available a new Experimental Renewable Option and Rate Schedule ERO (“Schedule ERO”).  Schedule ERO would allow Industrial and Commercial customers the opportunity to schedule a portion of the Solar PPA.  Entergy’s Schedule ERO application is currently pending at the LPSC.

Entergy Generation Construction Projects:  In the past two years, the LPSC has approved Entergy proposals for large generation construction projects worth a combined estimated total greater than $2 billion.

Entergy 980 MW Power Plant in St. Charles Parish:  In November 2016, the LPSC approved Entergy’s proposal to construct a 980 MW CCGT unit located in Montz, Louisiana (near New Orleans), at a site adjacent to the existing Little Gypsy generation units.  The project was selected from among bidders in Entergy’s 2014 Request for Proposal (“RFP”) for resources in Amite South (southeast Louisiana area).  The project is estimated to cost $869 million and has a projected in-service date of June 2019.

Entergy 994 MW Power Station in Lake Charles, Louisiana:  In June 2017, the LPSC approved Entergy’s proposal to construct a 994 MW CCGT unit located in Westlake, Louisiana.  The project was selected from among bidders in Entergy’s 2015 RFP for Long-Term Development and Existing Capacity and Energy Resources.  The project is estimated to cost $872 million and has a projected substantial completion date of May 2020.

Entergy 361 MW Combustion Turbine in Washington Parish:  In May 2018, the LPSC approved Entergy’s acquisition of the Washington Parish Energy Center, a new 361 MW simple cycle combustion turbine (“CT”) to be constructed in Bogalusa, Louisiana by a subsidiary of Calpine Corporation (“Calpine”) for a purchase price of approximately $222 million.  Calpine had submitted an unsolicited offer to Entergy to construct the CT and sell it to Entergy for a turn-key price.  The acquisition and related assets is estimated to cost $261 million and has an estimated “turnover” date of April 2021 for delivery of a fully-permitted, fully operational facility.

Entergy Transmission Construction Projects:  The LPSC has also approved Entergy transmission construction projects worth an estimated combined total of more than $192 million, and Entergy recently submitted a new application for certification of an estimated $92 million transmission project.

Entergy Economic Transmission Project in Southeast Louisiana:  In December 2015, the LPSC approved Entergy’s proposal to build a portfolio of transmission projects in southeast Louisiana termed the Louisiana Economic Transmission Project (“LTEP”), which was identified in the MISO Transmission Expansion Plan (“MTEP”) 2015 as addressing congestion in southeast Louisiana at a cost below its estimated benefits.  Pursuant to Entergy’s January 2019 bi-annual report, the revised estimate for the total project cost is approximately $75 million.  The project is 100% complete and in-service.

Entergy Reliability Transmission Project in Lake Charles, Louisiana:  In December 2015, the LPSC approved Entergy’s proposal to build a portfolio of transmission projects termed the Lake Charles Transmission Project (“LCTP”) to meet reliability needs in the Lake Charles, Louisiana area.  The LCTP was submitted as an “out-of-cycle” project for the MTEP 2015 process and was approved by the MISO Board of Directors as a Baseline Reliability Project.  Pursuant to Entergy’s January 2019 bi-annual report, the revised estimate for the total project cost is greater than $187 million, and the estimated in-service date for the entire project is February 2019.

Entergy Economic Transmission Project in Downstream of Gypsy Area:  In November 2018, Entergy submitted an application to the LPSC for certification of a new transmission construction project located in the Downstream of Gypsy (“DSG”) area of southeast Louisiana.  As part of MTEP 2015, MISO identified the project as addressing congestion in southeast Louisiana at a cost below its estimated benefits.  The project is estimated to cost $92.3 million and has a projected in-service date of second quarter 2022.  The proceeding is in its early stages.

Cleco Power Application for Implementation of TCJA:  At the end of January 2019, in an ongoing proceeding, Cleco Power LLC (“Cleco Power”) filed an application with the LPSC seeking authorization to (1) implement rate reductions resulting from the TCJA, (2) modify certain tariffs in connection with the rate reductions, and (3) implement residential base revenue decoupling.  Cleco Power also requested expedited treatment so that its rate reductions can be implemented effective July 1, 2019.  The application is currently pending at the LPSC.

Cleco Cajun Acquisition of NRG South Central:  In April 2018, Cleco Power and its parent company, Cleco Corporate Holdings, LLC (“Cleco Corp”), filed an application at the LPSC requesting approval for Cleco Cajun, a wholesale subsidiary of Cleco Corp, to acquire NRG South Central Generating LLC, along with related generating units and wholesale sale contracts.  In January 2019, the LPSC approved the acquisition with the adoption of 59 Regulatory Commitments.

Cleco Natural Gas Hedging Proposals:  In August 2017, Cleco Power filed applications for natural gas hedging programs with the LPSC (a Long Term Derivative Hedging Program and a Physical Bilateral Hedging Program) pursuant to the LPSC’s General Order requiring each investor owned utility to bring forth three natural gas hedging programs for LPSC consideration.  In January 2019, Cleco Power filed a supplemental filing requesting that a hybrid of its two natural gas hedging programs be recognized as its third program under the LPSC General Order and that certain larger customers be allowed to opt-in to the long term hedging programs.  The supplemental filing is currently pending at the LPSC.

by Carrie Tournillon

The Louisiana Public Service Commission (“LPSC”) and the State Legislature are conflicted over regulation of motor carriers of waste in Louisiana.  While the Louisiana Constitution grants the LPSC the authority to regulate common carriers, and the LPSC oversees the certification and permitting of such carriers, in the 2017 Regular Session the Legislature enacted Senate Bill 50 (Act 278) that changes the statutory requirements for a carrier to become an approved motor carrier of waste in the State.  Act 278 was signed into law by Governor Edwards on June 15, 2017.

Under the LPSC rules, carriers of waste must prove “public convenience and necessity,” which requires contracts with shippers for contract carrier permits and testimony or affidavits from shippers for common carrier certificates, in support of need for the requested new or expanded authority.  An applicant also must prove fitness to operate.

However, Legislative Act 278 eliminates the requirement to prove “public convenience and necessity” to obtain authority from the LPSC to operate as a common or contract carrier of waste within the state.  An applicant only must prove fitness to operate.

At the LPSC’s Business & Executive Session last month, there was much discussion regarding whether the new legislation is an unconstitutional infringement on the jurisdiction of the LPSC over common carriers. Ultimately, the LPSC directed its Staff to file suit challenging Act 278 and to take all action necessary to protect the LPSC’s jurisdiction.

At the same meeting, the Commissioners also considered but declined to adopt new rules for obtaining authority to haul waste within Louisiana. The LPSC Staff’s proposed rules would have set forth guidelines for certification of common and contract carriers and created a rebuttal presumption that granting the certificate was in the public interest if the applicant met the application requirements.  While considered to be an improvement over current LPSC rules, the Staff’s proposed rules still required applicants to prove “public convenience and necessity,” including having shippers provide affidavits in support of the need for the certificate.

The LPSC Commissioners disagreed over whether the Staff’s proposed new rules went far enough to change the standard for obtaining authority to haul waste within the state.  One Commissioner offered a motion to approve the Staff proposal, supporting it as an industry solution developed with stakeholders in the trucking business.  Another Commissioner argued extensively in favor of opening up the market for hauling waste in Louisiana and urged as a substitute motion that the LPSC adopt new rules based on the Legislative Act 278, which would eliminate the “public convenience and necessity” requirement.  Both motions failed 2-2.

While the LPSC Staff’s proposed rules were not adopted by the LPSC in June, it is expected that there will be additional discussion of changes to the rules, and that the constitutional issues raised by Act 278 will be pursued by the LPSC in the courts.

For more information, contact a member of the Kean Miller Utilities Regulatory Team.