By Katherine King, Randy Young, and Carrie Tournillon

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 on Demand Response:  In February 2019, the LPSC opened a rulemaking to determine the need for and develop rate schedules and programs offering demand response products and allow for participation of retail customers in MISO programs, including to determine whether the programs should be mandatory for utilities and whether certain larger customers should be allowed to participate directly in wholesale demand response programs and under what conditions. A proposed rule has been issued, and comment procedures are ongoing to obtain input from stakeholders.

Entergy Proposed Experimental Interruptible Option (“EIO”) Tariff:  In October 2019, Entergy filed a proposed new interruptible tariff for industrial and commercial customers.  The tariff proposal contains various pricing levels, terms and restrictions, and is currently docketed for proceedings before the LPSC.

LPSC Rulemaking On Tariff and Site-Specific Contract Procedures: In July 2019, the LPSC issued a new rule that includes required procedures for consideration of tariff changes and site-specific contracts proposed by electric utilities.

Entergy Formula Rate Plan Extension: In May 2018, the LPSC approved an extension and modification of Entergy’s Formula Rate Plan (“FRP”) for annual filings and rate adjustments in 2018, 2019 and 2020, subject to 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 2019, the LPSC approved an acknowledgment that Entergy has completed the required process for its Integrated Resource Plan (“IRP”) for the years 2018 through 2038.  The objective of the IRP process is for the utility to provide its evaluation of a set of potential resource options that offers the most economical and reliable approach to satisfy future load requirements of the utility. However, the IRP process does not result in LPSC approval of the proposed resource plan or approval of construction or acquisition of any particular resources. Rather, LPSC consideration of resource approvals occurs in separate certification proceedings on individual proposals submitted by the utility on a case-by-case basis.

Louisiana Electric Rates, Industrial Customer Market Access: 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 comments were filed by stakeholders in February 2019.  A final report from LPSC Staff is anticipated, which will be presented to the Commissioners for a determination regarding steps forward.

Entergy Proposed Solar PPA and Experimental Renewal Option (“ERO”) Tariff:  In March 2019, the LPSC approved Entergy entering 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. Thereafter, Entergy separately sought approval  of a new Experimental Renewable Option (“ERO”) Tariff which would allow Industrial and Commercial customers the opportunity to schedule a portion of the Solar PPA. The proposed ERO Tariff was opposed by Industry and Commercial customer intevenors as being an inappropriate structure and model for Louisiana, and a contested settlement proposal was rejected by the LPSC in October 2019.

Entergy Generation Construction Projects:  In recent 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 December 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 as a self-build project in a Request-for-Proposals (“RFP”), was estimated to cost $869 million, and went into service in June 2019.

Entergy 994 MW Power Station in Lake Charles, Louisiana:  In July 2017, the LPSC approved Entergy’s proposal to construct a 994 MW CCGT unit located in Westlake, Louisiana.  The project was selected as a self-build project in a Request-for-Proposals (“RFP”), was 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 was estimated to cost $261 million, and recent indications are the in-service date is projected for 2020.

(LPSC Rulemaking) New Generation Deactivation Transparency Rule:  In October 2018, the LPSC issued a 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 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”). MISO identified and approved the project as addressing congestion in southeast Louisiana at a cost below its estimated benefits, as part of its MISO Transmission Expansion Plan (“MTEP”). The project construction was completed in 2018, at a cost of $75M.

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.  MISO identified and approved the project as addressing congestion in southeast Louisiana at a cost below its estimated benefits, as part of its MTEP process.  The project was estimated to cost $92M, and has a projected in-service date of second quarter 2022.  The proceeding is pending further evaluation by Entergy of the costs, and also pending consideration by the LPSC.

Cleco Power Application for Rate Change:  On June 28, 2019, Cleco Power LLC (“Cleco Power”) filed an application with the LPSC to change retail electric rates and to extend its FRP.  In the filing, Cleco is proposing to address implementation of prospective savings from the lower federal tax rate and the amortization of excess accumulated deferred income tax (“ADIT”) resulting from the federal Tax Cuts and Jobs Act (“TCJA”); residential revenue decoupling and other changes to the residential rate schedule; to increase its return on equity (“ROE”) from 10% to 11%; and to increase the equity percentage of its capital structure from 51% to 53%.  The hearing is scheduled for June 2020, with new rates expected to be implemented in July 2020.

Cleco Power Application for Implementation of TCJA:  In late January 2019, Cleco Power filed an application with the LPSC seeking authorization to implement rate reductions resulting from the TCJA, modify certain tariffs in connection with the rate reductions, and implement residential base revenue decoupling.  Cleco Power also requested expedited treatment so that its rate reductions can be implemented effective July 1, 2019.  A settlement agreement was approved by the LPSC in July 2019, authorizing the refund of accrued savings resulting from the TCJA’s reduction in the federal income tax rate and moving to Cleco Power’s rate case proceeding Cleco’s proposal for implementation of prospective savings relating to the TCJA and its request to implement residential base revenue decoupling.  The refund of accrued TCJA savings will be implemented through customer bill credits over a 12-month period, which began in August 2019.

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.

Entergy New Orleans Application for Rate Change:  In July 2018, Entergy New Orleans (“ENO”) filed an application with the City Council of New Orleans to change its retail electric and gas rates.  The rate application was withdrawn in August 2018, with a revised application filed in late September 2018, with a revised set of rates to mitigate rate impacts to ENO residential customers in Algiers, who had previously been customers of Entergy Louisiana, LLC.  ENO also proposed adoption of an ROE of 10.75% and new contemporaneous cost recovery riders and FRPs, including one for electric operations which incorporates a proposed decoupling mechanism as required by the Council and one for gas operations.  The proposed electric rates would result in an overall decrease in ENO’s revenues by approximately $20 million per year.  After discovery and several rounds of testimony filings, a hearing was held on the revised application in June 2018, followed by two rounds of briefing.  In November 2019, the Council adopted a Resolution and Oder that requires ENO to make a compliance filing pursuant to the terms of the Resolution and Order, with such compliance filing expected to further reduce ENO’s revenue requirements in excess of the $20 million reduction proposed by ENO, authorizes FRPs for ENO’s electric and gas operations, and sets ENO’s authorized ROE at 9.35%.  The compliance filing is expected to be filed by ENO in December 2019.

City of New Orleans Rulemaking on Renewable Portfolio Standard:  In March 2019, the City of New Orleans opened a rulemaking docket to establish a Renewable Portfolio Standard (“RPS”) for the City of New Orleans.  Following two rounds of comments on how the RPS should be structure, the Advisors to the City of New Orleans issued a Report that set forth three alternative RPS structures for consideration.  The alternative structures include (i) a 100% renewable RPS, (ii) a 100% renewable and clean standard (“RCPS”), and (iii) a 100% resilient RPS (“R-RPS”).  Two additional rounds of comments have been filed on the Advisors’ Report and proposed structure alternatives, and the docket is pending further action by the Council.

Entergy New Orleans Application for 90 MW Renewable Portfolio:  In July 2018, ENO filed an application with the City Council of New Orleans seeking approval of its 90 MW proposed renewable energy resources portfolio, consisting of a 20 MW self-build solar project located in New Orleans East (“New Orleans Solar Station” or “NOSS”), a 50 MW build-own-transfer (“BOT”) solar project located outside of Orleans Parish (“Iris BOT”), and a 20 MW PPA from a solar project that is also located outside of Orleans Parish (“St. James Solar PPA”).  In March 2019, after taking into consideration comments from the Council’s Advisors regarding whether the Iris Solar Facility’s costs could be reduced in any way, ENO filed a supplemental and amending application, proposing to substitute a proposed Iris purchased power agreement (“Iris Solar PPA”) in the place of the Iris BOT.  Then in May 2019, ENO filed additional testimony in support of ENO’s decision to provide an updated cost estimate and economic analysis for the NOSS project based on substantial reductions in the previously estimated project cost.  In July 2019, the City Council approved the amended 90 MW renewable portfolio pursuant to a settlement agreement among the parties.

This report was last updated on November 1, 2019