Entergy Corp. (NYSE: ETR) said Dec. 9 that its subsidiaries – Entergy Arkansas, Entergy Gulf States Louisiana and Entergy Texas – have signed an agreement to acquire the Union Power Station near El Dorado, Arkansas.
This is a highly efficient, natural gas-fired 1,980-MW (summer-rated) facility. The station is owned by Union Power Partners LP, an independent power producer and wholly-owned by Entegra TC LLC, which is about to emerge from a pre-packaged Chapter 11 bankruptcy financial work-out along with parent Entegra Power Group LLC.
“Our service territory is at the heart of an industrial renaissance that is built on competitive energy costs, low electricity prices and smart economic growth policies of our state governments,” said Leo Denault, Entergy chairman and chief executive officer. “The acquisition of these highly efficient units at a price favorable to our customers will help us meet the increased demand and be a significant step in the ongoing modernization of our generating fleet.”
Low electricity prices are one reason that more than 85 projects involving over $65bn of investment and projected to create tens of thousands of new jobs and the potential addition of approximately 1,700 MW in new industrial load by 2016 have been announced, signed or are under development in Entergy’s service area.
The Union Power Station, which entered commercial service in 2003, consists of four combined-cycle gas-fired generating units, or CCGTs, each rated at 495 MW. Under the Asset Purchase Agreement, Entergy Arkansas and Entergy Texas have each agreed to acquire one unit and Entergy Gulf States Louisiana has agreed to acquire two units. Entergy New Orleans will receive 20% of the output from the Entergy Gulf States Louisiana units via an at-cost purchase power agreement, subject to City Council of New Orleans approval.
The plant purchase price is $948m ($479/kW), or $237m per unit, subject to adjustments. The purchase price is approximately half the cost to build a comparable new CCGT facility.
The purchase is contingent upon, among other things, obtaining necessary approvals, including acceptable cost recovery, from the various federal and state regulatory authorities and the expiration of the waiting period under the Hart-Scott-Rodino antitrust law. The targeted closing date is late 2015.
Entergy Corp. is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with about 30,000 MW of generating capacity, including more than 10,000 MW of nuclear power, making it one of the nation’s leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas.
Entegra Power owns and operates six combined cycle power plants capable of producing about 3,300 MW of power, as well as a 42-mile interstate pipeline. Two of the combined cycle plants are located at the Gila River Power Station in Gila Bend, Arizona, and the other four are located at the Union Power Station in Arkansas.