Entergy Arkansas outlines power supply situation in first IRP since 2012

Entergy Arkansas Inc. on Oct. 30 filed with the Arkansas Public Service Commission an Integrated Resource Plan (IRP) for the period 2017–2036 that shows that some gas-fired capacity will be retired in the short term, that there are uncertainties about coal-fired power due to factors like the U.S. EPA’s CO2-reducing Clean Power Plan, and that new capacity will be needed over the next few years.

“The uncertainties that dominated EAI’s most recent IRP, filed with the Commission on October 31, 2012 (e.g., uncertainties associated with EAI’s transition to post-System Agreement operation and planning for EAI as a single electric utility), have been replaced to some extent with other uncertainties, such as potential environmental regulations, advances in renewable resource technologies, and future natural gas prices,” said the filing. “Based on the IRP analysis, EAI’s total generation capability may be short of its peak customer demand plus reserve target by as soon as the summer of 2017. The deficit expands over time as expected customer demand increases and older generating units reach the end of an assumed useful life.”

An economically optimal portfolio of supply-side resources was developed for each of the three future worlds analyzed in the 2015 IRP. Based on the work conducted as part of the IRP analysis, it is reasonable to conclude that EAI’s supply-side resource additions will likely consist of natural gas-fired and renewable energy resources, the company said. The total amount of supply-side capacity that will be needed, and exactly when that capacity will be needed, is uncertain. There is even more uncertainty associated with exactly how much of each supply-side technology should be added to EAI’s fleet. Because of that uncertainty, EAI has not established specific targets for renewable generation or traditional generation as part of this IRP analysis.

The 2015 IRP Action Plan consists of six action items:

  • Coal Environmental Compliance – EAI will continue to monitor changes in environmental law at the state and federal level and evaluate options for environmental compliance for the EAI coal units (Independence and White Bluff plants), with Arkansas Public Service Commission review and support before significant capital is expended to comply with applicable environmental regulations.
  • Clean Power Plan – EAI will engage in the Arkansas Clean Power Plan (CPP) stakeholder process sponsored by the Arkansas PSC and the Arkansas Department of Environmental Quality, with a focus on assuring that EAI’s customers retain the value of the low-greenhouse gas emissions resources for which they are and/or have been providing cost-support. In addition, EAI also will continue to analyze the long and complex EPA final rule in order to assess various compliance options open to the state if the rule survives litigation.
  • Complete the Acquisition of Power Block 2 from the Union Power Plant – The acquisition of Power Block 2 of the gas-fired Union Power Plant in Arkansas is expected to be completed in later 2015 or early 2016. Other subsidiaries of parent Entergy Corp. (NYSE: ETR) would acquire the rest of the plant.
  • Continue participation in Energy Efficiency – EAI will continue to offer cost effective Energy Efficiency (EE) and Demand Response (DR) programs within the commission’s rules and Arkansas state law.
  • Supply-side Resource Additions – EAI will monitor its load and capability position and take steps to add supply-side resources for both traditional and/or renewable resources as warranted. Based on current information, a competitive solicitation may be issued in 2016 for both short-term and long-term resources. However, the exact scope and timing of the next EAI Request For Proposals (RFP) is uncertain and is dependent on many factors that have been discussed throughout this IRP report. In addition to market solicitation, EAI will be considering developing self-build proposals for certain supply-side technologies.
  • Stakeholder Engagement Process – An immediate priority will be for EAI to closely review stakeholder comments and develop a detailed plan to address concerns and suggestions.

As for existing power generation, the IRP noted that Lake Catherine Unit 4 is a 516-MW gas-fired steam unit that was originally scheduled to deactivate at the end of 2014. A Reliability/Sustainability program was developed and implemented as a result of the 2012 IRP. With the capital additions contemplated in that program, the unit is currently expected to be available through May 31, 2025.

Since the 2012 IRP, EAI has deactivated approximately 420 MW of older natural gas- and diesel-fired generation. Total generation retirements since the 2012 IRP totals approximately 964 MW across 13 units. Additionally, two older units, approximately 28 MW total, are planned to retire at the end of May 2016.

The company controls, through ownership or through purchase power contracts, a diverse array of generating resources totaling approximately 5,277 MW to serve native load customers.

  • The nuclear resources include 1,721 MW in the two-unit Arkansas Nuclear One plant located near Russellville and 307 MW from the Grand Gulf Nuclear Station near Port Gibson, Mississippi, under a long-term purchase power contract.
  • EAI utilizes 1,031 MW from coal-fired generation at the White Bluff and Independence plants located near Redfield and Newark. EAI shares ownership of White Bluff with the Arkansas Electric Cooperative and several municipal electric utilities and shares ownership of Independence with Entergy Mississippi Inc. (EMI), Arkansas Electric Cooperative, Entergy Power and several municipal utilities.
  • The company’s generation fleet is rounded out with 94 MW of hydroelectric capacity along the Ouachita River Valley and 2,224 MW of natural gas-fired generation that includes 597 MW from the Hot Spring Plant, 489 MW from the Ouachita Plant and 495 MW from Power Block 2 of UPP, which are modern combined cycle gas turbines (CCGT).

EAI has sought regulatory approval for two additional generating resources.

  • First, as a result of EAI’s 2014 Request for Proposals, it has executed a long-term power purchase agreement (PPA) for a planned 81-MW solar photovoltaic resource to be located in Stuttgart, Arkansas, called Stuttgart Solar. The commission on Sept. 24 approved this PPA. The 2015 IRP assumes this resource achieves commercial operations by 2019.
  • In a separate proceeding before the commission, EAI wants approval to acquire Power Block 2 of the Union Power Partners combined cycle gas turbine plant located in El Dorado, Arkansas. The acquisition would provide about 500 MW of capacity to EAI’s portfolio. The 2015 IRP assumes the acquisition receives approval and is closed by the end of 2015. In the event the acquisition is not approved, EAI’s existing short-term PPA for the same amount of capacity from Union Power Partners would continue through May 31, 2017.

Under the assumption that the planned resources described above proceed as planned, the 2015 IRP assumes a total of approximately 5,600 MW of capacity resources in EAI’s portfolio by 2019.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.