Louisiana PSC approves deal on Entergy Gulf States buy of Union plant units

The members of the Louisiana Public Service Commission at their Oct. 28 meeting signed off on a stipulated agreement between the parties that helps clear the way for Entergy Gulf States Louisiana LLC (EGSL) to buy Power Blocks 3 and 4 of the gas-fired Union Power Station in Arkansas.

On Jan. 13, the company filed its application for approval to purchase Power Blocks 3 and 4 of the Union Power Station (UPS). Other units of Entergy Corp. (NYSE: ETR) are due to buy the other two blocks. Notable is that the approved stipulated deal forbids EGSL from exercising its option to acquire Power Blocks 1 or 2 should the currently intended purchaser(s) of those units, Entergy Arkansas Inc. (EAI) or Entergy New Orleans Inc. (ENO), be unable to obtain timely regulatory approval for such purchase.

The UPS is a 1,980-MW (summer rated) facility that entered commercial service in 2003 and consists of four combined-cycle natural gas-fired generating units. The buy will be from Union Power Partners LP.

The stipulated agreement, filed with the commission on Sept. 22, said about dealing with the power generating units that EGSL has or plans to retire over the next few years, leading to its need for these two power blocks: “EGSL and [Entergy Louisiana LLC] shall make a docketed ling with the LPSC within 60 days after issuance of the order approving the Settlement Term Sheet in this matter to review the decisions to deactivate and/or retire Willow Glen Units 2 and 4, Ninemile 3, and Little Gypsy 1, and determine whether the public interest would be served by reactivating those units. The Companies shall make an initial filing to explain the basis of the decisions to de-activate or retire and provide supporting analyses. The Companies shall then participate in a Technical Conference to review their decisions and analyses with respect to these four units. In addition, at the Technical Conference, the Companies will present the current deactivation assumptions in the ten year planning horizon for the remaining EGSL and ELL legacy gas generation and explain the analysis that the Companies will perform to determine whether to deactivate those units.

“The Companies agree that, following the Technical Conference, upon request of any party, the matter shall be referred to an Administrative Law Judge for further proceedings for review and determination, under applicable law, of the prudence of the deactivation or retirement decisions for Willow Glen 2, Willow Glen 4, Ninemile 3 and Little Gypsy 1 and whether such units should be returned to service. Such proceedings shall include an opportunity for the Companies to supplement their initial ling should they so choose and for all parties to conduct discovery, file testimony and evidence, and obtain LPSC determination regarding the prudence of such decisions in proceedings pursuant to the LPSC rules of practice and procedure and applicable law.”

Entergy representative Anthony P. Walz. on Sept. 4 submitted rebuttal testimony in this case that said about Willow Glen Units 2 and 4:  “The planning assumption for WG2 and WG4 at the time the Entergy Operating Committee originally allocated UPS was based on the information then available, which indicated that both units would be operated through 2027. Fossil Operations had assessed both units and informed System Planning and Operations (‘SPO’) that both units would deactivate in [redacted time] unless additional investment was made to sustain the units. SPO assessed the economics of the two units and determined, based on the available cost estimates, that it would be economic to continue to operate the units beyond [redacted date]. In the second half of 2013, resource plans began to assume that WG2 and WG4 would continue to operate beyond [redacted time] based on the results of preliminary analysis.”

Walz added: “Further assessment of the units during the remainder of 2014 and 2015 indicated that the cost of sustaining the units through 2027 was likely to be much greater than originally estimated. By the time that the Entergy Operating Committee reallocated UPS capacity it appeared likely that the most economic disposition of WG2 and WG4 was to deactivate both units in [redacted time]. Accordingly, the reallocation analysis assumed that the units would be deactivated. The reasonableness of that assumption was confirmed the following month when the Entergy Operating Committee decided to deactivate WG2 and WG4 effective [redacted time]. It should surprise no one familiar with the Entergy System’s planning process or the Company’s resource portfolio that older gas-fired steam units are aging and are at risk for deactivation sooner than may be assumed at any particular point in time.”

power plant list on the Entergy website shows Willow Glen, located at St. Gabriel, La., as a five-unit plant, with Unit 2 (195 MW) and Unit 4 (470 MW) both fired by oil and natural gas. The other units at the plant are Unit 1 (152 MW, gas/oil), Unit 3 (450 MW, gas), and Unit 5 (485 MW, gas/oil).

Little Gypsy Unit 1 experienced a forced outage and upon further assessment, it was determined that repair and continued operation of this unit would not be economic. Therefore the unit was retired effective June 1 of this year, Entergy has said. Also, recent assessments concluded that the expected cost and risk of continuing to operate Ninemile Unit 3 exceeded the expected benefit; therefore, the decision was made to deactivate this unit effective June 1, 2016. Little Gypsy 1 no longer appears on the Entergy power plant list, while Ninemile (also known as Ninemile Point) Unit 3 is a 103-MW facility fired by gas and oil. The Generation Hub database shows Little Gypsy 1 at 238 MW (net summer) and fired by natural gas.

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.