Entergy CEO: Construction on Lake Charles Transmission Project expected to begin in 1Q16

Entergy (NYSE:ETR) expects construction on the Lake Charles Transmission Project to begin soon, Entergy Chairman and CEO Leo Denault said on Feb. 18 during the company’s 4Q15 earnings call.

“In addition to approval of more than $700m in transmission investments in all four states of our service territory, as part of the Midcontinent [ISO], or MISO, MTEP15 process, we initiated one of the largest transmission projects in our history,” Denault said. “This project includes two new substations, expansion of two existing substations and 25 miles of new high voltage transmission lines around the Lake Charles, La., area. It will both enhance reliability for existing customers in that area, as well as support new load in this growing region of Louisiana. The Louisiana Public Service Commission approved a certificate of public need and necessity at its business and executive session in December. We expect construction to begin in the first quarter of 2016.”

As noted on the company’s website, the project involves the construction of a new 500-kV switching station east of the Nelson generating station, construction of about 10 miles of new 500-kV line from the new switching station south to a new 500-kV bulk substation, installation of a new 500-230-kV, 1200 MVA autotransformer at the bulk substation, and construction of about four miles of new 230-kV transmission line from the bulk substation to the existing Carlyss 230-kV substation. Entergy added that the project also includes the construction of about 12 miles of new 230-kV transmission line from the Carlyss substation to the Graywood/Solac substation area. The project, which has an estimated cost of about $187m, including contingency, is expected be placed in service by summer 2018, Entergy said.

Denault also noted during the call that the regulatory frameworks are now better aligned to facilitate future investments to enhance the efficiency and reliability of Entergy’s system to benefit its customers.

“We’re seeing the results of this improved framework in the settlement of our Arkansas rate case,” he said. “The settlement reflects a net $133m base rate increase and a 9.75% authorized return on equity, effective at the end of February. It also sets the framework for the formula rate plan with a future test year in the coming years. The Arkansas Public Service Commission is expected to act on the settlement and issue an order later this month.”

Denault also noted that Entergy continues to move forward with the process of installing smart meters on its utility system, saying: “These types of investments are another way for us to lower cost and improve service for our customers. Some benefits of AMI include operational efficiencies, timely information provided to our customers so they can better understand and control their usage, and faster outage restoration and improved system reliability for our customers.”

The operating companies anticipate making regulatory filings where applicable for the smart meter investment between 3Q16 and 3Q17, he said.

Among other things, Denault also noted that the Public Utility Commission of Texas recently approved a settlement that the company reached for an incremental increase to its distribution investment rider of just over $5m, effective at the start of the year.

“We also are nearing completion of the regulatory review of our request for an incremental $13m written requirement under a similar rider for transmission investment,” he said. “We expect a proposal for decision later this month, and a commission consideration in March.”

He further noted that Entergy last December received final approval from FERC to end the system agreement among Entergy Louisiana, Entergy Texas and Entergy New Orleans, the three operating companies that remain parties to that agreement.
“This is an important step towards simplifying our regulatory structure and reducing risk and uncertainty for us and our customers,” he said. “It will allow us to put greater focus on the distinct opportunities at each of our retail regulatory jurisdictions, as well as on core operations without the distractions from the near-constant interregional litigation associated with this agreement.”

Discussing plant matters, Denault said that the New York ISO recently determined that retirement of the James A. FitzPatrick nuclear power plant, when combined with several other facilities, will result in a resource adequacy shortfall in 2019.
“However, we expect there will be more cost-effective solutions to fill this need,” he said.

The company noted in a Feb. 18 statement that the shutdown date for the FitzPatrick plant is planned to be Jan. 27, 2017.

Denault also noted that ISO New England has determined that there is no reliability need associated with the Pilgrim nuclear power plant retirement in June 2019, adding: “As a result, we have moved forward with plans to close both plants. As we’ve said before, these difficult, yet necessary, steps are not what we wanted.”

Of the Indian Point nuclear power plant, for instance, he noted that the U.S. Nuclear Regulatory Commission confirmed that the company’s timely application for license renewal enabled the continued operation of that plant, following the original expiration date of the license this past December. Furthermore, the Vermont Yankee nuclear power plant announced that it will be ready to begin the transfer of spent fuel into dry cask starting in 2017, or two years earlier than originally planned, he said.

Earnings report

Entergy on Feb. 18 reported 4Q15 earnings per share of 56 cents on an as-reported basis and $1.58 on an operational basis. For the full year, the company said that it realized a loss of 99 cents per share on an as-reported basis and operational EPS of $6 per share. The as-reported loss resulted from asset impairments in the third and fourth quarters reflecting the effects of strategic decisions in the Entergy Wholesale Commodities business to reduce the company’s exposure to volatile and poorly structured wholesale power markets, Entergy said.

About Corina Rivera-Linares 3268 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.