Entergy reveals $869m pricetag for 980-MW St. Charles power project

Entergy Louisiana LLC told the Louisiana Public Service Commission in a May 9 filing that it can now reveal the confidential cost estimate for its St. Charles Power Station (SCPS), a 980-MW (nominal) combined-cycle gas turbine (CCGT) facility to be built in St. Charles Parish, Louisiana.

The company said that Entergy Services Inc. on April 29 issued a notice of final results of a 2015 Request for Proposals (RFP) for Long-Term Developmental and Existing Capacity and Energy Resources for Entergy Louisiana, and on April 28 issued a notice of final results of a 2015 RFP for Long-Terrn Combined-Cycle Gas Turbine Capacity and Energy Resources and Limited-Term Capacity and Energy Resources for Entergy Texas Inc.

“The selections in the aforementioned requests for proposals mitigate the risk of harm to customers associated with public disclosure of the St. Charles Power Station cost estimate. Accordingly, ELL publicly discloses the following information, which was previously classifed as condential and commercially sensitive: The St. Charles Power Station is estimated to cost $868.6 million, inclusive of transmission expense ($18.5 million) and regulatory expense ($2.6 million). The total LPSC jurisdictional first-year, non-fuel revenue requirement for St. Charles Power Station is estimated to be $129.8 million, before considering any benefits and revenues expected to be derived from the resource.”

The company noted that other information designated as confidential or commercially sensitive in the company’s application and supporting testimony remains confidential, including without limitation the terms of an engineering, procurement and construction agreement with Chicago Bridge & Iron.

This ongoing case went through a hearing in April. In an April 13 pre-hearing brief, Entergy Louisiana wrote: “The Company submitted its application in support of its construction of SCPS, a combined-cycle gas turbine (“CCGT”) facility in St. Charles Parish, Louisiana, in August 2015 following its selection through the Request for Proposals for Long-Term, Supply-Side Developmental Resources in Amite South (the “2014 Amite South RFP”) process that began in September 2014.

“As the nearly 2,000 pages of testimony and exhibits led with ELL’s application demonstrate, the Company has a signicant long-term supply need for base-load and core-load-following generation capacity, and locating that resource in Amite South is necessary, because among other reasons the Amite South region experiences limitations in the ability to import power and is vulnerable to hurricanes.

“ELL’s need for long-term capacity is occurring at a time when the Midcontinent Independent System Operator (“MISO”) capacity market is tightening, making it even more critical that ELL construct SCPS to ensure adequate capacity is available in the market. Simply put, SCPS is the best available option to begin addressing the Company’s signicant capacity need and will provide substantial, undisputed benets to customers.

“The Commission’s Staff (“Staff”) supports the addition of SCPS; and intervenors Marathon Petroleum Company, LP, ArcelorMittal LaPlace, LLC, and Cleco Power LLC expressed no opposition to its construction. Although three intervenors in this docket — including two merchant generators interested in compelling ELL to purchase capacity from them instead of constructing SCPS — seek to delay ELL’s acquisition of long-term generation resources, delay is not in the interest of ELL’s customers, who are projected to save over $1.3 billion in supply costs during the expected life of SCPS.”

Incidentally, those two merchant generators are Occidental Chemical Corp. and Calpine Corp.

Entergy: Time needed to get this project built means delay not feasible

“The delay advocated by the opposing intervenors relies on the assumption that the MISO annual capacity market can fill the capacity need projected by the Company,” Entergy added. “But relying on the MISO annual capacity market to meet long-term capacity needs is an unreasonably risky alternative. This market does not provide long-term pricing for capacity or the opportunity to obtain long-term capacity. Furthermore, the MISO capacity market is steadily moving from its current state of oversupply toward equilibrium – the point in time at which load requirements (demand) and capacity (supply) are expected to reach balance absent new generation additions.

“As available supply diminishes, capacity prices are expected to increase. In other words, at equilibrium, there will be no excess capacity available in the market and the addition of new-build generation resources will be necessary to ensure that there is adequate and reasonably priced capacity available to serve ELL’s customers.

“Entergy’s System Planning and Operations (“SPO”) organization currently predicts that the MISO South capacity market will reach supply/demand equilibrium in 2022, but MISO itself has indicated that market equilibrium could be reached across its entire footprint as early as 2020. As a utility that must serve customer load at the lowest reasonable cost, ELL cannot wait until demand for capacity exceeds market supply to construct new generation resources.”

Occidental has a CCGT cogeneration facility at its Taft chemical plant in St. Charles Parish and sells certain energy and capacity from that facility to ELL under a long-term power purchase agreement (PPA) that will expire in 2018. In this docket, Occidental has asked the commission to dismiss ELL’s application and order it to re-issue the 2014 Amite South RFP or, alternatively, to allow Occidental to displace 500 MW of the capacity that ELL proposes to add by constructing the SCPS.

For its part, Calpine has the unfinished Washington Parish Energy Center project facility in Washington Parish that it began constructing in 2001, and it complains that proposals concerning that facility were eliminated from further consideration in the 2014 Amite South RFP. The Washington Parish Energy Center is designed as a nominal 576 MW (winter rating for General Electric 7FA.03 turbines), 2x2x1 natural gas-fired combined cycle plant located near Bogalusa, Louisiana, in Amite South.

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.