Calpine again criticizes Entergy’s choice of its own St. Charles power project

Calpine Corp. (NYSE: CPN) in a post-hearing reply brief filed June 3 at the Louisiana Public Service Commission again accused a unit of Entergy (NYSE: ETR) of structuring a power supply request for proposals (RFP) to favor its own St. Charles power project and in that process exclude Calpine’s partially-built Washington Parish Energy Center.

“Entergy and LPSC Staff attempt to present Calpine’s participation in the 2014 Amite South Request for Proposal (‘RFP’) and in this subsequent certication proceeding in a negative light, undervaluing the critical role of third-party bidders to the RFP’s competitive solicitation process and to this certication proceeding,” said Calpine. “Entergy relies on a fawed Total Supply Cost analysis, which was never performed on Calpine’s Washington Parish Energy Center (‘WPEC’) proposals in the RFP, to downplay the economics of the WPEC. Entergy also ignores Intervenor witness criticisms that the Amite South RFP failed to comply with the Market Based Mechanism Order. Further, Entergy claims that the Self Build is the best generation choice, balancing technology, economics and risk, even though only resources of the same generation type were allowed to compete against the Self Build in the RFP and the ‘risks’ evaluated in the RFP were not transparent to third-party bidders.

“Calpine has focused on identifying issues with Entergy’s fawed RFP design and evaluation framework and explaining the Value to Entergy customers of the WPEC — as proposed in response to the RFP. Unfortunately, Staff makes unsubstantiated assertions with respect to Calpine’s position in this proceeding. Staffs off-the-mark assertion that Calpine wants the RFP reissued so that it can ‘possibly cure the non-conforming bid it submitted in the Amite South RFP’ is inaccurate and misplaced. Staff wrongly accuses Calpine of wanting to ‘unload’ the WPEC without recognizing that Calpine is trying to compete in the RFP and any selection of the WPEC would require certication by the LPSC. Further, Staff wrongly includes Calpine with Intervenors who challenge Entergy’s load growth assumptions, and then criticizes Calpine for not evaluating Entergy’s capacity needs, which Calpine has no obligation to do.

“In addition to responding to the errors in Staffs and Entergy’s initial post-hearing brief, Calpine incorporates in this reply brief the evidence discussed at length in its initial post-hearing brief, including the below key deficiencies in Entergy’s RFP design and evaluation of proposals. For the reasons listed below, Entergy’s RFP does not provide an effective market test of the Self Build, as required by the Market Based Mechanism Order (‘MBM Order’), or support certification of the Self Build under the LPSC’s 1983 General Order.”

Calpine later added: “Understandably, Calpine would want to secure a contract for the acquisition of the WPEC proposed by Calpine in the Amite South RFP. Yet, it is disingenuous to suggest that Calpine could achieve a price for the proposed acquisition of the WPEC from the RFP that harms ratepayers or is contrary to the public interest. Entergy would have to recommend the transaction to its Operating Committee for approval and to the LPSC for certication, and the acquisition would be subject to certication by the LPSC to ensure it would serve the public convenience and necessity.”

Entergy Louisiana LLC is before the Louisiana PSC for approval of its St. Charles Power Station (SCPS), a 980-MW (nominal) combined-cycle gas turbine (CCGT) facility to be built in St. Charles Parish, Louisiana.

Calpine has offered the unfinished Washington Parish Energy Center facility in Washington Parish that it began constructing in 2001. 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.

Said Entergy Louisiana in its own June 3 brief: “The evidentiary record in this proceeding has demonstrated, and the initial round of post-hearing briefs has confirmed, that certifying SCPS is not a close call.

“The opposing intervenors — Occidental Chemical Corporation (‘Oxy’), Calpine Corporation’s (‘Calpine’), and the Louisiana Energy Users Group (‘LEUG’) (collectively, the ‘Opposing Intervenors’) — continue to advocate a wait-and-see approach to resource planning that is irresponsible, imprudent, and plainly motivated by the economic self-interests of Calpine and Oxy, a leading member of LEUG. As Staff notes, the positions of Oxy and Calpine in this matter reflect their desire to ‘make some money off of their facilities.’

“The record is clear in this proceeding that ELL has a substantial overall need for capacity. In fact, under every load and capability forecast (hereinafter sometimes referred to as ‘ELL’s need analysis’) presented in this case, including the version with the lowest peak load, ELL has demonstrated an overall long-term capacity deficit by Planning Year 2019 and beyond that exceeds twice the capacity of SCPS.’ As ELL and Staff have shown, in conducting its need analysis, the Company has employed reasonable resource planning assumptions betting its obligation to reliably serve customers at the lowest reasonable cost. By contrast, the Opposing Intervenors make numerous changes to ELL’s need analysis based on the following unsupported and highly questionable assumptions designed to downplay the need for SCPS and bolster the likelihood of capacity purchases from their own resources.”

Occidental has offered to sell capacity to Entergy out of its existing Taft cogen in Lousiana to replace at least part of the capacity represented by the St. Charles project.

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.