Entergy Texas Inc. on Oct. 7 applied at the Public Utility Commission of Texas for a Certificate of Convenience and Necessity (CCN) to construct the 923-MW Montgomery County Power Station, a new gas-fired facility to be located near Willis, Texas.
The project size is given as 993 MW (nameplate) and 923 MW (summer rating). This highly efficient and economical combined-cycle unit will provide critical capacity to meet the long-term needs of Entergy Texas customers, this Entergy Corp. (NYSE: ETR) subsidiary said.
The current overall cost estimate of the Montgomery County Power Station (MCPS) is $937.3 million, which is inclusive of the estimated costs of transmission upgrades, contingency, an allowance for funds used during construction, and expenses related to obtaining commission certification. MCPS will produce an expected $1.7 billion in net benefits to Entergy Texas customers through supply cost savings over the unit’s life, the company added.
Several factors demonstrate the need for MCPS, the utility said. Entergy Texas (ETI) is projecting capacity deficits of approximately 700 MW in the year 2021, growing to 1.2 GW in 2022 and 1.7 GW by 2026. These deficits are largely the result of expected load growth, purchased power agreement (PPA) expirations, and deactivation of aging generation units. ETI’s load is expected to grow 3.6% (or 127 MW) by 2021 and 7.5% (or 268 MW) by 2026. During that same time frame, ETI will see more than 600 MW of PPAs expire. Further, ETI deactivated over 200 MW from its gas-fired steam generation fleet in 2016 and is preparing for the additional deactivation of more than 500 MW of gas-fired steam generation over the next ten years—each of which will have over 55 years of service at the time of their expected deactivation.
In addition, the MISO South capacity market is expected to reach a supply/demand equilibrium by 2022, or sooner, which portends significant capacity price increases. Failing to invest in long-term resources now will unreasonably expose ETI’s customers to high capacity prices as demand meets or exceeds available capacity, the company said.
MCPS will not only provide a hedge against expected capacity shortages and price volatility in MISO, but will significantly reduce Entergy Texas customer supply costs by approximately $1.7 billion over the life of the facility on a net present value basis. MCPS is expected to yield roughly $100 million in fuel cost savings in the first full year of operation alone.
MCPS will be located in Entergy Texas’s Western Region, an area spanning just west of Woodville to a few miles west of College Station and from slightly south of The Woodlands to north of Huntsville. The Western Region is a “load pocket,” i.e., an area with a shortage of local generation capacity that makes it heavily reliant on transmission imports to serve customers. By adding regional generation, MCPS is expected to favorably impact locational marginal prices, address local voltage stability issues, support system reliability, allow greater flexibility in scheduling transmission maintenance, and support more rapid restoration of service to customers following major storm events such as hurricanes.
MCPS is expected to produce energy approximately 30% more efficiently than ETI’s gas-fired steam units, and modern pollution controls will make MCPS one of the cleanest fossil fuel-fired resources in ETI’s resource portfolio.
The project is expected to provide 25 new jobs while MCPS is in operation and 2,500 new jobs during its construction, while adding hundreds of millions of dollars to the local economy above and beyond the amount invested to construct and operate MCPS.
The site for this project is ETI’s existing Lewis Creek power plant, which is located near Willis in Montgomery County.
The company said that Chicago Bridge & Iron Inc. has been selected to provide Engineering, Procurement and Construction services for the MCPS project.
Independent monitor says this was a proper selection out of a 2015 RFP process
Attached to the application was testimony from Wayne J. Oliver, Principal and Founder of Merrimack Energy Group Inc. He acted as independent monitor for Entergy Services Inc.’s 2015 Request for Proposals (RFP) for Long-Term Combined Cycle Gas Turbine Capacity and Energy Resources and Limited-Term Capacity and Energy Resources for Entergy Texas. The self-built MCPS was picked as the winner out of that RFP process.
The long-term component of that RFP sought 1,000 MW of long-term capacity, capacity related benefits, energy, other electric products, and environmental attributes (if any) from one or more developmental resources in the Western Region of Texas or developmental resources or existing Combined Cycle Gas Turbine resources that can provide generation that would be incremental to the generation in the Western Region. In the long-term component of the RFP, Entergy Texas indicated it intended to market test a self-build alternative at the Lewis Creek site.
Oliver said his findings include:
- The 2015 Entergy Texas solicitation process was undertaken in a fair, equitable and unbiased manner by Entergy Services with his oversight. The solicitation process initiated by ESI is a consistent and equitable process designed to treat all proposals the same throughout the process. “I found that ESI followed its protocols and objectives throughout the solicitation,” he wrote.
- The MCPS self-build project was the lowest reasonable cost option for customers taking into account all costs and risks. This project had the lowest total supply cost and highest total supply cost savings of all proposals evaluated based on a number of scenarios considered.
- Although there are no formal competitive bidding requirements in Texas, ETI undertook a competitive procurement process with oversight by an independent monitor designed to ensure all bidders were treated fairly and equitably. The process was designed based on previous Entergy Services solicitation processes implemented in other states that have formal competitive rules or guidelines.