NEW ORLEANS - The New Orleans City Council Utility Committee pushed back a deadline to February to make a final decision on Entergy’s request to build a new, $232 million gas-fired power plant at Michoud in New Orleans East.
But the fight over whether Entergy customers should have to cover the costs of a power plant using fossil-fuel technology – and a $25 million profit for Entergy – is already hitting a fever pitch.
The council’s utility advisers said an October deadline requested by Entergy was too quick and wouldn’t give the public and the council enough time to review the details and justification of Entergy’s request. The advisers suggested a January deadline and intervenors, including environmental and renewable energy advocates who question the need for any new power generation, asked for a delay until the spring.
The council committee went with a compromise of Feb. 26, an additional 30 days beyond the advisers’ recommendation.
The moves by the committee come as controversy swirls around the power plant proposal. Entergy’s original plan to build a 226-megawatt gas-fired plant was put on hold in January when new data was released showing the city’s power grid did not need as much power at peak usage times than the utility company originally thought.
That led to a months-long delay in the process, and a new plan that still called for a combustion turbine gas plant to produce 226 megawatts, but also offered a second option, a far smaller 128-megawatt plant that would use seven gas-fired engines and would include so-called “black-start” technology allowing it to start on its own even if outside transmission lines were lost in a hurricane.
But the far smaller plant would cost almost as much to build -- $210 million instead of $232 million – and Entergy still says the larger plant is better for long-term sustainability. Councilwoman Susan Guidry didn’t like the fact that Entergy was still clinging to its original proposal.
“That’s a non-starter, not having black-start capability,” she said.
Forest Bradley-Wright from the Alliance for Affordable Energy questioned why Entergy had a clause in its contract with a private company that’s already adding millions of dollars to the cost of building the power plant. Entergy said that’s a standard escalator clause in such contracts that essentially keeps the contractor on standby for when the regulators – in this case, the City Council – lets the project begin.
What’s more, opponents questioned Entergy’s changing explanations for the urgent need for the new plant. Initially, Entergy argued it needed more power to meet growing customer demand, but revised its forecast this year to show usage basically holding steady over the next 20 years.
Now, Entergy CEO Charles Rice is warning that “cascading blackouts” are imminent if a new power plant is not built in the city, to replace aging infrastructure at the Nine Mile Point facility across the river and to address reliability problems with transmission of electricity Entergy purchases on the regional MISO market.
“This project isn’t really about demand,” Rice said. “What this project is about is grid stability and grid reliability. Even though demand may decrease, you still need a dependable and reliable grid, and this unit will allow us to have that.”
Monique Harden, an attorney for the Deep South Center for Environmental Justice, said the threat of blackouts is a new argument Entergy didn’t make in its original application last year. She said it’s a false argument that conflates transmission concerns and distribution problems and preys on customers’ anger over the power outages they have been experiencing on a regular basis.
“That (proposed) power plant has nothing to do with the outages we see every day,” Harden said. “When you go into the kitchen and you see the blinking lights on the stove and your microwave, it’s gotten to a point where you just reset it and move on. But that’s all because they haven’t taken care of the distribution part of the electricity, and you can just see the sorry state that it’s in.”
Rice said Entergy is already spending big money on improving its distribution system – the local system of power lines usually referred to as “the grid.” He said the company spent $10 million on upgrades in 2016, $16 million in 2017 and plans to spend $14 million more next year.
Harden also questioned Entergy’s profit motive. She pointed out that, in addition to seeking rate increases to pay for the new power plant, Entergy also wants ratepayers to foot the bill for an 11-percent return on equity from construction, which would amount to about $25 million.
Entergy estimates the average electric and gas bill would go up by about $5.84 a month to pay for those items, but opponents said they believe it will be higher by the time the City Council approves the plan.