South Coast Solar

The most important item on the Louisiana Public Service Commission’s agenda Wednesday was the one that was not discussed in public.

The five commission members went into executive session for 90 minutes to discuss Entergy Louisiana LLC’s application to repower a former natural gas plant, Little Gypsy in St. Charles Parish, as a coal and petroleum coke plant. The docket item also gave them the authority to discuss construction and financing of the project.

Commissioners said they were meeting privately, because they needed to discuss litigation strategy concerning a lawsuit filed by the Tulane Environmental Law Clinic on behalf of local environmental organizations challenging the project. When they emerged, they said they were unable to comment.
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Commission Chairman Lambert Boissiere III went so far as to say he could not even comment about the rising costs of the project based on material publicly available from the commission, which regulates utilities.

“I can’t comment on any material facts on Little Gypsy at this time,” Boissiere said. “The one thing Louisiana ratepayers need is a diversification of its fuel sources.”

Commissioner James Field, who put the item on the agenda for discussion, also said he could not talk because of the litigation. Field said he did not know anything about the cost of the project, which has increased from $1 billion to $1.76 billion, but it seemed to him that costs should be going down with the decline in construction and demand for materials because of the recession.

“That really wasn’t discussed,” Field said.

The agenda item was puzzling because the commission approved the project in November 2007, and comments on a second docket, dealing with a request by Entergy to have customers start paying for the project while it is under construction, are not due until Feb. 19.

Some wondered whether the executive session and the reluctance to discuss anything about the project might be signs that Little Gypsy may go the way of other coal projects across the country that have stalled.

On Monday, for example, Nevada’s major utility, NV Energy Inc., announced it would postpone a proposed $5 billion coal plant because of increasing environmental and economic uncertainties.

Congress is expected to take steps to tax carbon emissions because of concerns about global warming. While the form of those taxes is unknown, they would make operation of coal plants more expensive. According to NV Energy, its project is on hold until technologies are developed to burn coal with fewer emissions or to store carbon byproducts.

Earlier in the day, the Sierra Club and the Alliance for Affordable Energy, two groups involved in the Little Gypsy lawsuit, released a report they commissioned from an economics research firm in Arkansas. The report stated that the project will be more expensive than Entergy projected.

The groups contend that Entergy in its plans to repower Little Gypsy failed to adequately account for the potential cost of carbon-emission control legislation, increases in the cost of power-plant construction and increases in the cost of coal because of worldwide demand and that the costs could easily exceed $2 billion.
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“We will be paying for this plant for 20 years before we get any benefit,” said John Atkeison, director of climate and clean energy programs at the Alliance, a New Orleans watchdog group. “Let’s find a better way to do it.”

Estimates submitted by Entergy to the PSC have stated that the plant would provide economic benefits for customers in 13 years.

Entergy plans to rebuild the Little Gypsy plant as one that burns coal and petroleum coke, a refinery byproduct abundant in Louisiana, to diversify its fuel sources as a hedge against the cost of natural gas. Natural-gas prices have shot up in recent years and peaked in July, but they have been falling with the economy ever since.

Although it was approved more than a year ago by the PSC, the project was delayed because of an unrelated court case involving mercury emissions in Washington, D.C. According to Entergy, the costs went up while the project languished because of increases in construction and labor costs and the cost of having money sit idle. The company also stated it increased provisions for the cost of unknowns in the project, which is expected to open in 2013.

Michael Twomey, vice president of Louisiana regulatory affairs for Entergy Services Inc., declined to comment about the report, because the environmental groups have sued over the conversion of the plant.

“This case is in litigation, and we’re not going to comment,” Twomey said.

It is unclear whether or under what conditions the PSC has the ability to change its mind about a project that has already won its approval, since companies make large investment decisions based on regulatory approvals.

Melissa Watson, a staff attorney at the PSC, said the PSC set up a docket to monitor Little Gypsy, as it did with Cleco Power LLC ’s Rodemacher Unit 3 plant north of Alexandria. Like Little Gypsy, that facility would burn a variety of solid fuels, including coal and petroleum coke. It is expected to open this fall.

“I don’t want to say that the commission can never look back,” Watson said. “Entergy has a continuing obligation to prudently manage the project.”

A deadline for the U.S. Environmental Protection Agency to approve or reject the project passed without comment Friday, leaving the Louisiana Department of Environmental Quality free to issue a key permit for the plant if it desires.

According to Entergy, it expects to soon receive the remaining permits necessary to rebuild the plant.

Source:  Nola.com