The following is prepared by the Kean Miller LLP Utilities Regulation team on important topics affecting consumers of electrical power in Louisiana related to recent and current proceedings of the Louisiana Public Service Commission (“LPSC”). For more information, please contact us at [email protected]
LPSC Rulemaking on Customer-Centered Options: The LPSC has a proceeding underway to research and evaluate customer-centered options. In the proceeding, an industrial customer trade association – – the Louisiana Energy Users Group (“LEUG”), has proposed an Industrial Customer Market Option that would provide access to off-site CHP generation, the bilateral wholesale power market and the MISO energy, capacity and operating reserve markets. LEUG proposes the option as a means to offset some of the need for Entergy to replace aging generation fleet, and thereby help avoid or reduce costs for all ratepayers, while also helping industrials maintain competitive rates in Louisiana. LEUG has also proposed a Renewable Generation Option, that would allow industrials to negotiate directly with renewable developers for power supply and “sleeve” the transaction through their utility to provide delivery and back-up power if needed. Other stakeholders in the proceeding have presented other customer-centered options for consideration. A Technical Conference was held by the LPSC in December 2022, and next steps in the proceeding are pending determination.
LPSC Rulemaking on Renewable Generation Options: The LPSC has an ongoing rulemaking proceeding to consider customer options to access renewable generation. In the proceeding, an industrial customer trade association – – the Louisiana Energy Users Group (“LEUG”), has proposed tariff options for industrial customer participation in renewable projects through “sleeve transactions” and “virtual PPAs.” The LPSC Staff has issued a report and recommendation that provides support for utilities to offer a “sleeved PPA” option for new renewable generation in Louisiana, and next steps in the proceeding are pending determination.
Louisiana Task Force on Climate Change: Through participation in the Power Production Committee, an industrial customer trade association – – the Louisiana Energy Users Group (“LEUG”) is pursuing interests that include long-term reliable and competitive power supply for Louisiana, exploring access to renewable power, and use of cogeneration to increase efficiencies and reduce emissions.
Electric Grid Status / Maintenance: The LPSC has an ongoing proceeding to evaluate the Louisiana electric grid regarding status, maintenance and whether there is more that could have been done and can be done to benefit Louisiana customers. In urging the need for the evaluation, a presentation by an LPSC Commissioner showed Louisiana SAIDI / SAIFI levels at well-above national averages.
Electric Grid Resiliency / Hardening: The LPSC has an ongoing proceeding to conduct an assessment of the Louisiana utility grid infrastructure for resilience and hardening for future storm events.
Entergy Proposal for Future Ready Resilience Plan: Entergy has filed an application with the LPSC presenting a $9.6 Billion plan for accelerated resilience projects over a 10 year period, and seeks approval to implement and recover costs for the initial $5 Billion spending over 5 years beginning in 2024. The application has just recently been filed and deliberations by the LPSC have not yet begun.
Minimum Generation Capacity Obligation: The LPSC has an ongoing rulemaking to consider whether to adopt a Minimum Physical Capacity Threshold obligation for electric generation for jurisdictional electric utilities. Comments have been submitted by stakeholders, and next steps in the proceeding are pending determination.
Energy Efficiency: The LPSC has issued and has under consideration a proposed new Phase II Energy Efficiency Rule that would have the LPSC take-on the implementation of programs in Louisiana rather than the utilities, including retention by the LPSC of an: (a) Administrator, (b) Energy Efficiency Manager, (c) Fiscal Agent, (d) EM&V Contractor, and (e) Fiscal Auditor. Costs of the programs would be funded through a new Public Benefits Fee (“PBF”). Opt-out provisions are included in the proposed rule for certain larger customers.
Entergy Storm Restoration Cost Securitization and Recovery: Entergy has pursued approval from the LPSC for recovery of and securitization financing for approximately $4.8 Billion of Entergy restoration costs for Hurricanes Laura, Delta, Zeta in 2020 and Winter Freeze Uri and Hurricane Ida in 2022. In February 2022, the LPSC approved $3.1 Billion of costs to proceed to securitization financing and recovery from ratepayers including $290 million to replenish reserves for future storms. An additional $1.6 Billion of costs submitted by Entergy for recovery is pending consideration by the LPSC.
LPSC Audit of Additional Fuel Adjustment Costs from Winter Freeze Uri: Audit proceedings are underway at the LPSC to evaluate the prudence of $163 million of additional fuel adjustments costs incurred during the February 2021 freeze event. The $163 million additional costs were recovered from ratepayers through the fuel adjustment, amortized over the months of April-August 2021.
Entergy Integrated Resource Plan (“IRP”): Proceedings are underway at the LPSC on the Entergy 2023 IRP, including a stakeholder process. The draft IRP was filed in October 2022, and the final IRP is due in May 2023. The objective of the IRP process is for the utility to provide its evaluation of a set of potential resource options that offers the most economical and reliable approach to satisfy future load requirements of the utility. However, the IRP process does not result in LPSC approval of the proposed resource plan or approval of construction or acquisition of any particular resources. Rather, LPSC consideration of resource approvals occurs in separate certification proceedings on individual proposals submitted by the utility on a case-by-case basis.
LPSC Rulemaking on Demand Response: In May 2021, the LPSC approved a new rule that emphasizes the importance of Demand Response in Louisiana and requires electric utilities to pursue Demand Response tariffs or justify why they are not.
Entergy Market Value Demand Response (“MVDR”) Tariff: In September 2020, the LPSC approved a new Entergy tariff that allows customers and aggregators to access MISO Demand Response products – although only through Entergy.
Entergy Proposed Experimental Interruptible Option (“EIO”) Tariff: In July 2021, the LPSC approved new Entergy tariffs that provide certain interruptible rate options for industrial customers.
Entergy Proposed Certification of 475 MW Solar Generation and Geaux Green Subscription Tariff: In September 2022, the LPSC approved an Entergy request for certification of three purchase power agreements and a build-own-transfer agreement for 475 MW of new solar generation development projects, plus a new tariff that would allow customers to purchase subscriptions in the projects. Costs of the subscriptions would be incremental to the customer’s existing electric bills, and the subscriptions would be capped initially at 50 MW. Subscribing customers would receive credits for market revenues, and also benefit from associated Renewable Energy Credits (“REC”), relative to their subscribed share.
Entergy Proposed Green Pricing Option (“GPO”): In March 2021, the LPSC approved new Entergy tariffs that provide for sale of Renewable Energy Credits (“REC”).
Entergy Proposal for Distributed Generation: In October 2022, the LPSC approved an Entergy application to deploy 150 MW of utility-owned distributed generation, including a rate schedule to charge host customers for a portion of the generators as back-up power costs.
Entergy Proposal for Increase in Nuclear Decommissioning Cost Funding: Proceedings are underway at the LPSC to consider an Entergy request to increase its funding for nuclear decommissioning costs, based on evaluations for its Waterford and River Bend nuclear generation units.
Formula Rate Plan (“FRP”) Extension: In May 2021, the LPSC approved an extension and modification of Entergy’s FRP for annual filings and rate adjustments in 2021, 2022, and 2023, subject to settlement terms reached by Entergy, LPSC Staff and intervenors. The settlement terms included, among other things: a 9.50% ROE; a $63 million rate reset for 2021; a 9.0-10.0% earnings bandwidth subject to a $70 million cumulative rate cap for 2022/2023; resolution of lost revenue claims from covid and hurricanes; a distribution investment cost recovery rider; and a transmission investment cost recovery rider.
LPSC Rulemaking on New Generation Deactivation Transparency Rule: In October 2018, the LPSC issued a rule which requires electric utilities to report generation unit deactivations and retirements 120 days prior to implementation, including support for the decisions and continuing reports on units that are placed in deactivation status for possible return in the future. The final rule creates more transparency and accountability on the part of utilities.
Entergy 980 MW Power Plant in St. Charles Parish: In December 2016, the LPSC approved Entergy’s proposal to construct a 980 MW CCGT unit located in Montz, Louisiana (near New Orleans), at a site adjacent to the existing Little Gypsy generation units. The project was selected as a self-build project in a Request-for-Proposals (“RFP”), was estimated to cost $869 million, and went into service in 2019.
Entergy 994 MW Power Station in Lake Charles, Louisiana: In July 2017, the LPSC approved Entergy’s proposal to construct a 994 MW CCGT unit located in Westlake, Louisiana. The project was selected as a self-build project in a Request-for-Proposals (“RFP”), was estimated to cost $872 million, and went into service in 2020.
Entergy 361 MW Combustion Turbine in Washington Parish: In May 2018, the LPSC approved Entergy’s acquisition of the Washington Parish Energy Center, a new 361 MW simple cycle combustion turbine (“CT”) to be constructed in Bogalusa, Louisiana by a subsidiary of Calpine Corporation (“Calpine”) for a purchase price of approximately $222 million. Calpine had submitted an unsolicited offer to Entergy to construct the CT and sell it to Entergy for a turn-key price. The acquisition and related assets was estimated to cost $261 million, and the unit went into service in 2020.
Kean Miller Regulatory Attorney Contacts:
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II City Plaza
400 Convention Street, Suite 700
Baton Rouge, Louisiana 70802