A $948 million power plant acquisition will add more clean, high-efficiency power generation for Entergy Corp. customers but also higher electric bills.
Entergy Louisiana customers, those in the Baton Rouge area and west, will see their electric bills rise by about $7 a month in the short term from the cost of the Union Station Plant purchase, said Phillip May, president and chief executive officer of Entergy Louisiana. Because the plant uses about half the natural gas of some of Entergy’s older power plants, Union Station’s fuel savings will lower the total increase to about $4.30 a month.
For Entergy New Orleans, rates will rise $5.51 per month for a customer using 1,000 kilowatt hours, then settle out at a $2.60 per month by 2019 as fuel savings factor in.
In the first year, Entergy expects to cut its fuel costs by $55 million, and the fuel savings will increase as the price of natural gas rises, May said. Over the 30-year life of Union Power Station, the net benefit for customers is estimated at $240 million.
Under the deal, the natural gas-fired plant will be owned by Entergy subsidiaries. The plant has four power-generating units. Entergy Louisiana LLC, which provides electricity to about half the state, will own two. Entergy New Orleans Inc. and Entergy Arkansas Inc. will each own one unit.
By all accounts, Entergy got a great deal on the Union Power Station, paying about half what it would cost to build a similar facility.
Entergy announced the deal in December 2014 while owner Entegra Power Group LLC was reorganizing under the federal bankruptcy code. Entergy completed the deal Thursday.
Casey DeMoss, CEO of the Alliance for Affordable Energy, said the consumer group agrees with Entergy: The acquisition is a good deal for ratepayers now and over the long term.
However, May said it’s important to remember that Entergy customers’ rates are among the lowest in the country.
Customers in what used to be Entergy Gulf States, from just east of Baton Rouge to the Sabine River, paid $82.82 for 1,000 megawatt hours of power. The average bill in Louisiana was $94.14. The average nationwide was $127, May said.
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