A New Orleans City Council committee has cleared a path for Entergy New Orleans to purchase a portion of the low-cost power generated at an Arkansas power plant.
The City Council’s Utility, Cable, Telecommunications and Technology Committee last week unanimously approved an agreement in principle that will allow Entergy New Orleans to participate in the sale of the Union Power Station in El Dorado, Arkansas.
Under the agreement, the power station will be purchased by Entergy Arkansas, Entergy Texas and Entergy Gulf States Louisiana. The latter firm will acquire two of the station’s four natural gas-fired generating units, which are capable of producing 990 megawatts of power, according to the committee.
Through a purchase agreement, Entergy New Orleans would buy 20 percent of the power generated by the Entergy Gulf States Louisiana portion of the plant, or about 200 megawatts of power, Councilman Jason Williams said.
“This acquisition could not come at a better time,” said Williams, chairman of the Utility Committee. “With the Entergy generation plant retirements scheduled for 2016, including Michoud, this deal will help fill the gap and meet the energy needs of our citizens well into the future.”
Clint Vince, the council’s chief legal adviser on energy matters, called the deal “an exceptional, low-cost power supply opportunity.”
The other Entergy companies are purchasing the plant out of bankruptcy, which provides Entergy New Orleans with an opportunity to acquire power at about half the cost of building a comparable facility, Vince said. The plant also is more efficient than Entergy’s Michoud plant, which will be taken out of service next year, he said.
Entergy New Orleans said the Entergy Gulf States Louisiana purchase is expected to produce more than $200 million in savings to ratepayers over its life.
The savings for Entergy New Orleans customers will be about $60 million, said Joe Vumbaco, a technical adviser to the council on energy matters.
The purchase agreement is supported by the Alliance for Affordable Energy, an independent watchdog group.
“The alliance always supports more efficient power generation and certainly power generation that will bring reduction in cost for the consumers in New Orleans,” said Logan Atkinson Burke, the alliance’s manager of administrative and regulatory affairs.
The council committee set an April 30 deadline for closing the deal.