Louisiana Nucor plant shut down after equipment failure _lowres (copy)

Nucor has a direct iron reduction plant in Convent that produces iron ore pellets that are mixed with scrap metal to make steel.

CONVENT — St. James Parish government is opening up negotiations that would allow as many as three rural electric cooperatives to provide power to the industry-heavy parish now served exclusively by Entergy Corp.

Over the objections of Entergy, Pointe Coupee Electric Membership Corporation, South Louisiana Electric Cooperative Association and Dixie Electric Membership Corporation each have won the right to start talking with Parish President Timmy Roussel about electrical franchise agreements.

If any of the three nonprofit, member-owned cooperatives reaches a deal, the electrical provider would gain a foothold in the lucrative and growing industrial sector along the Mississippi River between Baton Rouge and New Orleans that Entergy now dominates.

The negotiations come as some of the state's major chemical and petrochemical plants have complained that Entergy's industrial rates are too high compared with other parts of the country, including Texas. Meanwhile, parish and cooperative executives say St. James continues to garner interest from new industries looking to locate in the parish and find cheaper power alternatives.

"This Mississippi River corridor is a wealth of opportunity for many people," said Myron Lambert, general manager of the Pointe Coupee co-op based in New Roads, also known as PC Electric. 

Due to low natural gas prices, available land and a location outside Baton Rouge's stiffer air pollution limitations, St. James Parish has landed major projects in recent years, such as the Yuhuang Chemical plant in 2014, and continues to be considered by other prospective companies.

Joseph Ticheli, general manager of SLECA, said he personally has had three prospective companies ask him over the past two years if his cooperative based in Houma was already in St. James Parish or, if not, could it be. SLECA's service territory stops at the parish line.

Roussel, who is in his second term as St. James Parish president, said SLECA had made a similar push several years ago when he was a parish councilman, but the electric cooperative was never able to gain the traction it has this time, which also opens the door for other cooperatives to seek access to the St. James market.   

"I really think they're going after some of the new big boys that are looking at St. James Parish, if they become realistic," Roussel said Friday of the cooperatives' interests.  

A  majority on the seven-member Parish Council sided with opening negotiations apparently after some significant behind-the-scenes lobbying of parish officials. Ticheli reminded the council during a public comment period on Feb. 7 that he and other SLECA officials had been meeting with them individually since March 2016.

Before the votes, Entergy executives pointed out that their residential rates are lower than the cooperatives' and are among the lowest in the country and could see further reductions due to the recent tax bill passed in Congress. That's a benefit the nonprofit cooperatives won't see because they don't pay those taxes.

Mark Kleehammer, Entergy vice president of regulatory affairs, said the utility is not aware of any industrial project that was turned away over power rates.

"So, to me, I think it's critical to note there is not a pricing problem here. You know, we're looking for a solution for a problem. This is not one of the problems," Kleehammer told the council.  

But he said allowing the cooperatives to come into St. James Parish could actually hurt the 9,000 customers the company serves because the big industrial users help Entergy keep rates flat for residential users. Later, in interviews, Melonie Stewart, Entergy's acting vice president of customer service, added that the cooperatives were trying to cherry pick the new industrial customers and had little interest in serving new residential customers. 

In contrast, Ticheli, Lambert and John Vranic, CEO and general manager of DEMCO, pitched the benefits of allowing their operations into the parish market, suggesting more competition and greater consumer choice would benefit St. James ratepayers.

"Fifty-seven parishes have consumer choice, seven do not," Ticheli said. "That ought to tell you something about the state. Most all parishes have some type of choice. That's a good thing. That is as American as apple pie."

The competition argument seemed to carry some weight with parish leaders. 

"I think competition is the American way," Councilman Eddie Kraemer said. "We're not telling Entergy that they can't service St. James Parish anymore. We're just allowing everybody to have the opportunity to go put up their best bid and let everybody make the choice of who they want."

Public utilities don't compete in the same way that two drug stores on opposite corners of an intersection might. Entergy and the cooperatives are among the power utilities regulated by the Louisiana Public Service Commission and allowed monopolies in their own service areas. The cooperative's executives told the Parish Council they would not be able to pursue Entergy's existing 9,000 customers in the parish but only new ones. 

But the push to open up St. James' power market to the cooperatives would seem to fit within industry's preferred method to handle the region's future electrical needs, including through expanded access to wholesale power. 

In position papers, the Louisiana Energy Users Group, a trade group, promotes access to alternative sources of power as one part of its strategy, as opposed to major capital investments by Entergy in new plants that ratepayers would have to support.

In December 2013, Entergy also joined the Midcontinent Independent System Operator. The  independent power grid management organization gives cooperatives a path to compete for business by using parts of the grid outside their traditional service areas, Lambert said. 

"With that, it opens up better access, or more open access, to the grid for everyone," Lambert said.

Amid resistance from Louisiana Energy Users, Entergy also has broken ground on a planned $869 million, 980 mega-watt gas-fired plant in St. Charles Parish, arguing it will be more efficient and, ultimately, will save ratepayers money.

On Feb. 8, PC Electric also got a franchise agreement with West Baton Rouge Parish and recently reached one with Iberville Parish, Lambert said. But, in St. James, the Parish Council would need another vote for final agreements. The Louisiana Public Service Commission would also have a say in how power is sold.

Colby Cook, Public Service Commission spokesman, said the commission's jurisdiction does not extend to the approval of local franchise agreements but any service would have to be "at commission-approved rates and terms and conditions, subject to commission rules and regulations."

Though some parish council members said they hoped they could have the agreements to review by March, Roussel said he was uncertain the parish could make that time frame. Roussel said he first wants to meet with Parish Attorney Cody Martin to discuss whether to hire a legal specialist in electrical franchise agreements. 

Follow David J. Mitchell on Twitter, @NewsieDave.