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PSC Delays Power Plant Conversion

The Associated Press

BATON ROUGE, La. (AP) — Entergy Louisiana's one-time plan to convert a major generator from natural gas to petroleum coke, a plentiful byproduct of refining, was put on a hold of at least three years Wednesday by state utility regulators.

The project at the Little Gypsy plant in southeastern Louisiana, approved by the Public Service Commission in late 2007 amid predictions of major breaks on power bills, fell apart with the sudden fall of natural gas prices, cost overruns, locked-down credit markets and uncertainty about what carbon legislation will emerge from Congress.

The PSC, with almost no discussion, approved the delay without objection. Entergy Louisiana, a unit of New Orleans-based Entergy Corp., recommended the action last month. Environmentalists wanted the project canceled permanently, saying there was no way it could be revived economically.

By Sept. 1, Entergy Louisiana must detail what costs it wants to recover from its 658,000 customers. The utility has said it spent about $300 million on the project, which saw higher construction costs drive its projected price tag from $1 billion to $1.6 billion.

Those costs will be reviewed in a likely lengthy proceeding by the PSC, which can disallow any it believes were not properly incurred.

At the time of the project's approval, gas prices were about three times the current rate. There also have been several major finds of shale natural gas in the United States, including the Haynesville Shale in northwestern Louisiana, that have vastly altered the long-term gas supply picture.

Entergy Louisiana has said one possible alternative to petroleum coke at Little Gypsy is the use of a combined cycle gas turbine, a more-efficient way of generating power with gas.