Entergy cancelling Little Gypsy conversion project

Entergy has decided against converting the Little Gypsy power plant in Montz from natural gas to petroleum coke and coal and has asked the Louisiana Public Service Commission to approve their decision.

Entergy announced that they would build a generating unit at the Little Gypsy power plant on April 4, 2007 that would have run on petroleum coke and coal as opposed to natural gas. At the time of the announcement, gas prices were nearly three times higher than they are now. Because petroleum coke is a plentiful byproduct of the refining process, the conversion was supposed to save Entergy’s customers money.

However, rising construction costs, and the fall in gas prices, combined to increase the cost of the conversion from $1 billion to $1.6 billion.

In a filing last week with the PSC, Entergy asked for permission to cancel the plan entirely, saying that the planned cost savings would no longer be attainable.

Entergy also asked the PSC to adopt its cost-recovery program. By adopting the program, residential customers will pay about $2.75 extra per month for each 1,000 kilowatt hours for five years.

Back in February, the Alliance for Affordable Energy and the Sierra Club said that plans to convert the plant would leave customers with higher bills. The Tulane Environmental Law Clinic also filed suit against Entergy challenging the project.

The report from the Sierra Club and the Alliance for Affordable Energy, which was released to the PSC, said that the bills would rise because of new carbon regulations expected from the Obama administration. The report was written by economist James Metzger, who argued that investing in energy efficiency and renewable energy would be preferable to converting the Little Gypsy plant. The groups called on the PSC to withdraw its approval of the plant’s conversion project.

Environmental groups were opposed to the project because they said it would generate more emissions than the burning of natural gas and because they believe the cost of carbon taxes will erase any financial benefit for consumers.

 

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