Little Gypsy cancels coal conversion plans

Published 12:00 am Wednesday, May 25, 2011



LAPLACE – A once-touted plan to convert Entergy’s aging Little Gypsy natural gas power plant in St. Charles Parish to one that burns coal and petroleum coke has officially been put to rest by a recent ruling from the Louisiana Public Service Commission.

The high cost of construction, coupled with lower natural gas prices, prompted the decision to scrap the $1.8 billion project, according to a release from the Public Service Commission. The commission voted 4-0 in favor of cancelling the project at a May 17 meeting in Baton Rouge.

With the cancellation, Entergy Louisiana must now rely on its 669,000 customers to help pay the roughly $200 million already spent on the project. As part of the regulatory system giving exclusive service territories to power companies in exchange for controlled rates, customers usually bear the costs of generating projects – including those that are canceled.

According to a release from Entergy, customers will pay about $1 more per thousand-kilowatt hour each month to cover the cost of the project. Entergy had been able to cut costs from $300 million to $200 million by salvaging and selling off materials intended for the plant.

Entergy embarked on the plan to convert the power generator, located in Montz, back in 2007 with approval from the Public Service Commission in the hopes of reducing dependence on volatile natural gas. Since that time, however, there has been a change in the market and many analysts have said prices for natural gas could remain low longer than anticipated.

In addition, new regulations from the Environmental Protection Agency regarding industrial plant emissions linked to climate change would make the facility much more expensive to operate. Coal and petroleum coke plants generally produce a high amount of greenhouse gases. The cost of construction with the new rules in place inflated the budget from $1 billion to $1.6 billion.

Environmental groups operating in the state have applauded Entergy and the PSC’s decision to scrap the project. Jordan Macha, associate regional organizer for the Sierra Club, said the move reinforces the state’s need to focus on clean, safe and job creating forms of energy production.

“The end of the Little Gypsy project should demonstrate to other utilities that dirty fossil fuels that make our families sick are not an option for Louisiana or the nation,” Macha said. “We are pleased to see the return of science and the rule of law to the decision making process. Americans already have the know-how and the technology. Now there is the political will to achieve real pollution reductions.”