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Industry News

Entergy Announces Modifications to Acquisition of the 1,980-MW Union Power Station

LCG, July 20, 2014--Entergy Corporation announced that its subsidiary, Entergy Texas, Inc. and other parties, filed a motion Friday with the Public Utility Commission of Texas (PUCT) to dismiss the company's application requesting a Certificate of Convenience and Necessity (CCN) for one of the four generating units at the Union Power Station near El Dorado, Arkansas. If the PUCT grants the parties' motion to dismiss, Entergy Texas' quest to purchase the unit would terminate, and the unit will instead be acquired by Entergy New Orleans, Inc. at an unadjusted purchase price of $237 million, subject to the approval of the New Orleans City Council and the satisfaction of other conditions to close the transaction.

The Union Power Station is an existing 1,980-MW generating facility that consists of four, 495-MW combined-cycle natural gas-fired electric generating units. Entergy Corporation announced on Dec. 9, 2014, that three of its subsidiaries, Entergy Texas, Entergy Arkansas, Inc. and Entergy Gulf States Louisiana, L.L.C., had entered into an agreement to each acquire a portion of the Union Power Station. However, parties in the Entergy Texas CCN case have indicated in regulatory proceedings that they are opposed to the transaction.

The president and CEO of Entergy Texas stated, "We have heard the positions of the other parties, including those representing some of our major customer groups, and do not see a viable path forward for the acquisition of this unit. We are requesting that the Commission dismiss the CCN filing. We look forward to working with the PUCT and stakeholders as we continue to develop strategies to meet the generation resource needs in Texas."

The companies have been working to obtain the necessary approvals to complete the transaction. Entergy Arkansas and Entergy Gulf States Louisiana are in the process of obtaining regulatory approvals for the purchase. The New Orleans City Council previously approved Entergy New Orleans' participation in the transaction through a purchase power agreement (PPA) in which Entergy New Orleans would be allocated 20 percent of the two units purchased by Entergy Gulf States Louisiana. The purchase by Entergy New Orleans of one of the four units will be in lieu of the PPA.

The president and CEO of Entergy New Orleans stated, "Our customers in New Orleans would benefit from the clean, reliable and low-cost energy provided by this facility. Entergy New Orleans has a need for additional generation, and this unit is an ideal way to meet this need at a price that is approximately half the cost of building a comparable new unit."

The Union Power Station is located on a 330-acre site near El Dorado, Arkansas and began commercial operations in July 2003. Each combined-cycle unit includes two GE 7-FA combustion turbines with inlet air fogging, two Alstom heat recovery steam generators (HRSG) with supplemental duct-firing, and one GE single case, single flow axial exhaust condensing steam turbine.

The aggregate plant purchase price is $948 million ($479/kW), or $237 million per unit, subject to adjustments. The purchase of the entire Union Power Station facility currently remains on track to be completed by the end of 2015.

Entergy's group president of utility operations said, "We remain committed to completing this transaction and delivering to our customers the benefits these four units offer. The acquisition of these highly efficient units at a favorable price will help us to reliably meet the resource needs of our growing region and is a significant step in the ongoing modernization of our generating fleet."
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