Louisiana regulators approve new Entergy infrastructure for $10 bil Meta data center

Louisiana regulators approved a settlement agreement Aug. 20 that paves the way for new Entergy Louisiana generation and transmission to power a planned $10 billion Meta Platforms data center in the northern part of the state, over objections from environmental and customer advocates as well as industrial groups.

The Louisiana Public Service Commission approved the settlement agreement, which includes construction of three 754-MW gas-fired combustion-turbine plants totaling 2,262 MW, a $3.2 billion investment, as well as a new 500-kV transmission line, new substation and equipment upgrades, in a 4-1 vote. Commissioner Davante Lewis voted against.

"I recognize we are building in a business environment of tradeoffs, but those fundamentals, to me, are at the heart of this proposal and were just too bitter for me to swallow," Lewis said. "A third party's corporate goals led to the basis of this deal ... I cannot say with enough certainty that this deal ... serves the greater good."

The Entergy subsidiary plans to locate two of the three planned gas plants next to the data center. The third is expected to be located north of Baton Rouge. The total Entergy investment is estimated at about $5 billion, and the generation and transmission are expected to take three to four years to build, Entergy representatives said. (Docket No. U-37425)

PSC members, as well as local and state officials such as Gov. Jeff Landry, have celebrated the data center project in Richland Parish, Louisiana, an area they said needs economic development.

"This is something we've been waiting a long, long time for in North Louisiana," Commissioner Foster Campbell, who represents the district in which the project is planned, said. "I'm for it 1,000%. I want to see something happen for North Louisiana and I know this will do it."

Entergy Louisiana, in filings for the project last year, said it hoped to have the project reviewed by October 2025. Several environmental and customer watchdogs expressed concern about the accelerated timeline, among other objections.

Opposition speakers heard

The Alliance for Affordable Energy, Union of Concerned Scientists and multiple individual Louisiana residents who spoke at the Aug. 20 hearing said they were concerned about grid reliability and environmental risks, and requested that regulators delay their vote to the originally planned date in October. Entergy previously requested that regulators move up the vote to August.

"This settlement puts all of your constituents and customers in the state at the mercy of a nonpublic contract between two corporations," said Logan Burke, executive director of the Alliance for Affordable Energy. "We'd like to see this commission move to prohibit any cost shifting, any at all, from these hyperscalers, Meta and others to come, to everyday Louisianans who are already struggling."

Some of Louisiana's major oil, gas and petrochemical companies joined a coalition — the Louisiana Energy Users Group — to oppose Entergy's proposal, arguing it could lead to "unprecedented risk" for existing utility customers, including potentially subsidizing the project. That group includes about 28 industrial companies operating in the state, such as The Dow Chemical Co., ExxonMobil Corp., Nucor Corp., and Shell USA Inc., which collectively spend about $5.5 billion on electricity and other services in the state annually.

"The data center load will increase the Entergy electric needs in Louisiana by roughly 30%," the Louisiana Energy Users Group wrote in an Aug. 18 letter to regulators. "It will far exceed the size of any other load existing today on the Entergy system, and the requested investment to serve the new load is highly unique and unprecedented in the magnitude of financial cost and risk it presents to existing ratepayers."

Some intervenors, such as the Sierra Club and the Southern Renewable Energy Association, joined the settlement agreement.

Risks considered

Entergy has said its deal with the Meta subsidiary includes safeguards for customers, including minimum bill requirements for the data center and a parent company guarantee. Critics of the deal said those measures may not be fully enforceable, or may not be enough to offset the burden on other Entergy customers from the project.

Larry Hand, vice president of regulatory and public affairs at Entergy Louisiana, told regulators that Meta's goal "was not to come to Louisiana and cause costs to be shifted to other customers."

"We believe the settlement that we reached with the staff does mitigate the risk of cost shift to other customers," Hand said. "We believe the net impact on a monthly bill for a customer — it's going to change over time — but it's going to be plus or minus one dollar or so."

Concerns raised by Louisiana residents who spoke at the Aug. 20 hearing included the Meta data center's impacts on bills and local water resources, lack of a cost cap for construction, grid reliability, whether hiring for the project will include local residents, fuel price volatility and the speed and lack of transparency in the regulatory process.

Meta has told Louisiana regulators that it may require a total of 2.2 GW, and Hand told commissioners that Entergy is planning new generation around that figure.

Lewis asked Hand why Entergy did not complete a bid process for the proposed resources, as it typically would be required to do, and instead proposed to build the generation itself.

"To get Meta and meet their timelines, we needed to move fast," Hand said, adding that Meta will cover a large share of project costs, though Entergy has not publicly shared specific amounts. Meta has also committed to paying for 1,500 MW of designated solar or solar and storage resources, according to previous Entergy filings.

The settlement agreement includes a deal between Entergy and Meta for 15 years, though some expressed concerns about what may happen once that term expires.

Louisiana PSC staff consultants said the settlement agreement includes minimum bill requirements for Meta to cover "100% of the cost of these three new generators" as well as "the cost of the purchased generation." The agreement also includes a termination fee within the 15-year period. The termination fee does not cover the full costs of the project since staff and Entergy were unsuccessful in negotiating that point with Meta.

Project critics, including major industry representatives, said the settlement agreement did not include sufficient measures to guarantee that the customer protections are enforceable, particularly since the agreement is not with parent company Meta, but instead a subsidiary, Laidley LLC.

"There's a lot of risk for everybody, but we're mitigating that risk in many ways," Hand said.

Entergy's recovery of costs associated with building the project is subject to oversight and approval by the PSC.