The Louisiana Public Service Commission signed off on a series of 20-year power purchase agreements for five rural Louisiana electric cooperatives sourced largely from a planned new gas plant and three solar projects.
Independent power producer Kindle Energy LLC's 730-MW combined-cycle Magnolia Power Generating Station is expected to be complete by March 2025, according to S&P Global Market Intelligence data. Since the plant is not yet running, commission staff acknowledged the resource plan could expose to some risk the future power supply needs of 1803 Electric Cooperative Inc., an entity formed to procure and supply wholesale power to the five co-ops, according to the PSC's order released Jan. 28. (Docket No. U-35927)
According to a Jan. 25 article in The Advocate, the PSC's 4-1 decision approving the contracts marks the first time Louisiana electric cooperatives will obtain power supply from outside the state.
The plant is set to make up the largest share of the co-ops' power. If it is delayed, the co-ops are entitled to liquidated damages. The 1803 Cooperative members are Beauregard Electric Cooperative Inc., Claiborne Electric Cooperative Inc., Northeast Louisiana Power Cooperative Inc., South Louisiana Electric Cooperative Associationn and Washington-St. Tammany Electric Cooperative Inc. (Docket No. U-35927)
The commission recognized 1803 Cooperative in July 2021 as a public utility formed to supply wholesale power to its five member co-ops. The co-ops submitted the power purchase agreements to replace existing agreements that expire between Dec. 31, 2024, and March 31, 2025, with Cleco Cajun LLC affiliate Louisiana Generating, which operates the Big Cajun 1 and Big Cajun 2 coal- and gas-fired plants. Entergy Corp. owns a portion of one of the three units at Big Cajun 2.
The 20-year deal for the Magnolia plant is expected to provide the largest share of power for the co-ops at 409 MW of capacity, according to the order.
Under the new agreements, more than a third of the co-ops' power would come from renewables.
The 1803 co-ops also secured 20-year agreements with the Bayou Galion Solar Project for 98.1 MW, Bayou Chicot Solar for 150 MW and Bayou Teche Solar for 95 MW. The solar project entities are subsidiaries of ibV Holdings LLC, according to the filing.
The co-ops also have an agreement with Exelon Generation Co., which now operates as Constellation Energy Corp., for a five-year power purchase agreement for electricity, capacity and ancillary services covering 27% of their real-time load, according to the order. The sixth agreement is a five-year contract for 185 MW from Calpine Energy Services LP.
The Magnolia plant is planned to be constructed with the capability to use up to 50% hydrogen fuel that would be carbon-free. Magnolia does not yet have the necessary permits to burn hydrogen, and "there are additional steps that would have to be taken before it would even become an option," PSC consultant Philip Hayet told regulators, according to the order.
Commission officials said there was risk involved with the Magnolia plant agreement since it would provide the largest share of power and the plant has not yet been built. As a result, the 1803 co-ops are required under the commission's order to file quarterly monitoring reports on the construction and financing of the Magnolia plant and the solar contracts. Magnolia Power is also required under the order to increase the total amount of liquidated damages it may pay to the 1803 co-ops to $15 million in the event the plant is late in opening.
As part of the commission's order, when the 1803 co-ops conduct their first integrated resource plan, they are expected to file a risk management policy to include the costs of acquiring natural gas, Midcontinent ISO market capacity and energy. The co-ops are also expected to investigate the costs and benefits of capacity outage insurance as "protection in the event that the Magnolia Generation Station suffers significant outages," according to the order.
