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Entergy New Orleans clears major hurdle for peaker project

A New Orleans City Council panel on Feb. 21 approved the application of Entergy New Orleans LLC to build a 128-MW gas-fired peaker plant, a major milestone in the utility's multiyear endeavor to replace retired capacity and install generation within city limits.

The full council is likely to also approve the Entergy Corp. subsidiary's petition at its March 8 meeting, paving the way for the $210 million project to proceed.

Entergy New Orleans, or ENO, framed the to-be-named peaker as the only way to ensure localized reliability after its Michoud plant was retired in 2016. The utility's transmission system was largely designed and evolved around that facility, and ENO said Michoud provided essential service to the city during past storms when lines went down.

The utility initially submitted a proposal in June 2016 for a 226-MW combustion-turbine facility on the Michoud site, but that effort was paused in February 2017 after ENO wanted to review whether it was necessary to meet future demand.

Five months later, the utility filed an amended application with two options: the first option still advocated for the 226-MW plant, but also a 128-MW peaker, which would consist of seven reciprocating internal combustion engines. The latter more closely matched ENO's revised projected capacity need.

The second option would have several other benefits not offered by the original proposal, the utility said: lower emissions, less groundwater usage, greater operational flexibility and on-site black-start capability. The last of these is the ability to quickly reboot during a loss of power.

The council's Utility, Cable, Telecommunications and Technology Committee at its Feb. 21 meeting endorsed the 128-MW peaker over the 226-MW plant. Four of the panel's five members voted to find that the peaker is in the public interest and therefore eligible for recovery of prudently incurred costs.

"We wanted to make sure that we were matching the right solution to the existing problem in the best interests of our residents and businesses," Councilmember Jason Williams said in a statement of the committee's view that the 226-MW plant was "the wrong size and the wrong technology for the city."

Williams and his colleagues had previously criticized ENO for not providing enough information on its initial proposal. An attorney to the councilmembers said at a July 2016 hearing that it was "extremely, unbelievably disappointing" that the utility was, in his view, not doing its part during the regulatory process.

The New Orleans City Council consists of seven members, meaning that ENO already has the votes necessary to win final approval so long as the four council members who voted affirmatively Feb. 21 maintain their support.

The council also plans to consider the utility's combined rate case at some point in 2018, which will include peaker costs. The facility's expenses could also be decoupled from the rate case and taken up separately.

ENO's peaker has faced considerable opposition from environmentalists and community groups alike. The Alliance for Affordable Energy said the utility "utterly failed" to prove the project's public interest, arguing that ENO does not need additional capacity for 15 years. Ratepayers will be left holding the bag for excess generation, the group and others said.