©2019 E&E Publishing, LLC
Republished with permission
From a perch near the Gulf of Mexico, Entergy Corp. is positioning itself as a utility company of the future — even if critics lament what that could mean for electricity choices and costs in the South.
The company, Louisiana’s largest power provider, is exploring a different type of model where a utility extends its control of generation to homes and businesses while still investing in big, central station plants.
The concept could inform electricity trends beyond the parts of Louisiana, Mississippi, Texas and Arkansas that Entergy serves through its regulated utilities.
“Innovation and new technologies will be an important part of our business as we continue to explore solutions to improve our customers’ everyday lives,” Entergy CEO Leo Denault said on a recent earnings conference call.
But for critics like Logan Atkinson Burke, executive director of the Louisiana-based Alliance for Affordable Energy, Entergy is building its future in an “old-fashioned way” that protects its monopoly and insists that everything comes from its spending.
“And we continue to argue that that is not the best way to use ratepayer dollars and is not the most cost-effective way to get where we all want to go,” she said.
Entergy has faced pushback in recent years over a variety of issues, including its proposed natural gas-fueled New Orleans power station, the company’s support for an end to net metering in much of Louisiana and questions about outages at a nuclear power plant in Mississippi.
Two pilot projects on Entergy’s agenda also show a utility eager to expand its role: company-owned solar panels on homes and backup natural gas-fueled generation at businesses. It’s also investing about $1.6 billion to help keep nuclear power plants running. And Entergy said in July that it could add 7,000 to 8,000 megawatts of new generation from 2022 through 2030 — with possibly half tied to renewables and half to gas.
The company is working on utility-scale renewable projects and purchases, and it has used a program in New Orleans to help put solar on commercial rooftops.
In a statement, the company said it’s investing “in understanding how new technology can help Entergy meet the specific needs of our customers.” It said that more than $100 million is invested annually across Entergy’s five utilities in energy efficiency and demand response efforts to benefit customers, and that rebates are available for some electrification projects.
Paul Patterson, an analyst at Glenrock Associates LLC, said it’s no secret that utilities such as Entergy want to retain control in their regions.
“I think it’s understandable that if there’s going to be investment … in the power sector in their service territory, they’d like to be the ones to make the investment,” he said.
Here’s a closer look at three Entergy projects that could have a ripple effect:
Solar on homes
In Louisiana, solar supporters are smarting from a decision this year by the Louisiana Public Service Commission to end net metering for new residential solar installations in much of the state starting in 2020 (Energywire, Oct. 11).
Net metering is used by utilities to provide credit to solar users for the excess power they generate. Under a traditional net-metering setup, the same rate is used to net the amount of grid power used by the customer against the power sent to the grid.
Entergy supported the state regulators’ decision to shift to a new setup, which will lower the financial returns for future rooftop solar users. However, traditional net metering remains in place in New Orleans, where the City Council regulates electric service.
Meanwhile, Entergy has pushed ahead on a pilot program that places solar on the homes of low-income New Orleans customers. The first installation happened last year, according to a company release in February 2019. The company told E&E News recently that it’s about 25% of the way to having the planned 100 systems installed. After that, Entergy said it plans to evaluate lessons learned and potential next steps.
“Our ability is to further anticipate and get in front of what our customers want and deliver those products earlier than they were expecting,” Benjamin Byboth, a senior innovation manager at Entergy, said during a video about the program. He said the company brought the concept “from a blank idea to market in under six months.”
Unlike many offerings from solar companies, this plan doesn’t cost a solar host anything. A customer gets a $30 credit on each month’s power bill for allowing the solar installation, according to Entergy.
But the setup could limit the upside for homeowners.
Jeff Cantin, who’s president of a company called Solar Alternatives, estimated that residential customers could save $50 to $250 a month with a traditional solar installation, depending on the details.
Burke of the Alliance for Affordable Energy said an incentive for distributed solar installations would leverage private investment and attract more solar on roofs and reduce energy burdens more than Entergy’s program.
A concern among utilities is that not all of the grid costs are reflected in solar users’ bills under traditional net metering, according to Patterson. Supporters of net metering often respond by talking about how distributed solar benefits the grid. Patterson said utility companies are open to solar under their preferred setups, including community solar projects owned by a utility.
Patterson said he’s a little suspicious about the level of interest among customers in personal choices in power.
“On the one hand, I don’t think they want one size fits all,” he said. “On the other hand, I think in many cases they want things to be … relatively simple.”
It’s good to see solar going up from anyone, according to Cantin, who is also a board member of the Gulf States Renewable Energy Industries Association. Still, he said a monopoly shouldn’t work to reduce other choices. And Cantin said a utility should also be clear about the potential costs to ratepayers from distributed energy programs.
“I don’t see an issue with Entergy entering that space, but I think consumers and businesses that have been operating in that space for a long time need to be well-protected by regulators,” he said.
David Ellis, CEO of the Entergy New Orleans utility, said the company is proud of the program.
“We’ll look back at this project and say, ‘This was a time when we implemented something that defined us as a utility of the future,'” Ellis said in the video about the new plan.
Generation at businesses
Another Entergy concept in the works is a backup, on-site generation option for businesses. Entergy has said an initial pilot at The Woodlands, Texas, is located outside a grocery store and can run synchronously with the grid.
“This pilot project will be used to help Entergy Texas evaluate back-up generation solutions for future commercial and small industrial customers,” the company said in a statement in October.
Under the project, gas-fueled generation is owned by Entergy but could help a business operate as usual during widespread outages.
“For example, retail businesses would be able to provide services to the general public during significant weather events,” Denault said on the recent earnings call. “In other times, when needed, the resource can be deployed by the utility, which benefits all customers.”
Entergy Mississippi also is pursuing a potential version of the project, according to the company. Denault called Entergy-owned, customer-sited generation a “win-win” solution.
“Our plan is to eventually implement this idea at all operating companies,” Denault said.
Allan Schurr, chief commercial officer at Enchanted Rock LLC, said his company was proud to partner with Entergy on the pilot project. In this case, Enchanted Rock sold the generation facility to the utility but still maintains it.
The grocery company pays the local Entergy utility a certain amount related to the project.
Schurr said the facility is a little over 1 MW, and he said this sort of equipment in most markets usually operates less than 500 nonemergency hours a year. Entergy decides when it runs for those hours, he said.
Schurr said utilities are seeking ways to serve customers better. But he said it can be challenging for utilities to come up with unique offerings for larger customers, which tend to be more sophisticated and have more complex needs.
“These resiliency services are the kinds of services that utilities are particularly well-suited to provide,” Schurr said, adding, “I think Entergy is out in front of the group given the business model that they’ve created to scale this out.”
Nuclear and New Orleans
Entergy also continues to face issues in its home city of New Orleans, which gets a chunk of its electricity from the Grand Gulf nuclear power station in nearby Mississippi.
While Entergy is working to exit far-flung reactors, it retains nuclear generation at sites in Louisiana, Arkansas and Mississippi. The company has outlined how carbon-free power output from Southern nuclear plants is slated to remain a key part of its generation mix in the years ahead.
It’s investing about $1.6 billion in nuclear related to plant upgrades and personnel. That is largely tied to Southern plants, and much of the spending could be recovered via rate base.
Even so, Entergy has continued to face questions about the performance of Grand Gulf. An E&E News analysis last year showed extensive periods where the plant was at reduced or zero power from 2013 through November 2018 (Energywire, Dec. 4, 2018). The plant was offline a number of days in November 2019.
Denault said on the recent earnings call that Grand Gulf could move into a higher performance rating — from Column 2 to Column 1. And that has happened, according to a letter from the Nuclear Regulatory Commission. But the CEO noted that a coming outage at Grand Gulf next year would be considered part of a “catch-up” in terms of the investment profile.
“So it’ll be a long outage,” Denault said, adding that an “outage in 2020 in Grand Gulf will be the final one in terms of getting things back to where they need to be, and then it’s just a continued climb to excellence.”
Work at Grand Gulf in 2020 is scheduled to include refueling and maintenance, according to Entergy.
Simon Mahan, executive director of the Southern Renewable Energy Association, said Entergy could find cheaper power through power purchase agreements for wind and solar.
A variety of power resources also are potentially available through the market managed by the Midcontinent Independent System Operator. But various Entergy utilities remain committed to power from Grand Gulf.
Andrew Tuozzolo, chief of staff for New Orleans City Council President Helena Moreno (D), said the council will continue to seek a full accounting of the reliability and upkeep of Grand Gulf. A multiday unplanned outage last December resulted in higher costs for New Orleans ratepayers of more than $1 million, Tuozzolo said.
Burke with the Alliance for Affordable Energy called for regulators in Louisiana and New Orleans to conduct a prudence investigation of spending and operations since 2015 at Grand Gulf and of projections for the future.
“How much more is Entergy going to pour into a plant that hasn’t been performing?” she asked.
Brandon Presley (D), a Mississippi utility regulator, told E&E News last week that he remains concerned about Grand Gulf and wants to continue to monitor it and ask appropriate questions. Pending proceedings at the Federal Energy Regulatory Commission also could shape the plant’s future.
While nuclear questions have swirled around Entergy, the New Orleans City Council previously voted to fine the company’s local utility $5 million in the wake of a paid actor scandal during a push for a new gas-fired power station that’s planned for New Orleans (Energywire, Feb. 22). And last month, the council voted for a reduction in rates for most Entergy New Orleans customers. It also backed a $1 million fine related to reliability concerns.
That outcome pleased critics somewhat, but concerns remain about the proposed gas-fueled plant in New Orleans that is being challenged. It could be in service as soon as next year, and Entergy has argued the gas plant is needed.
Recent action by the City Council “still doesn’t represent a long-lasting and real savings for the people of New Orleans,” Burke said.
Reprinted from Energywire with permission from E&E News, LLC. E&E provides daily coverage of essential energy and environment news at www.eenews.net.