As Louisiana officials work to promote economic growth, the question of how to provide enough power for the biggest users, while keeping costs down for everyone else, is going to keep coming up.
Two Louisiana Public Service Commission members from opposite sides of the political aisle are addressing that question in different ways in proposals that will be up for debate this week.
In September, Gov. Jeff Landry issued an executive order to establish the “Lightning Speed Initiative,” meant to “ensure challenges and delays are identified and addressed in real time” and make the state’s economy more competitive.
Inspired by that directive, Public Service Commissioner Jean-Paul Coussan is proposing the LPSC Lightning Amendment, which he describes as a “modernized regulatory pathway that allows utilities to respond more quickly and efficiently when major employers are ready to invest and expand in Louisiana.”
“This amendment is designed for speed-to-market and economic-development-driven power needs,” Coussan says. “It strengthens Louisiana’s competitiveness, supports job creation, bolsters national security and ensures ratepayers remain protected.”
While his amendment is not limited to data centers, the multibillion-dollar Meta project the PSC approved in August helps illustrate the goal. For that arrangement, the commission suspended some of its rules that normally govern new generation projects to accelerate the timeline.
Commissioner Davante Lewis voted against approval, arguing that there were too many unanswered questions about the deal that Meta, Entergy and other stakeholders agreed to. The other four members all voted for it, citing the economic upside for northeast Louisiana and measures meant to ensure that other Entergy ratepayers aren’t stuck with higher costs.
But for Coussan, that experience sparked an idea: Instead of suspending rules for specific projects, why not create a faster process on the front end that will be attractive to companies when they decide where to invest?
Under his proposal, criteria to participate would include:
- A signed long-term electric service agreement with a minimum length of 10 years.
- A letter from the secretary of Louisiana Economic Development confirming the customer’s interest and the importance of power availability within the five-year initial in-service date.
- Guaranteed fixed revenue to support at least half of the associated capacity costs.
For projects that pass the test, standard requirements to consider other potential sources of power already available on the market before building more capacity would be waived, with the goal of getting to a PSC vote within seven months, when it could take up to two years otherwise.
“The speed at which the regulatory process is moving right now from a federal level, state level, local level has accelerated,” Coussan says. “We’re answering the call of the modern economy.”
He says his proposal is modeled on the Meta deal. But Lewis says the conditions that helped justify that agreement are unique.
Remember, utilities in Louisiana are monopolies that get a guaranteed profit when they build stuff. It’s the PSC’s job to make sure they’re not building more than is needed, so customers don’t pay for more than they need.
When commission staff looked at what Entergy was planning to build for Meta, compared to the plants the utility already has that are slated to retire, they saw the potential for excess capacity.
So if Meta doesn’t renew the agreement after 15 years as the contract allows, you could take the power the newer plants produce and distribute it back into Entergy’s grid, which could save customers from paying for new generation that they don’t need, Lewis says.
“Our staff was very clear on the record that that can’t be replicated again in Entergy’s territory,” he says. “And it doesn’t really exist in any of the other utilities’ territories.”
As it stands now, Coussan’s proposal would allow utilities to build more than is necessary to serve a specific project, Lewis says. The 10-year commitment his amendment would require is less stringent than the 15-year contract, with an option to renew, that Meta made with Entergy, he adds.
“I’m not sold yet that we should waive our rules based off of some very loose agreements,” Lewis says.
Lewis has his own proposal that specifically addresses the expected demands from “hyperscalers” like Meta that build and operate massive data centers. Louisiana is being considered for several other similar projects, according to industry and state officials.
His proposal would direct staff “to investigate and propose a regulatory model that addresses the key elements of how large loads connect to the grid, procure energy capacity, and share costs.”
If the commission is looking to expedite projects, there should be some guardrails that dictate what that will look like, he says. There would still be some flexibility, because each project will have its own “unique circumstances,” Lewis says.
“But I think it’s important for us, if we’re going to take on this challenge, not to fall in the trap that other states did,” which was approving a series of one-off deals that “did not complement each other or complement the grid,” he adds.
Lewis stresses that his proposal wouldn’t create any new rules. The goal is to create a collaborative process that allows interested parties to set up a framework that promotes economic development while addressing the power supply and constituent concerns.
“Here’s what the commission will be looking for when we start to certify or approve an agreement for a large load,” he says.
The two proposals are not necessarily mutually exclusive. In fact, they could be complementary, Coussan says.
Both proposals are expected to be discussed at this week’s PSC meeting. Both will move forward unless a commissioner objects, which would trigger a vote.
The meeting is scheduled for 10 a.m. on Wednesday at the Natchitoches Events Center. (See the agenda)
