Cogeneration firm invites PSC investigation into negotiations

Entergy has apparently walked away from negotiations to purchase substitute natural gas from a new gasification project in Lake Charles that could save Louisiana energy customers $400 million over 30 years. Lake Charles Cogeneration is a $2 billion project at the Port of Lake Charles to gasify petroleum coke to deliver 42 billion cubic feet of substitute natural gas to the Henry Hub annually. The project was designed to provide a hedge against volatile natural gas prices in a state that is heavily dependent upon it for electric utilities, and estimates are that it will guarantee $400 million in savings to Louisiana ratepayers over 30 years. However, in a letter to Louisiana Public Service Chairman Lambert Boissiere III, Lake Charles Cogeneration Vice President Donald Maley writes that “little progress” has been made with Entergy on a proposed contract, and that in October, Entergy terminated all discussions about the long-term purchase of substitute natural gas. In a statement to 10/12 Weekly, Entergy spokesman Philip Allison says the company had serious concerns about the project – and doubts about the projected financial savings – after two years of negotiations. “Entergy Services Inc. attempted numerous times to explain to Lake Charles Cogeneration the need to address certain key operational and pricing elements in any contract,” Allison says. “ESI even developed a proposed structure for a contract that would account for these items, but this proposal was rejected by LCC. It was LCC’s unwillingness to address these basic issues, after two years of negotiations, that caused ESI to terminate the negotiations.” Meanwhile, Boissiere has called on Entergy to temporarily suspend its plans to spend $1.76 billion to convert its Little Gypsy plant in St. Charles Parish into one that burns coal and petroleum coke. The financial benefit of the project is being questioned since gas prices have fallen, and Congress is looking at taxing carbon dioxide emissions. Today, the PSC will consider both a request from Lake Charles Cogeneration to investigate the benefits of its project and a motion from Boissiere to reconsider its approval of the Little Gypsy plant conversion. To read Lake Charles Cogeneration’s letter to the PSC, click here and zoom in. To read Entergy’s full statement to 10/12 Weekly, click here.– Penny Brown Font