Entergy Louisiana’s plans to procure billions of dollars worth of new gas-fired power is setting up a pivotal fight over the utility’s control over the electric market, with an unlikely coalition of opponents arguing that the company is set to heap huge costs on residents.
Entergy is planning to deactivate a host of aging power plants built in the 1960s and 1970s in the coming years. At the same time, the company is courting power-hungry data centers that require new infrastructure to be built. And the state’s energy-intensive petrochemical sector is looking for new power sources, particularly renewables that make their products more attractive overseas.
Those converging forces are creating what the Alliance for Affordable Energy, a consumer advocacy group, calls an “unprecedented inflection point” for the future of energy in Louisiana. And it’s creating strange bedfellows, with climate advocates aligned with the petrochemical industry in taking on Entergy, the state’s dominant utility.
“What is being put into their pipeline is stunning,” said Logan Burke, executive director of the Alliance. “There’s just no other word for it.”
Now, a yearslong debate over whether industrial customers should be able to break out of Entergy’s control over the power sector is coming to a head.
Entergy wants to buy 2 gigawatts of gas power to replace power stations that will be deactivated in the coming years. It is also asking for regulatory approval to build 2.4 gigawatts of natural gas-fired power stations to service Meta’s massive data center planned for Richland Parish. A one-gigawatt power plant can power about 876,000 homes per year, according to the Carbon Collective, an investment adviser.
Those investments, along with other proposals by Entergy to build new infrastructure, will cost billions. And a group of petrochemical plants who are fighting to inject more competition into the market expect that ratepayers will see bills skyrocket if Entergy moves forward with its plans.
The Louisiana Energy Users Group, in a letter filed with the state regulator recently, forecast rates will rise by nearly 90% by 2030 compared to 2018 costs. The prospect of huge rate hikes come at a time when customers are reeling from high costs everywhere, from utility bills to property insurance premiums.
The group, composed of big petrochemical companies such as Chevron and ExxonMobil, is seeking permission for those companies to build or buy their own power without going through Entergy. Those plans have heightened a long-simmering argument between industry and Entergy.
Petrochemical companies say having their own power supplies would save residential customers money, but Entergy argues it would cost residential customers more in the long run.
The industrial customers want to instead be allowed to find other developers to produce 1,500 megawatts of renewable power and another 2,000 megawatts of “cogeneration” power, using heat to produce power more efficiently than traditional gas-fired power.
The group wrote in a letter to regulators last month that continued delay with no action on the Louisiana Energy Users Group proposal “benefits Entergy at the expense of all ratepayers.”
The decision now rests in the hands of the Public Service Commission, which regulates Entergy and has debated for years about whether to allow more competition into the market. But Entergy is asking the commission to end the debate over the so-called “customer centered options” docket and allow it to move forward with building or buying gas-fired power plants.
The commission could take up Entergy’s request as soon as March 26.
Entergy called the projections from the Louisiana Energy Users Group, LEUG, of rate increases a “misleading ploy.” Spokesperson Brandon Scardigli said Entergy’s low rates for industrial users are a big reason companies choose to set up shop here.
“Louisiana has some of the lowest electric rates in the U.S. according to published data from the Energy Information Administration and expects that to continue when the legacy units are deactivated and replaced with highly efficient units,” Scardigli said.
He said the proposal from LEUG would not address problems with aging legacy units in areas where there’s not enough transmission lines to get power in from other areas. If the Public Service Commission approves their proposal, he predicted it would shift “hundreds of millions of dollars a year to residential customers in Louisiana.”
Which plan would raise rates?
Louisiana does have lower electric rates than the national average. But that doesn’t tell the whole story.
A state audit released in January found Louisiana residents have paid increasingly more, on average, for electricity over the last decade while experiencing increasingly less reliable service. That’s because residents use far more power than other states, utilities rely heavily on natural gas-fired power plants and state regulators are understaffed, among other problems, the Louisiana Legislative Auditor found.
Louisiana has long struggled with high energy usage because of hot summers and homes that are not energy efficient.
Proponents of the effort to inject more competition into Louisiana’s power sector have long argued it would help address some of the state’s chronic problems.
Entergy asked the PSC in January to end that debate and allow it to move forward buying and building new power plants.
In response, LEUG and the Alliance for Affordable Energy have hit back, arguing regulators should evaluate whether big chemical plants can save everyone money by finding their own power.
Both sides argue the other would raise rates on customers.
“If they get all this approval for this new generation and it hits the ratepayer, we know that rates are going to skyrocket,” said Jay Connaughton, spokesperson for Amplify Louisiana, which represents several large power providers allied with LEUG.
He said it would be a “huge win” if they could keep the increases from hitting customers.
Whether residents would ultimately save money relies on a complex question of who is on the hook to pay for fixed costs already incurred by Entergy. The Alliance for Affordable Energy suggests the commission could look at industrial customers paying an “exit fee” to offset those costs.
Connaughton said his group is supportive of the Meta plant and other data centers eyeing Louisiana. And he argues the state could be better-positioned to get new data centers if more power providers are allowed in.
Could more investment spur alternative energy?
Data centers require enormous amounts of electricity, straining the grid at a time when many states and utilities — including Entergy — say they are working to move away from carbon-emitting resources. The crush of new data centers being built to power AI projects are causing a supply chain crunch for parts needed to build gas plants, driving up costs. Entergy said in a statement it has been able to secure enough equipment to build the new power.
Public Service Commissioner Eric Skrmetta, a Republican who often sides with Entergy, said he doesn’t see any reason to move away from the current system, where Entergy handles power for customers.
Skrmetta said he believes President Donald Trump’s administration will fix supply chain issues, and took issue with LEUG’s forecast about rates climbing. He argued in favor of the current system, saying “if it ain’t broke, don’t fix it.”
“Nothing stops these companies from building what they want for themselves on their property, they don’t want that,” he said. “I see them trying to game the system to the disadvantage of the residential and commercial ratepayers of the state.”
Skrmetta is also working to curtail the state’s energy efficiency program, designed to fund projects to reduce the amount of energy customers use, calling the program “inflationary.”
Commissioner Davante Lewis, one of two Democrats on the panel, said the commission must grapple with who is going to bear the cost of the growth in power needs from data centers and industrial growth.
“Why should residential and small commercial users have to share some of these costs when if industry is the reason that we need more generation, shouldn’t they just pay for it?” he said.
Burke, of the Alliance for Affordable Energy, said Entergy is trying to build new gas plants because that’s what they know best, and because they’ve backed themselves into a corner by under-building the transmission system. Renewable developers have long argued that Entergy’s lack of investment in transmission — long-range, high-voltage power lines — has stifled their ability to create more alternative energy sources.
Burke said the commission should take time to evaluate how to best handle the onslaught of new power needs without burdening residents. And, she argued, the status quo is untenable, with people already struggling to pay their bills.
“How do we do this without bankrupting families who already can’t afford to keep the lights on?” she asked.
