April 9, 2009 at 2:02 pm #3140
Little Gypsy project may be delayed or canceled
AP (4/09/09) BATON ROUGE, La. — Louisiana utility regulators will decide later whether to put a major power plant project on a lengthy hiatus _ or cancel the plan altogether.
Either way, Entergy Louisiana’s plan to convert a generator at the Little Gypsy plant in southeastern Louisiana to petroleum coke has likely fallen by the wayside because of escalating project costs _ an original $1 billion to $1.76 billion _ natural gas prices that have fallen sharply and a major unknown _ what carbon legislation will eventually emerge from Congress.
The utility, a unit of New Orleans-based Entergy Corp., told the Public Service Commission that it wants a delay of at least three years for the project. Environmental groups that have opposed the plant on pollution grounds since its inception urged regulators to cancel it completely.
The PSC did not indicate when it would vote after formally receiving Entergy Louisiana’s recommendation and preliminary report on Wednesday.
Last week, Entergy Louisiana, in a filing with the commission, said there were too many economic unknowns to continue the project. When the conversion was approved by the PSC in November 2007, natural gas prices were three times as high as today, and the project _ using petroleum coke, a plentiful refinery byproduct _ was hailed as a big cost-saver for the utility’s 658,000 ratepayers.
But Karen Freese, regulatory attorney for Entergy’s Louisiana units, said the potential savings had largely been lost in the ensuing months since the plan was approved. She said Entergy was projecting long-term gas prices to be low enough to render the conversion largely useless to saving ratepayers money.
Since the project was approved, there have been several major finds of shale natural gas in the United States, including the Haynesville Shale in northwestern Louisiana, that have altered the gas supply picture.
Freese said Entergy Louisiana already had suspended work on project contracts and was moving to cancel the agreements. In its filing, Entergy Louisiana said preliminary estimates of spending to this point totaled around $300 million, a figure that could go lower as contract cancellations are negotiated.
Entergy Louisiana can try to recover its costs from ratepayers from the delayed or canceled project _ and its PSC filing indicated it would. The PSC reviews those costs and can disallow any portion found not to have been prudently incurred.
Environmentalists suggested the PSC sound the death knell for a project those groups had opposed from the beginning.
“Ratepayers should not pay a nickel more than the $300 million spent on this ill-conceived project,” said Jesse George, an attorney for the Alliance for Affordable Energy.
Commissioner Jimmy Field said the PSC approved the project knowing of its potential environmental impact, but the pressing issue in 2007 was the overreliance on expensive natural gas for generating fuel.
In its filing, Entergy Louisiana has said one possible alternative to petroleum coke at Little Gypsy is the use of a combined cycle gas turbine, a more-efficient way of generating power with gas.
April 9, 2009 at 2:23 pm #6164
Here is update on the Baton Rouge Little Gypsy Petcoke Repower project – looks to be delayed or canceled due to project cost & other unknowns like Carbon Tax. (Just one early steps to a “Cap & Die” state for US Energy Industry).
I think their economic reason is very transparent “lie” you would have to take the very extreme short lived range of NG prices to get a 3X number vs Petcoke – more realistic values would be that NG prices have dropped from highs of $9/MMBTU to less than $6/MMBTU, but so has petcoke from $3/MMBTU down to $1.50/MMBTU which has a more realistic differential between NG & Petcoke dropping from high of $6/MMBTU down to current differential of $4.50/MMBTU (~a 30% change NOT a 300% change).
The comments in this article also highlights the Environmentalist have shifted from just “BLOCKING” or delaying coal & petcoke projects and are making big push now to “KILL” off as many fossil fueled projects as possible which will push power cost high enough to justify the expensive/unreliable “Green” alternatives into firm additions.
Couldn’t happen at worse time since the power cost will eventually eliminate what remains of some of our manufacturing industries (and jobs) ……. especially those like Aluminum where power is 20% of production cost.
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