Entergy Louisiana Application to Build 5.3 MW of New Gas Capacity
Synapse provided technical assistance to Sierra Club in reviewing Entergy Louisiana LLC’s (Entergy) application for approval to build seven new combined cycle power plants, totaling 5,278 MW, and three Battery Energy Storage System (BESS) projects in Louisiana to serve a new data center customer (Meta). These proposed resources would be added to the 2.2 GW of new combined cycle capacity the Commission has already approved. Synapse's testimony focused on (1) whether Entergy has established a need for the seven proposed combined cycle turbines and the three BESS projects; (2) whether the data center customer is covering the full incremental cost of service through the proposed Large Load, High Load Factor Power Service Rate Schedule and the minimum monthly charge during the term of the Energy Service Agreement (ESA), as well as its allocated share of fixed and variable costs and associated riders; (3) whether Meta is covering the full incremental cost of the transmission expansion projects being built to serve the data center; (4) whether the contract terms and protections in place are sufficient; and (5) whether Entergy properly evaluated alternatives to the proposed projects.
Synapse found that the data center customer is not covering the full incremental cost of the resources needed to serve its load. Instead, it is covering the incremental cost plus for the life of the contract. This creates a stranded asset risk and could leave a large balance for other ratepayers to cover at the end of the contract. Synapse also found that the contract termination provisions and other contract terms do not provide sufficient protection for existing customers. In addition, Entergy has not shown that one of the proposed transmission projects would be needed but for the data center customer. Finally, Synapse found that Entergy did not justify the choice of the three combined cycle plants or support the proposal with robust modeling and consideration of alternatives, including renewables, battery storage, load flexibility, and grid-enhancing technologies.
Synapse recommend that the Commission find that the Project is not in existing customers’ interests and deny all certifications and approvals that Entergy has requested. Alternatively, if the Commission approves the Project, it should require Entergy and the data center customer to (1) amend the ESA to depreciate all of the gas plants and the West Form transmission project over the 20-year contract term; (2) amend the ESA to require the customer to cover its share of fuel costs through a separate FAC process; (3) obtain Commission approval to retain any generators at the end of the contract term; and (4) conduct a robust analysis of alternatives.