POWER April 2016 - 77

GENERATION TRANSITIONS
Entergy Sheds Uneconomic
Merchant Nuclear Plants to Focus
on Regulated Business
Around the turn of the century, Entergy took a flyer on older, low-cost nuclear
units to bid into new competitive wholesale markets. Facing pressure
from cheap gas and unanticipated political challenges, the company now
grapples with disentangling itself from unsustainable investments in merchant
nuclear generation.
Kennedy Maize
E
ntergy Corp., a dominant investor-owned
utility in the middle south, hugging the
Mississippi River drainage area from
New Orleans to Memphis (including a piece
of Texas), faces what may be a unique generation
transition. New Orleans-based Entergy's
future may depend on how it can shed heavy,
money-losing investments made at the turn of
the 21st century in merchant nuclear units far
from its regulated Dixie service territory.
Entergy's Generating Profile
Emphasizes Gas and Nuclear
Entergy has about 30,000 MW of generating
capacity, including 5,000 MW of merchant
generation outside of its state-regulated Mississippi
River service territory. The majority
of the Entergy companies' capacity is gas,
about 17,500 MW, with plants dating back
to the 1950s. The largest gas-fired station is
Ninemile Point in Westwago, La., at 2,083
MW. The first unit at the four-unit plant went
into service in 1955. The most recent, Ninemile
Point 6, a 560-MW combined cycle unit,
entered service in 2014 (Figure 1).
Entergy's other large gas-fired plants are
the 1,825-MW Sabine in Orange, Texas, and
1,651-MW Willow Glenn in St. Gabriel, La.
Given the utility system's location in the
heart of the Gulf Coast oil patch, that generating
profile is no surprise. But elsewhere,
the company has sold off a merchant gas
plant (see sidebar, " Entergy Sells Large R.I.
Gas Generator " )-just one sign of its lost appetite
for the merchant business.
The oldest generators on the Entergy
system are hydro units dating back to the
company's earliest days (for a brief corporate
history, see the sidebar, " From Sawdust
to Utility Giant " ): three 4-MW plants in
Malvern, Ark., installed in 1925, and two 31MW
units in Hot Springs, Ark., circa 1932.
Those are the only renewable assets on the
April 2016 | POWER
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77
utility books, according to the Entergy website.
The wholesale side includes 40 MW of
wind in Iowa and another 40 MW in Texas.
Coal is a relatively small part of the Entergy
generating base, totaling 2,244 MW, all added
to the Entergy system between 1980 and
1984. The largest coal plant is the two-unit,
934-MW White Bluff plant in Redfield, Ark.,
which went into service in 1980 and 1981.
After gas, nuclear is the second-largest
generating technology for the utility system:
five units with a total of 5,222 MW in nameplate
capacity. Entergy commissioned Arkansas
Nuclear One's (ANO's) 836-MW Unit
1 in 1974 and the 987-MW Unit 2 in 1980.
Grand Gulf at 1,266 MW, arrived in Mississippi
in 1985, along with Waterford 3 (1,159
MW) in Louisiana. River Bend in Louisiana
(974 MW) went into service in 1986.
Risky Merchant Power Business
Perhaps emboldened by its experience with
nuclear generation within its regulated business,
Entergy, along with some other utilities
with successful regulated nuclear generation,
made a high-stakes bet as restructuring swept
the electric utility business in the late 1990s.
At the time, many experts believed that nuclear
generating plants, with their high embedded
capital costs and substantial operation
and maintenance expenses, would not be able
to compete in competitive markets.
Entergy disagreed, figuring it could acquire
older units in wholesale markets at firesale
prices. Some utilities with only one unit
under their control, and comfortable with
cost-of-service economic regulation, were
terrified of the impacts of competitive markets.
They were eager sellers. Entergy saw
1. Ninemile Point 6. With easy access to abundant natural gas, it's no surprise that Entergy's
portfolio in the Gulf Coast states favors that fuel. Courtesy: Entergy

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POWER April 2016

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