Entergy Louisiana Temporarily Delays Start of Construction for Little Gypsy 3 Repowering Project

A federal court decision in February unrelated to the Little Gypsy 3 repowering project may require Entergy Louisiana, LLC, to submit another layer of environmental analysis for approval before starting physical construction of its project in Montz, La. The additional analysis could cause a temporary delay in the onset of construction for several months.

Prior to the federal court ruling, state and federal environmental laws required utilities building new plants to show that the plant’s emissions would meet the environmental requirements under the U.S. Environmental Protection Agency’s 2005 “Clean Air Mercury Rule.” The construction permit for the Little Gypsy project was issued in November 2007 under the regulations in effect at the time. Onsite construction of the project was scheduled to begin in July.

The February federal court decision set aside the “Clean Air Mercury Rule” and may now require utilities to supply additional analysis that shows emissions from new plants, including mercury emissions, meet “Maximum Achievable Control Technology” standards before beginning construction.

The Little Gypsy project, with its modern, redundant and state-of-the-art emissions control technologies, is fully expected to meet MACT standards. However, because Little Gypsy received its construction permit before a formal MACT analysis was required, Entergy Louisiana will likely need to provide additional technical analysis to the Louisiana Department of Environmental Quality to show the plant meets the MACT standard.

Entergy Louisiana is in discussions with state and federal environmental agencies to identify the additional analysis that needs to be submitted, and will issue an adjusted timetable for construction once that is determined.

“Although additional environmental analysis will cause a delay in the beginning of construction, it will also confirm that the project has maximum state-of-the-art emissions control technology in place,” said Renae Conley, president and chief executive officer of Entergy Louisiana, LLC. “Building and operating a technologically-advanced plant with the lowest possible emissions is in keeping with our commitment to follow environmental laws and meet or exceed the requirements of all environmental permits for the plants we operate.”

The project will repower an older, oil and gas-fired unit at the Little Gypsy site by installing two state-of-the-art circulating fluidized boilers capable of using lower-cost petroleum coke and coal. The repowered unit will have more advanced emissions-control technology than the existing older, oil and gas-fired boiler. Entergy Louisiana is repowering the unit to bring needed fuel diversity to its customers and reduce the effect of high natural gas prices on customers. On Nov. 8, 2007, the Louisiana Public Service Commission unanimously approved repowering of the unit.

At current natural gas prices, the Little Gypsy repowering project is estimated to provide over $150 million in fuel savings to customers in its first year of operation. In addition, a study performed by economist Dr. Loren Scott estimates the project will provide $116 million in new household earnings for the region, along with 1,500 construction jobs and 25-35 permanent jobs. The economic study estimates that the construction project will pump more than $500 million in new business sales into the region.

“The Little Gypsy repowering project is important to our customers, and we are fully committed to its construction,” Conley said. “It will allow us to stabilize and reduce fuel costs for customers and provide reliable electricity to our service territories. With natural gas prices higher than late last year when the LPSC approved the project — prices that are showing no signs of decline — the fuel savings our customers will receive from the repowered Little Gypsy 3 once the plant is online are more important than ever.”

A chronology of events that has resulted in the additional analysis for the Little Gypsy project follows:

*The Little Gypsy repowering project received its air permit from the Louisiana Department of Environmental Quality in November 2007, which authorized construction to proceed. The LDEQ permit, which was approved by the EPA without objection, was issued under state and federal environmental laws that applied to electric generating units at the time.
*Under the existing environmental regulations, EPA regulated mercury emissions from utility plants under its 2005 “Clean Air Mercury Rule,” through a cap-and-trade mechanism.
*In February, a Washington, D.C., federal court ruled that EPA’s 2005 Clean Air Mercury Rule was inconsistent with the Federal Clean Air Act, and set it aside. EPA has asked the full court of appeals to rehear the case.
*Utilities may now have to show that a new plant’s emissions, including mercury emissions, meet Maximum Achievable Control Technology standards before construction may begin. MACT sets emissions limits based on the highest-performing and most effective pollution control technologies used by similar plants in the industry.
*Entergy Louisiana will show, and expects LDEQ to agree, that the Little Gypsy repowering project meets or exceeds MACT standards. Modern, redundant and extensive emissions controls are incorporated into the plant’s design.
*Entergy Louisiana is in discussions with state and federal environmental agencies to establish the additional analysis and information that needs to be submitted, and will submit a new timetable for construction once that is determined.