Louisiana utility’s plan to buy Texas power plant derailed over ratepayer cost
Louisiana’s utility company dropped plans to buy a gas-fired power plant in Texas after pushback over how much it would cost residents amid a data center boom in the state. The $1.8 billion proposal was projected to raise the average monthly residential utility bill by $9, according to reporting in the Times-Picayune.
Utility company Entergy Louisiana kept the door open to pursuing the purchase again in the future under revised terms that could lessen the impact on customers.
Across the country, the artificial intelligence boom is creating a race to add new power sources to the grid. With a tight supply chain for gas turbines needed for new power plants, which can take up to five years to build, every existing plant becomes more valuable for utility companies like Entergy that have massive data centers being built within their service territory. But that growth also sparks concerns over whether residents and small businesses could see their costs rise.
Why did Louisiana’s power company want a Texas power plant?
The attempt to purchase the 1.26-gigawatt Cottonwood Energy Project located a stone’s throw across the state line in East Texas comes as Entergy Louisiana has already proposed building a dozen new power plants.
A year ago, three power plants in Louisiana were approved to serve a $50 billion Meta data center, and seven more are pending. In February, Entergy applied to build two more new gas power units not directly tied to Meta’s data center project.
Entergy has publicly stated that its attempt to purchase the Cottonwood power plant is needed to meet growing power demand not related to data center development. But a report prepared for the state regulatory agency, the Louisiana Public Service Commission (LPSC), found the opposite.
According to testimony gathered by the LPSC, the “near-term capacity need [Entergy] relies upon to justify Cottonwood is not being driven by general system load growth. Rather, the need appears to be driven primarily by the timing and magnitude of the extraordinary Meta-Related Load Additions.”
In June, Louisiana Gov. Jeff Landry directed a message to the LPSC, which has approval power over the purchase, to “not allow anyone to take advantage of power markets at the expense of our ratepayers.”
Entergy will “identify ways to lessen the initial bill impacts of the proposed Cottonwood acquisition” and intends to try again on a “revised timeline,” Brandon Scardigli, an Entergy spokesperson, told the Times-Picayune.
How much power does Entergy want to add?
When Entergy’s three power plants that are already approved are added to the seven under regulatory review, it equals 7.5 gigawatts of gas power — more than enough power for 5 million homes. That’s the power explicitly for Meta’s Hyperion data center in Richland Parish. Meta says the data center will include 5 gigawatts of computing power, but more power may be needed to run buildings across the 2,250-acre campus.
The new gas plants proposed in February would add an additional 1.5 gigawatts to the grid. And if the Cottonwood purchase is successfully revived, Entergy’s grid would add about 1.3 gigawatts. The Meta deal also includes 4 gigawatts of renewable energy additions that are either approved or pending before the PSC.
In total, Entergy is looking to add more than 14 gigawatts of power to its grid. That’s about five times more electricity than it takes to power all the homes in Louisiana. The scale of that build is raising concerns among consumer advocates.
The Louisiana-based Alliance for Affordable Energy, represented by lawyers at the national nonprofit Earthjustice, is one group challenging Entergy’s plans before an administrative law judge at the LPSC.
“Meta may cover much of the upfront sticker price,” said Logan Burke, executive director of the Alliance for Affordable Energy, in a statement to Straight Arrow. But Burke argues “all of Entergy Louisiana’s customers are on the hook for costs that are buried in the technical details.”
Those details revolve around whether Entergy is building more power plants than will ultimately be needed and the risk to ratepayers if Meta were to abandon the project.
Entergy has said that its deal with Meta will save customers $2.7 billion due in part to Meta’s contribution to fixed costs of running the power grid. Details on how Entergy arrived at that number have not been released. Entergy did not respond to requests for comment from Straight Arrow.
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Ella Rae Greene, Editor In Chief
