Port of New Orleans' plan to build $650M power plant awaits approval by Entergy

Port of New Orleans President Gary LaGrange is planning to build a new power plant in eastern New Orleans he says would lower the Port's industrial utility costs and residential rates across the city.

But Entergy, the city's sole utility provider, must give its approval before the plan

LaGrange signed a three-year lease option agreement Oct. 27 with Crescent City Power LLC, a subsidiary of San Diego-based Sempra Energy, to allow a new $650 million power plant to be built on Port- owned land on the Mississippi River Gulf Outlet.

We're still at the beginning of the game even though we've been working for more than three years to get here, LaGrange said.

The agreement details the benchmarks and timeframes for Sempra, a Fortune 100 energy company, to establish an agreement with Entergy and begin building the plant, he said.

But before land is cleared and construction begins, Sempra must place a winning bid when Entergy releases its next request for power proposal.

We always try to find the lowest-priced electricity for our customers through a request for proposal process, said Amy Stallings, communications manager for Entergy New Orleans. In Louisiana, Entergy utilizes a competitive bidding process to solicit supply side resource proposals from participants.

Entergy compares the proposals against available alternatives including construction of new generation facilities, upgrading existing power plants and/or adding electric transmission infrastructure to help import lower-cost power.

Sempra's bid must ensure Entergy can pass on the lowest costs to its customers for the plan to proceed, she said.

Art Larson, Sempra spokesman, said the company has spoken with Entergy about the proposal process and will submit a bid when the utility company issues future requests.

We're optimistic about the future of those discussions and believe we will put in a bid that Entergy will accept that will lead to the construction of this project, he said.

Entergy has not established a timeframe for its next proposal request but LaGrange said he expects a request to be made in early 2005.

Entergy is the key component and key player, LaGrange said. Unless Entergy agrees to purchase energy (from Sempra) at a wholesale cost, which they will be able to do much cheaper than what they are getting at the antiquated Michoud plant right now, then all of this is null and void.

LaGrange said the proposed 1,250-megawatt gas-fired plant's modern technology and efficiency would allow Entergy to pass on savings to its customers of 25 percent to 40 percent of current utility costs.

Larson said the new combined cycle plant would feature two gas- fed turbines and a steam turbine fed from heat exhaust from the gas turbines. These plants are about 45 percent more efficient than older, conventional plants and help with the rising cost of natural gas because energy is recycled.

The power plant is expected to create 30 to 40 full-time positions and as many as 300 jobs during the three to four-year construction period. It would be the largest construction project in the city of New Orleans since the Superdome was built and would bring substantial city and state tax revenue, LaGrange said.

The plant, planned for 106 acres of Port-owned land near Interstate 510, would sit on the north bank of the Mississippi River Gulf Outlet opposite Entergy's Michoud plant with access to established power transmission lines.

It would be constructed in phases, Larsen said.

The first phase would include a 380-megawatt unit, the second phase would add a 600-megawatt unit, and a 220-megawatt unit could be added later raising the plant's potential capacity to 1,200 megawatts.

In his annual State of the Port Address, LaGrange stressed the need for the Port to diversify its business and building partnerships with economic development and government leaders.

This Port exists as an economic development agency for the New Orleans waterfront, he said. We take the valuable waterfront assets and convert them into economic activity and jobs for the people of New Orleans, Jefferson and St. Bernard.

LaGrange said utility rates at the Port of Houston are 40 percent less than those at the Port of New Orleans. He hopes to provide incentives to induce economic development in industrial areas such as the Port, the New Orleans Regional Business Park and Jourdan and France roads.

If we can make business a little easier and a little less expensive without much overhead for our customers, that's what we're supposed to be doing as a facilitator for economic development, LaGrange said. And if we can help lower residential rates, then we're filling our role as a good citizen.