Regulators in Texas mull over implementing price limitations for Entergy's gas plants due to budgetary constraints

Entergy Texas, a utility company, has proposed the construction of two gas-fired power plants – the 754-MW Legend Power Station and the 453-MW Lone Star Power Station – with a combined capacity of about 1.2 GW. The proposal is currently under consideration by the Public Utility Commission of Texas (PUCT).

The utility believes these power stations are the right fit to meet its customers' needs, as it projects its summer coincident peak load will increase by approximately 19.7% by 2028 and 29.5% by 2034. Entergy Texas filed the application for these plants last year, claiming that at an expected $1,800/kW, the plants are about 25% below current market prices.

However, the proposal has raised concerns among regulators, industry groups, and consumer advocates. The lack of a request for proposals (RFP) to determine which projects to pursue has been a point of contention. Regulators, including Chair Thomas Gleeson, have expressed concerns about the process by which the proposal was made.

Gleeson has suggested a possible "hard" or "soft" cap of $1.8 billion on the capital costs that Entergy Texas could seek recovery and profit on. According to Gleeson's memo, a "soft" cap could establish a presumption that, to the extent capital costs exceed $1.8 billion, Entergy Texas did not act prudently.

The Texas Industrial Energy Consumers group, Office of Public Utility Counsel, and PUCT staff have also raised concerns about the selection process of the gas plants. There are no specific publicly available details on which groups or individuals Entergy Texas did not consult when applying for the Legend Power Station and Lone Star Power Station gas power plants to develop an open offer for project selection.

The primary contested issue is whether the Dispatchable Portfolio, represented by these gas plants, is a cost-effective alternative to meet Entergy Texas's significant near-term need for additional capacity. Entergy Texas has argued that the impending need for new capacity left no time to develop an RFP process.

The two plants will be back on the commission's agenda at the September 11 open meeting. The PUCT is considering the Entergy proposal, and a decision is yet to be made. The construction of these power plants, if approved, would cost approximately $2.4 billion.

Regulators in Texas mull over implementing price limitations for Entergy's gas plants due to budgetary constraints