NRG signs power deals, suspends NOx project at Big Cajun II

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NRG Energy (NYSE: NRG), through subsidiary Louisiana Generating(LaGen), has entered into definitive agreements for an 11-year power contract extension through 2025 with the Washington-St. Tammany Electric and Claiborne Electric cooperatives, NRG said Feb. 2

Both cooperatives filed applications with the Louisiana Public Service Commission on Feb. 1 seeking approval of the agreements. Together, the two contracts are for more than 450 MW of electrical load at peak demand.

“Louisiana Generating is pleased to continue our relationship with Washington-St Tammany Electric and Claiborne Electric,” said Jennifer Vosburg, President of LaGen. “As an independent power generation company, we provide a perfect partnership for not-for-profit electric distribution cooperatives that has resulted in some of the lowest residential rates in the state. When compared to rates of competing utilities, the rates we are able to offer our cooperative customers attract members to their area and help them grow; and we will be able to meet their load growth needs for years to come.”

NRG Energy and LaGen own a diverse fleet of power plants in the region. The ultra-efficient, natural gas-fueled Cottonwood combined cycle plant sets the bar in the region for low cost fossil-fueled generation while the Big Cajun II plant uses low-sulfur coal and controls to reduce NOx and particulate matter to produce affordable power in an environmentally responsible fashion, NRG noted.

“As a wholesale provider that must compete in the marketplace, Louisiana Generating works hard to keep costs low for our customers,” said Vosburg. “While some energy analysts express concerns that regulated utilities are using recent EPA regulations to increase their rate bases and revenues, which will in turn increase costs on their customers, we don’t work that way.”

LaGen has submitted comments to the Louisiana PSC regarding the U.S. Environmental Protection Agency’s Cross-State Air Pollution Rule (CSAPR), which had been due to go into effect on Jan. 1 but has been temporarily stayed by a federal appeals court. “With the flexibility that we worked into our compliance plan, Louisiana Generating was able to adjust to the changing CSAPR compliance requirements,” said Vosburg. “If CSAPR is reinstated, we are prepared to comply with the rule on time and without the need to add expensive new generation to meet our contracted services. Our approach means reduced risk and lower costs for our customers.”

On Jan. 31, LaGen filed an update with the Louisiana PSC of comments it had first submitted in August 2011 on CSAPR impacts. In the August filing, the company said its preliminary plan to meet summer ozone NOx requirements was to install about $30m worth of selective non-catalytic reduction (SNCR) systems on all three units at Big Cajun II, to be supplemented with emissions credit purchases. Then in October 2011, EPA issued revisions to the NOx ozone season budget for Louisiana that increased the state’s NOx credit allocation. EPA also delayed the variability provision of the NOx rule until 2014, reducing uncertainty over the number of allowances needed to comply in 2012 and 2013.

Due to these EPA changes, the company has now suspended plans for the Big Cajun II SNCRs and now plans to rely just on NOx allowance purchases. That is the only plan update offered in the Jan. 31 filing, which came in a case where the PSC is monitoring the CSAPR compliance plans of several power generators in the state, even those, like LaGen, that are not under direct PSC oversight.

Cooperative customers extending contracts with LaGen preserve historic transmission rights invaluable to ensuring reliable electricity supply, NRG added in the Feb. 2 announcement. “As the second largest user of transmission in the Entergy footprint, our long term use and knowledge of Entergy’s transmission system translates into benefits for our customers, both now and if Entergy moves to the MISO independent regional transmission organization as it has proposed,” said Vosburg. “In addition to serving existing customers, an Entergy move to MISO would allow new communities to benefit from the low cost, reliable power that NRG and Louisiana Generating provide in the region.”

NRG Energy, through LaGen and NRG Power Marketing, manages a diverse portfolio of load and generation along the Gulf Coast. Louisiana Generating serves the full requirements needs for 10 Louisiana electric cooperatives with a peak demand of over 2,300 MW. The total generation portfolio exceeds 3,600 MW, and includes a diverse mix of coal and gas-fired generation in Louisiana and East Texas.

Barry Cassell
About the Author

Barry Cassell

Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 26 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.

Barry can be reached at barryc@pennwell.com.

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