News Center > Entergy Subsidiaries Agree to Buy Union Power Station
Entergy Subsidiaries Agree to Buy Union Power Station
Four Clean, Efficient and Modern Units to help meet Future Load Growth
NEW ORLEANS – In a move that will help meet the future energy needs of a growing region, Entergy Corporation (NYSE: ETR) announced today that its subsidiaries, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C. and Entergy Texas, Inc. have signed an agreement to acquire the Union Power Station near El Dorado, Arkansas. The Union Power Station is a highly efficient, natural gas-fired 1,980-megawatt (summer-rated) generating facility. The station is owned by Union Power Partners, L.P., an independent power producer and wholly-owned by Entegra TC LLC.
“Our service territory is at the heart of an industrial renaissance that is built on competitive energy costs, low electricity prices and smart economic growth policies of our state governments,” said Leo Denault, Entergy’s chairman and chief executive officer. “The acquisition of these highly efficient units at a price favorable to our customers will help us meet the increased demand and be a significant step in the ongoing modernization of our generating fleet.”
In the U.S. Energy Information Administration’s most recent regional rankings of retail electricity prices, the West South Central Region – which includes Arkansas, Louisiana, Texas and Oklahoma – had the lowest industrial rates of any region in the country.
Low electricity prices are one reason that more than 85 projects involving over $65 billion of investment and projected to create tens of thousands of new jobs and the potential addition of approximately 1,700 MW in new industrial load by 2016 have been announced, signed or are under development in Entergy’s service area.
The Union Power Station, which entered commercial service in 2003, consists of four combined-cycle gas-fired generating units, or CCGTs, each rated at 495 MW. Under the Asset Purchase Agreement, Entergy Arkansas and Entergy Texas have each agreed to acquire one unit and Entergy Gulf States Louisiana has agreed to acquire two units. Entergy New Orleans will receive 20 percent of the output from the Entergy Gulf States Louisiana units via an at-cost purchase power agreement, subject to City Council of New Orleans approval.
The plant purchase price is $948.0 million ($479/kW), or $237.0 million per unit, subject to adjustments. The purchase price is approximately half the cost to build a comparable new CCGT facility.
The purchase is contingent upon, among other things, obtaining necessary approvals, including acceptable cost recovery, from the various federal and state regulatory authorities and the expiration of the waiting period under the Hart-Scott-Rodino antitrust law. The targeted closing date is late 2015.
The total investment associated with this proposed plant acquisition, including the amounts associated with the purchase price, transaction costs, contingency and future investment in the plant and transmission upgrades, was generically included in the previously disclosed preliminary 2015 through 2017 capital plan for Entergy and the affected subsidiaries. In addition, the estimated earnings implications were reflected in the financial outlook of approximately 5 to 7 percent compound annual average net income growth through 2017 (off 2013 base year) for the Utility business.
Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including more than 10,000 megawatts of nuclear power, making it one of the nation’s leading nuclear generators. Entergy delivers electricity to 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $11 billion and approximately 14,000 employees.
Additional investor information can be accessed at www.entergy.com/investor_relations
In this news release, and from time to time, Entergy Corporation makes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed in this news release and in Entergy’s most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Entergy’s other reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with rate proceedings, formula rate plans and other cost recovery mechanisms; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Vermont Yankee or any of Entergy’s other nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; and (g) economic conditions and conditions in commodity and capital markets during the periods covered by the forward-looking statements, in addition to other factors described elsewhere in this release and subsequent securities filings.