Meridian Star

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December 2, 2012

Entergy completes $206M purchase of power plant

JACKSON, Miss. —

JACKSON, Miss. (AP) — Entergy Mississippi says it has completed its $206 million purchase of a Jackson power plant.

The unit of New Orleans-based Entergy Corp. bought the plant from KGen Power Corp. of Houston Friday. It also completed the $253 million purchase of another KGen plant in Malvern, Ark.

"This is a sound investment and an important part of our commitment to meet the growing energy needs of our customers now and in the future," Entergy Mississippi CEO Haley Fisackerly said in a statement. "This facility is highly efficient and uses clean-burning natural gas, a fuel in abundant supply today in Mississippi."

Purchase of both natural-gas fired plants had been delayed by a U.S. Department of Justice inquiry into whether Entergy illegally manipulated the power transmission market in its four-state territory of Arkansas, Louisiana, Mississippi and Texas. Justice officials said they believed Entergy acted to block competitors such as KGen from selling power profitably, but said Entergy could buy the plants because their purchase would not affect competition much.

A Mississippi residence using 1,000 kilowatt hours per month would pay an additional $1.65 a month to finance the plant, Entergy has told regulators. However, Entergy plans to use KGen's Jackson plant to replace an older gas-fired plant three miles away that burns gas only half as efficiently, saving at least $3 million a year in fuel costs. So customers may come out ahead.

The two plants bring to seven the number of generating facilities Entergy has bought from independent generators. Those independent companies rushed into the South in the 1990s at the prospect of power deregulation. But they ran into trouble when natural gas prices spiked before plummeting, and when they couldn't sign long-term contracts to sell power. Entergy has been able to buy the plants cheaply because of independents' distress. The KGen units are half as expensive as a new gas-fired plant Entergy is building near New Orleans.

Houston-based KGen offered to sell the plants to Entergy in 2009. It plans to dissolve once it distributes the proceeds of the sales to investors.

Entergy Mississippi provides electricity to more than 437,000 customers in 45 counties on the western side of the state.

 

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