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Entergy Services, Inc.
a 639 Loyola Avenue (70113)
PO. Box 61000 """"'—_— New Orleans. LA 70161-1000
gy Tel 504 576 6825
Fax 504 576 5579
Eadams4@entergy.com
Elizabeth L. Adams
Counsel
Legai Servsces__—,.Regu?£ry \ of
November 2, 2016
By Hand Delivery -
, Eve Kahao Gonzalez, Secretary
Li, Louisiana Public Service Commission
'
9"
Galvez Building, 12th Floor
602 North 5th Street
Baton Rouge, LA 70802
Re: Ex Parte: Application of Entergy Louisiana, LLC for Approval to Construct
Lake Charles Power Station, and for Cost Recovery (LPSC Docket No. U- )
Dear Ms. Gonzalez,
I have enclosed the original and three copies of a Public Redacted Version of the
Application of Entergy Louisiana, LLC (“ELL”) for Approval to Construct Lake Charles Power
Station, and for Cost Recovery. This ling includes the Direct Testimony and Exhibits of Phillip R. May, Joshua B. Thomas, Jonathan E. Long, Paul J. Girard, Ill, Charles W. Long, John P.
Hurstell, William C. John, Anthony P. Walz, Phong D. Nguyen, and Charles E. DeGeorge. Please retain the original for the record, two copies for your les, and return a date—stamped copy to our by-hand courier.
I have also enclosed three copies of the Highly Sensitive Protected Material (“HSPM”) Version of the referenced ling, which is being provided to you under seal pursuant to the
provisions of the LPSC General Order dated August 31, 1992, and Rules 12.1 and 26 of the
Commission’s Rules of Practices and Procedures. The condential materials included in the
ling consist of competitively sensitive market information, the disclosure of which presents an
unreasonable risk of harm to the Company and its customers, as well as participants in the
request for proposal process. Accordingly, it is critical that this information remain condential.
Please retain two copies for the Louisiana Public Service Commission Staff attorney and
research attorney and return a date—stamped copy to our by-hand courier.
Additionally, portions of Mr. C. Long’s testimony and exhibits are considered
Condential Energy Infrastructure Information (“CEII”) as dened by 18 C.F.R. § 388.113(c)(1). The sensitive nature of CEII requires additional protections and safeguards; therefore, the Company encloses an additional CEII version of the Direct Testimony of Mr. C.
Long and accompanying CEII exhibits CWL—2 and CWL-6. CEII disclosed in this docket is
Entergy Services, Inc.
a 639 Loyola Avenue (70113)
PO. Box 61000 """"'—_— New Orleans. LA 70161-1000
gy Tel 504 576 6825
Fax 504 576 5579
Eadams4@entergy.com
Elizabeth L. Adams
Counsel
Legai Servsces__—,.Regu?£ry \ of
November 2, 2016
By Hand Delivery -
, Eve Kahao Gonzalez, Secretary
Li, Louisiana Public Service Commission
'
9"
Galvez Building, 12th Floor
602 North 5th Street
Baton Rouge, LA 70802
Re: Ex Parte: Application of Entergy Louisiana, LLC for Approval to Construct
Lake Charles Power Station, and for Cost Recovery (LPSC Docket No. U- )
Dear Ms. Gonzalez,
I have enclosed the original and three copies of a Public Redacted Version of the
Application of Entergy Louisiana, LLC (“ELL”) for Approval to Construct Lake Charles Power
Station, and for Cost Recovery. This ling includes the Direct Testimony and Exhibits of Phillip R. May, Joshua B. Thomas, Jonathan E. Long, Paul J. Girard, Ill, Charles W. Long, John P.
Hurstell, William C. John, Anthony P. Walz, Phong D. Nguyen, and Charles E. DeGeorge. Please retain the original for the record, two copies for your les, and return a date—stamped copy to our by-hand courier.
I have also enclosed three copies of the Highly Sensitive Protected Material (“HSPM”) Version of the referenced ling, which is being provided to you under seal pursuant to the
provisions of the LPSC General Order dated August 31, 1992, and Rules 12.1 and 26 of the
Commission’s Rules of Practices and Procedures. The condential materials included in the
ling consist of competitively sensitive market information, the disclosure of which presents an
unreasonable risk of harm to the Company and its customers, as well as participants in the
request for proposal process. Accordingly, it is critical that this information remain condential.
Please retain two copies for the Louisiana Public Service Commission Staff attorney and
research attorney and return a date—stamped copy to our by-hand courier.
Additionally, portions of Mr. C. Long’s testimony and exhibits are considered
Condential Energy Infrastructure Information (“CEII”) as dened by 18 C.F.R. § 388.113(c)(1). The sensitive nature of CEII requires additional protections and safeguards; therefore, the Company encloses an additional CEII version of the Direct Testimony of Mr. C.
Long and accompanying CEII exhibits CWL—2 and CWL-6. CEII disclosed in this docket is
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Ms. Gonzalez
Louisiana Public Service Commission
November 2. 2016
Page 2
provided pursuant to, and shall be exempt from public disclosure pursuant to, 18 C.F.R. § 388.ll3(c)(l), the Commission’s General Order dated August 31, 1992, and Rule 12.1 of the Rules of Practice and Procedure of the Louisiana Public Service Commission. Please retain a
CEII Version for the record and return a date—stamped copy to our by—hand courier. An additional copy of the C Ell Version is enclosed and marked for the Administrative Law Judge.
Additional copies of the HSPM of this ling will be provided to the appropriate representatives of the Louisiana Public Service Commission Staff and made available to
intervenors once a suitable HSPM Agreement has been executed by the parties. Similarly, CEII
copies will be made available to individuals once a suitable C Ell Agreement has been executed.
Please note that the Company requests in its Application the Commission implement procedures to facilitate a decision on a timeframe consistent with its General Order dates
September 20, 1983, including shortening the intervention period to fteen days. Additionally, the Company request that notice of this matter be published in the Commission’s November 4, 2016 Official Bulletin.
If you have any questions, please do not hesitate to call me. Thank you for your courtesy and assistance with this matter.
Respectfully submitted,
Qda/mo Elizabeth L. Adams
ela
Enclosures
cc: Commissioners (public version only) Melanie Verzwyvelt (public version only) Melissa Watson (public version only) Paul Zimmering (public version only) Deborah Barta (public version only)
Ms. Gonzalez
Louisiana Public Service Commission
November 2. 2016
Page 2
provided pursuant to, and shall be exempt from public disclosure pursuant to, 18 C.F.R. § 388.ll3(c)(l), the Commission’s General Order dated August 31, 1992, and Rule 12.1 of the Rules of Practice and Procedure of the Louisiana Public Service Commission. Please retain a
CEII Version for the record and return a date—stamped copy to our by—hand courier. An additional copy of the C Ell Version is enclosed and marked for the Administrative Law Judge.
Additional copies of the HSPM of this ling will be provided to the appropriate representatives of the Louisiana Public Service Commission Staff and made available to
intervenors once a suitable HSPM Agreement has been executed by the parties. Similarly, CEII
copies will be made available to individuals once a suitable C Ell Agreement has been executed.
Please note that the Company requests in its Application the Commission implement procedures to facilitate a decision on a timeframe consistent with its General Order dates
September 20, 1983, including shortening the intervention period to fteen days. Additionally, the Company request that notice of this matter be published in the Commission’s November 4, 2016 Official Bulletin.
If you have any questions, please do not hesitate to call me. Thank you for your courtesy and assistance with this matter.
Respectfully submitted,
Qda/mo Elizabeth L. Adams
ela
Enclosures
cc: Commissioners (public version only) Melanie Verzwyvelt (public version only) Melissa Watson (public version only) Paul Zimmering (public version only) Deborah Barta (public version only)
BEFORE THE
zeta
LOUISIANA PUBLIC SERVICE COMMISSION
IN RE: APPLICATION OF ENTERGY
LOUISIANA, LLC FOR APPROVAL TO
CON STRUCT LAKE CHARLES POWER
STATION, AND FOR COST RECOVERY
DOCKET NO. U-
APPLICATION OF ENTERGY LOUISIANA, LLC
FOR APPROVAL TO CONSTRUCT THE
LAKE CHARLES POWER STATION, AND FOR COST RECOVERY
Entergy Louisiana, LLC (“ELL” or the “Company")' respectfully submits this
Application seeking approval and certication of construction of the Lake Charles Power Station
(the “Project” or “LCPS”), a nominally-sized 994-megawatt (“MW”) combined-cycle gas
turbine (“CCGT”) facility in Westlake, Louisiana. This Application, led in accordance with the
Louisiana Public Service Commission’s (“Commission”) General Order dated September 20,
1983 (the “1983 General Order”),2 requests certication that the public convenience and
necessity would be served by construction and deployment of LCPS. In addition to certication
under the 1983 General Order, the Company respectfully requests, among other relief, a nding
that the Project complies with the Commission’s Market-Based Mechanisms General Order
(“MBM Order”),3 ndings relating to appropriate cost recovery, and the development of a
ELL is a limited liability company duly authorized and qualied to do and doing business in the State of
Louisiana, created and organized for the purposes, among others, of manufacturing, generating, transmitting, distributing, and selling electricity for power, lighting, heating, and other such uses. ELL also engages in the local
distribution of natural gas to residential, commercial, municipal, and other customers in East Baton Rouge Parish.
2
LPSC General Order dated September 20, 1983 (In re: In the Matter of the Expansion of Utility Power
Plant; Proposed Certification of New Plant by the LPSC), as amended by General Order (Corrected) in Docket No.
R-305 I 7 (In re: Possible modifications to the September 20, I983 General Order to allow (1) for more expeditious certifications of limited—term resource procurements and (2) an exception for annual and seasonal liquidated damages block energy purchases) dated May 27, 2009.
3
General Order, Docket No. R-26172 Subdocket A, In re: Development of Market-Based Mechanisms to
Evaluate Proposals to Construct or Acquire Generating Capacity to Meeting Native Load, Supplements the
September 20, 1983 General Order, dated February 16, 2004 (as amended by General Order, Docket No. R-26172
BEFORE THE
zeta
LOUISIANA PUBLIC SERVICE COMMISSION
IN RE: APPLICATION OF ENTERGY
LOUISIANA, LLC FOR APPROVAL TO
CON STRUCT LAKE CHARLES POWER
STATION, AND FOR COST RECOVERY
DOCKET NO. U-
APPLICATION OF ENTERGY LOUISIANA, LLC
FOR APPROVAL TO CONSTRUCT THE
LAKE CHARLES POWER STATION, AND FOR COST RECOVERY
Entergy Louisiana, LLC (“ELL” or the “Company")' respectfully submits this
Application seeking approval and certication of construction of the Lake Charles Power Station
(the “Project” or “LCPS”), a nominally-sized 994-megawatt (“MW”) combined-cycle gas
turbine (“CCGT”) facility in Westlake, Louisiana. This Application, led in accordance with the
Louisiana Public Service Commission’s (“Commission”) General Order dated September 20,
1983 (the “1983 General Order”),2 requests certication that the public convenience and
necessity would be served by construction and deployment of LCPS. In addition to certication
under the 1983 General Order, the Company respectfully requests, among other relief, a nding
that the Project complies with the Commission’s Market-Based Mechanisms General Order
(“MBM Order”),3 ndings relating to appropriate cost recovery, and the development of a
ELL is a limited liability company duly authorized and qualied to do and doing business in the State of
Louisiana, created and organized for the purposes, among others, of manufacturing, generating, transmitting, distributing, and selling electricity for power, lighting, heating, and other such uses. ELL also engages in the local
distribution of natural gas to residential, commercial, municipal, and other customers in East Baton Rouge Parish.
2
LPSC General Order dated September 20, 1983 (In re: In the Matter of the Expansion of Utility Power
Plant; Proposed Certification of New Plant by the LPSC), as amended by General Order (Corrected) in Docket No.
R-305 I 7 (In re: Possible modifications to the September 20, I983 General Order to allow (1) for more expeditious certifications of limited—term resource procurements and (2) an exception for annual and seasonal liquidated damages block energy purchases) dated May 27, 2009.
3
General Order, Docket No. R-26172 Subdocket A, In re: Development of Market-Based Mechanisms to
Evaluate Proposals to Construct or Acquire Generating Capacity to Meeting Native Load, Supplements the
September 20, 1983 General Order, dated February 16, 2004 (as amended by General Order, Docket No. R-26172
schedule and procedures to permit this Application to be considered on a timely basis, as
follows:
INTRODUCTION
As discussed herein and in the accompanying testimony, the Company has a substantial
overall long-term need for base load and core load-following generation capacity.4 This need
persists notwithstanding the completion of the Ninemile 6 CCGT facility, the acquisition of
Union Power Station Power Blocks 3 and 4, and the anticipated construction of the proposed St.
Charles Power Station. As discussed below, without the future capacity additions reected in
ELL’s supply plan, the Company would have a projected capacity decit of over 2,400 MW in
2020. Assuming all of the other planned additions are made, without LCPS, ELL’s capacity
decit could nevertheless grow to more than 900 MW by 2020 and almost 1,900 MW by 2028.5
The Company’s need for signicant amounts of long-term capacity will continue to increase
throughout the next decade primarily due to load growth and unit deactivations.
Il.
ELL also needs base load and core load-following resources to satisfy a projected energy
deficiency, without which resources customers will be exposed to market energy prices without
the benet of offsetting energy margins that can be obtained by LCPS. Specically, without its
Subdocket B, dated November 3, 2006, and further amended by the April 26, 2007 General Order, and the
amendments approved by the Commission at its October I5, 2008 Business and Executive Meeting and now in
General Order, Docket No. R-26172, Subdocket C dated October 29, 2008).
4
Generating resources that employ CCGT technology, such as LCPS, are technologically and economically suited both for base load and load-following roles at current long-term forecasts for natural gas prices and carbon
dioxide (“CO2”) cost.
5
It follows that the Company’s capacity needs will be even greater if, for example, the St. Charles Power
Station is not constructed and placed in service in 2019.
schedule and procedures to permit this Application to be considered on a timely basis, as
follows:
INTRODUCTION
As discussed herein and in the accompanying testimony, the Company has a substantial
overall long-term need for base load and core load-following generation capacity.4 This need
persists notwithstanding the completion of the Ninemile 6 CCGT facility, the acquisition of
Union Power Station Power Blocks 3 and 4, and the anticipated construction of the proposed St.
Charles Power Station. As discussed below, without the future capacity additions reected in
ELL’s supply plan, the Company would have a projected capacity decit of over 2,400 MW in
2020. Assuming all of the other planned additions are made, without LCPS, ELL’s capacity
decit could nevertheless grow to more than 900 MW by 2020 and almost 1,900 MW by 2028.5
The Company’s need for signicant amounts of long-term capacity will continue to increase
throughout the next decade primarily due to load growth and unit deactivations.
Il.
ELL also needs base load and core load-following resources to satisfy a projected energy
deficiency, without which resources customers will be exposed to market energy prices without
the benet of offsetting energy margins that can be obtained by LCPS. Specically, without its
Subdocket B, dated November 3, 2006, and further amended by the April 26, 2007 General Order, and the
amendments approved by the Commission at its October I5, 2008 Business and Executive Meeting and now in
General Order, Docket No. R-26172, Subdocket C dated October 29, 2008).
4
Generating resources that employ CCGT technology, such as LCPS, are technologically and economically suited both for base load and load-following roles at current long-term forecasts for natural gas prices and carbon
dioxide (“CO2”) cost.
5
It follows that the Company’s capacity needs will be even greater if, for example, the St. Charles Power
Station is not constructed and placed in service in 2019.
supply plan additions, ELL projects that by 2020 it will have a need for approximately 2,500
MW of base load and core load-following generation. Based on its commercially-proven low
heat rate, LCPS is projected to operate at a high capacity factor, which means that the unit is
expected to produce a significant amount of energy margins to offset purchases from the
Midcontinent Independent System Operator, Inc. (“MISO”) market.
III.
Through this Application, the application in Docket No. U-33770 (St. Charles Power
Station), and other resource negotiations discussed below and in the accompanying testimony,
ELL is taking the necessary steps to implement its supply plan and satisfy its obligation to be
prepared to reliably and efficiently serve all load that materializes in its service area. LCPS is
the second of two large, developmental additions that the Company currently has planned to
bridge what otherwise would be a substantial resource deficit.
IV.
In addition to helping the Company meet its overall long-term need for capacity and
energy, LCPS would address specific supply conditions and planning objectives in the West of
the Atchafalaya Basin (“WOTAB”) planning region. WOTAB is a transmission planning area
generally west of the Baton Rouge, Louisiana metropolitan area, to the western-most portion of
Entergy Texas, Inc.’s (“ETI”) service territory.6 As discussed in the testimonies of several ELL
witnesses, new generation is needed in WOTAB to maintain reliability in the region as load
growth continues, the existing generation eet ages, and unit deactivations become more
probable and imminent. Furthermore, as noted in several proceedings at the Commission, a new
6 For the purposes ofthis docket, WOTAB will refer to Louisiana portion of the region, which runs roughly
from west of Baton Rouge, Louisiana, to the Texas state line and from just north of the Gulf of Mexico to the
northern edge of ELL’s service area in southwest Louisiana.
supply plan additions, ELL projects that by 2020 it will have a need for approximately 2,500
MW of base load and core load-following generation. Based on its commercially-proven low
heat rate, LCPS is projected to operate at a high capacity factor, which means that the unit is
expected to produce a significant amount of energy margins to offset purchases from the
Midcontinent Independent System Operator, Inc. (“MISO”) market.
III.
Through this Application, the application in Docket No. U-33770 (St. Charles Power
Station), and other resource negotiations discussed below and in the accompanying testimony,
ELL is taking the necessary steps to implement its supply plan and satisfy its obligation to be
prepared to reliably and efficiently serve all load that materializes in its service area. LCPS is
the second of two large, developmental additions that the Company currently has planned to
bridge what otherwise would be a substantial resource deficit.
IV.
In addition to helping the Company meet its overall long-term need for capacity and
energy, LCPS would address specific supply conditions and planning objectives in the West of
the Atchafalaya Basin (“WOTAB”) planning region. WOTAB is a transmission planning area
generally west of the Baton Rouge, Louisiana metropolitan area, to the western-most portion of
Entergy Texas, Inc.’s (“ETI”) service territory.6 As discussed in the testimonies of several ELL
witnesses, new generation is needed in WOTAB to maintain reliability in the region as load
growth continues, the existing generation eet ages, and unit deactivations become more
probable and imminent. Furthermore, as noted in several proceedings at the Commission, a new
6 For the purposes ofthis docket, WOTAB will refer to Louisiana portion of the region, which runs roughly
from west of Baton Rouge, Louisiana, to the Texas state line and from just north of the Gulf of Mexico to the
northern edge of ELL’s service area in southwest Louisiana.
CCGT in the Lake Charles area has for years been part of ELL’s Integrated Resource Plan for
meeting the planning needs and objectives of the WOTAB region. ELL’s most recent Integrated
Resource Plan, led in August 2015, was the product of a dynamic, ongoing process that
considers both generation and transmission options to meet customer needs. Indeed, if LCPS
were eliminated from ELL’s supply plan and not constructed, the Company would need to make
a considerable transmission investment in the near term in order to maintain reliability and North
American Electric Reliability Council (“NERC”) compliance in WOTAB. As explained below
and in the accompanying testimony, such a course of action would be a far less economic,
effective, and enduring means of meeting ELL’s obligations to reliably serve customers and
would not be in customers’ best interests.
V.
To address both its overall need for long-terrn capacity and energy, as well as the need
for local generation in WOTAB, on September 29, 2015, Entergy Services, Inc. (“ESI”),7 as
agent for ELL, issued a 2015 Request for Proposals (“RFP”) for Long-Term Developmental and
Existing Capacity and Energy Resources (the “2015 ELL RFP”). LCPS, a self-build proposal
developed by the Self-Build Commercial Team of ESI on ELL’s behalf, was submitted into and
market tested in the 2015 ELL RFP.8 LCPS and a PPA for capacity from an existing CCGT
facility (Proposal 8538) were competitively selected in the Commission- and independently-
monitored RFP process. The market test determined that LCPS provides the best economics of
all the proposals submitted in the 2015 ELL RFP under all sensitivities evaluated.
7
ES] is an affiliate of the Entergy Operating Companies (“EOCS”) and provides engineering, planning,
accounting, technical, and regulatory—support services to each of the EOCs. The five current EOCs are ELL,
Entergy Arkansas, lnc., Entergy Mississippi, lnc., Entergy New Orleans, Inc, and ETI.
8
As ELL witnesses Anthony Walz and Jonathan Long discuss in their testimonies, ESI established a detailed
process for segregating the personnel responsible for developing the LCPS self-build option from those responsible for the evaluation ofthe bids in the 2015 ELL RFP.
CCGT in the Lake Charles area has for years been part of ELL’s Integrated Resource Plan for
meeting the planning needs and objectives of the WOTAB region. ELL’s most recent Integrated
Resource Plan, led in August 2015, was the product of a dynamic, ongoing process that
considers both generation and transmission options to meet customer needs. Indeed, if LCPS
were eliminated from ELL’s supply plan and not constructed, the Company would need to make
a considerable transmission investment in the near term in order to maintain reliability and North
American Electric Reliability Council (“NERC”) compliance in WOTAB. As explained below
and in the accompanying testimony, such a course of action would be a far less economic,
effective, and enduring means of meeting ELL’s obligations to reliably serve customers and
would not be in customers’ best interests.
V.
To address both its overall need for long-terrn capacity and energy, as well as the need
for local generation in WOTAB, on September 29, 2015, Entergy Services, Inc. (“ESI”),7 as
agent for ELL, issued a 2015 Request for Proposals (“RFP”) for Long-Term Developmental and
Existing Capacity and Energy Resources (the “2015 ELL RFP”). LCPS, a self-build proposal
developed by the Self-Build Commercial Team of ESI on ELL’s behalf, was submitted into and
market tested in the 2015 ELL RFP.8 LCPS and a PPA for capacity from an existing CCGT
facility (Proposal 8538) were competitively selected in the Commission- and independently-
monitored RFP process. The market test determined that LCPS provides the best economics of
all the proposals submitted in the 2015 ELL RFP under all sensitivities evaluated.
7
ES] is an affiliate of the Entergy Operating Companies (“EOCS”) and provides engineering, planning,
accounting, technical, and regulatory—support services to each of the EOCs. The five current EOCs are ELL,
Entergy Arkansas, lnc., Entergy Mississippi, lnc., Entergy New Orleans, Inc, and ETI.
8
As ELL witnesses Anthony Walz and Jonathan Long discuss in their testimonies, ESI established a detailed
process for segregating the personnel responsible for developing the LCPS self-build option from those responsible for the evaluation ofthe bids in the 2015 ELL RFP.
VI.
As discussed by Messrs. Girard and Charles W. Long, development and deployment of
signicant generation and transmission projects is a time-consuming process that must begin
several years in advance of the need-by date. If the Company receives the approvals requested
from the Commission, and there are no unanticipated project delays related to the procurement of
all of the necessary permits, materials, and supplies, the Project is expected to enter service in
2020. Company witness Jonathan E. Long discusses the Project’s schedule in his testimony and
the importance of issuing a timely full notice to proceed to the Project’s principal contractor.
The Company, accordingly, is requesting that the Commission direct or establish a Procedural
Schedule that is consistent with the 120-day certication period set forth in the 1983 General
Order.
VII.
With this Application, the Company submits the Direct Testimonies of Phillip R. May,
Joshua B. Thomas, Jonathan E. Long, Paul J. Girard, Charles W. Long, John P. Hurstell, William
C. John, Anthony P. Walz, Phong D. Nguyen, and Charles E. DeGeorge. The purpose of the
testimony of each witness is as follows:
0 Phillip R. May — Mr. May, President and Chief Executive Ofcer (“CEO”) of
ELL, provides an overview of the Project and the Company’s capacity and energy
needs supporting the 2015 ELL RFP. Mr. May also describes the current status of
industrial load growth in Louisiana, particularly in the Lake Charles area of
WOTAB, and he discusses the basis for siting the Project at ELL’s Roy S. Nelson
facility near Lake Charles. Finally, he provides an overview of the Company’s
VI.
As discussed by Messrs. Girard and Charles W. Long, development and deployment of
signicant generation and transmission projects is a time-consuming process that must begin
several years in advance of the need-by date. If the Company receives the approvals requested
from the Commission, and there are no unanticipated project delays related to the procurement of
all of the necessary permits, materials, and supplies, the Project is expected to enter service in
2020. Company witness Jonathan E. Long discusses the Project’s schedule in his testimony and
the importance of issuing a timely full notice to proceed to the Project’s principal contractor.
The Company, accordingly, is requesting that the Commission direct or establish a Procedural
Schedule that is consistent with the 120-day certication period set forth in the 1983 General
Order.
VII.
With this Application, the Company submits the Direct Testimonies of Phillip R. May,
Joshua B. Thomas, Jonathan E. Long, Paul J. Girard, Charles W. Long, John P. Hurstell, William
C. John, Anthony P. Walz, Phong D. Nguyen, and Charles E. DeGeorge. The purpose of the
testimony of each witness is as follows:
0 Phillip R. May — Mr. May, President and Chief Executive Ofcer (“CEO”) of
ELL, provides an overview of the Project and the Company’s capacity and energy
needs supporting the 2015 ELL RFP. Mr. May also describes the current status of
industrial load growth in Louisiana, particularly in the Lake Charles area of
WOTAB, and he discusses the basis for siting the Project at ELL’s Roy S. Nelson
facility near Lake Charles. Finally, he provides an overview of the Company’s
Application and introduces the testimony of the other witnesses supporting the
Application.
@_1 ~ Mr. Thomas is the Director, Regulatory Policy for ESI. Mr.
Thomas discusses the regulatory and ratemaking issues that will need to be
resolved in order for the Company to initiate and successfully complete the
Project at the lowest reasonable cost to customers. Specically, he sets forth the
regulatory approvals required by the Company; discusses the Company’s
compliance with applicable Commission General Orders and explains why
approval of LCPS is in the public interest; and discusses the proposed plan by
which the Staff can monitor the progress of the construction of LCPS. Mr.
Thomas also provides the estimated first-year revenue requirement associated
with the Project; describes the proposal to recover, through the fuel adjustment
clause (“FAC”), the variable costs associated with the Long-Term Service
Agreement (“LTSA”) that ELL is expected to enter into in connection with
certain major maintenance activities for LCPS; and explains the proposed rate
recovery plan and the importance of timely recovery with respect to costs related
to LCPS.
Jonathan E. Long — Mr. J Long is the Vice President, Project Management for
ESI. He provides an overview of the Project, explains how the cost estimates
associated with the Project were developed, and provides the current total cost
estimate and schedule associated with the Project. He also describes the process
used to select the engineering, procurement, and construction (“EPC”) contractor
for the Project and the management approach that the Company intends to employ
Application and introduces the testimony of the other witnesses supporting the
Application.
@_1 ~ Mr. Thomas is the Director, Regulatory Policy for ESI. Mr.
Thomas discusses the regulatory and ratemaking issues that will need to be
resolved in order for the Company to initiate and successfully complete the
Project at the lowest reasonable cost to customers. Specically, he sets forth the
regulatory approvals required by the Company; discusses the Company’s
compliance with applicable Commission General Orders and explains why
approval of LCPS is in the public interest; and discusses the proposed plan by
which the Staff can monitor the progress of the construction of LCPS. Mr.
Thomas also provides the estimated first-year revenue requirement associated
with the Project; describes the proposal to recover, through the fuel adjustment
clause (“FAC”), the variable costs associated with the Long-Term Service
Agreement (“LTSA”) that ELL is expected to enter into in connection with
certain major maintenance activities for LCPS; and explains the proposed rate
recovery plan and the importance of timely recovery with respect to costs related
to LCPS.
Jonathan E. Long — Mr. J Long is the Vice President, Project Management for
ESI. He provides an overview of the Project, explains how the cost estimates
associated with the Project were developed, and provides the current total cost
estimate and schedule associated with the Project. He also describes the process
used to select the engineering, procurement, and construction (“EPC”) contractor
for the Project and the management approach that the Company intends to employ
through completion of the Project. In addition, Mr. J. Long discusses the risk
mitigation measures put in place to manage Project risk as well as the status of the
required permits/approvals for the Project. Finally, he discusses the estimated
non-fuel operations and maintenance (“O&M”) costs for the Project.
Paul J. Girard, III — Mr. Girard is the Director, Resource Planning and Market
Operations for ELL. He testies about the Company’s current plans to meet the
long-term supply needs of its customers, anticipated load growth in the Lake
Charles Area, the Company’s current resource portfolio and identied needs, and
the long-term planning objectives that will be served by constructing a new
generating resource near Lake Charles.
Charles W. Long — Mr. C. Long is the Director, Transmission Planning for ESI.
His testimony discusses the transmission planning process of both the Company
and MISO and describes the unique geographical and transmission—related
characteristics of the WOTAB region. He then identies the transmission
reliability benets that will be realized because of LCPS, specically, benets
gained from its location in the WOTAB region. Mr. C. Long then discusses the
process used to identify transmission upgrades that will be necessary for the
integration of LCPS into the electric grid. Finally, he discusses transmission
projects that will be required to maintain the reliability of the system if LCPS is
not constructed, as well as projects that can be avoided or obviated by
constructing the LCPS Project within the proposed timeframe.
John P. Hurstell — Mr. Hurstell is the Vice President, System Planning for ESI.
Mr. Hurstell describes the Company’s unit deactivation assumptions and the
through completion of the Project. In addition, Mr. J. Long discusses the risk
mitigation measures put in place to manage Project risk as well as the status of the
required permits/approvals for the Project. Finally, he discusses the estimated
non-fuel operations and maintenance (“O&M”) costs for the Project.
Paul J. Girard, III — Mr. Girard is the Director, Resource Planning and Market
Operations for ELL. He testies about the Company’s current plans to meet the
long-term supply needs of its customers, anticipated load growth in the Lake
Charles Area, the Company’s current resource portfolio and identied needs, and
the long-term planning objectives that will be served by constructing a new
generating resource near Lake Charles.
Charles W. Long — Mr. C. Long is the Director, Transmission Planning for ESI.
His testimony discusses the transmission planning process of both the Company
and MISO and describes the unique geographical and transmission—related
characteristics of the WOTAB region. He then identies the transmission
reliability benets that will be realized because of LCPS, specically, benets
gained from its location in the WOTAB region. Mr. C. Long then discusses the
process used to identify transmission upgrades that will be necessary for the
integration of LCPS into the electric grid. Finally, he discusses transmission
projects that will be required to maintain the reliability of the system if LCPS is
not constructed, as well as projects that can be avoided or obviated by
constructing the LCPS Project within the proposed timeframe.
John P. Hurstell — Mr. Hurstell is the Vice President, System Planning for ESI.
Mr. Hurstell describes the Company’s unit deactivation assumptions and the
processes undertaken to develop deactivation assumptions and change a
generating unit’s status, as well as the specific analyses undertaken that support
recent determinations that deactivation of Willow Glen Units 2 and 4 and
Sterlington Unit 7B is the lower cost option for customers. Finally, he discusses
the risk of relying on the MISO market to meet the Company’s long-term
resource needs.
William C. John — Mr. John is the Manager of Sales and Load Forecasting for
ESI. His testimony addresses the process used to develop ELL’s load forecasts
and presents ELL’s three most recent load forecasts, beginning with the forecast
used in the evaluation of proposals in the 2015 ELL RFP.
Anthony P. Walz — Mr. Walz is employed by ESI as the Director, Planning
Analysis for System Planning and Operations (“SPO”). Mr. Walz provides an
overview of ELL’s long-term resource planning process and describes the 2015
ELL RF P, the process through which resources designed to meet ELL’s identied
resource needs were competitively solicited and the self-build option represented
by the Project market-tested. He also summarizes the results of the 2015 ELL
RFP, addressing the criteria used to evaluate the projects bid into the RFP and the
rationale for the selection of the Project and the contingent selection of Proposal
8538.
Phong D. Nguyen — Mr. Nguyen is employed by ESI as the Manager, Financial
Analysis for SP0. Mr. Nguyen describes the economic evaluation of the
proposals evaluated in the 2015 ELL RFP.
Charles E. DeGe0rge — Mr. DeGeorge is employed by ESI as the Manager,
processes undertaken to develop deactivation assumptions and change a
generating unit’s status, as well as the specific analyses undertaken that support
recent determinations that deactivation of Willow Glen Units 2 and 4 and
Sterlington Unit 7B is the lower cost option for customers. Finally, he discusses
the risk of relying on the MISO market to meet the Company’s long-term
resource needs.
William C. John — Mr. John is the Manager of Sales and Load Forecasting for
ESI. His testimony addresses the process used to develop ELL’s load forecasts
and presents ELL’s three most recent load forecasts, beginning with the forecast
used in the evaluation of proposals in the 2015 ELL RFP.
Anthony P. Walz — Mr. Walz is employed by ESI as the Director, Planning
Analysis for System Planning and Operations (“SPO”). Mr. Walz provides an
overview of ELL’s long-term resource planning process and describes the 2015
ELL RF P, the process through which resources designed to meet ELL’s identied
resource needs were competitively solicited and the self-build option represented
by the Project market-tested. He also summarizes the results of the 2015 ELL
RFP, addressing the criteria used to evaluate the projects bid into the RFP and the
rationale for the selection of the Project and the contingent selection of Proposal
8538.
Phong D. Nguyen — Mr. Nguyen is employed by ESI as the Manager, Financial
Analysis for SP0. Mr. Nguyen describes the economic evaluation of the
proposals evaluated in the 2015 ELL RFP.
Charles E. DeGe0rge — Mr. DeGeorge is employed by ESI as the Manager,
Generation Planning and Models for SP0. Mr. DeGeorge addresses the
Production Cost Assessment sub-team’s use of the AURORAxmp Electric Market
Model (“AURORA”) production cost model to assess the variable supply cost
effect of each proposal evaluated in the 2015 ELL RFP. He describes the
AURORA model, the input assumptions used to assess the RFP proposals, and
benchmarking conducted to confirm the AURORA model is appropriately
simulating the operation of the MISO market. Finally, Mr. DeGeorge describes
the AURORA modeling methodology and results for the proposals evaluated in
the 2015 ELL RFP.
As required by the 1983 General Order, this Application and the supporting testimony
include the specic data that the Company relied upon to justify the Company’s decision to
construct LCPS, an estimate of the costs to construct LCPS, ELL’s estimated rst-year revenue
requirement associated with LCPS, the estimated in-service date, and the construction schedule
and milestones.
OVERVIEW OF RESOURCE
VIII.
As described in more detail by Mr. J. Long in his Direct Testimony, the Company
proposes to construct LCPS in Westlake, Louisiana. LCPS is a CCGT resource with a nominal
capacity of 994 MW and a projected summer rating of 924 MW. The Project is designed with
two Mitsubishi Hitachi Power Systems (“MHPS”) 501 GAC combustion turbines (“CTS”), two
Nooter Eriksen heat recovery steam generators (“HRSGS”) with duct ring, one Toshiba steam
turbine generator in a 2x1 CCGT configuration, and other balance of plant equipment, including
a cooling tower for closed-cycle cooling operations.
Generation Planning and Models for SP0. Mr. DeGeorge addresses the
Production Cost Assessment sub-team’s use of the AURORAxmp Electric Market
Model (“AURORA”) production cost model to assess the variable supply cost
effect of each proposal evaluated in the 2015 ELL RFP. He describes the
AURORA model, the input assumptions used to assess the RFP proposals, and
benchmarking conducted to confirm the AURORA model is appropriately
simulating the operation of the MISO market. Finally, Mr. DeGeorge describes
the AURORA modeling methodology and results for the proposals evaluated in
the 2015 ELL RFP.
As required by the 1983 General Order, this Application and the supporting testimony
include the specic data that the Company relied upon to justify the Company’s decision to
construct LCPS, an estimate of the costs to construct LCPS, ELL’s estimated rst-year revenue
requirement associated with LCPS, the estimated in-service date, and the construction schedule
and milestones.
OVERVIEW OF RESOURCE
VIII.
As described in more detail by Mr. J. Long in his Direct Testimony, the Company
proposes to construct LCPS in Westlake, Louisiana. LCPS is a CCGT resource with a nominal
capacity of 994 MW and a projected summer rating of 924 MW. The Project is designed with
two Mitsubishi Hitachi Power Systems (“MHPS”) 501 GAC combustion turbines (“CTS”), two
Nooter Eriksen heat recovery steam generators (“HRSGS”) with duct ring, one Toshiba steam
turbine generator in a 2x1 CCGT configuration, and other balance of plant equipment, including
a cooling tower for closed-cycle cooling operations.
IX.
The current estimated cost to construct LCPS is $871.7 million, which reects the use of
a xed-price, xed-duration form of EPC contract, subject to certain dened possible
adjustments. The EPC contract accounts for a signicant portion of the overall estimated cost of
the Project. Other components included in the overall Project cost estimate are an allowance for
funds used during construction (“AFUDC”), transmission interconnection to the switchyard,
estimates for Network Resource Interconnection Service (“NRIS”) projects, project contingency,
internal construction management, indirect loaders, insurance coverage, expenses related to
seeking Commission certication, and other non—EPC costs.
X.
The estimated costs of operating and maintaining LCPS are detailed in the Direct
Testimony of Mr. Jonathan Long, and these costs are reected in the estimated rst-year revenue
requirement set forth in the Direct Testimony of Mr. Thomas.
XI.
As discussed in the Direct Testimony of Mr. Walz, although construction of LCPS will
require a signicant upfront investment, the resource is expected to produce net supply cost
savings for customers in excess of $1.96 billion (on a net present value basis) during the
expected life of the plant. These net supply cost savings are expected to exceed the construction
cost of the Project in less than ten years.
FACILITY DESCRIPTION
XII.
The proposed Project site is in Westlake, Louisiana, near ELL’s existing Nelson units.
As Mr. May discusses in his Direct Testimony, the Nelson site was chosen after multiple sites
10
IX.
The current estimated cost to construct LCPS is $871.7 million, which reects the use of
a xed-price, xed-duration form of EPC contract, subject to certain dened possible
adjustments. The EPC contract accounts for a signicant portion of the overall estimated cost of
the Project. Other components included in the overall Project cost estimate are an allowance for
funds used during construction (“AFUDC”), transmission interconnection to the switchyard,
estimates for Network Resource Interconnection Service (“NRIS”) projects, project contingency,
internal construction management, indirect loaders, insurance coverage, expenses related to
seeking Commission certication, and other non—EPC costs.
X.
The estimated costs of operating and maintaining LCPS are detailed in the Direct
Testimony of Mr. Jonathan Long, and these costs are reected in the estimated rst-year revenue
requirement set forth in the Direct Testimony of Mr. Thomas.
XI.
As discussed in the Direct Testimony of Mr. Walz, although construction of LCPS will
require a signicant upfront investment, the resource is expected to produce net supply cost
savings for customers in excess of $1.96 billion (on a net present value basis) during the
expected life of the plant. These net supply cost savings are expected to exceed the construction
cost of the Project in less than ten years.
FACILITY DESCRIPTION
XII.
The proposed Project site is in Westlake, Louisiana, near ELL’s existing Nelson units.
As Mr. May discusses in his Direct Testimony, the Nelson site was chosen after multiple sites
10
were considered and evaluated based on a range of considerations related to reliability, cost, and
technical feasibility. LCPS is expected to utilize existing infrastructure and resources at the
Nelson site, including existing transmission and cooling water infrastructure. Generation from
the resource is expected to interconnect with the MISO System at a 138 kV, 230 kV, and/or a
500 kV transmission switchyard located at or near the Nelson site. Furthermore, the site is
located close to large load concentrations, which improves reliability and reduces losses.
XIII.
The Clean Air Act requires that the Company obtain an air quality permit from the
Louisiana Department of Environmental Quality (“LDEQ”) that encompasses all applicable
regulatory requirements. The air permit application for LCPS was submitted to the LDEQ on
October 27, 2016, and is pending approval. With respect to water quality, the existing Nelson
site currently operates under a valid Louisiana Pollution Discharge Elimination System
(“LPDES”) permit.
PROJECT EXECUTION AND MANAGEMENT
XIV.
As explained in the Direct Testimony of Mr. J. Long, the Company has chosen a single-
source EPC approach for the Project to ensure that the resources necessary to execute this
substantial undertaking are brought to bear in a timely and cost-effective manner. The Company
negotiated a xed-price,° fixed-schedule duration form of EPC contract with Chicago Bridge &
Iron (“CB&l”) that reects a detailed scope of work.
9
As Mr. Jonathan Long explains, although the EPC agreement with CB&I is a xed—price form of contract,
there are elements ofthe pricing that are not fixed.
11
were considered and evaluated based on a range of considerations related to reliability, cost, and
technical feasibility. LCPS is expected to utilize existing infrastructure and resources at the
Nelson site, including existing transmission and cooling water infrastructure. Generation from
the resource is expected to interconnect with the MISO System at a 138 kV, 230 kV, and/or a
500 kV transmission switchyard located at or near the Nelson site. Furthermore, the site is
located close to large load concentrations, which improves reliability and reduces losses.
XIII.
The Clean Air Act requires that the Company obtain an air quality permit from the
Louisiana Department of Environmental Quality (“LDEQ”) that encompasses all applicable
regulatory requirements. The air permit application for LCPS was submitted to the LDEQ on
October 27, 2016, and is pending approval. With respect to water quality, the existing Nelson
site currently operates under a valid Louisiana Pollution Discharge Elimination System
(“LPDES”) permit.
PROJECT EXECUTION AND MANAGEMENT
XIV.
As explained in the Direct Testimony of Mr. J. Long, the Company has chosen a single-
source EPC approach for the Project to ensure that the resources necessary to execute this
substantial undertaking are brought to bear in a timely and cost-effective manner. The Company
negotiated a xed-price,° fixed-schedule duration form of EPC contract with Chicago Bridge &
Iron (“CB&l”) that reects a detailed scope of work.
9
As Mr. Jonathan Long explains, although the EPC agreement with CB&I is a xed—price form of contract,
there are elements ofthe pricing that are not fixed.
11
XV.
Under the xed-price, xed-schedule duration EPC contract structure, CB&I will act as
an independent contractor with respect to the EPC services dened in the contract’s scope of
work. CB&l also will procure the CTs, HRSGS, and steam turbine from the original equipment
manufacturers (“OEMS”). CB&I’s procurement of this equipment will allow it full coordination
and scheduling of the OEMs in order to meet the xed schedule provided in the contract.
XVI.
The Project will be managed and monitored by the Company through a Project Team, led
by a Project Director, with oversight from an Executive Steering Committee (“ESC”). The ESC
will provide oversight and strategic direction for the Project and will monitor and provide
direction relating to Project performance, key risks, and value drivers that may affect the Project
risk prole.
THE PLANNING PROCESS AND RESOURCE NEEDS
XVII.
In order to continue meeting the power needs of customers reliably at the lowest
reasonable cost, the Company must maintain a portfolio of generation resources that includes the
right amount and types of capacity. With respect to the amount of capacity, Mr. Walz explains
that the Company must maintain sufcient generating capacity to meet its peak load plus a
planning reserve margin. The Company plans long-terrn resources to a 12% reserve margin.
With respect to the type of capacity, the Company seeks to add modern, efcient generating
capacity, which will predominantly be CCGTs and CTs.
12
XV.
Under the xed-price, xed-schedule duration EPC contract structure, CB&I will act as
an independent contractor with respect to the EPC services dened in the contract’s scope of
work. CB&l also will procure the CTs, HRSGS, and steam turbine from the original equipment
manufacturers (“OEMS”). CB&I’s procurement of this equipment will allow it full coordination
and scheduling of the OEMs in order to meet the xed schedule provided in the contract.
XVI.
The Project will be managed and monitored by the Company through a Project Team, led
by a Project Director, with oversight from an Executive Steering Committee (“ESC”). The ESC
will provide oversight and strategic direction for the Project and will monitor and provide
direction relating to Project performance, key risks, and value drivers that may affect the Project
risk prole.
THE PLANNING PROCESS AND RESOURCE NEEDS
XVII.
In order to continue meeting the power needs of customers reliably at the lowest
reasonable cost, the Company must maintain a portfolio of generation resources that includes the
right amount and types of capacity. With respect to the amount of capacity, Mr. Walz explains
that the Company must maintain sufcient generating capacity to meet its peak load plus a
planning reserve margin. The Company plans long-terrn resources to a 12% reserve margin.
With respect to the type of capacity, the Company seeks to add modern, efcient generating
capacity, which will predominantly be CCGTs and CTs.
12
XVIII.
Even after the completion of the Ninemile 6 CCGT facility, the acquisition of Union
Power Station Power Blocks 3 and 4, and construction of the proposed St. Charles Power
Station, the Company will continue to have a need for additional long-terrn capacity. To
illustrate the extent of the Company’s need, ELL witness Mr. Girard has compared the
Company’s projected overall planning requirements (based on peak load plus planning reserve
margin) with the generating resources and long-tenn contracted resources that it expects to have
in its portfolio. That analysis shows that, without the capacity additions reflected in ELL’s
supply plan, the Company would have a projected capacity deficit of 2,406 MW in 2020. Even
if all of the other planned additions were made, without LCPS, ELL would have an overall
capacity decit of 903 MW in 2020 and growing to 1,880 MW by 2028. Without any of the
planned additions (including St. Charles Power Station), the overall capacity deficit would grow
to nearly 3,750 MW by 2028.
XIX.
Over the same time frame, MISO market conditions are expected to tighten. SPO’s
current planning assumption is that market equilibrium in MISO South (where supply, including
third-party resources, and demand balance) will occur around 2022, though MISO and its
independent market monitor have predicted that equilibrium may be reached as soon as 2018
across all MISO areas. As equilibrium approaches, the addition of new-build resources will be
necessary to maintain market balance as load grows and/or resources deactivate. In addition,
LCPS is projected to provide significant economic benets by providing a modern, efcient
generating unit that is expected to operate at a high capacity factor. As a result, as noted above,
LCPS will generate significant energy margins that will offset the cost to ELL customers of
13
XVIII.
Even after the completion of the Ninemile 6 CCGT facility, the acquisition of Union
Power Station Power Blocks 3 and 4, and construction of the proposed St. Charles Power
Station, the Company will continue to have a need for additional long-terrn capacity. To
illustrate the extent of the Company’s need, ELL witness Mr. Girard has compared the
Company’s projected overall planning requirements (based on peak load plus planning reserve
margin) with the generating resources and long-tenn contracted resources that it expects to have
in its portfolio. That analysis shows that, without the capacity additions reflected in ELL’s
supply plan, the Company would have a projected capacity deficit of 2,406 MW in 2020. Even
if all of the other planned additions were made, without LCPS, ELL would have an overall
capacity decit of 903 MW in 2020 and growing to 1,880 MW by 2028. Without any of the
planned additions (including St. Charles Power Station), the overall capacity deficit would grow
to nearly 3,750 MW by 2028.
XIX.
Over the same time frame, MISO market conditions are expected to tighten. SPO’s
current planning assumption is that market equilibrium in MISO South (where supply, including
third-party resources, and demand balance) will occur around 2022, though MISO and its
independent market monitor have predicted that equilibrium may be reached as soon as 2018
across all MISO areas. As equilibrium approaches, the addition of new-build resources will be
necessary to maintain market balance as load grows and/or resources deactivate. In addition,
LCPS is projected to provide significant economic benets by providing a modern, efcient
generating unit that is expected to operate at a high capacity factor. As a result, as noted above,
LCPS will generate significant energy margins that will offset the cost to ELL customers of
13
purchasing energy in the MISO market. Moreover, as discussed above, LCPS is an important
component of ELL’s plan for maintaining reliability in the WOTAB area.
2015 ELL RFP
XX.
As Mr. Walz discusses in his Direct Testimony, based on the Company’s forecasted long-
term need for capacity and energy and area planning objectives in WOTAB, ESI issued the 2015
ELL RFP on September 29, 2015, which sought up to 1,000 MW of capacity, capacity-related
benets, energy, other electric products, and environmental attributes (if any) from any
developmental single integrated generation resource located in WOTAB and/or existing
resources in the MISO South footprint.
XXI.
A number of processes were established in order to ensure that the 2015 ELL RFP was
conducted in a fair and impartial manner, including oversight from an Independent Monitor
(“IM”). The IM’s role was to monitor the design and implementation of the solicitation,
evaluation, and selection to ensure impartiality and objectivity. The IM also provided an
objective, third-party perspective on ESI’s efforts to ensure that all bids proposed in the 2015
ELL RFP were treated consistently and without undue preference to any bidder. Messrs. Walz
and Nguyen describe the numerous safeguards put in place to ensure that the 2015 ELL RFP was
conducted in a fair and impartial manner and that condential information was not improperly
disclosed to or used by any employee, consultant, or other representative of ESI or any other
Entergy competitive afliate.
14
purchasing energy in the MISO market. Moreover, as discussed above, LCPS is an important
component of ELL’s plan for maintaining reliability in the WOTAB area.
2015 ELL RFP
XX.
As Mr. Walz discusses in his Direct Testimony, based on the Company’s forecasted long-
term need for capacity and energy and area planning objectives in WOTAB, ESI issued the 2015
ELL RFP on September 29, 2015, which sought up to 1,000 MW of capacity, capacity-related
benets, energy, other electric products, and environmental attributes (if any) from any
developmental single integrated generation resource located in WOTAB and/or existing
resources in the MISO South footprint.
XXI.
A number of processes were established in order to ensure that the 2015 ELL RFP was
conducted in a fair and impartial manner, including oversight from an Independent Monitor
(“IM”). The IM’s role was to monitor the design and implementation of the solicitation,
evaluation, and selection to ensure impartiality and objectivity. The IM also provided an
objective, third-party perspective on ESI’s efforts to ensure that all bids proposed in the 2015
ELL RFP were treated consistently and without undue preference to any bidder. Messrs. Walz
and Nguyen describe the numerous safeguards put in place to ensure that the 2015 ELL RFP was
conducted in a fair and impartial manner and that condential information was not improperly
disclosed to or used by any employee, consultant, or other representative of ESI or any other
Entergy competitive afliate.
14
XXII.
As part of ESI’s effort to ensure the 2015 ELL RFP was conducted in a fair and impartial
manner, separate teams were created to evaluate proposals, including the Viability Assessment
Team, the Deliverability Assessment Team, the Economic Evaluation Team, the Accounting
Evaluation Team, and the Credit Evaluation Team. Mr. Walz discusses the role of each team in
his Direct Testimony. As Mr. Walz also explains, based on the results of the RFP evaluation
process, the LCPS self-build option was identified as the alternative that best satises all of the
RF P objectives at the lowest reasonable cost alternative considering risk. As Mr. Nguyen further
explains, out of the proposals submitted in response to the 2015 ELL RFP, LCPS provided by far
the best overall economics across numerous metrics and sensitivities.
TRANSMISSION
XXIII.
As Mr. C. Long explains in his Direct Testimony, WOTAB is a load constrained region
due to concentrated loads and geographic features that limit transmission imports, which means
that loads must be served, at least in part, by local generation. Locating a large and efficient
generator in WOTAB would support reliability by making the region less dependent on
importing power to serve load and enhancing the reactive power capability of the region. Mr. C.
Long describes the transmission projects required to deploy and operate LCPS. He also explains
that LCPS is a crucial component of ELL’s long-terrn integrated generation and transmission
resource planning and plays a significant role in maintaining reliability in the WOTAB region.
In illustrating this point, Mr. C. Long describes the considerable and immediate transmission
investment that would need to be made if LCPS is not constructed in order to maintain regional
reliability and compliance with NERC standards.
15
XXII.
As part of ESI’s effort to ensure the 2015 ELL RFP was conducted in a fair and impartial
manner, separate teams were created to evaluate proposals, including the Viability Assessment
Team, the Deliverability Assessment Team, the Economic Evaluation Team, the Accounting
Evaluation Team, and the Credit Evaluation Team. Mr. Walz discusses the role of each team in
his Direct Testimony. As Mr. Walz also explains, based on the results of the RFP evaluation
process, the LCPS self-build option was identified as the alternative that best satises all of the
RF P objectives at the lowest reasonable cost alternative considering risk. As Mr. Nguyen further
explains, out of the proposals submitted in response to the 2015 ELL RFP, LCPS provided by far
the best overall economics across numerous metrics and sensitivities.
TRANSMISSION
XXIII.
As Mr. C. Long explains in his Direct Testimony, WOTAB is a load constrained region
due to concentrated loads and geographic features that limit transmission imports, which means
that loads must be served, at least in part, by local generation. Locating a large and efficient
generator in WOTAB would support reliability by making the region less dependent on
importing power to serve load and enhancing the reactive power capability of the region. Mr. C.
Long describes the transmission projects required to deploy and operate LCPS. He also explains
that LCPS is a crucial component of ELL’s long-terrn integrated generation and transmission
resource planning and plays a significant role in maintaining reliability in the WOTAB region.
In illustrating this point, Mr. C. Long describes the considerable and immediate transmission
investment that would need to be made if LCPS is not constructed in order to maintain regional
reliability and compliance with NERC standards.
15
COMPLIANCE WITH APPLICABLE COMMISSION RULES AND ORDERS
XXIV.
For the reasons discussed previously and in detail in the accompanying testimony, LCPS
serves the public convenience and necessity, is in the public interest, and is therefore prudent,
and should be certied in accordance with the Commission’s 1983 General Order. As discussed
above, the Project will add modern, efcient CCGT capacity to the Company’ generating
resource portfolio that can be used in either a load—following or base load role as necessary or
appropriate, and will contribute to meeting the Company’s long-term supply needs. Moreover,
LCPS will support system reliability by adding necessary capacity within the load constrained
WOTAB region at a cost that is favorable when compared to other available market
opportunities.
XXV.
In addition, as discussed by Mr. Walz, the RFP process was designed to be consistent
with the requirements of the MBM Order, including providing the opportunity for Commission
Staff review and involvement as contemplated by the MBM Order. Specically, Mr. Walz
explains that ESI conducted the 2015 ELL RFP in accordance with the process outlined in that
Order, including:
o posting the draft RFP for comment by market participants and Commission Staff and
obtaining and responding to such comments;
0 conducting a Bidders’ Conference to present the draft 2015 ELL RFP and respond to
questions from market participants;
0 participating in a Technical Conference;
16
COMPLIANCE WITH APPLICABLE COMMISSION RULES AND ORDERS
XXIV.
For the reasons discussed previously and in detail in the accompanying testimony, LCPS
serves the public convenience and necessity, is in the public interest, and is therefore prudent,
and should be certied in accordance with the Commission’s 1983 General Order. As discussed
above, the Project will add modern, efcient CCGT capacity to the Company’ generating
resource portfolio that can be used in either a load—following or base load role as necessary or
appropriate, and will contribute to meeting the Company’s long-term supply needs. Moreover,
LCPS will support system reliability by adding necessary capacity within the load constrained
WOTAB region at a cost that is favorable when compared to other available market
opportunities.
XXV.
In addition, as discussed by Mr. Walz, the RFP process was designed to be consistent
with the requirements of the MBM Order, including providing the opportunity for Commission
Staff review and involvement as contemplated by the MBM Order. Specically, Mr. Walz
explains that ESI conducted the 2015 ELL RFP in accordance with the process outlined in that
Order, including:
o posting the draft RFP for comment by market participants and Commission Staff and
obtaining and responding to such comments;
0 conducting a Bidders’ Conference to present the draft 2015 ELL RFP and respond to
questions from market participants;
0 participating in a Technical Conference;
16
0 identifying clearly the resource needs and the capacity products for which proposals were
sought to meet those needs;
0 engaging the services of an IM to oversee the design and conduct of the RFP and
ensuring that the IM had full access to all 2015 ELL RFP processes and evaluations and
the opportunity to provide comment and direction regarding those matters; and
0 designing processes appropriately to safeguard condential information, including (1)
confining the dissemination of information to only those persons engaged in the 2015
ELL RFP process and in accordance with practices approved by the IM, and (2)
conducting the 2015 ELL RF P in a manner that was fair and impartial to all bidders and
resulted in selection of the lowest reasonable cost resource that could meet the supply
needs of customers targeted in the 2015 ELL RFP.
Also, as required by the MBM Order, ESI kept the Commission Staff informed of and involved
in the development and implementation of the RFP and all resource selections.
REGULATORY APPROVAL PLAN
XXVI.
As discussed by Mr. J. Long in his Direct Testimony, ELL is negotiating an LTSA for the
maintenance of the LCPS CTs with the OEM. The LTSA is expected to have a structure and
scope similar to other LTSAs recently entered into by ELL or its afliates, providing for a
defined scope of major maintenance activities. As explained by Mr. Thomas in his Direct
Testimony, the costs for major maintenance services included on the base scope of work of the
LTSA are expected to be variable costs that depend on the number of unit starts and hours of
run-time. Therefore, the Company proposes that these variable costs be recovered through the
17
0 identifying clearly the resource needs and the capacity products for which proposals were
sought to meet those needs;
0 engaging the services of an IM to oversee the design and conduct of the RFP and
ensuring that the IM had full access to all 2015 ELL RFP processes and evaluations and
the opportunity to provide comment and direction regarding those matters; and
0 designing processes appropriately to safeguard condential information, including (1)
confining the dissemination of information to only those persons engaged in the 2015
ELL RFP process and in accordance with practices approved by the IM, and (2)
conducting the 2015 ELL RF P in a manner that was fair and impartial to all bidders and
resulted in selection of the lowest reasonable cost resource that could meet the supply
needs of customers targeted in the 2015 ELL RFP.
Also, as required by the MBM Order, ESI kept the Commission Staff informed of and involved
in the development and implementation of the RFP and all resource selections.
REGULATORY APPROVAL PLAN
XXVI.
As discussed by Mr. J. Long in his Direct Testimony, ELL is negotiating an LTSA for the
maintenance of the LCPS CTs with the OEM. The LTSA is expected to have a structure and
scope similar to other LTSAs recently entered into by ELL or its afliates, providing for a
defined scope of major maintenance activities. As explained by Mr. Thomas in his Direct
Testimony, the costs for major maintenance services included on the base scope of work of the
LTSA are expected to be variable costs that depend on the number of unit starts and hours of
run-time. Therefore, the Company proposes that these variable costs be recovered through the
17
FAC, as the Commission has previously authorized for ELL’s Ninemile 6 CCGT,l0 as well as
several other facilities, including Perryville, Acadia Power Block 2, Ouachita Unit 3, Calcasieu,
and Union Power Station Units 3 and 4.“
XXVII.
As detailed in the Direct Testimony of Mr. Thomas, the Company proposes a one-step
regulatory approval process whereby the Commission would issue a decision, supported by the
evidence and sound regulatory principles, that the construction of the Project is in the public
interest and therefore prudent. As part of this decision, the Commission would approve an In-
Service Rate Recovery Plan, approve a Monitoring Plan whereby the Company would make
periodic progress reports to Staff during the construction phase, and make appropriate findings
that will reasonably ensure that the Company will be permitted to recover the prudently-incurred
costs associated with LCPS.
XXVIII.
As part of the Regulatory Approval Plan, the Company is requesting an In-Service Rate
Recovery Plan that will permit the timely inclusion of the LCPS costs in rates. As discussed in
the Direct Testimony of Mr. Thomas, the plan assumes, rst, that ELL will have a Formula Rate
Plan (“FRP”) in place, which requires an annual ling as occurs currently for ELL. Given that,
the Company proposes that 12 months prior to the expected in-service date, ELL will make a
compliance submission in this docket providing the then-best estimate of LCPS’s rst-year
revenue requirement and supporting data (“Revenue Requirement Submission”). The parties to
'°
See LPSC Order No. (1-3 1971, April 5, 2012.
"
LPSC Order No. U-27836, May 3, 2005 (Perryville); LPSC Order No. U-30422-A, October 31, 2009
(Ouachita); LPSC Order No. U—3l196-C, February 9, 2011 (Acadia); LPSC Order No. U-32759-A, November 21,
2013 (Ca1casieu); LPSC Order No. U-33510, November 5,2015 (Union).
18
FAC, as the Commission has previously authorized for ELL’s Ninemile 6 CCGT,l0 as well as
several other facilities, including Perryville, Acadia Power Block 2, Ouachita Unit 3, Calcasieu,
and Union Power Station Units 3 and 4.“
XXVII.
As detailed in the Direct Testimony of Mr. Thomas, the Company proposes a one-step
regulatory approval process whereby the Commission would issue a decision, supported by the
evidence and sound regulatory principles, that the construction of the Project is in the public
interest and therefore prudent. As part of this decision, the Commission would approve an In-
Service Rate Recovery Plan, approve a Monitoring Plan whereby the Company would make
periodic progress reports to Staff during the construction phase, and make appropriate findings
that will reasonably ensure that the Company will be permitted to recover the prudently-incurred
costs associated with LCPS.
XXVIII.
As part of the Regulatory Approval Plan, the Company is requesting an In-Service Rate
Recovery Plan that will permit the timely inclusion of the LCPS costs in rates. As discussed in
the Direct Testimony of Mr. Thomas, the plan assumes, rst, that ELL will have a Formula Rate
Plan (“FRP”) in place, which requires an annual ling as occurs currently for ELL. Given that,
the Company proposes that 12 months prior to the expected in-service date, ELL will make a
compliance submission in this docket providing the then-best estimate of LCPS’s rst-year
revenue requirement and supporting data (“Revenue Requirement Submission”). The parties to
'°
See LPSC Order No. (1-3 1971, April 5, 2012.
"
LPSC Order No. U-27836, May 3, 2005 (Perryville); LPSC Order No. U-30422-A, October 31, 2009
(Ouachita); LPSC Order No. U—3l196-C, February 9, 2011 (Acadia); LPSC Order No. U-32759-A, November 21,
2013 (Ca1casieu); LPSC Order No. U-33510, November 5,2015 (Union).
18
this docket would have an opportunity to request information regarding the revenue requirement
calculation and to propose corrections. An additional update to the estimated first-year revenue
requirement would be submitted in this docket 60 days prior to the expected in-service date
(“Final Estimate Update”) and, again, the parties would have an opportunity to request
information regarding the revenue requirement calculation and to propose corrections. Absent
proposed adjustments, the Final Estimate Update would serve as the basis for the amount that is
included in rates the first billing cycle following the unit’s placement in service. In the event
adjustments to the Final Estimate Update are proposed, any adjustments agreed upon by ELL
would be reflected in the rates that are implemented with the rst billing cycle following
placement of the Project in service. To the extent there are unresolved issues regarding a
proposed adjustment, the revenue requirement included in the Final Estimate Update would be
implemented, subject to refund, and resolution would take place in the subsequent FRP in
accordance with the dispute resolution process provided for therein. Any changes to the revenue
requirement that result from that process would be reected in the F RP outside of sharing, just as
the revenue requirement would have been initially reected in FRP rates.
XXIX.
Based on the current FRP procedures, ELL’s 2019 Evaluation Period (calendar year 2019
test year) would not include any effects of LCPS. However, ELL proposes to include in the
Evaluation Report for 2019 the first year revenue requirement for LCPS and implement an
interim rate adjustment in July 2020 (assuming a June 2020 in-service date). Consequently, rates
placed into effect with the rst billing cycle of September 2020 will reect the results of the
2019 test year and effects of including the estimated first-year’s revenue requirement of LCPS
outside of sharing. In the test year 2020 FRP ling, again assuming the existence of an FRP, it
19
this docket would have an opportunity to request information regarding the revenue requirement
calculation and to propose corrections. An additional update to the estimated first-year revenue
requirement would be submitted in this docket 60 days prior to the expected in-service date
(“Final Estimate Update”) and, again, the parties would have an opportunity to request
information regarding the revenue requirement calculation and to propose corrections. Absent
proposed adjustments, the Final Estimate Update would serve as the basis for the amount that is
included in rates the first billing cycle following the unit’s placement in service. In the event
adjustments to the Final Estimate Update are proposed, any adjustments agreed upon by ELL
would be reflected in the rates that are implemented with the rst billing cycle following
placement of the Project in service. To the extent there are unresolved issues regarding a
proposed adjustment, the revenue requirement included in the Final Estimate Update would be
implemented, subject to refund, and resolution would take place in the subsequent FRP in
accordance with the dispute resolution process provided for therein. Any changes to the revenue
requirement that result from that process would be reected in the F RP outside of sharing, just as
the revenue requirement would have been initially reected in FRP rates.
XXIX.
Based on the current FRP procedures, ELL’s 2019 Evaluation Period (calendar year 2019
test year) would not include any effects of LCPS. However, ELL proposes to include in the
Evaluation Report for 2019 the first year revenue requirement for LCPS and implement an
interim rate adjustment in July 2020 (assuming a June 2020 in-service date). Consequently, rates
placed into effect with the rst billing cycle of September 2020 will reect the results of the
2019 test year and effects of including the estimated first-year’s revenue requirement of LCPS
outside of sharing. In the test year 2020 FRP ling, again assuming the existence of an FRP, it
19
would be necessary to annualize the LCPS costs incurred by ELL to reect twelve months of
costs and re-align the net revenue requirement to be included within the FRP bandwidth
calculation. After the LCPS initial revenue requirement is recovered through the FRP for one
twelve-month period, the Company will true up all components of the rst-year retail revenue
requirement to reect the actual O&M expense incurred during the first year of operation. This
adjustment would also reect any additional adjustments required as a result of actual first year
operations, and remove the amount associated with the recovery of deferred costs. Assuming the
initial revenue requirement is reected in July 2020 FRP rates, this true-up would occur with
implementation of the 2021 Evaluation Period FRP, with rates effective in September 2021.
This true-up would be implemented outside the FRP sharing mechanism. Thereafter, the
Evaluation Report for the applicable FRP and corresponding prospective rates will reect the
realignment of the LCPS-related revenue requirement and will be taken into account within the
bandwidth calculation of the applicable F RP (i.e., inside of sharing) through the subsequent FRP
Evaluation Period with any required change in rates taking effect with the corresponding
Evaluation Period rate effective date. Through this recovery plan, inclusion of the costs of LCPS
in rates would be coordinated with the inclusion of the non-LCPS revenue requirement that is
reected in rates. This would allow for the recovery from customers of the non-fuel costs at the
same time customers receive the fuel savings from LCPS being placed in-service. The Company
specifically requests that the Commission approve this procedure to implement the necessary
change in rates contemporaneously with the commercial operation of LCPS. This in-service
ratemaking treatment is consistent with that approved by the Commission in connection with
ELL’s construction of Ninemile 6.12
'2
See Order Nos. U-31971 and U-33033 and ELL’s Rider Schedule FRP—7, Section 3.A.3.
20
would be necessary to annualize the LCPS costs incurred by ELL to reect twelve months of
costs and re-align the net revenue requirement to be included within the FRP bandwidth
calculation. After the LCPS initial revenue requirement is recovered through the FRP for one
twelve-month period, the Company will true up all components of the rst-year retail revenue
requirement to reect the actual O&M expense incurred during the first year of operation. This
adjustment would also reect any additional adjustments required as a result of actual first year
operations, and remove the amount associated with the recovery of deferred costs. Assuming the
initial revenue requirement is reected in July 2020 FRP rates, this true-up would occur with
implementation of the 2021 Evaluation Period FRP, with rates effective in September 2021.
This true-up would be implemented outside the FRP sharing mechanism. Thereafter, the
Evaluation Report for the applicable FRP and corresponding prospective rates will reect the
realignment of the LCPS-related revenue requirement and will be taken into account within the
bandwidth calculation of the applicable F RP (i.e., inside of sharing) through the subsequent FRP
Evaluation Period with any required change in rates taking effect with the corresponding
Evaluation Period rate effective date. Through this recovery plan, inclusion of the costs of LCPS
in rates would be coordinated with the inclusion of the non-LCPS revenue requirement that is
reected in rates. This would allow for the recovery from customers of the non-fuel costs at the
same time customers receive the fuel savings from LCPS being placed in-service. The Company
specifically requests that the Commission approve this procedure to implement the necessary
change in rates contemporaneously with the commercial operation of LCPS. This in-service
ratemaking treatment is consistent with that approved by the Commission in connection with
ELL’s construction of Ninemile 6.12
'2
See Order Nos. U-31971 and U-33033 and ELL’s Rider Schedule FRP—7, Section 3.A.3.
20
XXX.
In the alternative, should ELL no longer have an F RP in place when LCPS enters
commercial operation, the Company proposes to le a general rate case twelve months prior to
the anticipated in—service date of LCPS with pro forma adjustments to the test year to reect the
LCPS’s estimated rst-year revenue requirement. The effect of regulatory lag associated with a
project of this size is too signicant for the Commission not to provide for the timely inclusion
of LCPS costs in the rates of ELL. Also, it is important to align the timing of the cost
responsibility for LCPS with the timing of customers’ receipt of benets from the Project.
XXXI.
Timely implementation of a rate change under either alternative ratemaking process
would avoid the need for a deferral order from the Commission because cost recovery would
begin contemporaneously with the commercial operation of the unit. However, if the Company
is unable to begin recovering Project costs when LCPS is placed in service, then the Company
requests the approval to defer all non-fuel costs, including a full return on the investment, until
such time as those costs are reflected in rates. Such a deferral would include the accrual of
carrying charges at the full Commission-authorized rate of return, and the Company proposes
that the deferred costs would be recovered over a two-year period. This alternative recovery is
generally more costly to customers due to the accumulation of carrying charges on the deferred
balance.
XXXII.
As part of the Regulatory Approval Plan, the Company proposes a Monitoring Plan
patterned after the monitoring plan approved by the Commission relating to Ninemile 6 in
Docket No. U-31971 and the monitoring plan proposed for the St. Charles Power Station in
21
XXX.
In the alternative, should ELL no longer have an F RP in place when LCPS enters
commercial operation, the Company proposes to le a general rate case twelve months prior to
the anticipated in—service date of LCPS with pro forma adjustments to the test year to reect the
LCPS’s estimated rst-year revenue requirement. The effect of regulatory lag associated with a
project of this size is too signicant for the Commission not to provide for the timely inclusion
of LCPS costs in the rates of ELL. Also, it is important to align the timing of the cost
responsibility for LCPS with the timing of customers’ receipt of benets from the Project.
XXXI.
Timely implementation of a rate change under either alternative ratemaking process
would avoid the need for a deferral order from the Commission because cost recovery would
begin contemporaneously with the commercial operation of the unit. However, if the Company
is unable to begin recovering Project costs when LCPS is placed in service, then the Company
requests the approval to defer all non-fuel costs, including a full return on the investment, until
such time as those costs are reflected in rates. Such a deferral would include the accrual of
carrying charges at the full Commission-authorized rate of return, and the Company proposes
that the deferred costs would be recovered over a two-year period. This alternative recovery is
generally more costly to customers due to the accumulation of carrying charges on the deferred
balance.
XXXII.
As part of the Regulatory Approval Plan, the Company proposes a Monitoring Plan
patterned after the monitoring plan approved by the Commission relating to Ninemile 6 in
Docket No. U-31971 and the monitoring plan proposed for the St. Charles Power Station in
21
Docket No. U-33770. The Company’s proposed Monitoring Plan is attached to the Direct
Testimony of Mr. Thomas as Exhibit JBT-2. The Monitoring Plan contemplates a quarterly
report providing detailed information on the status of LCPS, its costs, and other activities that are
critical to completing the Project in a timely manner, and it includes appropriate condentiality
restrictions designed to address any competitive concerns that would arise with respect to
intervenors who are also participants in the power market. The Monitoring Plan will serve as an
“early warning system,” and the Company commits to providing the Commission in the quarterly
reports an afrmation as to whether continuing the Project is, in the Company’s opinion, in the
public interest.
XXXIII.
As explained in the Direct Testimony of Mr. Thomas, in the event the Company believes
it to be in the public interest to cease construction and cancel the Project, it will make a ling in
this proceeding seeking Commission approval of that recommendation. In this Application, the
Company seeks approval of this procedure.
XXXIV.
As discussed in the Direct Testimony of Mr. Thomas, the Company is not requesting the
sort of specic approvals concerning risk management and use of contractors that were proposed
in connection with the application to certify the St. Charles Power Station. ELL has not included
those requests in its application to certify LCPS in the light of the Commission’s issuance of a
Notice of Rulemaking in Docket No. R-34246 to consider the appropriateness and potential
scope of the Commission’s review and pre-approval of utility contracts regarding the
22
Docket No. U-33770. The Company’s proposed Monitoring Plan is attached to the Direct
Testimony of Mr. Thomas as Exhibit JBT-2. The Monitoring Plan contemplates a quarterly
report providing detailed information on the status of LCPS, its costs, and other activities that are
critical to completing the Project in a timely manner, and it includes appropriate condentiality
restrictions designed to address any competitive concerns that would arise with respect to
intervenors who are also participants in the power market. The Monitoring Plan will serve as an
“early warning system,” and the Company commits to providing the Commission in the quarterly
reports an afrmation as to whether continuing the Project is, in the Company’s opinion, in the
public interest.
XXXIII.
As explained in the Direct Testimony of Mr. Thomas, in the event the Company believes
it to be in the public interest to cease construction and cancel the Project, it will make a ling in
this proceeding seeking Commission approval of that recommendation. In this Application, the
Company seeks approval of this procedure.
XXXIV.
As discussed in the Direct Testimony of Mr. Thomas, the Company is not requesting the
sort of specic approvals concerning risk management and use of contractors that were proposed
in connection with the application to certify the St. Charles Power Station. ELL has not included
those requests in its application to certify LCPS in the light of the Commission’s issuance of a
Notice of Rulemaking in Docket No. R-34246 to consider the appropriateness and potential
scope of the Commission’s review and pre-approval of utility contracts regarding the
22
construction and/or acquisition of signicant generation and transmission-related assets.”
Considering the importance of the issues, however, ELL has included with its Application
complete information about its approaches to the use of contractors to construct LCPS and to
project risk management. The Commission will therefore have this information as it determines
the prudence of ELL’s decision to commence construction under the 1983 General Order.
REQUEST FOR TIMELY TREATMENT
XXXV.
As discussed herein, the Company is requesting that the Commission direct or establish a
Procedural Schedule in accordance with the 120-day certication period set forth in the 1983
General Order. As Mr. Thomas discusses in his Direct Testimony and as discussed by other
witnesses, there are signicant nancial and operational implications for ELL’s customers if
LCPS is not constructed on the timetable proposed. And as discussed by Messrs. Girard and
Charles Long in their Direct Testimony, development and deployment of signicant generation
and transmission projects is a time consuming process that must begin several years in advance
of the need-by date. The 120—day requirement in the Commission’s 1983 General Order
recognizes the importance of timely feedback from the Commission because, if the Commission
determines that a proposed resource option is found to not serve the public interest, the Company
must then pursue other options to maintain reliable, affordable electric service.
XXXVI.
In the case of ELL’s needs in WOTAB, the Company must either construct new
generation in the region or a major transmission project, as discussed by Mr. Charles Long.
'3
See Commission Docket No. R-34246, In re: Rulemalcing to consider the appropriateness and potential
scope of the Louisiana Public Service Commission ’s review and pre-approval of utility contracts regarding the
construction and/or acquisition of signicant generation and transmission related assets, Notice of Rulemaking
dated September 22, 2016.
23
construction and/or acquisition of signicant generation and transmission-related assets.”
Considering the importance of the issues, however, ELL has included with its Application
complete information about its approaches to the use of contractors to construct LCPS and to
project risk management. The Commission will therefore have this information as it determines
the prudence of ELL’s decision to commence construction under the 1983 General Order.
REQUEST FOR TIMELY TREATMENT
XXXV.
As discussed herein, the Company is requesting that the Commission direct or establish a
Procedural Schedule in accordance with the 120-day certication period set forth in the 1983
General Order. As Mr. Thomas discusses in his Direct Testimony and as discussed by other
witnesses, there are signicant nancial and operational implications for ELL’s customers if
LCPS is not constructed on the timetable proposed. And as discussed by Messrs. Girard and
Charles Long in their Direct Testimony, development and deployment of signicant generation
and transmission projects is a time consuming process that must begin several years in advance
of the need-by date. The 120—day requirement in the Commission’s 1983 General Order
recognizes the importance of timely feedback from the Commission because, if the Commission
determines that a proposed resource option is found to not serve the public interest, the Company
must then pursue other options to maintain reliable, affordable electric service.
XXXVI.
In the case of ELL’s needs in WOTAB, the Company must either construct new
generation in the region or a major transmission project, as discussed by Mr. Charles Long.
'3
See Commission Docket No. R-34246, In re: Rulemalcing to consider the appropriateness and potential
scope of the Louisiana Public Service Commission ’s review and pre-approval of utility contracts regarding the
construction and/or acquisition of signicant generation and transmission related assets, Notice of Rulemaking
dated September 22, 2016.
23
While the Company believes the construction of LCPS is clearly the preferred, more economical
means to meet this need, that is ultimately a question for the Commission to decide, but it is
critical that the Commission make this decision in a timely manner, consistent with the 120-day
certication period set forth in the 1983 General Order. To assist in the timely resolution of this
matter, the Company also requests that the intervention period in this matter be shortened to
fteen (15) days and that a scheduling conference be held the week following the close of the
intervention period.
SERVICE OF NOTICES AND PLEADINGS
XXXVII.
The Company requests that notices, correspondence, and other communications
concerning this Application be directed to the following persons:
Mark D. Kleehammer Lawrence J. Hand, Jr.
4809 Jefferson Highway Elizabeth L. Adams
Mail Unit L-JEF-357 639 Loyola Avenue
Jefferson, Louisiana 70121 Mail Unit L-ENT-26E
Telephone: (504) 840-2528 New Orleans, Louisiana 70113
Facsimile: (504) 259-1685 Telephone: (504) 576-6825
mkleeha@entergy.com Facsimile: (504) 576-5579
lhand@entergy.com eadams4@entergy.com
The Company requests that the foregoing persons be placed on the Ofcial Service List for this
proceeding and respectfully requests that the Commission permit the designation of more than
one person to be placed on the Ofcial Service List for service in this proceeding.
REQUEST FOR CONFIDENTIAL TREATMENT
XXXVIII.
Portions of the supporting Direct Testimony and Exhibits contain information considered
by the Company to be proprietary and condential. Disclosure of certain information may
24
While the Company believes the construction of LCPS is clearly the preferred, more economical
means to meet this need, that is ultimately a question for the Commission to decide, but it is
critical that the Commission make this decision in a timely manner, consistent with the 120-day
certication period set forth in the 1983 General Order. To assist in the timely resolution of this
matter, the Company also requests that the intervention period in this matter be shortened to
fteen (15) days and that a scheduling conference be held the week following the close of the
intervention period.
SERVICE OF NOTICES AND PLEADINGS
XXXVII.
The Company requests that notices, correspondence, and other communications
concerning this Application be directed to the following persons:
Mark D. Kleehammer Lawrence J. Hand, Jr.
4809 Jefferson Highway Elizabeth L. Adams
Mail Unit L-JEF-357 639 Loyola Avenue
Jefferson, Louisiana 70121 Mail Unit L-ENT-26E
Telephone: (504) 840-2528 New Orleans, Louisiana 70113
Facsimile: (504) 259-1685 Telephone: (504) 576-6825
mkleeha@entergy.com Facsimile: (504) 576-5579
lhand@entergy.com eadams4@entergy.com
The Company requests that the foregoing persons be placed on the Ofcial Service List for this
proceeding and respectfully requests that the Commission permit the designation of more than
one person to be placed on the Ofcial Service List for service in this proceeding.
REQUEST FOR CONFIDENTIAL TREATMENT
XXXVIII.
Portions of the supporting Direct Testimony and Exhibits contain information considered
by the Company to be proprietary and condential. Disclosure of certain information may
24
present an unreasonable risk of ham to ELL and its customers, as well as participants in the
2015 ELL RF P. Therefore, in light of the sensitive nature of such information, the Company has
submitted two versions of the Direct Testimony of Messrs. May, J. Long, Girard, C. Long,
Hurstell, Walz, and Nguyen as well as Exhibits of Messrs. May, Thomas, J. Long, Girard, C.
Long, Hurstell, John, Walz, Nguyen, and DeGeorge, one marked “Public Version” and the other
marked “Highly Sensitive Protected Material” (“HSPM”). Although the condential and
sensitive information and documents included with the Application may be reviewed by
appropriate representatives of the Commission Staff and intervenors pursuant to the terms and
conditions of a suitable condentiality agreement once such an agreement has been executed in
this docket, this confidential information also is being provided pursuant to, and shall be exempt
from public disclosure pursuant to, the Commission’s General Order dated August 31, 1992, and
Rule 12.1 of the Rules of Practice and Procedure of the Louisiana Public Service Commission.
XXXIX.
Additionally, portions of Mr. C. Long’s testimony and exhibits are considered
Confidential Energy Infrastructure Information (“CEII”) as dened by 18 C.F.R. §
388.l13(c)(1). The sensitive nature of CEII requires additional protections and safeguards;
therefore, the Company has submitted an additional CEII version of the Direct Testimony of Mr.
C. Long and accompanying exhibits CWL-2 and CWL-6. Although the CEII testimony and
exhibits included with the Application may be reviewed by appropriate representatives of the
Commission Staff and intervenors pursuant to the terms and conditions of an appropriate CEII
agreement once such an agreement has been executed in this docket, the CEII material is being
filed with the Commission pursuant to, and shall be exempt from public disclosure pursuant to,
25
present an unreasonable risk of ham to ELL and its customers, as well as participants in the
2015 ELL RF P. Therefore, in light of the sensitive nature of such information, the Company has
submitted two versions of the Direct Testimony of Messrs. May, J. Long, Girard, C. Long,
Hurstell, Walz, and Nguyen as well as Exhibits of Messrs. May, Thomas, J. Long, Girard, C.
Long, Hurstell, John, Walz, Nguyen, and DeGeorge, one marked “Public Version” and the other
marked “Highly Sensitive Protected Material” (“HSPM”). Although the condential and
sensitive information and documents included with the Application may be reviewed by
appropriate representatives of the Commission Staff and intervenors pursuant to the terms and
conditions of a suitable condentiality agreement once such an agreement has been executed in
this docket, this confidential information also is being provided pursuant to, and shall be exempt
from public disclosure pursuant to, the Commission’s General Order dated August 31, 1992, and
Rule 12.1 of the Rules of Practice and Procedure of the Louisiana Public Service Commission.
XXXIX.
Additionally, portions of Mr. C. Long’s testimony and exhibits are considered
Confidential Energy Infrastructure Information (“CEII”) as dened by 18 C.F.R. §
388.l13(c)(1). The sensitive nature of CEII requires additional protections and safeguards;
therefore, the Company has submitted an additional CEII version of the Direct Testimony of Mr.
C. Long and accompanying exhibits CWL-2 and CWL-6. Although the CEII testimony and
exhibits included with the Application may be reviewed by appropriate representatives of the
Commission Staff and intervenors pursuant to the terms and conditions of an appropriate CEII
agreement once such an agreement has been executed in this docket, the CEII material is being
filed with the Commission pursuant to, and shall be exempt from public disclosure pursuant to,
25
18 C.F.R. § 388.113(c)(l), the Commission’s General Order dated August 31, 1992, and Rule
12.1 of the Rules of Practice and Procedure of the Louisiana Public Service Commission.
PRAYER FOR RELIEF
XL.
WHEREFORE, Entergy Louisiana, LLC respectfully requests that the Commission,
subj ect to the fullest extent of its jurisdiction, grant relief and give its approval as follows:
1. Find that the Company’s construction of LCPS serves the public convenience and
necessity and is in the public interest, and is therefore prudent, in accordance with
the Commission’s 1983 General Order;
Find that the selection of the Project through the 2015 ELL RFP is consistent with
the terms of the Commission’s MBM Order;
Find that the retail revenue requirement associated with the Project (to be
determined in a subsequent revenue requirement ling) is deemed eligible for
recovery in the first billing cycle of the month following commercial operation of
LCPS via Rider FRP, outside of the FRP sharing mechanism and outside of the cap
set forth in Section 2.C.2.d;
Authorize (i) a deferral of the non-fuel revenue requirement (i.e., costs that are not
eligible to be recovered through the FAC) associated with LCPS until such time as
the cost of LCPS is reflected in the Company’s retail rates, (ii) a deferral of the
costs to hire and train LCPS plant staff in advance of the in-service date, and (iii) an
accrual of carrying charges at the full Commission-authorized rate of return,
commencing on the date of commercial operation of LCPS and continuing until
such time as such costs of LCPS are reected in the Company’s retail rates;
Authorize the recovery, over a two-year period, of any deferred balances referenced
in Paragraph 4 above beginning contemporaneously with the time that the costs of
LCPS begin to be recovered from customers through rates;
Approve recovery, though the FAC, of the variable expenses incurred under the
LTSA applicable to LCPS;
Approve the Monitoring Plan under which the Company will report to Commission
Staff on a quarterly basis the status of LCPS, including schedule, costs, and other
critical associated activities;
26
18 C.F.R. § 388.113(c)(l), the Commission’s General Order dated August 31, 1992, and Rule
12.1 of the Rules of Practice and Procedure of the Louisiana Public Service Commission.
PRAYER FOR RELIEF
XL.
WHEREFORE, Entergy Louisiana, LLC respectfully requests that the Commission,
subj ect to the fullest extent of its jurisdiction, grant relief and give its approval as follows:
1. Find that the Company’s construction of LCPS serves the public convenience and
necessity and is in the public interest, and is therefore prudent, in accordance with
the Commission’s 1983 General Order;
Find that the selection of the Project through the 2015 ELL RFP is consistent with
the terms of the Commission’s MBM Order;
Find that the retail revenue requirement associated with the Project (to be
determined in a subsequent revenue requirement ling) is deemed eligible for
recovery in the first billing cycle of the month following commercial operation of
LCPS via Rider FRP, outside of the FRP sharing mechanism and outside of the cap
set forth in Section 2.C.2.d;
Authorize (i) a deferral of the non-fuel revenue requirement (i.e., costs that are not
eligible to be recovered through the FAC) associated with LCPS until such time as
the cost of LCPS is reflected in the Company’s retail rates, (ii) a deferral of the
costs to hire and train LCPS plant staff in advance of the in-service date, and (iii) an
accrual of carrying charges at the full Commission-authorized rate of return,
commencing on the date of commercial operation of LCPS and continuing until
such time as such costs of LCPS are reected in the Company’s retail rates;
Authorize the recovery, over a two-year period, of any deferred balances referenced
in Paragraph 4 above beginning contemporaneously with the time that the costs of
LCPS begin to be recovered from customers through rates;
Approve recovery, though the FAC, of the variable expenses incurred under the
LTSA applicable to LCPS;
Approve the Monitoring Plan under which the Company will report to Commission
Staff on a quarterly basis the status of LCPS, including schedule, costs, and other
critical associated activities;
26
10.
ll.
12.
13.
Rule that, with respect to the Project described in the Application, the Company has
complied with, or is not in conflict with, the provisions of all applicable LPSC
Orders;
Find, as provided in the Commission’s Special Order No. 7-2000, dated March 22, 2000, that the condential testimony, exhibits, and other materials referenced in the
Application shall be exempt from public disclosure pursuant to the Commission’s
General Order dated August 31, 1992 and Rule 12.1 of the Rules of Practice and
Procedure of the Louisiana Public Service Commission;
Direct that the period for interventions and protests be shortened to fteen (15) days and that a scheduling conference be held the week following the close of the
intervention period;
Develop and implement appropriate procedures to facilitate a Commission decision
on the Company’s Application consistent with the 120-day requirement in the
Commission’s 1983 General Order;
Direct that notice of all matters in these proceedings be sent to Mark D.
Kleehammer, Lawrence J. Hand, Jr., and Elizabeth L. Adams as representatives of
the Company; and
Order such other general and equitable relief as to which the Company may show
itself so entitled.
Respectfully submitted,
BY: . . Lawrence J. Hand, Jr., La. Bar No. 23770
Elizabeth L. Adams, La. Bar No. 33703
Mail Unit L-ENT-26E
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone: (504) 576-5469
Facsimile: (504) 576-5579
ATTORNEYS FOR
ENTERGY LOUISIANA, LLC
27
10.
ll.
12.
13.
Rule that, with respect to the Project described in the Application, the Company has
complied with, or is not in conflict with, the provisions of all applicable LPSC
Orders;
Find, as provided in the Commission’s Special Order No. 7-2000, dated March 22, 2000, that the condential testimony, exhibits, and other materials referenced in the
Application shall be exempt from public disclosure pursuant to the Commission’s
General Order dated August 31, 1992 and Rule 12.1 of the Rules of Practice and
Procedure of the Louisiana Public Service Commission;
Direct that the period for interventions and protests be shortened to fteen (15) days and that a scheduling conference be held the week following the close of the
intervention period;
Develop and implement appropriate procedures to facilitate a Commission decision
on the Company’s Application consistent with the 120-day requirement in the
Commission’s 1983 General Order;
Direct that notice of all matters in these proceedings be sent to Mark D.
Kleehammer, Lawrence J. Hand, Jr., and Elizabeth L. Adams as representatives of
the Company; and
Order such other general and equitable relief as to which the Company may show
itself so entitled.
Respectfully submitted,
BY: . . Lawrence J. Hand, Jr., La. Bar No. 23770
Elizabeth L. Adams, La. Bar No. 33703
Mail Unit L-ENT-26E
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone: (504) 576-5469
Facsimile: (504) 576-5579
ATTORNEYS FOR
ENTERGY LOUISIANA, LLC
27
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