Keep in mind, every week Grand Gulf is down this summer is costing New Orleanians between $7-12 million. Those bills will come due as your August and September bills come in.
Mississippi Public Service Commission negotiated independently with Entergy for a settlement that the Alliance and all of the other utility regulators agree is far too low. In fact, Councilmember J.P. Morrell referred to this settlement as “pawn shop” prices.
For the Alliance, a low-ball settlement is simply not a fair resolution for the years-long problems with Grand Gulf, including poor performance, imprudent management, and inequitable profit levels, which have led to a dozen separate suits at FERC. What’s worse, this money won’t solve those problems or hold Entergy accountable for the future. This is outrageous, and the Alliance will continue to fight in Louisiana and at the Federal level for a better outcome.
Background on Grand Gulf
Construction on Grand Gulf in Port Gibson, Mississippi was completed in 1982 and Grand Gulf began providing electricity to the grid in July 1985.
WHo owns Grand Gulf?
Construction on Grand Gulf in Port Gibson, Mississippi began in the 1970s. In 1974, Entergy determined that Entergy Mississippi could not finance the unit independently, so Middle South Energy, Inc. was created to own and construct the unit. Middle South Energy's name was changed to System Energy Resources, Inc. (SERI) in the late 1980s.
From the start, Grand Gulf has a long and legendary history of imposing inordinate costs on ratepayers. As of 1983, well before the Grand Gulf plant went on-line, the project cost had risen "from a projected total cost of $1.2 billion for both units to $2.8 billion for Unit No. 1 alone." A FERC administrative law judge found that between now and 1993 the total amount which ratepayers will incur for Grand Gulf power will be $3 billion more than if the power were generated from existing units. By the time construction of Grand Gulf was completed, the cost of the plant had increased to "in excess of $3 billion for one unit."
In 2012, despite the already high costs imposed on ratepayers by Grand Gulf, SERI (the entity that owns Grand Gulf) elected to expend an additional approximately $800 million to uprate Grand Gulf. For this $800 million, SERI should have obtained 160 additional megawatts (MW), however an ill- conceived sale/leaseback transaction resulted in the uprate increasing SERI's owned capacity by only about 142 MW.
Frequent Outages To This Day
In 2016 Grand Gulf’s performance managed to reach new lows, driving its all-in costs to consumers to exceedingly high levels. In that time period, Grand Gulf’s capacity factor averaged an abysmal 61.4% while the average capacity factor for the U.S. nuclear fleet was 92.7%. Grand Gulf did not achieve anything approaching full output for the overall period, and approached a normal output level only in 2019 before declining again in 2020.
Complainants’ nuclear expert investigated the prudence of the plant’s operation and found significant evidence of imprudent management of Grand Gulf. Specifically, the nuclear expert found that since 2016 Grand Gulf has shown consistent, substantially degraded performance compared to the U.S. nuclear fleet and that this degradation cannot be explained by the age of the plant, type of plant, or any other “common cause” factor.
According to a recent filing by the New Orleans City Council, Grand Gulf’s problems are continuing. Grand Gulf is once again experiencing an outage which began on June 30, 2022. SERI attempted to power up starting around July 3, 2022, but was unable to get more than 60% power. On or about July 12, 2022, SERI shut down completely and has remained at 0% power through the date of this filing.
Over this same time period, Grand Gulf also has been subject to heightened safety review by the Nuclear Regulatory Commission ("NRC") to a far greater extent than most nuclear power plants.
The Complainants’ expert concluded that Grand Gulf is in the bottom 5% of the U.S. nuclear fleet with regard the Nuclear Safety Performance. More shocking is the NRC’s finding in 2018 that "deliberate" violations of safety protocols occurred at Grand Gulf.
The Complaint at FERC
On March 2, 2021, Louisiana Public Service Commission, Arkansas Public Service Commission, and Council of The City of New Orleans, Louisiana (Complainants) filed a formal complaint against System Energy Resources (SERI), Entergy Services, Entergy Operations, and Entergy Corporation alleging that SERI has violated the obligation of prudent utility management in operating the Grand Gulf nuclear unit, resulting in large overcharges to its four affiliated customers, including Entergy Louisiana and Entergy New Orleans.
The basic principle underlying the complaint is that ratepayers should not have to continue to pay exceedingly high costs for consistently degraded and imprudent performance, or for the costs of SERI's continual safety violations.
More specifically, the consequences of the imprudent operation of the Grand Gulf plant include:
The objective of the Complaint is to try and resolve the outage and safety violation issues by giving SERI a financial incentive to address these issues in a competent manner.
The complainants are seeking a modification of the Unit Power Sales Agreement (UPSA) to tie cost recovery to Grand Gulf's performance level going forward, (2) refunds for costs that would not have been incurred but for SERI’s imprudent management actions, and (3) the adoption of a new ratemaking procedure for SERI to ensure that adequate economic analysis of alternatives is performed prior to making major new investments in Grand Gulf.
This information was pulled from AAE, Deep South Center For Environmental Justice (DSCEJ), and Sierra Club's comments in opposition to the proposed settlement, submitted on August 1, 2022. View & download our full comments using the button above.
Photo Credit: Clarion-Ledger