Clear vision, clear progress.

2015 Integrated Report

Invest to Deliver Power Safely, Reliably and Efficiently

In 2015, we provided power and natural gas safely, reliably and efficiently to existing customers and invested to serve future demand. Investments in our generation, transmission and distribution infrastructure help us manage our production costs and maintain low rates while meeting reliability goals and environmental regulations.


Charles Rice, President and CEO, Entergy New Orleans

Generation

Since 2002, we have replaced nearly 20 percent of our generation resources with cleaner, more efficient resources.

Ongoing portfolio transformation is a key strategy for Entergy. We engage stakeholders and anticipate future environmental requirements in our planning process. This process guides our investments in long-term generation resources to plan for the retirement of aging assets and meet growing load demands while reducing our environmental footprint. Modernizing our fleet creates meaningful benefits for our customers through improved efficiency, reliability and resiliency. Our strategy calls for the evaluation of acquisitions, long-term power purchases and new-build options to develop a modern and efficient generation portfolio capable of providing reliable, cost-effective power. Our resource decisions are informed by many factors such as prospective environmental regulations, including CO2, energy efficiency and demand-side management programs, as well as the preferences and expectations of our customers. As a result, since establishing our portfolio transformation strategy in 2002, we have replaced nearly 20 percent of our generation resources with cleaner, more efficient resources.

In early 2016, we completed our acquisition of Union Power Station, a 1,980-megawatt generating facility near El Dorado, Arkansas. The facility consists of four highly efficient, combined-cycle natural gas-fired generating units. We acquired Union Power Station, which went into commercial service in 2003, at a purchase price that was approximately half the cost to build a comparable new CCGT facility.

In order to provide additional generation for our Louisiana customers, we selected in 2015 the self-build option in a competitive process with an independent monitor. We have requested approval from the Louisiana Public Service Commission to proceed with the construction on the St. Charles Power Station, a 980-megawatt CCGT in Montz, Louisiana. With a targeted in-service date of June 2019, this plant will provide economic and reliable power to our customers for many years. We are planning for additional resource needs with similar units in the Lake Charles area of Louisiana and the western region of our Texas service territory through self-build or other agreements to be determined in competitive bid processes. Our long-term plans also call for the addition of smaller, more flexible combustion turbine units in New Orleans and Arkansas.

We have pilot projects underway in multiple utility operating companies to study the feasibility of utility-scale solar generation. Together, these projects will help us assess geographic differences and capacity factors while providing our customers with access to a renewable energy source. Entergy Mississippi, Inc. launched three solar pilot installations in three different locations, each capable of generating 500 KW from fixed-tilt solar arrays. Entergy New Orleans selected a contractor to begin construction in 2016 of a 1 MW solar generation project with state-of-the-art battery storage technology to help compensate for cloud cover. Entergy Arkansas entered into a power purchase agreement to facilitate construction of an 81 MW photovoltaic solar energy generating facility that is expected to be connected to the grid in mid-2019. When complete, the 500-acre project will be capable of generating enough clean energy to power approximately 13,000 homes.

Generation Sources Used
to Meet Utility Demand

bar1

Utility Nuclear Fleet
Capability Factor

Capability factor: percentage of the maximum energy generation a plant is capable of supplying to the grid, limited only by factors within control of plant management


Rick Riley, Incoming President and CEO, Entergy Arkansas

Transmission

Our move to MISO enhances reliability by informing all market participants on the state of grid conditions and market operations through the public posting of electricity prices and other key system information. MISO mitigates transmission congestion on a least-cost basis, allowing for more timely and efficient congestion management. Integrating MISO into our business model also has created different flow patterns on our transmission system and highlighted where new transmission facilities and upgrades are economic. In 2015, we invested more than $630 million in transmission infrastructure. Highlights include:

Entergy Arkansas began construction on a 24-mile transmission line in southeast Arkansas to support economic growth in the region and improve reliability. The $62 million investment is in addition to the $25 million investment already underway in a 27-mile transmission line in southeast Arkansas.

Entergy Louisiana received certification for the Lake Charles project, a $159 million project, excluding contingency, that includes the construction of two new substations, the expansion of a third and the addition of about 25 miles of high-voltage transmission lines to move power reliably and efficiently into this fast-growing region. Construction begins in 2016.

Entergy Mississippi will begin construction of the $132 million Southwest Mississippi Reliability Improvement Project in the spring of 2016, which includes a new 65-mile transmission line and the rebuilding of several sections of existing transmission lines. The project is needed to maintain compliance with industry standards and support growth in the Natchez area.

Entergy New Orleans began a $30 million transmission upgrade to enhance reliability and increase capacity. This is an important step in preparation for our future generation landscape, such as the retirement of our Michoud generating facility in coming months.

Three important projects will go into service in Entergy Texas, Inc. in early to mid-2016. The Ponderosa–Grimes 230 kV line, the Orange County Project and the China–Amelia 230 kV line together represent nearly $150 million of transmission investment and will provide reliability benefits throughout the Entergy Texas footprint.

Two new Transmission Control Centers are under construction and on track for completion in 2016 in Arkansas and Mississippi. Each center represents a $23 million investment and is being built to withstand an EF5 tornado. The centers will share sophisticated communications technology to enable close coordination of operations and enhance training and development.

Electric Distribution

We are exploring new grid technologies to improve resilience, enhance reliability, lower cost and improve customer service. We are moving forward with steps toward the installation of smart meters to benefit our customers and expect to begin to make regulatory filings in 2016, where necessary. Smart meters facilitate operational efficiencies, enable faster outage response and empower customers with information to better understand and control their usage. In addition, smart meters lay the foundation for the next generation of grid technologies on our system. We are evaluating broader grid modernization initiatives, engaging with our stakeholders and bringing forward further proposals as appropriate.

We are also exploring technologies to improve grid reliability and resilience through storm hardening and wildlife protection, as well as technologies and devices that enable deployment of distributed energy resources and micro grids. Our goal is to meet customer expectations for service now and in the future while managing the required investments to maintain our rate advantage.

Gas Distribution

Our gas distribution business delivers natural gas to about 199,000 retail customers in Baton Rouge and New Orleans. In New Orleans, in the 10 years since the devastation of Hurricane Katrina, we have replaced more than 300 miles of pipe as of 2015, and rebuilding continues. In Baton Rouge, we began a gas pipeline replacement program in 2015 to replace 100 miles of pipe over the next 10 years to improve safety and reliability.