Back to top

Entergy (ETR) Gets Nod to Build Power Plant in Louisiana

Read MoreHide Full Article

Entergy Corporation (ETR - Free Report) has received an approval from the Louisiana Public Service Commission ("LPSC") to construct a natural gas-fired, combined-cycle power plant in St. Charles Parish.

Details of the Approval

With the LPSC vote, Entergy Louisiana can now start the construction of the 980-megawatt ("MW") unit in Montz, around 30 miles from New Orleans. The plant is scheduled to begin commercial operations by Jun 2019. The cost of building the plant, including transmission and other project-related expenses, is approximately $869 million.

Benefits of the Plant

This plant will offer a reliable source of clean and affordable energy that will duly satisfy customer demand and help drive economic growth in southeast Louisiana. It is also expected to facilitate sustainable reliability of the electric grid and ease the process of repairing the same after major storm events that hamper the transmission system.

The St. Charles Power Station, once built, will be one of the cleanest fossil fuel-fired units in Entergy Louisiana's generation fleet. Throughout the expected 30-year life of the unit, customers are projected to save over $1.3 billion, which will exceed the project's construction cost by 10 years.

According to an analysis by Louisiana economist, Dr. Loren Scott, during the plant's construction phase, an estimated 2,000 direct and indirect jobs will be generated annually across the state. It is also expected to boost Louisiana business sales by $1.4 billion and household earnings by $476.8 million.

Notably, Entergy Louisiana decided to build the unit after evaluating all other options submitted through a 2014 request for proposals for power resources to cater to southeast Louisiana. An independent monitor supervised the procurement and selection process, which was conducted after discussing with the LPSC staff.

Entergy's Plans

Entergy has stated plans to invest $10.3 billion in the 2017–2019 time frame, comprising $4.36 billion for generation, $2.84 billion for distribution and $2.45 billion for transmission. The company expects grid upgrades, asset replacement and industrial load growth to drive bottom-line growth.

In addition to pursuing opportunities in the generation business, the company has a strong project pipeline as well as the LPSC approval to replace 100 miles of pipe over the next 10 years. A combination of different types of projects will enable the company to diversify its revenue stream.

Zacks Rank & Key Picks

Entergy currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the utility sector include DTE Energy Company (DTE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and Xcel Energy Inc. (XEL - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

DTE Energy witnessed a 1.3% rise in its last five days’ stock price. On an average, the company posted a positive earnings surprise of 10.07% in the trailing four quarters.

CenterPoint Energy witnessed a 3.2% rally in its last one month’s stock price. On an average, the company recorded a positive earnings surprise of 5.07% in the four trailing quarters.

Xcel Energy witnessed a 0.8% increase in its last five days’ stock price. On an average, the company delivered a positive earnings surprise of 0.43% in the last four trailing quarters.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

More from Zacks Analyst Blog

You May Like