Entergy to Purchase Union Power Station in El Dorado for $948M

Entergy Corporation’s subsidiaries Entergy Arkansas Inc., Entergy Gulf States Louisiana LLC and Entergy Texas Inc. have agreed to purchase the Union Power Station in El Dorado for $948 million, the company announced Monday.

The 1,980-megawatt facility, which began operation in 2003, is currently owned by Union Power Partners LP, an independent power producer owned by Entegra TC LLC. Both companies filed for Chapter 11 bankruptcy protection in August.

Entergy said the sale is pending federal and state regulatory approval, but that the company plans to close on the deal in late 2015.

"Our service territory is at the heart of an industrial renaissance that is built on competitive energy costs, low electricity prices and smart economic growth policies of our state governments," said Leo Denault, Entergy’s chairman and chief executive officer, in a news release. "The acquisition of these highly efficient units at a price favorable to our customers will help us meet the increased demand and be a significant step in the ongoing modernization of our generating fleet."

The power station is made up of four combined-cycle gas-fired generating units, or CCGTs, with a rating of 495 megawatts. Under the purchase agreement, Entergy Arkansas and Entergy Texas will acquire one unit and Entergy Gulf States Louisiana will acquire two units, which will also be used by Entergy New Orleans under a purchase power agreement, if approved by the city council.

Entergy noted in its news release that the purchase price is about half of what it would cost to build a new CCGT facility.

Entergy’s power plants generate about 30,000 megawatts and has about 2.8 million utility customers in Arkansas, Louisiana, Mississippi and Texas. The company has about 14,000 employees and annual revenues of more than $11 billion.

In its bankruptcy filings, Entegra reported more than $1 billion in debts and between $500 million and $1 billion in assets.

Creditors based in Arkansas included $180,599 to Union County Water Conservation Board of El Dorado for utility and $125,018 to Diversified Services Lawn & Garden of El Dorado for trade debt.

Hugh McDonald, president and CEO of Entergy Arkansas, said in an interview that the bankruptcy did not play a role in the company’s decision to buy the plant. He said Entergy received an unsolicited offer from Entegra to buy the plant months ago and had leased power from the facility in the past.

A spokesman for the utility said the offer to buy the plant came in June.

"We’re excited that we get to acquire one unit out of this asset. It’s an Arkansas asset, it's a good quality resource ... It’ll be another addition to modernizing our overall generation fleet," McDonald said.