Before summarizing company results and describing an Entergy Corp. future ever more reliant on natural gas, nuclear and renewable energy sources, CEO Leo Denault honored a retiring Arkansan on Friday at the company's annual shareholders meeting in Little Rock.
Theodore Bunting Jr., a 1981 Hendrix College graduate and Louisiana resident who announced his retirement as group president of Entergy's utility operations in June, got a home-state sendoff.
"Theo has made great contributions to our business and our industry as a leader and a strategic advisor," said Denault, who called it fortunate that the last annual meeting of Bunting's tenure should be in Little Rock, just up the road from Bunting's hometown, Conway. He called Bunting "really one of the hardest-working people I've ever met."
Arkansas was also central to several other topics in the shareholders meeting and Denault's remarks to reporters afterward: Blanche Lincoln, who represented Arkansas in the U.S. Senate and Congress, was re-elected to Entergy's board; Arkansas Nuclear One was declared a "tremendous asset" due for upgrading; and Big River Steel of Osceola was named Entergy Arkansas' biggest power customer.
Company leaders also said that Entergy's two coal-fired power plants in Arkansas, White Bluff near Redfield and Independence near Newark, are likely to operate until they can be replaced by cleaner and cheaper natural-gas fired plants.
After describing an advanced strategy to wind down Entergy Wholesale Commodities, a company unit has owned and operated nuclear power plants in the northeastern United States, Denault described a continued commitment to nuclear energy in the South, as well as low-cost natural gas generation across Arkansas, Louisiana, Mississippi and Texas. The boom in shale gas production has reshaped the electric utility industry, he said, offering a far cheaper and more environmentally friendly alternative to coal.
Despite the Trump administration's vocal support for the coal industry, Denault said he sees no new coal plants in Entergy's future.
"If you look at our capital plan, it calls for natural gas and renewables. With the price of natural gas being what it is, it's significantly more economical than coal to begin with," he said. "And from an environmental standard, it's half the carbon. And in our case, new plants will cut that carbon amount by another 40 percent." Denault also emphasized his company's efforts in promoting energy efficiency. "The cleanest megawatt you make is the one you don't make."
Regardless of the change in administration, Denault said, Entergy's "environmental responsibility hasn't changed." The company was against the Obama administration's Clean Power Plan simply because it was "an overstep in the authority of the EPA," Denault said.
Entergy's strategy of getting out of the Northeast nuclear power business has been shaped by several factors. Falling power prices "meant that we were losing money" on those operations, Denault said, and Entergy was already moving to decommission plants in New York, Vermont, Massachusetts and Michigan. But as the process progressed, Entergy found ways to save some jobs.
After the 2014 shutdown of the Vermont Yankee nuclear plant in Vernon, Vermont, Entergy sold James A. FitzPatrick nuclear plant near Oswego, New York, to Exelon in a deal that closed a little more than a month ago.
"That was great because we had 600 employees at that plant, and like our nuclear plant here in Arkansas, it's a lifeblood of the community, and the biggest property taxpayer in that region," Denault said.
Plans to shut down the Indian Point nuclear units in Westchester County, New York, and the Palisades Nuclear Generating Station in Michigan are proceeding at a measured pace.
"It's a deliberate timing that allows us to keep a commitment to employees. If they want a job with Entergy somewhere else in the system, they can get it," he said.
Denault said that Arkansas Nuclear One in Russellville, River Bend and Waterford in Louisiana and Grand Gulf in Mississippi will all be filling jobs in coming years.
"Grand Gulf just got re-licensed, so we have to plan for running it another 20 years, so we can manage the hiring there with people who want to come from the northern fleet. We don't have to train them. They already know the system, they're already Entergy employees."
Denault said that unlike the northern nuclear plants, all commissioned in the early 1970s, the Arkansas nuclear plant and its Southern cousins are key factors in Entergy's future.
"Our capital plan is to make sure we upgrade the technologies in all these facilities so that they can continue to operate," the CEO said. "They run at very high capacity and provide tremendous stability to the grid. They also emit virtually nothing in the world of carbon."
The age of the 1970s-vintage nuclear units at Russellville do pose some problems, though, and Entergy is installing digital technology on components like turbine controls. Denault described the analog system using cards with components attached.
"For years, when a card failed, you'd go to a vendor to get it replaced. Well, guess what? The vendors stopped making the cards. So then when a card failed you'd go out to a shop that would buy components and rework the card. But guess what? They can no longer buy the components. So we're going to digital control systems, and we'll continue to do that at all our plants as we move forward."
Asked about the White Bluff and Independence coal plants, which have been the subject of environmental negotiations for years, Denault said Entergy is in a holding pattern.
"We continue to operate those plants to make sure they're reliable," he said. For reliability, environmental benefits and costs, it would be more efficient "to replace them with natural gas if we get to that point."
Rick Riley, CEO of Entergy Arkansas, said the company has employed low nitrogen oxide burners at the two coal plants, but reducing sulphur dioxide emissions would require installing scrubbers.
"That would be about a $2 billion cost for assets that will be about 50 years old at the end of this decade," Riley said, with Denault interjecting: "Nobody is spending $2 billion to keep ME running."
Denault said one challenge facing the company is a dearth of engineers to staff its nuclear facilities. He said Entergy hoped to employ nuclear expertise from the closing northern plants and work with local universities and schools to fill the void.
Denault and Riley also gave a shout-out to Big River Steel, the $1.5 billion steel plant described as the largest economic development project in state history. It's also the largest electricity customer connected to Entergy Arkansas lines.
"I don't know about records, but they're using a lot of energy," Riley said. "Once they've completed both phases, and they have a planned second phase, they will be the largest customer we have on the Entergy system.
"One of the reasons that they located in our service territory is because our rates are 20 percent below the national average. If we can continue to attract large customers both in Arkansas and the rest of the system due to our low rates and reliable service, then that will help the communities that we serve," he said.