Parish explores building replacement power generators in Houma

The city of Houma is seeking to build new power generators for its electrical utility system after Terrebonne Parish President Michel Claudet was authorized by the Parish Council’s Public Services Committee last week to negotiate with engineering consultants about constructing new generators.

Houma’s three power generators were built in the 1960s and 1970s and are at their “expected end of life,” said Cordell Grand, general manager of Louisiana Energy and Power Authority (LEPA), the state agency overseeing city-owned electrical utility systems.

“Where you’re getting power is more and more cost prohibitive,” Grand told the committee. “Your ability to trade capacity in the market for more efficient generation is disappearing.”

“You’re in a reactionary mode,” he said.

Morgan City, whose generators were constructed around the same time as those in Houma, has already made a commitment to build new generators for its city-owned electrical utility system, Grand said.

The committee’s resolution gives Claudet the ability to sign an intergovernmental agreement with Morgan City to share the costs of building the power generators. Terrebonne Parish Utilities Director Tom Bourg is the coordinating representative for both Houma and Morgan City.

A parish council-appointed Utilities Review Committee is authorized to negotiate along with Claudet.

The estimated price to build the generators in Houma is $180 million, Grand said.

“Houma and Morgan City are in similar situations,” Bourg said.

Houma has received bids providing engineering consulting services to build the generators from five nationally known firms, Bourg said. The committee last week ratified Claudet’s selection of the Seattle-based engineers R.W. Beck as one of the firms.

The Houma Electric Utility System produces between 15 and 25 percent of the electricity it distributes to its 26,185 customers. The system also buys some federal hydropower and makes short-term purchases.

Houma receives the bulk (40 percent) of its electricity from the Rodemacher No. 2 coal-fired plant near Alexandria, La. The facility is owned partly by five LEPA members, including Morgan City and Houma, as well as the Lafayette Public Power Authority and CLECO.

The transmission lines running from the

Rodemacher plant to Houma are owned by Entergy and CLECO. The lines distributing the electricity from the plant in Houma to its customers are owned by Terrebonne Parish.

However, the Houma Electric Utility System had been embroiled in a years-long dispute with Entergy over which power company would pay for expensive but needed upgrades to the Entergy-owned lines.

Grand estimated the cost to upgrade the lines would be between $90 and $130 million.

The resolution states that LEPA “exhausted all attempts to secure a contract for long-term firm deliverable power over the Entergy transmission system.”

“You need permission to move along the wires,” Grand told the committee. “We saw a steady increase in denial of transmissions.”

“It’s been a long-term struggle to get the power supply for Houma,” Bourg said.

“LEPA has worked for eight-plus years to put together a power supply proposal,” he said.

A joint Request for Proposals letter issued by Morgan City and Terrebonne Parish government also cites difficulties transmitting over the Entergy lines and “excessive upgrade costs.”

The letter states that firms seeking to bid on consulting work for the construction of the power generators should have some knowledge of the Entergy transmission system.

Houma has explored selling its power plant to Entergy or another power supply company. In April 2007, Bourg sent information about the Houma Electric Utility System to Entergy in Beaumont, Texas, valuing Houma’s system at $26 million.

Entergy distributes power to around 3,800 customers in Houma.

Adding to the problem of aging generators, the Houma utility system – along with most other power suppliers – has had to grapple with the recent high price of natural gas, used to fuel its electricity generators.

“We hadn’t seen that kind of spike before,” Grand said about natural gas prices last summer.

The difficulty with receiving transmissions from the Rodemacher plant has caused further strains, with Houma having to generate more of its own power.

“Because you’re getting cut off in summer, you’re a slave to transmission access,” Grand said. “If you can’t get enough transmission access, you have to put the unit on in town.

“It will be on for at least a week. It takes six to eight hours to turn on,” he added.

Though natural gas prices have decreased significantly since the summer, the price would need to fall even more for Houma and Morgan City’s generating units to become efficient, Grand told the committee.

LEPA has looked to buy power from other sources, but every time the agency has attempted to make long-term energy purchases, LEPA was told it needed to construct additional facilities, he said.

LEPA would like to build simple combustion turbine generators for Houma and, for Morgan City, the combined cycle gas turbine type. The simple combustion turbine has a quick-start capability. Both generators have fairly low capital costs.

The only feasible type of generator for Houma and Morgan City is gas-powered, since coal-fired and nuclear plants are too large and expensive for the area’s needs, Grand said.

Renewable energy plants are too expensive as well, he noted.

However, R.W. Beck’s proposal to provide consulting services prominently mentions using the renewables cane leaf matter and bagasse (from sugarcane harvesting and processing) and solid waste to power Houma’s proposed new power generating station.

Grand summed up Houma’s predicament: The parish can spend $120 million for transmission line upgrades to increase the power received from Rodemacher or spend $180 million to build new power generators.

He said, “The answer: new generation.”

The Terrebonne Parish Council’s Public Services Committee learned last week that Houma’s three power generators, which were built in the 1960s and 1970s, are at their “expected end of life.” * Photo by KEYON K. JEFF