Entergy Arkansas to buy 620-MW, natural gas-fired Hot Spring Energy Facility near Malvern, Arkansas, from KGen Power for US$253M

Rachel Carter

MALVERN, Arkansas , July 12, 2011 (press release) – Company returns to its roots with cleaner, more affordable alternatives

Entergy Arkansas, Inc. is announcing its plans to purchase a modern Arkansas power plant that will boost its generation capacity and fit into the company’s long-term strategic plan to provide for the long-term energy needs of its customers.

Located near Malvern, the Hot Spring Energy Facility is a 620-megawatt, combined-cycle gas turbine unit owned by KGen Power Corporation. Entergy Arkansas entered into a purchase agreement pending regulatory approvals to buy the plant for $253 million, which is far less than the cost to construct a comparable facility. The purchase also avoids time delays and additional unpredictable costs that are often associated with new construction.

“We view this as a sound investment to meet future power demand in Arkansas,” said Hugh McDonald, president and chief executive officer of Entergy Arkansas, Inc. “Hot Spring is a well-maintained, proven facility in our service area, and it will provide us with reliable, low-cost energy to serve the growing needs of our customers .”

The plant deploys advanced technology known as combined cycle gas turbine (CCGT) technology that leverages efficiencies of natural gas and its steam byproduct to produce maximum electricity at the most economic cost. Having access to a highly efficient generating process also means no incremental environmental impact with the purchase of additional megawatts. Purchase of this plant will create an additional clean-generating resource to Entergy‘s portfolio of plants furthering the company’s reputation as one of the cleanest electric utilities in the country. “Acquiring additional capacity also helps fill the company’s generation shortfall at the most economic market price benefiting our customers,” said Kurt Castleberry, director of resource planning for Entergy Arkansas, Inc. “All of these combined steps lead to downward pressure on costs to the consumer.”

Just as importantly, this purchase means another step toward preparing Entergy Arkansas as the company exits the System Agreement and ceases making subsidy payments to others thereby lowering future costs for our customers.

“The purchase of this unit aligns nicely with our main goals of generation planning as we exit the System Agreement,” added McDonald. “Upgrading the Entergy fleet only enhances our position to move to the Midwest Independent Transmission System Operator (MISO).”

After extensive review and analysis, Entergy Arkansas announced in April that it believes joining MISO is the best option for its customers and will provide the largest customer benefits. The utility projects net estimated benefits of between $192 million and $263 million from 2013 to 2022 by joining MISO, primarily the result of MISO’s large, more efficient marketplace.

This move also marks a historical return to the company’s electrical roots. The Hot Spring site sits less than a mile from where entrepreneur and Arkansas Power and Light founder Harvey Couch ran the very first electrical line between Malvern and Arkadelphia nearly a century ago. “This land and this community is where the vision began,” said McDonald. “We are so pleased to return to this community carrying out the dream that our predecessors nurtured of using the latest technology to support the economic development of Arkansas.”

Entergy Arkansas, Inc. provides electricity to more than 697,000 customers in 63 counties. It is a subsidiary of Entergy Corporation. Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas.

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