LEPA sells $120M in bonds to build power plant

 

Staff Report

The Louisiana Energy and Power Authority completed the sale of more than $120 million in revenue bonds for the final stage of design and construction of a new natural gas-run electrical power plant in Morgan City, according to a news release Thursday.

The plant, which will be located in Morgan City, will be a 64-megawatt nominal rated natural gas fired combined-cycle gas turbine generating plant. The new plant is the first power plant to be built in the southern region of Louisiana in 40 years, the release stated.

Morgan City will have a 10-megawatt share of the plant.

The bonds were sold two weeks ago, were delivered Thursday and the cash transferred into LEPA’s account, LEPA board member Tim Matte said.

“The first contracts issued are to purchase the turbines and to purchase the transformers and all the equipment,” Matte said. Those bonds were issued Thursday so the equipment can be ordered, and then in January the construction contract will be let, Matte said.

“The CCGT (combined-cycle gas turbine) technology is superior to conventional fossil fueled generating plants because of its higher efficiency, lower environmental impact, lower capital cost, and shorter construction time,” LEPA General Manager Cordell Grand said. “Because the plant is fuel efficient, it will help stabilize the cost of electrical power for these municipalities by minimizing the impact of fluctuations in natural gas rates,” Grand said.

Six LEPA member communities including Morgan City, Houma, Jonesville, Plaquemine, Rayne and Vidalia, have committed to participate in the project by entering into long-term power sales agreements for the plant’s power output. “The plant is expected to supply these municipalities with competitively priced electrical power that will reduce their reliance on older, more costly electric supply options,” Grand said.

At the most recent LEPA board meeting, the board authorized LEPA’s general manager to award the contract pending the bonds sale, Matte said.

“This project would not have been possible without the cooperation and hard work of these municipalities in jointly funding development of this project since 2010,” Grand said. LEPA expects to award a contract for the engineering, procurement, and construction of the plant in January 2014, with construction projected to begin in April 2014 and completion in late 2015, the release stated.

In the news release, Matte said, “One of the primary drivers that led to the development of the plant was the fact that the transmission constraints in parts of Louisiana undermined purchase of low-cost power by the municipalities that operate their own electrical systems. Siting the plant near Morgan City and Houma’s load helps to mitigate those transmission constraints, and will actually allow the participating municipalities to export excess power from a once constrained region.”

The plant will be located next to the Joseph J. Cefalu Sr. Municipal Steam Plant in Morgan City, and will be equipped with an emergency diesel generator to provide for the ability to restart the facility without relying on other generating facilities or external sources of power, the release stated.

To conserve treated water, the plant will utilize reclaimed water discharged from the nearby Morgan City Waste Water Treatment Plant. For fuel supply, a 1.3 mile, 8-inch natural gas pipeline will be constructed to interconnect the plant to the Texas Gas Transmission LLC pipeline, the release stated.

LEPA has selected and is in the process of contracting the major equipment suppliers for the plant’s gas turbine generator, steam turbine generator, heat recovery steam generator and step-up transformers. The Louisiana Department of Environmental Quality issued environmental operating permits for the plant on Sept. 23.

Though the bonds sale marks the actual start of the project, “we’ve been working on this since 2010 as far as actually the development costs were being collected,” Matte said. “You started paying for the development costs during that time period, and planning for that since 2009.”