The Grand Gulf nuclear plant near Port Gibson was commissioned in 1985. Construction took 11 years. It has produced electricity for 40 years. But it has been controversial since day one. Two Mississippi Public Service Commissioners went to prison over bribes related to it. It is 90% owned by Entergy Corporation (a public company) and 10% by Cooperative Energy. The original plan was for Entergy Mississippi (a sub of Entergy Corporation) to own it all. But costs and rates got out of hand, and other subs were brought in to share cost overrun pains.
Grand Gulf is in the news again. Entergy Corporation plans to shuffle its Grand Gulf ownership deck and transfer its Entergy Louisiana sub’s 17% interest to its Entergy Mississippi sub, increasing its interest to 57%. Why? Is the transfer for the benefit of Amazon’s data centers at the expense of Entergy Mississippi’s 384,000 residential customers? Their rates increased 32% in the last two years. Will the transfer cause further increases?
Entergy Mississippi is also building a new natural gas plant at Greenville for the data centers. Part of its output will go to residential customers. Will it cause further rate increases for residential customers? It shouldn’t because new natural gas plants produce cheap electricity - unless Amazon got a sweetheart deal at the expense of residential customers. Mississippi’s Public Service Commission would ordinarily monitor Entergy Mississippi projects to protect residential customers from monopoly abuses. However, the Governor and the Legislature usurped the PSC’s oversight authority over Entergy projects for the data centers and cloaked the data center contracts in secrecy.
Government secrecy agreements raise red flags. So do the specific exemptions from competitive bidding for Entergy’s construction contracts for the Greenville plant. They were justified to accelerate completion of the plant. But they are an invitation for Entergy to pad plant costs to its advantage and to residential customers disadvantage. Entergy gets a guaranteed 10.5% profit on plant costs. The greater its cost, the greater its profit. But higher costs raise residential rates - if they are prudent after PSC review. Will the PSC be able to determine prudence despite the Governor and Legislature’s concessions to Entergy and Amazon?
Data centers are a mixed blessing. They create jobs. But they can also cause electric rates and blackouts to increase for residential customers. Virginia is a case in point and a precautionary alert. It has more data centers than any other state. It also has electric grid and rate problems due to the data centers. A recent study by the Jack Kemp Foundation says that Virginia’s Dominion Energy must invest billions in new generation and transmission capacity to keep data center demand from squeezing out electricity for residential customers. Their rates are predicted to go up 25-75% by 2030 due to growing data center demand.
It looks like a capacity squeeze is occurring in Entergy Mississippi’s service area too. That may explain why Entergy Corp is shuffling more Grand Gulf capacity onto Entergy Mississippi. But is that good for residential customers? Wouldn’t another new natural gas plant be cheaper and more reliable? The Louisiana Governor just announced a new data center project that’s bigger than Amazon’s here. It’s to be powered by three new natural gas plants. And the LA Public Service Commission is to be the project watchdog. Why more Grand Gulf power for Mississippi’s data centers and less for Louisiana’s? Just asking.
The answer may have something to do with the age of Grand Gulf and the bathtub curve, a well-known phenomenon. It plots or graphs the productive output, reliability, and costs of a plant over time. The curve looks like a bathtub. Output and efficiency increase and costs drop during plant’s initial startup. Then they flatten out like the bottom of a bathtub, and the plant runs at high outputs and efficiency for a long time. Toward the end of the plant’s useful life, output falls, efficiency drops, and costs rise.
Grand Gulf is at that stage. It’s no longer efficient or reliable as it was in its prime. Its production has been below the national nuclear plant average seven of the last ten years. Its output has averaged only 77% of capacity since 2015 and was 55% in 2017. More electricity from the old plant may increase residential rates vs. electricity from a new natural gas plant. But it could be a lifesaving backup for the data centers which absolutely positively must have electricity 24/7/365. Who pays for its higher cost?
Coincidentally Amazon recently announced plans to make its data centers more efficient to reduce electricity consumption. It will simplify electric and mechanical designs, introduce more efficient liquid cooling, and incorporate artificial intelligence to help manage the centers. Finally, it will do all of this virtuously to save the planet. It will reduce embodied carbon in concrete (used because, you know, carbon dioxide is bad). And it will increase use of virtuous renewable solar and wind energy for others but not for its data centers - which require reliable power.
Entergy Mississippi’s President says it’s all good although he can’t talk about how much electricity the data centers will use - or how much will be available for its residential customers or how much their rates will increase. But you get the impression that data centers are his first priority. Residential customers will just have to trust him to do the right thing. Without PSC oversight.
Sound familiar? The secrecy part is deja vu all over again. You may remember secret sky high natural gas price forecasts justified the Kemper County Lignite Plant fiasco. The forecasts turned out to be pure fabrication. And the gasifier to produce syngas to replace natural gas didn’t work. But Mississippi Power’s residential customers got stuck with a 17% rate increase for unneeded electricity from remnants of the Kemper plant modified to burn natural gas.
Entergy’s residential customers may be in for unpleasant surprises too.
Kelley Williams, a Northsider, is chairman of Bigger Pie, a Jackson-based think tank promoting free markets and government efficiency.
