POWER May 2023 - 21

UTILITY SPOTLIGHT
mental regulations ramped up. The massive
impact of the 1973 Arab oil embargo
on fuel prices, meanwhile, heightened
concerns about the company's financial
health and prompted the company to
consider diversifying its fuel mix.
Nuclear was a prime consideration.
Middle South had been part of a consortium
that built and operated a test
fast-breeder reactor from 1969 to 1972
near Fayetteville, Arkansas. But while
completion of Middle South's first nuclear
plant, Arkansas Nuclear One Unit
1, progressed smoothly and began operations
in 1974, delays, regulatory setbacks,
and escalating construction costs
hit projects like the Waterford plant and
Grand Gulf in Louisiana. Grand Gulf,
in particular, suffered long delays. The
plant took 13 years to build, and when
it came online in 1985, its total costs
had ballooned to more than $3 billion-
far exceeding estimates. The debacle
prompted an acrimonious legal dispute
about which of Middle South's ratepayers
would pay for the cost escalation.
In 1989, Middle South sought to repair
fractures and quell the crisis within its
system by absorbing $900 million it invested
in Grand Gulf Unit 2 under an initiative
it called, " Project Olive Branch. "
Expanding Beyond the Middle South
The crisis, however, served as a crucial
pivotal
turning point in the company's
history. In 1989, Middle South rebranded
under a new name-Entergy. A combination
of " enterprise, energy, and synergy, "
the name reflected the company's
most valuable aspirations, but it also
pointed to the company's new dynamic
character. Entergy was effectively moving
away from its longstanding role as a
traditional utility to a global energy company
that could competitively respond
to market changes as deregulation took
root, it said.
Deregulation through the 1990s reshaped
the company further. Spurred by
a resurgence of interest in nuclear power
and an overhaul at the Nuclear Regulatory
Commission, Entergy snapped up several
" merchant " nuclear plants. In 1999,
it bought Pilgrim in Massachusetts for
$81 million (becoming the first U.S. company
to acquire a nuclear plant through
competitive bidding). Strong returns at
Pilgrim encouraged Entergy to acquire
Indian Point Units 2 and 3, and FitzPatrick
in New York, Vermont Yankee in Vermont,
and Palisades in Michigan. In tandem,
the company made international acquisitions
as countries privatized state-owned
May 2023 | POWER
electric systems, including in Argentina,
Pakistan, Australia, Chile, Peru, and the
UK. The complexities of an international
fleet, however, proved financially hefty.
By the early 2000s, it began a divestiture
of its foreign businesses to " concentrate
on what it did best. "
Multiple disruptions over the last decade
have transformed the company
even more. The company has grappled
with more stringent environmental policies,
decentralization and electrification,
a boost in shale gas production, a proliferation
of renewable power and battery
storage, and an increasing embrace of
digitalization. Led by Leo Denault, the
company notably set out to execute a
multi-year strategy to exit the merchant
power generation business and transform
the company into a leaner customer-focused
integrated energy company.
With the exception of FitzPatrick, which
Entergy sold to Constellation in March
2017, all of Entergy's merchant nuclear
plants have been shuttered.
A Leaner Operation
As Entergy embarks on its 110th year of
operation, the company is today a markedly
leaner entity. Today, the New Orleans-headquartered
power generating
giant's business profile comprises two
business segments: Utility and Entergy
Wholesale Commodities. However, with
the sale of the Palisades nuclear plant in
June 2022, Entergy no longer considers
Wholesale Commodities a reportable
business segment.
The Utility segment, meanwhile, covers
Entergy's generation, transmission,
distribution, and sale of electric power
in portions of a four-state footprint that
includes Arkansas, Mississippi, Texas,
and Louisiana (including the City of New
Orleans). The segment also includes the
operation of a small natural gas distribution
business that provides services to
customers in Baton Rouge and New Orleans,
Louisiana. The biggest players in
the segment, however, are Entergy's five
retail subsidiaries: Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy
New Orleans, and Entergy Texas.
Each is regulated by the Federal Energy
Regulatory Commission (FERC) and their
respective state utility commissions (Entergy
New Orleans is regulated by the
City Council). The company's retail business
serves 3 million utility customers.
These operating companies recover
their fuel, purchased power, and associated
costs from customers through
rate mechanisms, which are subject to
www.powermag.com
2. Entergy's utility-owned and leased generation
fleet is dominated by modern natural
gas plants (10.5 GW), followed by legacy gas
plants (6 GW), nuclear plants (5.2 GW), coal
plants (2 GW), and renewable energy facilities
(814 MW). Courtesy: Entergy
periodic regulatory review and adjustment.
Since 2013, however, the companies
have also participated in markets
managed by the Midcontinent Independent
System Operator (MISO), a
reliability transmission organization that
maintains functional control over their
combined transmission systems, and
administers wholesale energy and ancillary
services markets for participants in
the wholesale energy market. Entergy
says the nearly decade-long participation
has " already produced more than
$2 billion customer savings. "
As a whole, the integrated energy
company owns and operates a 24-GW
generation fleet (Figure 2) and 16,100
miles of high-voltage transmission lines,
105,800 miles of distribution lines, and
1,300 substations, which operate at 69
kV to 500 kV. As of December 2022, the
company had about 12,000 employees
and annual revenues of $13.8 billion.
A Sustainable Growth Strategy
But like other utilities POWER has pro21
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POWER May 2023

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