Louisiana public service commissioners voted 4-1 on Wednesday afternoon to approve a controversial Entergy proposal for three new gas plants, which will power Meta’s AI data center under construction in Richland Parish in northeast Louisiana.
The contested natural gas plants will be used to power Meta’s $10 billion data center, which will be among the largest in the Western Hemisphere when it’s completed in 2030. The data center will draw twice the power used by the city of New Orleans on a hot summer day.
To provide that power, the $3.2 billion trio of new Entergy plants will produce 2.3 megawatts of power when they are completed in 2026. Meta will subsidize their cost for the first 15 years, but costs thereafter will fall to ratepayers.
Before Wednesday’s vote, proponents on both sides spoke, trying to persuade commissioners to vote their way – though most commissioners seemed to have already made up their minds. Before public comment began, Commissioner Foster Campbell, representing District 5, which includes Richland Parish, told attendees he was “one thousand percent” in favor of the deal.
Opponents warned rates will increase soon, since Entergy customers will also pay for the $550 million transmission line needed to carry the power from the plants to the center. Entergy told commissioners that resident bills will only increase by one dollar. The data center is being built by Laidley, a Meta subsidiary.
Commissioner Jean-Paul Coussan, District 2, noted during the meeting that his office had received “dozens, hundreds” of emails questioning aspects of the deal, particularly why the settlement and contracts had not been more transparent.
Ultimately, the arguments about the data center’s potential economic growth seemed most persuasive to commissioners. The data center, said Commissioner Campbell, “will be as important to North Louisiana as the Superdome is to New Orleans.”
Davante Lewis, District 3, the sole “no” vote, questioned Entergy representatives during the hearing as to why there had been no formal Request For Proposal (RFP) seeking bids for the three generators, to demonstrate whether the gas plants were the most economical option to power the data center.
Many of the predictions about the data center relied on unknowns within a future market, Lewis said in a statement after the vote. “I believe my most important job as a regulator is to trust but verify and the truth is, there were a lot of things that I just cannot verify at this moment,” he said. “The fundamentals at the heart of this proposal were just too bitter for me to swallow.”
For ‘speed to market,’ Entergy skips formal RFP process
Entergy representatives indicated that they had sidestepped the formal RFP process to meet Meta’s timeline. Instead, the company selected the best bidder from an earlier RFP released by Entergy Texas, for construction of a unit the company was constructing, said Skylar Rosenbloom, a lawyer representing Entergy.
The company skipped it for the sake of “speed to market,” said Larry Hand, Entergy’s Vice President of Regulatory and Public Affairs. “We, Louisiana, and the rest of the country is living in a power-first world…to get Meta, and to meet their timelines, we needed to move fast.”
The three new plants will be able to replace others that will be aging by 2041, when Meta stops subsidizing their cost, Hand told the commission.
That did not sway Commissioner Lewis. “There are significant uncertainties about this deal’s impacts,” Lewis said in a statement. “When evaluating all the costs, the benefits, positives, negatives, certainties, and uncertainties associated with this deal – I am still left struggling with some fundamental questions; like the need for three new self-build gas generators all for one customer, without a competitive bidding process.”
Beyond doubts raised Wednesday by Lewis, Entergy has long been criticized by grid experts for its over-reliance on its own gas generators and focus on its own bottom line, even when other utilities are working with MISO, the regional grid operator, to produce cheaper and more environmentally sound energy. Entergy profits from building new power plants and transmission lines, as it can charge ratepayers to earn a rate of return on those investments.
Wednesday’s vote sparked alarm among some consumer and environmental advocates, who described the hearing as “rushed.” Normally, the Public Service Commission votes after getting a formal recommendation from a commission judge who has been hearing arguments from stakeholders. But on Wednesday, the commissioners first approved a settlement that allows Entergy to bypass the competitive procurement process.
“It’s difficult to make sense of the Commission’s decision to rush a vote on a hotly contested issue that will affect so many people’s lives and wallets,” said Paul Arbaje, an energy analyst at Union of Concerned Scientists, in a statement. “Louisianans have yet to get answers from the Commission on how sharply energy bills will rise and how the electricity grid will handle such a massive new draw on the system – particularly as climate change threatens the grid with more frequent and severe extreme weather events.”
The Sierra Club, which signed onto the settlement, had previously raised concerns about Meta’s data center causing problems with excessive demand on the regional power grid. In May, almost 100,000 Entergy customers experienced a blackout when demand exceeded supply, prompting MISO to order a load-shedding event.
“Entergy can’t keep the lights on on a good day,” said Logan Wolfe, a campaigner with the environmental group Earthworks, who doesn’t believe that Entergy will successfully power the massive facility. Another speaker noted that the project represents less than 1% of Meta’s market cap, and said the commission should not underestimate Meta’s ability to walk away and leave the data center project early. Some industry experts have warned that the AI business model is highly speculative; if the bubble bursts, Meta could withdraw from the project and leave Entergy ratepayers shouldering much of the costs.
Just hours after the Commission’s vote, the Wall Street Journal reported that Meta had frozen hiring for its AI division.
“It is true that if there is a cost overrun and Meta leaves early, that there may be a little bit of a gap,” Entergy’s lawyer told commissioners.
Opponents also questioned how much water the Meta project would use, and disputed the true number of 500 permanent jobs that Meta has pledged. Often, job pledges by incoming, out-of-town corporations prove to hire few locals, research has shown.
Louisiana is already one of the most gas-reliant grids in the country, critics noted. That means Louisiana electricity prices are especially impacted by changes in the price of natural gas – which is driven up as Louisiana exports liquid natural gas.
From Entergy’s standpoint, the positives outweigh the negatives, said Hand, Entergy’s VP, to commissioners. “There are risks” in the deal, but “perfection is the enemy of the good,” he said.