Dive Brief:
- Entergy Corp. is considering investing up to $300 million in natural gas reserves as a hedge against higher prices and to maintain reliable supply, but said it will need changes to regulations in Louisiana to move forward with the idea.
- The Louisiana Public Service Commission is considering a pilot program allowing utilities to directly invest in natural gas supplies.
- While the bulk of Entergy's gas investment would be in Louisiana, company officials also note Mississippi recently passed a law allowing for rate recovery of similar strategies.
Dive Insight:
Entergy joins a growing list of utilities looking to invest in natural gas reserves: Duke Energy and Florida Power & Light have both been considering shale reserves to help lock in lower gas prices. Speaking during the company's first quarter earnings call, company officials said pending regulations in Louisiana and recently-signed legislation in Mississippi could open the door for the company to make direct investments in gas.
Entergy CFO Drew Marsh said that initially the investments would make up a relatively small portion of the company's gas purchases — which represent about $3 billion annually. "In the neighborhood of $200 to $300, maybe initially in that range. It could be a little higher or lower, but something like that, if we decide to move forward," he told analysts, referring to the company's gas plans.
In March, Mississippi Gov. Phil Bryant signed a bill which authorizes "any generation and transmission electric power association to undertake economic development activities, whether directly, indirectly, or in conjunction with other entities." While some of Entergy's investment could be targeted to that state, officials said the bulk of it would be directed towards Louisiana.
