It didn’t take two of Arkansas’ largest electric utilities long to propose power generation projects under a new law that retooled how utilities are allowed to finance the construction of “strategic investments.”

Entergy Arkansas Inc., the state’s largest electric utility, has officially filed an application with the Arkansas Public Service Commission to build a 754-megawatt natural gas-fired power plant, which it hopes to finance with a rate increase starting in 2026. The company said in early August that the plant will generate $2.9 billion in economic benefits for the state during the construction phase.

And Entergy isn’t alone. The Southwestern Electric Power Company, already seeking commission approval for a $30.46-per-month residential base rate increase, is asking the commission to approve a request to charge Arkansas customers for the construction costs of two out-of-state natural gas power plants.

Entergy submitted a 2,142 page application for for a certificate of environmental compatibility and public need on August 1, officially beginning the process to build the new natural gas plant, called the Jefferson Power Station.

The new 754-megawatt natural gas-fired power plant will sit on a 45-acre site adjacent to the utility’s coal-fired White Bluff Plant near Redfield. White Bluff is slated to be shut down by the end of the decade in accordance with a 2021 settlement of a 2018 lawsuit brought by the Sierra Club and National Parks Conservation Association.

The White Bluff plant has a nameplate generation capacity of 1,800 megawatts, more than double the wattage of the planned Jefferson Power Plant, which will generate enough electricity to power more than 355,000 homes.

According to an official announcement from Entergy last week, the project will generate $2.9 billion in “direct, indirect and induced economic effects during the construction phase.” It will also employ 3,600 while being constructed and contribute $128 million in local, county and sales tax contributions, according to the announcement.

The company’s August 1 filing says the project is “crucial” to the company’s long-term plans and will be connected to the utility’s transmission grid with two short-distance transmission lines. If approved, construction would begin in the second quarter of 2026 and it will be operational in 2029.

Many details of the project, such as its cost, were not disclosed in the filing because of a commission-granted protective order. These orders typically apply to an applicant’s proprietary information, according to Danni Hoefer, the commission’s chief of staff.

W.S. Lee Station, a Duke Energy-owned 750-megawatt combined-cycle natural gas plant in South Carolina cost $700 million to build, according to a company fact sheet.

A spokesperson for Entergy could not be reached for comment about the cost of the project by deadline.

The project is meant to deal with increased energy demand in the state. In 2024, Arkansas consumed around 50% more energy than it produced, according to a report from the federal U.S. Energy Information Administration.

“(Jefferson Power Station) is the next in a serious of generation investment, which are necessary to ensure that (Entergy) is meeting the State’s power challenge,” the company said in its application.

However, some energy interests worry about the construction timeline on the project. Combined cycle combustion turbines, like the Jefferson County project, have long lead times, according to Lauren Waldrip, executive director of the Arkansas Advanced Energy Association.

According to a news release from Entergy Mississippi, it takes “about seven years” to plan and build a combined cycle combustion turbine project, like the Ridgeland Power Plant Project in Mississippi, set to be finished in 2029.

“The thing with renewables is they will be the quickest to get online,” Waldrip said. “Is anything a silver bullet? No … Solar and wind aren’t far-and-away going to solve our problems, but maybe they can get us to tomorrow at least.”

PROJECT FUNDING

The recently passed Act 373 — partially titled “The Generating Arkansas Jobs Act of 2025” — created a strategic investment rider (a supplemental charge not included in standard rates) and defines “strategic investments” as a broad array of investments that contribute to economic development.

Before the law was passed, utility companies would be allowed to recover construction costs after a project was generating power. Now, ratepayers could foot the bill as the project is being built.

According to testimony submitted to the commission by Caroline McNeal, a senior staff rate analyst at Entergy, the initial filing doesn’t establish the rates. Those rates could be set in 2026.

“There is no immediate rate impact to any customer. The purpose of this filing is to obtain commission approval,” McNeal said in her testimony.

The Arkansas Public Service Commission will have six months to review plans. If a plan is approved, the commission will conduct check-ins every 12 months until construction is complete.

The difference between the Entergy proposal and the Southwestern Electric Power Company project is that both SWEPCO power plant projects are in Texas.

The plants are meant to replace two existing coal-fired power plants that have closed or are slated to close by the end of the decade: the H.W. Pirkey Power Plant in Hallsville, Texas, and the J. Robert Welsh Power Plant in Titus County, Texas.

“SWEPCO’s election to use a Strategic Investment Rider for two projects pending regulatory approval, is tied to the fact that these generation projects are essential for ensuring reliable and efficient energy delivery to our customers,” Melissa Gage, the utility’s vice president of regulatory and finance, said in a statement.

In November 2024, the company filed an application seeking approval to build and operate a natural gas-fired generation unit at the site of the former Pirkey Plant, to be called Hallsville Units 1 and 2. The project will generate 450 megawatts, about two-thirds the amount of its coal predecessor.

In 2020, the company announced that it would retire the plant rather than “install the environmental compliance equipment necessary” under federal environmental regulations. It was decommissioned in 2023 and is being demolished.

It also seeking for the conversion of existing coal units at the Welsh plant to natural gas-fired generation units.

On March 26, eight days after Act 373 was signed into law, SWEPCO filed an amendment to their application, seeking a commission ruling that the two projects qualify for the new strategic investment rider, despite being out of state.

The company hasn’t filed a formal application for the rider itself, which would have to be under a separate docket, according to Hoefer.

The company’s intention to file an application comes as it is already seeking a $30.46 per month base rate increase to account for new power generation facilities, including two wind farms and system-wide grid improvements.

RATE SHOCK PREVENTION

According to Rep. Les Eaves, R-Searcy, a sponsor of the bill creating the strategic investment recovery rider, projects eligible for the rider could be built outside of the state, and funded by Arkansas ratepayers, under special circumstances and a “rare occasion” he said in March.

In an interview, Eaves said a goal of the legislation is to prevent “rate shock,” even if the plants are outside of the state.

“The most important thing we have to remember: all of the approvals go through the Public Service Commission,” Eaves said. “The whole goal is to make sure that over time, Arkansas has the lowest possible utility rates that we can.”

But SWEPCO’s application hasn’t been without scrutiny. The application has seen pushback from Jeffery Bower, a consultant for Massachusetts-based Daymark Energy Advisors, who submitted testimony on behalf of the General Staff of the Commission.

“I agree with the Company that the Welsh Project qualifies for recovery through a (strategic improvement) rider, and I recommend approval of the request. However, I do not agree with the company that the Hallsville Project meets any of the three criteria for an out-of-state project,” Bower said in his testimony.

SWEPCO, though, maintains that the projects are eligible for the rider.

“The projects will provide system reliability as well as a cost-effective energy solution, which will in turn help stabilize rates and enhance the competitiveness of Arkansas business,” Gage said in her testimony. “SWEPCO asserts that the projects fulfill the legislature’s intentions in Act 373.”

A public evidentiary hearing on the docket is scheduled for September 4, 2025.

Lucas Dufalla is a Report for America Corps member. Financial support for this coverage came from the Community Journalism Project.