09/12/2025

Entergy Wins Approval for $2.4 Billion Houston-Area Power Plants — But with Strings Attached

Houston Chronicle | Claire Dao | September 11, 2025

Entergy Wins Approval for $2.4 Billion Houston-Area Power Plants — But with Strings Attached

Entergy Texas will be allowed to charge its customers no more than $2.4 billion for its controversial plan to build two natural gas power plants in the Houston area to keep pace with the region’s growth, state regulators decided Thursday.

The decision allows Entergy to return to regulators to seek a rate hike of approximately $21.50 per month for its average customer in Houston’s northern suburbs and along the Gulf Coast, once the power plants are complete in mid-2028. 

The hard cost cap is meant to protect consumers from the risk that Entergy’s actual costs of building the power plants significantly exceed the estimated $2.4 billion, Thomas Gleeson, chairman of the Public Utility Commission of Texas, said in a memo ahead of the state agency’s Thursday meeting. 

Cost estimates for the two projects have steadily escalated since Entergy applied to build the power plants last year. On Thursday, Gleeson said the utility cautioned that estimates could still rise by another $120 million. 

Though rare, a cost cap was appropriate in this case to balance the urgent need for more electricity supply in the Houston region with concerns that Entergy didn’t fully explore more cost-effective alternatives, Gleeson said.

“It's needed, but we also have the mandate to protect customers, and I think this accomplishes both,” he said. 

Power plant cost debate 

In recent months, Entergy’s proposal to build the Lone Star power plant near Cleveland and the Legend power plant in Port Arthur has been heavily litigated.

The utility says the need for the two projects is “critical, urgent and unprecedented,” since its service territory spanning from Conroe to Beaumont is experiencing once-in-a-generation economic growth. 

Legend and Lone Star would collectively add 1.2 gigawatts of capacity, enough to power approximately 300,000 homes during peak demand. Without the additional power generation, Entergy warned that its customers could experience energy shortfalls as soon as 2028. 

Industrial energy users fought the proposals out of fear that their own electricity bills could skyrocket. Their influential lobbying group, the Texas Industrial Energy Consumers, argued that Entergy overlooked cheaper options, including other types of gas-fired power plants. Staff and consumer representatives with the Public Utility Commission agreed.

The PUC’s consumer representatives recommended that regulators establish a hard cap on how much Entergy would be allowed to charge for the power plants, since there was so much doubt about the cost estimates. 

But industrial energy users pushed for more. They wanted the commission to impose a “soft” cost cap, so that Entergy would have to prove in another application that its projects were the best option if it wanted to charge customers any more than $1.8 billion of the $2.4 billion cost.

Entergy had decried the idea of any cost caps. Caps would be “disastrous policy,” the utility’s lawyers said, and could discourage companies from building natural gas power plants in the state at all. That would threaten state policy goals, Entergy said, pointing to Gov. Greg Abbott and Lt. Gov. Dan Patrick’s insistence that more fossil fuel power plants are needed in Texas.

Still, the commission sided with its own consumer representatives Thursday, approving the hard cap. Following the decision, Entergy issued a news release Thursday announcing the approval, without mentioning the cost cap condition.

“We’ve heard directly from our customers and communities about the need for more power to support our rapidly growing region, and these facilities will deliver just that,” Eliecer Viamontes, CEO of Entergy Texas, said about the two power plants.