Entergy CEO says carbon capture needed

LITTLE ROCK, ARKANSAS - Entergy Corp. Chairman and Chief Executive Officer J. Wayne Leonard told shareholders that climate change is the biggest issue the energy industry has ever faced, and that producers and policymakers have to come to agreement on affordable solutions.

Speaking at the New Orleans-based utility's annual meeting in Little Rock, Leonard said wind energy and other proposed alternatives are too expensive to be practical as replacements for coal and natural gas for generating electricity.

"We all would like to get to a place where we're not burning fossil fuels," Leonard said. "We're not going to get there in our lifetimes."

He said U.S. utility customers want the nation to achieve energy independence, yet they want inexpensive energy that doesn't harm the environment. Even meeting that ideal would not solve the problem of greenhouse gases, considering the massive growth in China and a similar boom that may follow in India, he said.

"We don't control our own destiny in this," Leonard said.

Even if the U.S. subsidizes alternative energy solutions and brings down its own emissions, the country still needs to present an affordable way of achieving the same goal if it wants China and other nations to get on board, Leonard said.

Capturing carbon dioxide produced by coal-fired plants and storing it underground can be done in an affordable manner, Leonard said. Improved technology would make the process more efficient, he said.

Leonard said he understands his view won't be universally accepted, but he stressed that environmental solutions have to be affordable.

Leonard said President Barack Obama's proposed budget is sound in its energy policy goals, but he expressed concern about bills being considered in Congress that would expand wind energy production in a way that he says is unworkable.

A logistical problem with wind energy is that the areas of the U.S. with the greatest winds lie mainly in the West, in dead spots in the electric grid. It will cost billions of dollars to build the infrastructure to get that electricity into the grid, he said.

"We're not against renewables," Leonard said, but he does oppose government mandates to use technology that requires a heavy government subsidy that can't be sustained.

Entergy serves 2.7 million customers in Arkansas, Louisiana, Mississippi and southeast Texas.

In an interview afterward, Leonard said that the utility still intends to shed part of its nuclear division, but the meltdown on Wall Street has slowed progress. He said the company will decide later whether to spin off its nuclear plants that generate free-market electricity or opt for another type of transaction.

He also said the utility is moving forward with Entergy Arkansas' move to opt out of Entergy's system agreement among its electric utilities. That shift required eight years' notice and is to take place in 2018. A ruling that shifted operating costs from Entergy users in Louisiana to Entergy Arkansas customers prompted the move.

Entergy's first-quarter earnings were down 24 percent from a year before, but the company maintained its 2009 earnings outlook in the range between $6.70 per share and $7.30 per share.

Leonard said the company has been criticized by investors for not having enough industrial customers, but that lack of factories in its region helped soften the blow from the economic downturn.

"We haven't seen the kind of economic meltdown of our customer base that some others have had," Leonard said.

He said the utility does not anticipate much short-term growth, but it does not foresee any job cuts, either.

"I don't see the need for less people than we have today," he said.

Entergy employs 14,700 people, with 3,500 in Arkansas.

Leonard said he anticipates hiring in the nuclear division as the utility has to train new workers for its plants. Within its service area, Entergy has Arkansas Nuclear One at Russellville; Grand Gulf Nuclear Station at Port Gibson, Miss.; River Bend at St. Francisville, La.; and Waterford 3 at Taft, La. Entergy owns five plants in the northeast and Michigan.

Entergy had revenue of $13 billion in 2008.