Two Louisiana companies announced Friday they’ve cooked up apowerhouse gumbo, a stew that is expected to heat up the wholesalepower market in regional hubs around the country. New Orleans-basedutility giant Entergy and the Baton Rouge-based construction firm,The Shaw Group, are blending their talents to form Entergy-Shaw, astrategic joint venture that is expected to accelerate Entergy’sgoal of becoming a dominant low-cost wholesale power provider inkey regional energy hubs.

The new company will provide management, engineering,procurement, construction and commissioning services to buildelectric power plants, and is expected to capitalize on the rapidlygrowing electric power generation market, offering services forEntergy Wholesale Operations’ (EWO) power development plans inNorth America and Europe, and in the future to other powerdevelopment customers. EWO is the power development, marketing andtrading business unit of Entergy.

According to officials, Entergy-Shaw will use a market-drivenreference plant design that is expected to significantly reducepower plant capital costs, and also reduce construction,commissioning and operating risks using EWO’s gas turbine rolloutprogram. Entergy and Shaw will each own a 50% interest in the newcompany.

“We’re combining the skills, capabilities and expertise of twoentrepreneurial organizations,” said Geoff Roberts, EWO presidentand CEO. “The Shaw Group is to power plants what Intel is tocomputers,” and Roberts added that the new partnership willeliminate the middleman and allow Entergy to add value to themarketplace.

“Shaw provides complementary capabilities to EWO with extensivescheduling, construction, procurement, balance-of-plant anderection experience with complex projects,” said Roberts, addingthat the move is consistent with Entergy’s plan to build low-costpower plants. “Similar to the Entergy-Koch L.P. marketing andtrading alliance, this is another major step forward in achievingour objective of being a low-cost wholesale power provider intargeted North American and European energy markets.”

In April, the New Orleans-based Entergy announced a strategicpartnership with Koch Industries (see Daily GPI, April 25). Called Entergy-Koch L.P., thenew venture, which will be headquartered in Houston, is expected torank among the top U.S. energy commodity traders in combined volumesof electricity and natural gas trading.

“The combination of EWO and Shaw is a win/win for all partiesinvolved,” said J. M. Bernhard Jr., Shaw’s chairman, president andCEO. He said the partnership will allow Shaw to capitalize on its”core competency,” and provide his company with a “substantialstream of projects” that would both “solidify, and significantlyincrease, our revenue visibility over the next several years.”

An eight-member board of directors, four each from Entergy andShaw, will govern the new company, and the chairman will rotateeach year, with Entergy holding the position in the first year. Thenew company is subject to completion of some final documentationand receipt of any requisite regulatory approvals.

Entergy is the third-largest U. S. generator of electricity withrevenues in excess of $8 billion per year. It owns, manages, orinvests in power plants generating nearly 30,000 MW of electricitydomestically and internationally, and delivers electricity to about2.5 million customers in portions of Arkansas, Louisiana,Mississippi and Texas. Shaw is a leading innovator of turnkeypiping solutions and erection services with revenues in excess of$500 million.

Shaw supplies fabricated piping systems and services andprovides solutions to the chemical processing, crude oil refining,petrochemical processing and oil and gas exploration and productionindustries.

In other news, Entergy’s CFO C. John Wilder also said Fridaythat Entergy’s earnings will be in the “range of $2.35 to $2.45 pershare,” and said 2001 goals will be between $2.90 and $3.10.Wilder, who spoke to analysts at a meeting in New Orleans, saidEntergy’s “strong outlook” is the result of a “stronger balancesheet” and “renewed financial flexibility” following the 1998divestiture of London Electricity and CitiPower.

“Our strong outlook continues to reflect the successfulexecution of a back-to-basics strategy we outlined in August 1998,”Wilder said. “Since the new management team, Entergy’s 36% totalshareholder return ranks third among the 29 S&P electriccompanies.”

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