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Commission fails to agree on sale of coal power plant

Tuesday, October 16, 2012 by Michael Kanin

Electric Utility Commission Chair Philip Schmandt was unable to muster enough votes Monday night for a resolution that would have urged members of the Austin City Council to begin exploring a potential sale of the city’s share of the Fayette Power Plant.


Abstentions from commission Vice Chair Linda Shaw as well as Commissioners Shudde Fath and Karen Hadden – who was at her first meeting as a replacement for former Commissioner Barbara Day – sank Schmandt’s motion. Commissioner Michael Webber was out of town.


Austin Energy owns 50 percent of Units 1 and 2 of Fayette. The Lower Colorado River Authority owns the remainder.


Despite support for the idea of a Fayette divestment, every commissioner expressed some concern about the idea of pulling out of the coal-fired power plant near La Grange. Much of it centered on whether Austin Energy’s withdrawal from the facility would actually reduce coal emissions from the air. My own personal view is that (by) just shuffling existing resources around on the … grid – we swap our coal plant for somebody else’s gas plant – we have not reduced the carbon dioxide emissions,” said Commissioner Stephen Smaha.


Austin Energy was already on the way to reducing its reliance on Fayette energy by 24 percent by 2020 under its Resource Generation and Climate Protection Plan approved by Austin City Council in 2010.


Mayor Lee Leffingwell made full utility divestment in Fayette an issue during his 2012 re-election campaign. However, he also stressed the need to keep electric bills affordable for ratepayers.


Austin Energy shares the facility with the Lower Colorado River Authority (LCRA), the operating partner of the plant. As such, any City of Austin move would be mitigated by the fact that LCRA would still operate its portion of the facility. Also, LCRA has the right-of-first refusal to buy Austin’s share of the plant.


Though some environmental activists have urged Austin to hold on to its interest in the plant, and leave it dormant instead of offering it for sale to a utility that would continue to operate it, it is unlikely that the regional grid operator – the Electric Reliability Council of Texas (ERCOT) – would allow such a move.


The Fayette plant is what is known as a base-load facility. Because it burns coal to generate power, the operator of the Texas grid, ERCOT, counts on the Fayette County plant to operate nearly all the time. At a time growing concerns about electricity production keeping up with demand, any replacement of the facility would have to be supplemented with a similarly reliable type of generation. ERCOT has final say in any plant retirement.


Austin Energy officials have suggested that the utility look primarily to natural gas if the city decides to discontinue its participation in Fayette. Some commissioners would prefer a switch to renewable resources such as wind and solar power, but renewable sources alone would be insufficient to meet Austin Energy’s base-load need. (See In Fact Daily, Sept. 24, 2012.)


With Council members set to hear a briefing on the Fayette question during this morning’s work session, Schmandt wanted the commission to weigh in on the matter Monday night. His motion included a call for the utility to begin a Request for Proposal process to find a bidder for Austin Energy’s portion of the plant. As part of that process, he looked for an incentive that would encourage a prospective buyer to retire another one of its coal facilities after it purchases Fayette.


Though the Fayette plant is an aging facility, it also boasts $400 million worth of new scrubbers designed to purge some toxicity from its emissions. Theoretically, under Schmandt’s motion, a sale of the plant could thus reduce emissions by bringing on the retirement of a coal-burning facility that is worse for the environment.


Schmandt’s motion also included a call for the utility to not replace Fayette power with gas alone. This has been a recurring concern for commissioners.


Commissioner “Bernie” Bernfield was the only member of the commission to actually vote against Schmandt’s proposal. He remained concerned that he and his colleagues did not have enough information to move forward with a recommendation.

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