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Skeptical Council hears new AE generation plan

Friday, October 10, 2014 by Tyler Whitson

Despite disagreements over exactly how much solar energy Austin Energy should purchase by 2020, both sides in a tug of war over the utility’s generation plan agreed Thursday that Austin Energy should move forward with a request for proposals for more solar power.

City Council members, sitting as the Committee on Austin Energy, heard more about Austin Energy’s new 500+ Plan generation mix proposal, raising several questions about the merits and drawbacks of adding a 500 megawatt combined-cycle natural gas plant to its portfolio. That would most likely be placed at the Decker Power Station.

Michael Osborne, chair of the Austin Generation Resource Planning Task Force, also commented on the 500+ Plan, looking at it through the lens of the task force’s July report on increasing renewable energy sources and reducing carbon emissions.

Osborne challenged some of the assumptions that Austin Energy used in its analysis. “We’re not saying the methodology that they used is wrong, we’re saying it’s flawed,” Osborne said.

Council Member Laura Morrison told the Austin Monitor after the Council Committee on Austin Energy meeting that Austin Energy staff and task force members are providing “different answers” to Council questions. “I don’t believe that we’ve laid out where those differences come from,” she said.

“We just need to keep digging away until we can make sure we understand the decision that we’re making,” Morrison said, noting that it needs to happen before the end of the year.

Council Member Mike Martinez told the Monitor that Austin Energy’s presentation did not lead him to support constructing the gas plant AE has proposed to replace the aging plant at Decker, but he wants to hear more information and is open to continuing the conversation.

Austin Energy Chief Operating Officer Cheryl Mele said the biggest driver behind the 500+ Plan is Council’s August resolution that includes task force recommendations, which she referred to as Resolution 157.

“We’ve got a plan that adapts to many of the desires and many of the outcomes of Resolution 157,” she said, “with the key difference being that we have to look at our ability to produce revenue to support the other things that we want.”

Mele said that the utility’s ability to meet stringent goals “does depend on additional gas generation that’s very efficient to be able to balance the customers’ costs.” She added that “in the short term, having more efficient, cleaner generation locally is going to be a good thing for the customer bills.”

Osborne said that he would like the city put out a request for proposals on the 600 megawatt solar project included in Resolution 157.

“When it really comes down to it, we’re not going to know whether this plan is affordable until we see those bids,” Osborne said. “Once we see those bids, then we can have an independent, third-party group look at it and we can determine whether this plan is affordable or not.”

Mele said that the city can go forward with a request “regardless of which plan gets ultimately adopted.” She added that the offer would “probably be asked for in smaller blocks so that we can really go back and run the same analysis we’ve run to produce this to decide which contracts might be affordable.”

In a citizen communication, Jere Locke of the Texas Drought Project deeply criticized the gas plant proposal, saying the process used to extract natural gas from Texas oil shale is water-intensive and releases large amounts of methane into the atmosphere.

Austin Energy General Manager Larry Weis said that “the technology of natural gas generation … has improved so much that we actually find it to be the most environmentally friendly new generation resource that we can have for base load generation,” or reliable energy that meets local customer demands.

Weis also said that Austin Energy is aware of public concerns about how natural gas is developed. “I think that concerns us of course, but that’s not our role, to determine the environmental regulations and everything associated with how natural gas is produced,” he said.

“We’re not talking about using more gas,” he added. “Really what we’re talking about doing is using a different kind of gas generation and getting rid of coal generation and getting rid of older gas generation.”

In addition to the gas plant, Austin Energy’s new proposal for 2020 includes acquiring 500 megawatts of solar output and 375 megawatts of wind output. It would retire current less efficient gas-powered Decker Power Station steam units by 2019, retire the Fayette Power Project by 2025 and not expand the Sand Hill Energy Center.

The 500+ Plan also promises to add grid-scale storage “as technology and prices improve” and retains the 2050 carbon-neutral deadline in favor of the 2030 deadline that Council adopted as part of Resolution 157.

The task force report is not without its critics. Outspoken community activist Paul Robbins said he could not justify its recommendations. He said he would give $100 to the charity of choice of the first Council member who could show him a “single footnote” in the report.

Mayor Lee Leffingwell rang a note of caution during the discussion about affordability. “We’re a monopoly, but we should act as if we are deregulated,” Leffingwell said, referring to the possibility that the Texas legislature could deregulate the municipal utility based on that measure. “Who knows? That could happen at any time. We could be facing that situation.”

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