Wednesday, December 10, 2014 by Tyler Whitson

AE staff, stakeholders agree on gas plant review

Just in time for Council to consider it before the end of the year, Austin Energy and the environmental and business communities have cleared what appears to be the last hurdle of the 2025 energy generation resource plan.

Austin Energy staff told City Council on Tuesday that the utility has agreed with stakeholders on an independent review of the combined cycle natural gas plant that staff is proposing as part of the plan.

Council will consider adopting the generation plan at Thursday’s meeting, which will be the last before the new Council takes over next year. In addition to the 500 megawatt combined cycle natural gas plant, it sets goals for increased solar energy acquisition, increased local energy storage, retirement of Austin Energy’s share of the Fayette Power Project beginning in 2022 and more.

Even if Council adopts the plan, any action on the proposed gas plant will be contingent on the results of the review and the new Council’s subsequent approval.

Austin Energy Vice President of Energy Market Operations and Resource Planning Khalil Shalabi said at the work session that the review would examine the costs and benefits of constructing and operating the plant — a $500 million investment — as well as scenarios that do not involve the plant, such as increasing investment in renewable energy and storage.

Shalabi said that, if Council approves the plan, staff will put out a request for proposals for the independent review from consulting firms with plans to release a draft for review by May 29, followed by a final report on June 27.

Council Member Kathie Tovo requested assurance that Austin Energy would ask for input on the scope of the project from the Electric Utility Commission and potentially the Council Committee on Austin Energy before issuing the request for proposals.

Shalabi said that the utility would do that, and pointed out that Council would have final say on selecting a consultant. He also noted that the utility would ask the city’s Chief Financial Officer Elaine Hart Austin Energy’s Chief Financial Officer Mark Dombroski to manage the study, which would give his team “a little bit of distance.”

Though staff and stakeholders expressed that there was a general agreement on the proposed plan at last week’s Council Committee on Austin Energy meeting, details on the independent review were still in the works.

Shalabi said the new agreement on the review is the result of recent conversations that Austin Energy staff members had with stakeholders from the environmental and business communities. “I think, as of (Monday) night,” he said, “we’ve reached a point where we’re both happy with what’s written down going forward.”

Acting Director of the Lone Star Chapter of the Sierra Club Cyrus Reed — who has taken a leading role in the generation plan negotiations — was not present at the meeting.

Reed later told the Austin Monitor that the plan could use some tweaks as it relates to the independent review, but stakeholders are “generally happy with the language and the process for doing that study.”

Reed added that, though the Sierra Club has been the principal stakeholder representative, “it would be incorrect to say that everyone’s happy with the document that’s been produced” and that “there are a number of folks who feel like it gives too much of an emphasis on the potential for new gas and not enough on some other resources.”

Mayor Lee Leffingwell has criticized the idea of adopting a plan before the end of the year, and reiterated his concerns to Council. “I fear that this puts Austin Energy in a position of challenges to its viability to its existence in the years ahead,” he said, hinting that the state legislature could opt to deregulate the utility if it doesn’t stay competitive.

In an interview with the Monitor, Leffingwell reiterated his concerns that it could violate the affordability goals that Council set in 2011, which include a 2 percent cap on Austin Energy’s annual average bill increases and a target that the utility keep its rates within the bottom 50 percent among comparable utilities in the state.

“We’ve got serious questions about whether we’re meeting that criteria or not,” Leffingwell said.

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Key Players & Topics In This Article

2025 Generation Resource Plan: The Austin Energy plan to conserve energy, with a goal of reaching 55 percent renewable energy by 2025. The plan is reassessed every two years.

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

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