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Austin Energy, activists agree on generation plan

Friday, December 5, 2014 by Jo Clifton

After three months of intense negotiations, officials with the city’s electric utility and members of environmental groups — including, most prominently, the Sierra Club — have reached agreement on a proposed 2025 generation plan for Austin Energy.

That plan includes ramping down use of the coal-fired Fayette Power Plant in 2020 with an eye to beginning to retire the plant in 2022.

Austin Energy spokesman Robert Cullick said, “Through our discussions we were able to add 600 MW of solar, 450 MW of wind as well as higher energy efficiency and higher battery storage goals.”

On Thursday, City Council, while meeting as the Austin Energy Committee, directed staff to put the plan on the Dec. 11 Council agenda. There was not an official vote on the matter, and Mayor Lee Leffingwell objected. However, the rest of the Council members indicated that they wanted to hear the item next week, their final meeting before the new 10-1 Council takes office in January. Mayor Pro Tem Sheryl Cole was absent.

Under the plan, Austin Energy would eliminate the aging steam units at the Decker Power Plant and increase renewable energy goals from the current 35 percent by 2020 to 55 percent by 2025.

The main sticking point between the utility and environmentalists has been over replacement of the gas turbines at Decker with a modern 500 MW combined cycle plant. Environmentalists have argued against replacing the gas plant because it is a source of some pollution, though not nearly as much as the coal plant. Austin Energy has argued that it cannot do without the gas plant and still meet the city’s affordability goals for ratepayers.

Austin Energy Vice President for Market Operations & Resource Planning Khalil Shalibi said if the utility retires Decker and replaces it with another gas plant, it will have no impact on emissions.

“It’s the market,” Shalibi said. “If we retire Decker, some other gas plant will replace it, or even a coal plant, depending on what the marginal price is … It allows us flexibility from an environmental standpoint.”

The negotiators have agreed that Austin Energy will hire an outside company to do an independent study to make sure that the plant is a good investment for the city. However, arguments are likely to continue between the two sides over details of the study, how environmentalists will have input into the parameters of the study and how the outside company is selected.

Cyrus Reed, acting director of the Lone Star Chapter of the Sierra Club, took the lead in negotiating on behalf of environmental and solar interests. He was also a member of the Austin Energy generation plan task force that crafted ambitious goals for renewable resources, which Council adopted in August.

Reed said, “The plan does involve the potential for building a new gas plant … While we think ultimately some sort of new gas plant will be needed to make this plan work, we want to make sure that we do a really good independent review of that plan … so that we don’t move forward on a $500 million plant before we’ve done the proper process.”

But Reed agreed that this detail is minor compared to what Austin Energy and the environmental groups have agreed to. “This plan commits Austin Energy to retiring the Fayette Power Plant, the utility’s oldest and dirtiest resource, and it’s affecting thousands of people and Fayette County while we use that energy every day,” he said. “It’s also committing us to a path for renewables that would be the most aggressive of any utility in this country that doesn’t own hydropower.” Cullick said it is the dirtiest but not the oldest.

Tom “Smitty” Smith, director of the Texas arm of advocacy group Public Citizen, said the proposed plan is a “much improved version” of previous plans that Austin Energy has submitted. He went on to criticize the gas generation component, stating that an article recently published in the scientific journal Nature asserts that natural gas availability projections in Texas could be overstated by about 50 percent. Smith has opposed any iteration of the plan that includes fossil fuels.

Council Member Laura Morrison said the Nature study may indicate that “the error bars on the projected future gas prices just changed” and said the city should ensure that the study incorporates a margin of error.

“We need to make sure that we make it sophisticated enough to include all of that,” Morrison said, “and I look forward to working with everybody on making sure we get that in place.”

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