Thursday, December 18, 2014 by Tyler Whitson

EUC wants ‘fair shake’ in gas plant study

After much discussion about the scope of work for an independent review of Austin Energy’s proposed combined-cycle natural gas plant, the Electric Utility Commission voted Monday to organize a working group and provide the utility with official comments by Jan. 12.

Vice Chair Karen Hadden, who made the final motion, said she did not feel that there had been enough time for commissioners to formulate their comments ahead of the meeting.

“This is a really important issue,” she said. “It’s politically heated and it’s very important for the future of this utility, financially and environmentally. I think that you should allow us some time to consult the people we need to consult.”

Austin Energy Vice President of Energy Market Operations and Resource Planning Khalil Shalabi said the request for proposal from potential consulting firms to conduct the review is “time-sensitive” and that Austin Energy was planning to issue the request in the next two or three weeks, but would wait for the EUC’s comments.

The working group will meet in early January and will consist of Hadden and commissioners Brent Heidebrecht and Joep Meijer. They plan to provide Austin Energy with recommendations on the scope of the review, the request for proposal and a list of consulting firms that they would like the utility to directly notify about the request.

Shalabi expressed concerns that waiting too long to issue the request could adversely affect the timing of the review, which he hopes to have in draft form for review by staff and the EUC by May 29 and in final form for review by the EUC and City Council members by June 27. He said that it would likely cost hundreds of thousands of dollars. “With the way this evolved, it’s going to be a very expensive study,” he said.

Council gave Austin Energy the go-ahead to pursue the review of the 500 megawatt gas plant late last Thursday, when it approved the Austin Energy Resource, Generation and Climate Protection Plan to 2025. It instructed the utility to include two to four alternatives to the natural gas plant that use “reasonable combinations of energy storage, demand response or renewable energy.”

The plan includes a goal to reach 55 percent renewable energy by 2025 and specifies that any action Austin Energy takes on constructing the plant is contingent on the review and future Council action. It also set up Monday’s discussion and says the utility should consult the EUC after the consultant has submitted a draft report and after the report is finalized.

Hadden said she did not feel that the draft of the request for proposal that Council incorporated into the generation plan adequately addresses the consultant’s environmental qualifications and how much weight they would have in the selection process.

“I would like a fair shake, in terms of getting real consideration of the environmental issues,” Hadden said. “I do not feel that some of the qualifications as written — the criteria for the consultant — are going to get us to that type of consultant who has experience in that work.”

A few public speakers — many of whom spoke last Thursday — urged Austin Energy to ensure the data assumptions that will form the basis of the review take into account a range of predictions for future natural gas prices, the potential environmental impacts, risks and costs of natural gas extraction and processing and the potential benefits of renewable energy and demand reduction measures.

Shalabi pointed out that the energy plan draft that Council adopted includes a provision requiring that potential consultants demonstrate relevant experience and capabilities that include “the ability to analyze environmental risks and costs, including water usage and pollution impacts.”

Shalabi also said that the assumptions are not part of the request for proposal, but come into play after the consultant is selected. “The way I see it is we start working when the consultant is selected,” he said. “All we’re trying to do here is hire a qualified consultant. Once the consultant is on board, we would work with scope of work.”

Chair Michael Osborne raised concerns that future gas price predictions could come into play during the selection process because different consultants may use different sources, and thus come up with different predictions. “That will make or break things, so we’re going to have to make a compromise on that,” he said.

Osborne added an amendment requesting that Austin Energy staff provide the working group with a list of the firms to which they plan to directly send the request for proposal.

Austin Energy spokesman Robert Cullick followed up with the Monitor on Wednesday and clarified that the utility plans to provide the list to the EUC as long as the city’s procurement process allows it.

Shalabi stressed that the request for proposal will be posted online and will be accessible to the public.

Osborne said he understood the process and explained his rationale. “I realize it’s an open season, but, you know, guys 5-foot-5 don’t generally walk onto the University of Texas football team and make the team,” he said. He added that the purpose of his request is “to get other people on that list.”

Heidebrecht voted no on the final motion, Commissioner Shudde Fath abstained and Commissioner Chris Herbert was absent.

Photo by Mattia Luigi Nappi (Own work) [GFDL or CC BY-SA 3.0], via Wikimedia Commons

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Key Players & Topics In This Article

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.

Electric Utility Commission: The advisory body charged with oversight of Austin Energy, the City of Austin's municipally-owned electric utility.

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