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Austin Energy supports Clean Power Plan

Tuesday, November 10, 2015 by Tyler Whitson

Although Texas is a major player in a legal challenge to the federal Clean Power Plan, Austin Energy and three utilities outside of Texas have joined Houston-based Calpine Corp. in a legal motion to support the plan. Austin Energy General Manager Larry Weis told the Austin Monitor on Monday what the move means for the utility and its customers.

“It does put us on the other side of the table, if you will, from some in the industry that are taking a really, really strong position,” Weis said. “Our grounds for intervention are based on the goals of our utilities. We have an interest in the outcome and how it affects our generation portfolios.”

West Virginia, Texas and several other states have filed a legal challenge in the U.S. Court of Appeals for the District of Columbia against the Environmental Protection Agency for its Clean Power Plan, claiming that it is an illegal overreach that causes immediate and irreparable harm.

The plan, which the EPA finalized in August, sets individualized targets for states to cut carbon emissions by 2030 and calls for them to take action toward those goals by 2020.

Calpine, Austin Energy, Seattle municipal utility City Light, California-based Pacific Gas and Electric Company and international electricity and gas company National Grid filed a motion in that case on Thursday to intervene in support of the EPA and the Clean Power Plan.

If the Clean Power Plan is successful in its goal of reducing carbon emissions from coal-burning plants, it could help make Austin Energy more competitive in the Electric Reliability Council of Texas market, which covers about 90 percent of the state’s electric load.

Austin Energy spokesperson Lauren Hammond told the Monitor that the D.C. Circuit court will likely hand down its decision on the challenge early next year, after which it will hear arguments on the legality of the Clean Power Plan. At that point, the question of the plan’s legality will likely make its way to the U.S. Supreme Court, which may not rule until spring or summer of 2018.

Austin Energy is “one of the few companies” to actively support the EPA and its Clean Power Plan, Weis said. “They coincide with the goals of the city to have a lower carbon footprint and also to use our programs – energy efficiency and everything – so it’s all a package.”

Weis was referring to the Austin Energy Generation, Resource and Climate Protection Plan – which City Council adopted in December 2014 with a goal of reaching 55 percent renewable energy sources by 2025 – and the utility’s energy efficiency and demand management programs.

“The Clean Power Plan really addresses the coal units that are in there, and how a utility gets its resources outside of coal is going to be a subject really of each utility’s environment that they’re in,” Weis said. “For us, it will be more renewables, more solar, more wind. We will also have to add and replace our coal with combined-cycle natural gas.”

In October, Council directed Austin Energy to contract for between 400 and 450 megawatts’ worth of utility-scale solar based on a call for bids released in the spring. To date, the utility has contracted for a total of 288 MW based on those bids by signing a 170 MW contract with a subsidiary of Hanwha Q CELLS USA Corp. and a 119 MW contract with a subsidiary of First Solar Inc.

The city also has a 150 MW contract with Recurrent Energy for a project that will break ground this month and a 30 MW contract with FRV AE Solar for its Webberville Solar Project. All of the city’s solar contracts, which currently add up to 468 MW, last for a period of 25 years.

Council and Austin Energy are now waiting on Navigant Consulting to complete an independent study of the 500 MW combined-cycle natural gas plant, which is included in the generation plan, and a comparison of the plant with renewable alternatives. Based on the results of that study, Council will have to decide whether to authorize staff to move forward with constructing the gas plant.

Weis and other Austin Energy staff members have consistently argued that the gas plant is necessary to counterbalance the cost of the renewables in the generation plan and to keep the utility and its rates competitive in the state market. Meanwhile, solar advocates and others have argued that renewables are cheaper than natural gas and will be so in the long run.

Regardless of what happens, Austin Energy is moving away from coal and could stand to benefit from the Clean Power Plan, as the generation plan envisions retiring Austin Energy’s stake in the coal-fired Fayette Power Project.

“Some people will lobby the EPA to not have a plan. We’re the opposite,” Weis said. “We want them to have a plan, but we want it to be predictable, and we want it to have certain attributes in it that make sense, like it takes into account the energy efficiency that we’ve done and all the other programs that we have.”

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