27 Jan Austin’s Electric Utility Commission Pushes Hard For Fair Study Of Clean Energy Alternatives

EUC Vice Chairman Karen Hadden details the omissions from the Gen Plan Study RFP in summarizing Commission Member Joep Meijer's thorough analysis of items that Austin Energy left off the proposal.

Austin Electric Utility Commission saved the most important issue till last on their long Monday agenda. After 9 PM, the EUC rallied to pose a strong request to Gage Loots, Austin Energy's Supervising Senior Buyer:  "Please issue an important addendum to the RFP for the Gen Plan Gap Study."

If you're not an energy geek, that sentence might take some deconstructing.

2014 was a key year for developing a new 'Generation Plan' for Austin which would define the electrical generation resources for Austin Energy – the city's utility – for the coming decade. This planning cycle occurs every two years. It is a key time for public input into the energy and – necessarily – climate goals for the city of Austin – whose ambition is to be a national and world leader in renewable and sustainable energy.

As the 2014 planning cycle unfolded, it became clear that the utility department – ie, Austin Energy – wanted to limit public input, build a new 1000 MW natural gas power plant and move on. Activists all over Austin rallied and brought public pressure to bear on the process. In response, Austin City Council made some significant policy and process decisions.

First, they created their own Generation Plan Task Force to evaluate all the options and opportunities for renewable energy to replace fossil fuels in the Austin generation mix. Perhaps more importantly in the long run, they adopted a new Climate Protection Plan for 2050 which would move the entire city of Austin to be carbon neutral by 2050. Not just city government and city services – but the entire city! To help the city achieve those critical goals, the electric utility department would need to get there by 2030 to allow extra time for the other sectors of the economy to get there. The electric utility – though massive – is a very concentrated carbon source – and both easier to mitigate and under city jurisdiction. So a 2030 goal for Austin Energy is necessary to give some running room for the rest of the city of Austin to catch up.

The Generation Plan Task Force made it's recommendations late summer, although the exact timing of their presentation to Council was delayed by parliamentary tactics. They made powerful recommendations: make solar the default new generation source, add 600 MW more west Texas solar, add 200 MW local solar, add more energy efficiency, more weatherization, invest in energy storage – all subject to the need to be 'affordable.'

Now, Texas is a big place – and 'affordable' can be a big word. Many tribes can gather under it's tent – but in the end – it can also mean a lot of things to a lot of people. So treaties can be signed, but perhaps, different interpretations can be taken away from the table.

For the Mayor, it meant electric rates in the lower 50% of rates in ERCOT (mostly Texas) with no more than 2% annual increase. Those are laudable goals are helped in part by growing electric rates in the private utility markets that dominate parts of Texas. For Sierra Club, Austin Interfaith,PODER and others concerned with social justice, 'affordable' meant  low rates, weatherization programs, and extra help for low income families. For the Chamber and others it means low rates for silicon foundries and big business users. For Kathie Tovo and her groundbreaking resolution 158, it means finding ways to keep electric rates fair – especially for the disadvantaged in Austin. For Austin Energy, it means keeping generation costs down and balancing their budget. For the City Manager, it means keeping rates down and making profit margins that support many parts of Austin's city budget. In quick summary – there are countless competing demands on this key word 'affordability.'

It must be recognized that 2014's City Council had incredible experience in dealing with these matters of energy, climate change and affordability. They had been trained (lots of OJT) in the rate case, in looking for ways to close the coal plant, in countless meetings and hearings on Austin Energy. Ultimately in mid 2014, they created an entire 'Committee of the Whole' to manage Austin Energy – realizing that they all had hard earned expertise to give – and that the big ($2+ Billion)  business of Austin Energy was an elephant in the room at City Hall. It was too big to ignore – important enough to pay real attention to.

(This is a long digression, but bear with me, we're almost back to the EUC meeting.)

As time was running out on the 6-1 Council, no approved Generation Plan was in sight. Sierra Club and the Austin Beyond Coal Campaign worked hard to negotiate a plan before the clock ran out. It was important to have Austin Energy on board – after all they were the ones who had to believe it was a good plan and implement it. It was important to have a plan that was 'affordable' to as many constituents as possible.

On December 11, 2014 the Austin City Council passed – somewhere around 11 PM on their last meeting – a Generation Plan that met the many of the objectives of the many constituents – from City Council to Austin Energy to many climate activists. Many accepted the outcome – but not all. There was one minor matter tossed forward:  a 500 MW energy 'gap.' Austin Energy saw it as a simple slam dunk:  build a 500 MW combined cycle natural gas plant – the most efficient in Texas. Some environmentalists saw it as a possible economic reality if an independent 3rd party study proved it to be required. And others – in the spirit of the Gonzales "Come and Take It" – it equates to 'Hell NO!'

So back to the EUC meeting on January 29 – much is at stake.

Incredible gains were made in the 2014 Generation Plan:

• 150 MW West Texas Solar already purchased and being installed – below the price of natural gas.

• Reach for 600 MW more West Texas Solar

• Reach for 200 MW local Solar

• Close Decker gas thermal units in 2018

• Close Fayette Coal Plant (Austin's portion ) by 2022

 • Add 375 MW more wind – to equal 14% of all wind power in Texas

• Add 100 MW to 200 MW Demand Side Management

• Reach 55% renewables – 65% if 'affordable' by 2025.

Huge gains, some compromises. Some OK with that, other's not.

It all hinges on 'affordability.'

One thing was kicked down the road:  this 500 MW 'GAP'. Austin Energy thinks of it as a 500 MW combined cycle gas plant – shiniest most modern available – 60% efficient and dispachable! But with disruptive prices in wind and solar and erratic prices in gas – was high, now low, going higher? – is this the time to spend $500 Million for a gas plant that will have to run 30 years to pay back?  This is the time for a thorough evaluation of whether that is our best path forward.

With all that at stake, the EUC had a lot of work to do.

That "Gap Plan" is now in the City Council's lap, Austin Energy's lap and the EUC too.

The real question is, "When we close Decker (CO2 + ozone) and Fayette (CO2 + ozone + more), what will we replace it with?" Solar, Wind, Gas, Buy from ERCOT, Storage, Efficiency, Weatherization, Other???

The City Council approved Generation Plan calls for a major study of this question A critical component is exactly how fair, independent and far-reaching that study will be. And a big determinant to that is exactly how the study is defined in the bidding process. Questions that are excluded from the proposal are not likely to get serious answers in the study.

So back to the EUC meeting.

Gage Loots – Austin Energy's Supervising Senior Buyer answers questions from the EUC members as Austin Energy Chief Operating Officer Cheryl Mele looks on.

When the RFP (Request For Proposal) went out January 22, many important issues were not included in the proposal. Commissioner Joep Meijer and Vice Chairman Karen Hadden developed a thorough list of key items to add. After considerable discussion, the list was whittled down to a handful of topics the EUC considered essential to the study. They included:

• Evaluation of energy efficiency opportunities.

• Include full fuel costs including hedging and other financial costs.

• Evaluate purchased power options

• Include decommissioning costs in any proposed gas plant as part of the total package.

• Evaluate the environmental impacts of any proposed new generation and it's impact on Austin's ability to meet our climate goals.

• Include in analysis the expected longest useful life of the plant.

• Include the impact on water, both in water use and in any possible water contamination.

With that request passed, the meeting adjourned.