City intends to close Decker power plant by 2017

Austin Energy and City Council are in the midst of a debate over creating more solar energy options for Austin and closing a local natural gas-fueled power plant.

Austin Energy in late September will present the cost of phasing out Decker power plant and creating enough new solar energy for 100,000 homes.

On Aug. 28, Austin City Council passed a resolution sponsored by Councilman Chris Riley instructing the city-owned energy utility to accomplish those two goals by 2017.

"There have been plans to replace Decker for years now, but the question is what do we do to replace that power," Riley said. "Utility staff requested a new gas plant to replace Decker, which would be an expensive capital project that would saddle us with another fossil fuel–based generating plant for years."

Austin Energy serves 425,000 ratepayers and receives a peak capacity of 30 megawatts of solar energy from the nearby Webberville solar farm—far below the 600 MW peak capacity of solar energy that must be created as mandated by City Council. The city of Austin signed a contract with Recurrent Energy earlier this year to buy 150 MW of solar from West Texas.

Austin Energy Communications Director Robert Cullick said the new contract with Recurrent Energy will be more cost-effective than the Webberville solar farm currently under contract. Austin Energy had not set plans for phasing out the Decker power plant located in Northeast Austin prior to council's recent decision. Austin Energy instead sought to build a new gas plant to replace Decker at its current site, Cullick said. However, under the council's new order to make Austin carbon-free by 2030, that proposal is now unlikely.

Unknown cost to consumers

Mandating Austin Energy to buy 600 MW of solar energy—for reference, 1 MW produces power for about 1,000 homes—by 2017 would make residential utility bills more affordable, Riley said.

"We can still make significant progress on renewable energy while keeping our rates affordable," Riley said. "To the extent we've been seeing price spikes lately, it's not so much because of renewable energy; it's actually been due in large part to our dependence on fossil fuels."

However, Austin Energy officials claim the mandate could actually cost more than continuing to rely heavily on fossil fuel energy sources, Cullick said. In the past 12 months, the utility has purchased about $600 million worth of power from the open electricity market, with coal, gas and nuclear sources making up the bulk of that cost. Renewable sources make up the final 10 percent, Cullick said.

"Our ratepayers are responsible for this bill, but we have some physical assets like Decker that make $44 million," he said. "Last year, if we had not had [traditional power sources], we would have been $180 million in the red."

Data released by Austin Energy in June shows its power sources last year generated $49.7 million in revenue. However, it lost $81 million in 2012 with those same resources at its disposal.

Market conditions may be more favorable for solar energy in years down the road, Cullick said, resulting in higher returns from selling renewable energy—thus enabling the per-resident cost to decrease. But right now, he said, that is not regularly the case.

Based on research done by Solar Austin, a nonprofit group that promotes more renewable energy sources, the proposed new solar energy resources could save Austin Energy about $12.7 million each year starting in 2018 if the cost of natural gas remained the same. If the gas costs greatly increased, as some have predicted, solar energy savings could increase to about $32.7 million annually.

Austin Energy refutes the data, but Solar Austin President Kaiba White said she defends her group's findings because the analysis was done using data from the state energy regulatory group Electric Reliability Council of Texas, or ERCOT.

Pros vs. Cons

Solar energy cannot be stored for later use the same way as other energy, Cullick said, one reason why he said sun-powered energy may not be as cost-effective as traditional sources. In addition, solar sources can only be utilized during daytime, he said.

The hottest parts of the day are typically considered peak-use times. Dave Cortez, a member of the Lone Star chapter of the Sierra Club—a group focused on environmental conservation and public health, said those are the times when it is best to use solar energy. The City Council mandate requires approximately one-third of all solar power to come from local sources such as rooftop or yard panels.

Incentives are already offered to Austin residents who utilize or provide solar energy to the market. Bill credits, rebates and helping pay for solar panel installation are all services Austin Energy offers for users.

The proposed energy overhaul is not likely to affect the city budget for fiscal year 2014–15, Riley said.

Environmental impact

There is also concern from Austin Energy that phasing out Decker during the next three years could cause environmental hazards. The technicalities of shutting down the plant has not yet been worked out, and, if it is not done properly, it could cause problems Cullick said.

"You can't just close down a power plant," he said. "It makes the system unstable and subject to brownouts and blackouts."

Alternative power sources would need to be established to shut Decker power plant down without creating energy instability among users, Cullick said. That process would most likely be overseen by ERCOT.

More concerning, Riley said, is how much pollution Decker contributes to Austin's air.

"Decker is the single-largest point source of air pollution in Austin," Riley said. "I'm excited about the opportunity to improve our air quality by finally getting Decker out of the picture."

With the effect air pollutants can possibly have on Austin residents eliminating that health risk and cost to the community will be incredibly valuable, Cortez said.

Living solar

Austin resident Dale Bulla said he installed the first solar panels to his home in 2004. In July he said he paid his first Austin Energy bill in five years. The cost: $5.

Bulla typically avoids paying an electric bill each month because his account earns credits for providing power back to the market and because of his enrollment in Austin's green choice energy program.

Although his solar initiatives help his monthly bills, he said the key to spending less is to use less.