Dec 6 - Knight Ridder/Tribune Business News - Anton Caputo San Antonio Express-News

In a compromise with environmentalists expected to clear the way for a new coal-fired power plant, CPS Energy has agreed to substantially step up its conservation and renewable energy programs, part of a wide-ranging deal.

The 11th-hour resolution avoided a showdown in administrative law court Monday with environmental groups and a handful of San Antonio residents fighting the $1 billion plant.

"We went beyond what is normally done," said Joe Fulton, CPS Energy director of generation planning, research and environmental services. "That made it easier for these two parties to sit down and negotiate an agreement."

The utility's board still has to approve the agreement, which could occur at itsmeeting.

There are still hurdles, but with the major challenge behind it, CPS Energy expects to break ground on the 750-megawatt plant by summer and have it running by the summer of 2010.

Monday's settlement is confidential, but both sides confirmed that the utility will increase energy conservation from its current target of 10 percent of capacity by 2015, to 15 percent by 2020. That could include new programs to make homes more energy efficient.

The power company will also increase its renewable energy production -- wind energy is an example -- from its current target of 30 megawatts in 2011 to 65 megawatts in 2016.

"We think this sets a healthy precedent for other utilities in the state," said Tom "Smitty" Smith of the Austin-based Public Citizen.

The agreement could set precedent on many fronts, Smith said -- most notably on the issue of coal gasification technology.

The argument over gasification was the major obstacle in the case, one of the few issues that could have pushed CPS Energy's four-year effort to get a permit for the plant back to square one.

Environmental organizations view gasification as a cleaner technology than the conventional coal-burning technology CPS Energy has proposed.

It is particularly good at isolating the greenhouse gas carbon dioxide, which could prove important if the United States ever institutes a carbon control program to fight global warming.

Public Citizen and other groups want Texas to require power companies to consider gasification when building new plants. The Texas Commission on Environmental Quality is supposed to decidewhether power companies are required to consider gasification for new plants in Texas.

CPS will research the issue no matter what the state decides. As part of Monday's agreement, the utility will conduct a six-to seven-month study of the technology. Although this study will not affect the new plant, Smith said it could make an impact on future Texas plants.

Six more coal plants are proposed in Texas, and five are in the permitting process.

Monday's agreement also covers technology used to control mercury emissions. CPS now guarantees that if after a year the plant does not meet its promised mercury level, it will install state-of-the-art mercury control equipment.

It also has agreed to install continuous emissions monitors in the plant's smokestacks and to post the pollution readings online.

Monday's agreement involved all the groups who have been actively fighting the power plant. The city of China Grove opposes the plant but hasn't taken an active role in the administrative hearing process.

Mayor Dennis Dunk, who said he's believed all along that state regulators would approve the plant, said that if China Grove decides to actively fight the facility, it will do so in state court.