Sep 10 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - J.B. Smith Waco Tribune-Herald, Texas

Just last fall, it appeared the Texas coal rush was rolling ahead like an unstoppable locomotive.

Skyrocketing natural gas prices were pushing electricity prices up, and electric demand was growing. Coal, relatively cheap and relatively dirty, seemed the reasonable alternative.

Gov. Rick Perry last fall ordered regulators to expedite coal plant applications, and environmentalists feared the plants would be rushed through and rubber-stamped. Companies such as TXU subsequently lined up earlier this year to file a batch of new applications, resulting in 17 proposed coal units, including 10 in Central Texas.

But this summer, the coal train has hit some rough rails.

Mayors from Dallas, Fort Worth, Houston, Plano, Arlington and smaller cities such as Hillsboro have banded together to fight the permits, arguing that they would exacerbate urban smog problems.

Waco leaders have not joined that group but are expressing alarm over the sheer number of power plants proposed in Central Texas, including four units in McLennan County. Waco officials intend to raise those concerns at public meetings this week on new TXU plants near Riesel and Hallsburg.

And last month, TXU suffered a stinging setback when judges in a contested case hearing recommended that the TCEQ deny a permit for Oak Grove, a large lignite power plant planned in Robertson County.

Now that permit heads to a three-member TCEQ commission that appears divided on the issue of coal-fired power plants.

Environmental groups fighting the permits have been emboldened by recent turns of events. Lone Star Sierra Club executive director Ken Kramer said it's no longer just a "ragtag bunch of environmentalists" and local citizens who are sounding the alarm.

"I think a number of big-city mayors have awakened to the fact that these proposed coal-fired power plants could dramatically undercut their efforts to try to achieve their air quality standards," he said. "It gives us some reason for hope that the tide is beginning to turn."

Tom "Smitty" Smith, director of Public Citizen's Texas office, said the opposition to coal-fired power plants is growing.

"What we're seeing is the coming of a major storm," he said. "The wind has been behind TXU's sails because the regulatory process favors them. We're beginning to see a significant shift in the winds as the downwind cities affected by the pollution begin to fight. At least now we know we're going to have a fight, and we may end up with significant improvements."

Environmentalists have a long list of complaints against coal-fired power plants. Though modern coal plants are much cleaner than those of a generation ago, they still emit significant amounts of mercury, which can cause birth defects; sulfur dioxide, which causes acid rain; soot particles, which cause visibility and respiratory problems; and carbon dioxide, an as-yet-unregulated emission that many scientists say contributes to global warming.

But the most pressing issue in the current debate is smog. Fossil fuel-burning power plants create nitrogen oxides, which can travel long distances and convert to ozone-based smog in cities.

The Dallas-Fort Worth area is considered a federal "nonattainment" area for ozone and is under the gun to reduce ozone to safe levels by late 2009. The federal government could impose strict regulations on vehicles and industry if the region misses that deadline. Meeting it would require reducing current nitrogen oxide emissions by 42 percent.

TCEQ air quality director Susana Hildebrand said meeting the target in 2009 will be "challenging" but not impossible. She said the drop in ozone levels the area has seen in recent years should continue as older cars are replaced with cleaner ones.

But state Sen. Kip Averitt, R-McGregor, head of the Senate Natural Resources Committee, is less hopeful.

"I don't see any way they can meet their deadline," he said. "We could take all the cars off the road and we still wouldn't be there. They are going to meet it, just not by the deadline.

Meanwhile, a prominent coalition of mayors headed by Dallas Mayor Laura Miller has organized to fight the permits through contested case hearings. The mayors want the TCEQ to consider the cumulative impact of the coal plants instead of considering each one in isolation. They also want companies to use a controversial coal gasification technology that advocates say would curb pollutants significantly but which TXU said isn't proven.

TXU officials said their plans actually will reduce ozone in the Dallas-Fort Worth area. TXU is building 11 generation units in Texas, all at existing power plant sites, but the company is also planning to make pollution control upgrades at old facilities. Even with the new units, TXU is promising to make a 20 percent net reduction of key pollutants, including nitrogen oxide, for its Texas plants.

TXU also points to a state-funded air quality model by the Environ firm that predicts that TXU's cuts would cause Dallas-Fort Worth ozone levels to decrease, even if all the proposed new coal-fired power plants are built.

TXU spokeswoman Kimberly Morgan said the mayors have yet to propose a viable alternative to TXU's plans.

"I'm not sure exactly what they're trying to do," she said. "We know they have engaged a law firm. We don't think this is an issue that needs to be addressed in a courtroom."

But officials with the North Central Texas Council of Governments said there's still not enough research to prove the Central Texas coal plants won't worsen Dallas-Fort Worth air quality. The Environ study is based on weather conditions during high ozone days in 1999 and 2002, but those days may not be representative, said Chris Klaus, an air quality official for the council.

"The consultant did a good job on those particular episode days," he said. "But the verdict on the question is still out: Are those the days in reality typical of the days we get ozone?"

For Central Texas leaders, the Environ study gives little comfort. It shows that if the coal-fired plants were built, ozone levels could increase by 3 parts per billion or more in McLennan County, while Dallas-Fort Worth levels decrease.

"We feel like we're the ones most at risk," Waco Mayor Virginia DuPuy said. "It's the combination of all these power plants that concerns us. We want power, but we want clean power."

The TCEQ does not have an air monitor in Waco and lacks baseline data to show how far away the area is from the nonattainment standard, which is 85 parts per billion of ozone during an eight-hour period. DuPuy and other city leaders said there's an urgent need to monitor and create a baseline for Waco's ozone levels before the plants go forward.

Hildebrand, the TCEQ air quality official, said there's no reason to believe Waco is in danger of becoming a nonattainment area for ozone, based on past air models and the fact that urban ozone levels in Texas are dropping.

"My impression is that Waco is not approaching that standard, that it's not in jeopardy," she said. "I'm not aware of any information showing that's a problem."

Averitt said he could support creating air monitoring stations in Waco, but he said the coal plants likely would have their permits before any meaningful data could be collected.

Meanwhile, city leaders no longer appear to be willing to offer incentives to coal-fired power plants. A couple of years ago, the Waco-McLennan County Economic Development Corporation was considering giving LS Power a $5 million incentive for its proposed billion-dollar Riesel coal plant. But now that TXU is looking at building three more units at Tradinghouse and Lake Creek, that seems less likely, City Manager Larry Groth said.

"I think the introduction of the TXU permits changes the whole picture," he said.

The TCEQ's three-member board, which will make the ultimate decisions on the permits, appears divided. Commissioner Larry Soward has voiced serious concerns about issuing the permits without determining that the plants, individually and collectively, do not have a negative impact on the nonattainment areas. Chairwoman Kathleen Hartnett White appears ready to move forward with the permits.

Just this month, Gov. Perry filled the vacant third position on the commission with Martin A. Hubert, a former deputy commissioner of agriculture and general counsel for the Texas Senate Natural Resources Committee.

Kramer of the Sierra Club said Hubert might be expected to share Perry's desire to move the permits forward, but Kramer's experience is that Hubert is an "open-minded, fair-minded person."

On the Oak Grove permit application, the commissioners could accept or ignore the administrative law judges' recommendation for rejection. The judges found that TXU had not adequately proven that its pollution controls would work with lignite coal or that it would not worsen regional air quality.

Morgan, the TXU spokeswoman, said the recommendation against Oak Grove doesn't spell trouble for TXU's recently announced coal plants, which wouldn't burn lignite.

"This is just another step in the process," she said. "It's just an opinion, and it's not legally binding. At this point we have no plans to change our application. We're going to be working very diligently with TCEQ to make sure all their questions are answered."

Another unknown is whether all 17 proposed coal-fired power plants will actually be built. Kramer believes TXU is just trying to snatch up permits before the federal government enacts rules on carbon dioxide emissions, a claim TXU denied.

"My gut feeling is that not that many will be built in Texas," he said. "It would seem that's an inordinate number."