Wood-waste plant, meant to provide Austin with renewable energy, sits idleFeb 14 - Marty Toohey Austin American-Statesman
For most of the seven months since it rumbled to life, a wood-burning power plant in East Texas hasn't been producing electricity for Austin Energy customers despite a $2.3 billion contract. Simply put, the plant's electricity is now too expensive to use. But, even as the plant sits mostly idle, Austin Energy pays a fee to cover its operating costs. The utility won't say how much it pays to keep the plant staffed or the cost of the electricity the plant would produce, citing the competitive nature of the contract. "It concerns me that customers are on the hook, paying for this plant to sit idle," state Sen. Kirk Watson, D-Austin, recently wrote to city officials. The city-owned utility agreed to purchase power from the "biomass" plant in 2008 as part of a plan to aggressively invest in renewable energy and curb the city's contribution to global climate change. But the deal was based partly on the expectation that federal taxes would raise the price of carbon-based fuels, making wood waste seem like a more attractive option. That hasn't happened. Even as the plant was being debated five years ago, environmental activists, business lobbyists, open-government watchdogs and fiscal conservatives complained it wouldn't deliver the promised environmental benefits and that the contract was rushed to unanimous City Council approval. When Austin Energy executives were encouraging the council to approve the contract, they emphasized the plant was one of the few available sources of renewable power that could produce more or less around the clock. Cheryl Mele, Austin Energy's chief operating officer, said the utility first expected the 100-megawatt plant could run at full capacity about 90 percent of the time. Those expectations have since been revised. Mele said it might now run 75 percent of the time, though she said that so far it has produced electricity just 50 days during the seven months it has been operational. Part of the reason is that in 2010, the statewide electric grid began operating under long-awaited rules that muddied traditional notions of when a particular plant must be producing. Before the new rules, each electric utility was responsible for ensuring it had a steady stream of its own electricity at all times. Now, utilities sell their power into a statewide market, and the operators of the state grid choose the cheapest sources, then dispatch them through the grid back to utilities that pay for the electricity. The idea is to ensure the cheapest sources of electricity are used first. That means that at this time of year, when demand statewide is relatively low, even some coal plants aren't producing because natural gas is so cheap. The wood-waste plant's electricity is so expensive that the state grid won't buy it. "A lot of people would not have anticipated natural-gas prices being so low when we signed the contract," Mele said. Nacogdoches Power LLC persuaded the city to sign the 20-year contract without soliciting bids from competitors. The plant has since been sold to Southern Power, though the contract remains in place. Austin Energy executives say customers aren't paying for the plant's electricity if it's not producing, though they declined to say how much the plant's inactivity is affecting utility customers. Austin Energy is a monopoly, but its executives say they still have to compete against other utilities in situations such as the wood-waste plant, where there could be other interested utilities. A judge recently ordered Austin Energy to release the contract as part of an appeal that some customers filed over a recent rate increase. But the judge stipulated that when the contract is released, the lawyers handling the case cannot release the details, said Roger Borgelt, an attorney for Homeowners United for Rate Fairness. The wood-waste plant has been used by people on both sides of an argument about who should oversee Austin Energy. Watson wants the City Council to turn oversight over to an independent board, and the City Council is expected to take up the matter Thursday. |