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Fayette's Fate Up in the Ozone

AE proposes to sell its Fayette interest, but it may not fly

By Mike Kanin, Fri., Sept. 28, 2012

Austin Energy chart projecting Austin's CO2 emissions should it sell its interest in Fayette – even if the plant itself continued to burn coal
Austin Energy chart projecting Austin's CO2 emissions should it sell its interest in Fayette – even if the plant itself continued to burn coal

Austin Energy officials have entered the bizarro world in which a veteran environmental activist with the solid green pedigree of Tom "Smitty" Smith can dispute the conclusions of a report that calls for the sale of the utility's share of the coal-burning Fayette Power Project. That same report also met with skeptical responses on the city's Electric Utility Commission. At the center of this seemingly surreal picture is an AE pitch to replace Fayette's coal-generation capacity with plants fed by cleaner-burning natural gas – a proposition, critics counter, that could instead both increase carbon dioxide emissions and lock the city into a resource that may not prove sustainable.

Since 2010's approval of the ambitious Resource & Climate Protection Plan, AE has been in the business of looking for ways to cost-effectively limit the greenhouse gas emissions that result from the energy it produces. Statistically speaking, the plan presumes a 20% reduction in reliance on coal by 2020 (cutting Fayette's capacity factor to 60%). A subsequent October 2011 City Council resolution was more direct. Among other instructions, that document asked the utility and City Manager Marc Ott to examine the feasibility of selling the partial stake that AE shares in the Fayette plant with the Lower Colorado River Authority. Move­ment toward a coal-free Austin was reiterated by a 2011 Mayor Lee Leffingwell re-election campaign promise to remove Austin from the coal teat.

On Sept. 17, AE Chief Operating Officer Cheryl Mele unveiled a report to the EUC that plotted a course toward a Fayette-less utility. Under the plan, AE would replace Fayette coal power – a "baseload" grade of generation more reliable than the current state of renewable sources – with the use of natural gas.

Commissioners took their whacks first: "Just a comment," said Steve Smaha. "As far as the total amount of carbon emitted in Texas, it would be increasing under this scenario because not only would Fayette be operating, but there would also be the gas plant that we started up. ... So one could argue that selling AE's share of Fayette and then replacing it with a new gas plant would actually increase the amount of CO2 in the atmosphere."

Commission Chair Phillip Schmandt went next. "On this assumption, what percent of Austin Energy's total generation capacity would be represented by natural gas?" The concern implied in this question – that the utility would, sans Fayette, rely too heavily on gas generation for its source of power – would be specifically addressed in Smith's later testimony.

Arguing that the Fayette sale would not "reduce our CO2 emissions" but would rather "absolve us of our collective urban guilt" – because Austin would no longer own it directly – Smith revived the specter of Oscar Wyatt. Wyatt was a notorious Texas energy hustler, a man who in the Seventies promised the state (including Austin) cheap gas, and then – when prices skyrocketed – broke the contracts in a move that, as Smith characterized it, sent "gas to the Yankees and [froze] Texans."

Wyatt may not have been a natural gas fracker, but Smith nimbly used the Hous­ton­ian's fading memory to remind both commissioners and the utility that low natural gas prices are probably not here to stay. Smith told the Chronicle that a hybrid of generation sources – wind and solar, backed by gas power – could be an effective substitute for any power lost in a Fayette shuttering.

However, the practicalities of replacing Fayette coal power with a hybrid could still leave Austin invested in a gas-heavy generation portfolio. Though storage capacity for renewable sources is getting better, under current technology, wind and solar production would still have to be heavily paired with gas for the hybrid to serve as a reliable replacement for Fayette's baseload.

For her part, Mele told the commissioners, Smith, and the Chronicle that AE's plan to replace Fayette generation would be a flexible one. There's also the fact that grid demands could well prevent anyone – be it AE or some inheritor of the Fayette project – from walking away from the plant entirely. And for the record, the utility has not stipulated whether the gas power it proposes to generate will come from new plants – the scenario that could add more emissions to the mix – or existing facilities.

In other words, whatever world we all end up in, it seems likely that it will include Fayette in one way or another.


Austin Energy's report on the Fayette Power Project.

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