Mayor Urges Closure of Fayette Coal Plant by 2029

Austin Energy under pressure to finalize its plan for net zero

Fayette coal plant (Photo by Imjeffp / CC BY-SA 4.0)

Last Friday, Mayor Kirk Watson unexpectedly made Austin’s failure to get off coal the focus of his weekly newsletter, the Watson Wire.

Austin Energy has been working with the Electric Utility Commission’s Working Group on an update to its 2030 plan and is set to present to Council sometime this spring. One of the biggest barriers to reaching AE’s climate goals is the continued operation of the Fayette Power Plant in La Grange, which comprises three-quarters of AE’s emissions and a quarter of the city’s total emissions. To get out of its contract with Fayette’s co-owner, the Lower Colorado River Authority, Austin Energy has to put up a lot of money, and in years of negotiations, the two parties have been unable to agree on a price.

Austin Energy’s proposed solution to get out of Fayette is to replace it with a new gas plant that can transition to green hydrogen production. But the EUC Working Group has taken issue with Austin Energy’s modeling, saying it’s overly optimistic about both the affordability and availability of green hydrogen, which they say would increase pollution in the short term. It seems the mayor has similar concerns about the plan, as he wrote in the newsletter, “it’s time to put the brakes on the [2030 plan] and scrub all the options. … There’s nothing we can do – nothing that I can do as mayor – that’s more profound or effective in combating climate change than getting us out of that plant … no later than January of 2029.”

Sierra Club’s Cyrus Reed, chair of the EUC Working Group, says he’s glad to see a renewed focus on Fayette. “Taking a bit more time as [Watson] stated … could be useful to the process but we are still hopeful the update can move forward in a timely manner.”

Until they reach a deal with LCRA, Austin Energy has been running Fayette at the lowest level possible, AE General Manager Bob Kahn wrote in a statement. The EUC Working Group disputes this in their final recommendations and says Austin Energy should run the plant at the lowest level allowable by contract with LCRA, stop investing in capital improvements to the plant, spread the cost of its closure over 25 years, and pursue federal funding for replacement power. They also recommend replacement power be generated near Fayette “to create market pressure for the plant to shut down.”

Fayette is no longer just a logistical and environmental nightmare for Austin Energy, but a looming political one for Watson. If Austin fails to pull out of the plant, the city won’t reach its climate goals. However, Kahn’s response to the newsletter seems to suggest Watson himself could wield some influence in negotiations with LCRA that AE couldn’t on its own: “Austin Energy has long looked to exit its share of the FPP … Mayor Watson’s support of this key goal is appreciated, and he has unique skills and key relationships that will help the City achieve a positive outcome.”

Austin Energy has yet to bring a formal recommendation either to the EUC or Council – the next EUC meeting is scheduled for March 18.

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