Austin Energy's Balancing Act
Austin Energy has been trying to find ways to conserve energy and expand its current output of power to meet the rising demand for electricity. Without maintaining a balance between production and usage, Austin Energy is forced to deal with questions such as:
- How often is a blackout acceptable?
- What price for reliability is the public willing to pay to avoid a blackout?
In creating the ECAD ordinance, Austin Energy hopes to reduce energy usage by 700 megawatts by 2020 which would essentially eliminate a power plant’s worth of energy from being consumed. 700 megawatts is similar in size to the Holly power plant which was recently closed. If Austinites continue to waste power by not upgrading their homes to the acceptable levels that are tested during an energy audit, the cost of energy will rise and blackouts during peak usage times will be more frequent.
Here are some of the measures that are being considered by the city to meet the demand for more electricity:
In the summer of ’08, the Austin City Council gave Austin Energy approval to enter in a $2.3 billion contract to purchase all the power produced over 20 years by a proposed* 100-megawatt wood-waste-fueled biomass power plant.
Austin Energy plans to recover the cost through a fuel charge to its customers projected to increase the electric bills of the average residential consumer up to $2.50 starting in 2012.
Austin Energy currently receives some of its power from a nuclear facility, South Texas Project, in Matagorda County. Late last year, NRG Energy Inc. a 44% owner in the STP plant proposed doubling the plant’s size. The city hired an outside consultant to go over the proposal. They concluded that the project would have the city paying $2 billion or more over the next seven years. On Feb. 12, the Austin City council voted against participation in the project.
Austin Energy’s size relative to the debt that it would take on for this project is too disproportionate and could result in a negative effect on Austin Energy’s credit rating and could lead to higher borrowing costs.
However the project may still go forward as only 50% of the ownership of the plant is needed to approve the expansion.
Earlier this year the City Council gave approval to Austin Energy to build a 300-acre solar array that will generate 30-megawatts annually, enough electricity to power 5,000 homes.
Austin Energy would pay $250 million, $10 million a year for 25 years, for the electricity the solar array would generate.
Once it’s operating, Gemini Solar would be eligible for an estimated $60 million — about one-third the project’s estimated cost — through the federal investment tax credit program.
*Austin Energy has developed a proposed generation plan through 2020. That proposed plan includes about 900 MW of additional capacity, including a 200 MW expansion of the utility’s natural gas-fueled Sand Hill Energy Center, an additional 100 MW biomas plant, a doubling of the utility’s wind-generation portfolio to about 1,000 MW as well as 100 MW of solar capacity. The plan is under review through a public participation process that began last November. The utility expects to make final recommendations on the plan to the Austin City Council by mid to late summer.
