Austin Energy declines involvement in STP expansion

The South Texas Project (STP) is a two-unit, 2,725 MW nuclear facility located in Matagorda County, Texas. The City of Austin has a 16% (smallest) share of STP, along with CPS Energy and NRG Energy, Inc. According to the ownership/operation agreement between the three for STP, any owner may propose the construction of new generating units at the site. At least 50% of the plant ownership must participate in order for the construction to proceed. However, all owners have the right to decline involvement. This also represents the first application submitted to the NRC for a new nuclear plant in 29 years.

From Austin's perspective, analysis indicates that such participation could cost $2 billion or more over the next seven years, an amount and time frame that is likely to increase given the history of nuclear facility construction (particularly as Austin Energy and financial adviser on the matter WorleyParsons viewed the construction timetable as "overly optimistic"). The appealing factor would be an addition of 432 MW of clean, efficient baseload power.

However, this represents about double the amount of additional generation projected to be needed by 2020 for Austin Energy. Also, the amount of debt necessarily incurred from such a commitment relative to their size "could result in a downgrade of its credit rating, leading to higher future borrowing costs." [1]

That final economic factor as well as Austin Energy's strong existing plans for generation through 2020 are the primary reason for the lack of involvement. "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 biomass plant, a doubling of the utility's wind-generation portfolio to about 1,000 MW as well as 100 MW of solar capacity." [1]


Although Austin Energy's (AE) proposed generation plan through 2020 has yet to be finalized and approved by public review, it demonstrates a strong commitment to alternative energy sourcing. The largest portion being the very green and very Texas increase in projected wind power generation.

Transmission costs of this power to areas of East Texas, along with the availability of wood waste from logging and mill activity, among other reasons, have led to the approval of the $2.3 billion biomass plant. The plant burns waste wood to generate steam to produce electricity. Despite the apparent lack of technological "green-cred," the plant helps curb oncoming natural gas price hikes and carbon taxes, with the strong selling point of 24/7 on demand power that fits, legally speaking, within the goal of 30% renewables by 2020 [2].

CPS Energy, which is San Antonio's municipal utility and owner of 40% of the STP, quickly approved of the project; thus providing the necessary support for the project to proceed. The project is a part of NRG's initiative to provide "clean," cost-effective baseload power that does not contribute to global warming. The initiative is part of NRG's need to reduce carbon intensity due to it's large scale and strong dependence on North-East coal plants. Thus, they have resolved nuclear technology as the only large-scale, zero/low GHG or CO2 emissions capable of providing on-demand available power; and plan on building 10,000 MW of it within the next 20 years or so [3].

Such an aggressive move should be of concern to anyone aware of the unresolved issue of nuclear waste. Certainly the amount of energy supplied by such convenient baseload sources as coal and natural gas will need to be offset in the very near term (particularly coal), but do pending carbon restrictions force us into hasty financial and energy investments that we do not fully understand the environmental consequences of, particularly nuclear waste? This is the situation we have put utility companies in, and nuclear power is the clear solution for the time-being, or else wood-burning biomass plants. Is this what we want? Strong dedication to "alternative" sources that cleanly shirk their environmental responsibilities and reprecussions into areas other than CO2 emission? As ETP students are the main audience for this post and have been made aware of the lack of funding the utility industry puts into R&D, this decision is likely of little surprise.

To myself, these facts speak volumes to the public's need for conservation efforts. Usage studies, technology R & D, public education, and the necessary motivation - even if it comes in the form of government mandated financial motivation. Energy used should come with a clear monetary indication of the environmental impact had, whether emissions, waste, or resource depletion. Utility affiliated or not investment firms that will provide capital costs for home technologies to increase efficiency and reduce waste. I believe it is time to force the people to do what they know they need to, and make them aware that the answers to their hypocritical Utility Company demands can be solved in their own home.


1 - Austin Energy Press Release on STP Decision
http://www.austinenergy.com/About%20Us/Newsroom/Press%20Releases/2009/declinesParticipationSTP.htm

2 - Austin Energy Press release on East Texas Biomass Plant
http://www.austinenergy.com/about%20us/newsroom/Press%20Releases/2008/biomassContractApproved.htm

3 - NRG STP Proposal Press Release
http://www.snl.com/irweblinkx/file.aspx?IID=4057436&FID=4916766