An average CPS Energy customer would pay $6 more per month on their home energy bills if the utility were to replace one of its two coal plants with renewables and energy storage and convert the other coal plant to run on natural gas.
If the utility replaces both coal plants with wind power, solar power, and storage – a zero-fossil-fuel option – that average monthly bill increase would be $12. Both increases are in comparison to a baseline scenario that has CPS Energy burning coal into the 2060s.
These are some of the long-awaited figures in CPS Energy’s Flexible Path Resource Plan, released Friday. The document will likely mark a turning point in the years-long discussion over the fate of CPS Energy’s J.K. Spruce coal plants and whether San Antonio will meet its ambitious climate goal of effectively abandoning fossil fuels by 2050.
“One way or another, we know that this conversation has to get expanded,” CPS Energy President and CEO Paula Gold-Williams said in a virtual town hall Thursday. “The CPS Energy team will be here for the community, and we will ultimately make our way across the entire community to explain what we’re thinking and what we’re doing to get your input.”
The 279-page report includes the effect on average monthly bills over a 15-year period from 2022 to 2036. In this case, an “average bill” means a residential bill with 1,000 kilowatt-hours of electricity usage and 5,000 cubic feet of natural gas usage.
The report ties these bill changes to three possible scenarios for Spruce 1, a 560-megawatt plant finished in 1992, and Spruce 2, a 785-megawatt generator completed in 2010.
In all cases, CPS Energy is leaning toward an early retirement of Spruce 1 by 2029, replacing the unit with wind and solar power, along with storage to maintain reliability when solar and wind production is low. CPS Energy has already invested in battery storage, and it’s exploring other storage technologies via a request for proposals.
For Spruce 2, the $6 “gas conversion” scenario involves re-powering Spruce 2 as a natural gas unit in 2027. The no-fossil-fuel version involves replacing Spruce 2 with renewables sometime around then, as well.
The report touches not only on Spruce but on all of CPS Energy’s $11 billion in assets. It includes detailed financial assumptions about the costs of borrowing money, the needs of its changing workforce, fluctuating fuel prices, booming population, and other factors that will affect its business.
CPS Energy executives had planned to release the report last month, but it was delayed at the request of Ed Kelley, the utility’s longest-serving trustee. Kelley said he wanted to make sure it wasn’t revealing its “playbook” to other utilities competing to sell wholesale power on the Texas grid.
The decision last month to hold back on releasing the document came after the board voted on a “competitive matter” during a closed session, as described by Chief Legal Officer Carolyn Shellman. On Friday, the report went online a few hours after a similar closed session and vote. Utility officials didn’t reveal the results of the two votes, only that they had taken place.
Other board members and the utility’s staff had indicated that the document was always meant for public view. Still, Paula Gold-Williams, CPS Energy’s president and CEO, defended Kelley’s point in a tele-town hall Thursday, explaining that the utility uses the wholesale market to keep its local customers’ bills low.
“If we don’t keep some of that information secure, then people can outbid us, and then we won’t be able to optimize the assets and keep costs as well-controlled,” Gold-Williams said.
But she added that the utility has done well in “balancing” its need to remain competitive with an increasing focus on transparency. In recent years, CPS Energy started allowing public comment at meetings, posting meeting presentations on its website, and streaming its meetings live online.
Mayor Ron Nirenberg, who set San Antonio’s climate commitment in motion in 2017, praised the report’s release during the meeting Friday.
“Not only is transparency a fundamental necessity in our system of government, it’s the prudent way to deal with the tough issues that will have long-lasting impacts on our public,” Nirenberg said.
For climate activists, the report is welcome but overdue. Fed up with what they saw as delay tactics, activists spent much of 2020 pushing for a petition drive that would have required an early closure of Spruce and replaced CPS Energy’s board of trustees with direct City Council oversight. The effort ended last month when organizers fell 6,000 signatures short of their goal.
“Now that the board of trustees finally has a report in hand to begin answering many of our questions, it was disappointing to watch them feud over the public’s right to view it,” said Greg Harman, a San Antonio-based organizer for the Sierra Club, in a prepared statement.
“CPS Energy has a real opportunity to rekindle better relations with the community and move this conversation forward by recognizing the depth of our shared climate crisis and their responsibility to work closely with the community as partners in this project as partners, not adversaries,” Harman continued.
Gold-Williams and her colleagues stress that they’ve made no decisions on the Spruce plants. The utility’s board would have to approve any new energy deals or plant closures. City Council has the final say over CPS Energy’s rates.
But a January presentation from Chief Operating Officer Cris Eugster indicates converting Spruce 2 to natural gas is viewed favorably among utility executives. Eugster said the cost of repowering Spruce 2 as a natural gas unit is approximately $20 million cheaper than installing environmental controls that will be needed to run Spruce as a coal unit.
These controls include scrubbers to remove sulfur dioxide, a baghouse to cut down on fine particles, and technology to control mercury emissions and recycle toxic coal ash.
Another technology, selective catalytic reduction (SCR), would reduce emissions of nitrogen dioxides, a key ingredient in smog. The utility has already said it would rather close Spruce 1 early rather than spend $150 million on SCR.
For CPS Energy, giving Spruce 2 new life as a natural gas plant avoids the issue of stranded costs. The utility expects to pay nearly $1.8 billion over the coming years to settle the remaining debt tied to Spruce 2.
