Mayor Watson wants to halt Austin Energy plan, get city out of Fayette Power Plant by 2029

Austin Mayor Kirk Watson wants the city out of the coal-powered energy business and, as of now, says he won't support an updated version of Austin Energy's long-term plan expected to come before the City Council next month.

In an online newsletter released last week, Watson said it is time to halt the 2030 Resource, Generation and Climate Protection Plan — Austin Energy's guide to reach 93% carbon-free emissions — and "scrub all the options."

He wants the city to shut down its portion of the coal-burning Fayette Power Plant no later than January 2029.

But that is no easy task. The city has tried to do it for a decade with no success, and it requires a lot more than just a declaration from the council.

"We have to start, right now, putting together how we want to get out of Fayette by January of 2029," Watson told the Statesman. "That's going to take a lot of innovation, a lot of thought and some creativity. We can do that.

"I am putting together a plan for how we're going to address that goal," Watson said.

Austin Energy, the city's utility, has been negotiating with the Lower Colorado River Authority, which co-owns the facility in Fayette County, to close its portion of the plant.

The utility has not yet been able to come to an agreement "that would allow Austin Energy to affordably retire its share of the FPP coal plant as originally planned," Bob Kahn, Austin Energy's general manager, wrote in a statement to the American-Statesman.

What exactly that means is unclear.

Kahn's statement did not provide specifics about the financial barriers that have halted negotiations, and Austin Energy refused to make anyone available for an interview about the utility's financial situation related to the plant.

Watson did not share specifics about what could go into an agreement either, citing the ongoing nature of the negotiations during an interview with the Statesman.

"Right now, I can't tell you everything that would go into that agreement, and I won't tell you everything I might negotiate with," Watson said.

Kahn pledged to continue working toward a solution with the LCRA, but the river authority said it plans to continue operating the plant as long as it provides reliable, cost-effective power.

"As a partner in FPP, the city of Austin must meet its contractual obligations related to the plant. We value our years-long partnership and look forward to working with the city of Austin in the future and hearing any proposal the city may bring forward," LCRA spokesperson Clara Tuma said in a statement provided to the Statesman.

The LCRA is funded by revenue generated mostly by transmitting and generating electricity.

The Electric Reliability Council of Texas, the state's energy grid operator, would also have to sign off on any such closure, according to Kahn's statement.

Austin Energy is reviewing Watson's statement and will provide updates to the Austin Energy Utility Oversight Committee, which comprises all members of the City Council, at a future meeting, Kahn's statement said.

"Austin Energy has long looked to exit its share of the FPP (Fayette Power Plant) and reduce associated greenhouse gas emissions," Kahn's statement said. "This involves economic, legal and technical assessments of all options. We'll continue to work with stakeholders and City leadership to determine the best solution for our customers and the utility.

"Austin Energy has not identified a firm timeline for closing the Fayette Power Plant (FPP) as exit negotiations are ongoing," Kahn's statement said.

Austin's attempt to get out of the Fayette Power Plant

The plant, in Fayette County southeast of Austin, is co-owned by the city and the LCRA, a utility created in 1934 by the Legislature to produce electric power and manage the lower Colorado River. Austin's portion is 50% of two of the plant's three units, according to the Austin Energy website, and the LCRA manages the plant.

The city owes just under $124 million in bond debt related to the plant, according to Austin Energy. That debt will be paid through revenue secured by Austin Energy and "will be paid off in the normal course of business," according to Kahn's statement.

The city has been trying since 2014 to shut down its portion of the plant, which Watson said is Austin's "single biggest contributor to greenhouse gas emissions," accounting for 75% of Austin Energy's emissions and about 25% of the city's total emissions.

If it shuts down, that energy will need to be made up elsewhere.

The city's portion of the coal-burning plant accounts for 13% of the utility's energy production capacity, Kahn's statement said.

The utility said it needs more "dispatchable energy" — energy from sources like a power plant that can be accessed at any time without depending on outside factors such as the weather — as the utility's customer base continues to grow. This is "to ensure reliability and affordability on our customers’ behalf," Kahn's statement said.

The power supply in Austin relies on the state's electric grid.

"Our power flows into ERCOT and then ERCOT sends it back out," Kahn said in January.

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"The Electric Reliability Council of Texas (ERCOT) must approve the retirement of any generation resource as part of its assessment of whether a resource is necessary to support grid reliability," Kahn's statement said.

The LCRA statement said the plant "is important to the reliability of the ERCOT market."

The utility, Kahn's statement said, has taken steps to minimize its scheduled output at the plant by using the Reduce Emissions Affordably for Climate Health Plan, which will lower the plant's carbon emissions and take steps toward meeting reduction goals.

"Retiring Austin Energy’s portion of FPP remains a key goal of Austin Energy’s Resource, Generation and Climate Protection Plan," Kahn's statement said. "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."

This article originally appeared on Austin American-Statesman: Austin Mayor Kirk Watson wants city out of Fayette Power Plant by 2029