CPS agrees to buy 800-MW gas plant from Tenaska affiliate

In order to cope with the planned retirement of older coal-fired generation, CPS Energy, the municipal utility for San Antonio, Texas, has agreed to buy an 800-MW combined-cycle natural gas power plant from an affiliate of Tenaska Capital Management.

TCM is an affiliate of Omaha, Neb.,-based Tenaska, one of the largest independent power producers in the United States.

Output from the Rio Nogales power plant, located in Seguin, Texas, will replace the output of the 871-MW J.T. Deely coal plant. CPS has planned to take the two-unit Deely plant offline in 2018.

That 2018 mothball date won’t change and, in the meantime, CPS has been able to reduce Deely emissions through use of “ultra low-sulfur coal,” a CPS spokesperson said.

Purchasing the plant allows CPS Energy to avoid a minimum of $1bn in costs that would have been required to keep Deely, the utility’s oldest coal plant, operational and compliant with expected environmental regulations, CPS said.

“We are avoiding the continuous costs of environmental retrofits to Deely, starting with a $565 million scrubber,” said CPS President and CEO Doyle Beneby. “This investment is in power that does not emit particulate matter or sulfur dioxide and supports abundant natural gas resources in Texas, rather than coal from Wyoming.”

The CPS spokesperson said she was not at liberty to disclose the cost of the combined-cycle power plant at this time. The CPS board has already approved the sale.

CPS has been looking for additional natural gas resources for about eight months. The 10-year old gas plant is expected to run for the next 30 to 40 years.

Purchase of the plant is expected to be final in early April. About 30 current Rio Nogales employees will be offered jobs with CPS Energy.

Excluding the pending gas plant transaction, CPS Energy’s fleet includes about 2,800 MW of natural gas generation; 2,200 MW of coal, about 1,100 MW of nuclear and almost 1,100 MW of renewable energy under contract. The renewable figure includes 30 MW of solar power that’s currently under construction, the spokesperson said.



About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.