Austin Energy pursues possible sale of share of Fayette coal plant

Austin Energy, the municipal utility for the city of Austin, Texas, is looking at selling its 602-MW share of the coal-fired Fayette Power Project (FPP), possibly to plant co-owner the Lower Colorado River Authority, or to other parties.

The city’s Electric Utility Commission on Sept. 17 looked at the sale proposal from Austin Energy. Local reports said the Austin City Council will take up the matter next month.

A memo distributed to the commission by the utility for the Sept. 17 meeting pointed out that additions of renewable energy lately mean that about 27% of customer demand in 2013 will come from renewables. This puts the utility on the road to a 2020 goal and gives it the opportunity to get coal-fired generation out of its portfolio, the utility noted. It said the FPP value will only decline over time so it is recommending that it be allowed to issue a request for proposals for offers to buy its share of the plant. Austin Energy said it wants to look at gas-fired generation to replace its FPP share.

FPP puts out about 75% of the CO2 emitted by the utility, which means not having it would help with a goal to reduce CO2 emissions by 2020, the utility said. Another option would be to mothball Austin Energy’s share of the FPP, but the utility said that would likely not happen due the fact the plant is co-owned and there is a joint operating agreement in place. Austin Energy owns 50% of FPP Units 1-2, while LCRA owns 50% of Units 1-2 and all of Unit 3.

Conventional coal emissions are not much of a problem, said FPP, since it and LCRA in 2011 completed a five-year project to install flue gas desulfurization equipment on the plant to control SO2. This project puts the plant in a good position to comply with the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards, with an expected further cost to Austin Energy of $9m to comply with that rule. The utility said that as far as the court-vacated Cross-State Air Pollution Rule goes, it will have to assess its exposure when any new version of the rule comes out.

Austin Energy’s 2013 capacity lineup is currently: 602 MW coal (FPP only); 436 MW nuclear; 1,497 MW gas; 112 MW biomass; 849 MW wind; and 36 MW solar. It is looking to add up to 1,000 MW of gas-fired capacity as of 2014, coinciding with the sale of its share of FPP.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.