Clean Energy, Pollution Reduction, and Affordability: How Austin’s 2025 Energy Plan Came to Be

[All photos (c) albradenphoto.com]

For the past several years, many have joined us in bringing attention to the disastrous impacts of climate disruption in Central Texas. Record setting drought, disastrous flooding, and destructive wildfires have made the need for strong action on climate crystal clear. Dirty power plants like Austin’s natural gas-fired Decker plant and coal-fired Fayette plant are not only our electric utility’s largest sources of climate-disrupting pollution, they are two of the most clear and present dangers to our regional air quality and thereby the public health of Central Texans.

As Austinites, we pride ourselves on being unique and unlike any place in the country and world. At Sierra Club we share that pride. We too want to lead and show the country and world that those in the burgeoning climate justice movement can look to Austin for a blueprint to begin to address the intersections between climate disruption, poverty, public health, and the need for a just transition to an equitable and accessible 21^st century clean energy economy.

But as we’re in the midst of an unprecedented climate crisis, those most impacted by pollution from these dirty power plants are facing multiple crises all at once: poverty, lack of access to affordable healthcare, and limited access to well-paying, family-supporting jobs to name a few. These crises can and must be addressed by our newly elected 10-1 City Council, and Austin’s environmental community must do more to make sure a melting pot of constituents are involved in deciding the future of Austin Energy.

It is with all of these factors in mind that we dedicated ourselves to making sure that Austin’s 10-year energy plan is guided by three critical metrics: affordability, public health, and national leadership on combating climate disruption. 

As our members and supporters know, we played a key role in developing a 10-year clean energy plan for Austin that was approved last December by the previous City Council on a 6-1 vote (only outgoing Mayor Lee Leffingwell opposed it). After a packed year of work with our partners in the Austin environmental community – Public Citizen, Climate Buddies, SEED Coalition, Solar Austin, Austin Interfaith, the Faith, Energy, and Action Team, Environment Texas, the Austin Climate Action Network, and the Texas Drought Project – we made strategic decisions that we believe accomplish the goals of setting Austin on an affordable pathway to addressing these critical issues and does so in a way that puts Austinites in a very strong position to advocate for even stronger climate policies in 2015 and beyond.

How we got here

In late 2013, it became clear that Austin Energy wanted to go big on natural gas by proposing at least 1,000 MW of new gas. In their presentation to the Council Committee on Austin Energy, the scenarios for new gas were not paired with any commitments to retire coal or increase clean energy. Newspaper headlines said moving beyond fossil fuels without a comprehensive generation plan would cause rates to skyrocket, and there was no clear pathway to accomplish what we at Sierra Club had set as our main goals for 2014: retire our dirtiest and most harmful power plants, make Austin a national leader in clean energy, and to minimize financial risk to those most impacted by pollution and high energy bills. We immediately worked with our allies to have City Council create a new Austin Energy Generation Planning Task Force with multiple inputs and a very public process.

In July 2014, the Austin Energy Generation Resource Planning Task Force (established three months prior to examine and make recommendations for a “Generation Plan 2024”) released a series of recommendations. Many of these were incorporated into the “Affordable Energy Resolution” also known as Resolution 157 by former Councilmember Chris Riley. The bill was passed in dramatic fashion on August 28, 2014, as official city policy subject to affordability metrics – meaning they would not be implemented if they were expected to be unaffordable.

So what was in Resolution 157?

Resolution 157 included an ambitious solar goal of 600 MW of new utility-scale solar by 2017, intended specifically to replace the output from Decker, which is old, inefficient and Travis County’s largest point source of asthma-triggering pollution. However, Resolution 157 did not commit Austin Energy to actually shut it down, only to replace its power.

The resolution also set a very ambitious goal of 65% renewable energy by 2025. This number, however, was not based on any Generation Task Force recommendation. The Task Force did not recommend a renewable energy goal. City Council set this goal based on input from individuals. Most importantly (and unfortunately) it had not been vetted or thoroughly analyzed.

The resolution also reinforced the current 200 MW local solar goal by 2020 – 100 MW of which would be customer-sited solar and 100 MW of local utility-controlled solar. It also added important provisions allowing residential and commercial solar leasing, and changed the inputs into how Austin Energy calculates the Value-of-Solar rate that homeowners are paid for the solar they generate.

Furthermore, Resolution 157 established a 200 MW capacity goal for energy storage by 2025, but the exact ratio of local to utility-scale storage was not determined.

Finally, and perhaps most importantly, if affordable, Resolution 157 set a zero carbon goal for all utility-controlled power generation by 2030. Essentially, this would mean Austin Energy would need to end its ownership of all of its natural gas and coal power plants that produce carbon dioxide. It did not say Austin Energy would achieve zero carbon from all power sources, only those from plants its owns. It also explicitly said “zero carbon” not “net-zero carbon” which could be interpreted as disallowing offsets, such as renewable energy credits, as even a partial compliance pathway.

After Resolution 157

After the dust settled around the historic and chaotic vote on 157, our team was presented with many questions about the affordability of the resolution, whether it made public governance of Austin Energy more vulnerable to attack at the Legislature, and how we could address pressure from the Austin Chamber of Commerce and the Coalition for Clean, Affordable, Reliable Energy (CCARE) who vehemently opposed the policy. We also recognized there is significant value to moving the football forward with the utility on board, whereas 157 set incredibly strong aspirational goals as policy despite strong objections from Austin Energy.

Austin Energy analyzed the impacts of Resolution 157 and announced that it could cost between $678 million and $1.6 billion to implement based upon their September 2014 presentation. They also said a commitment to zero carbon would force them to buy power from fossil fuel generators on the wholesale power market, which might produce even more carbon through those purchases than if we controlled and slowly ramped down and retired our own units.

While we, and our environmental allies, said over and over again, “Austin Energy is using bad data, we can’t trust them,” we did a poor job modeling new scenarios and developing effective rebuttals to challenge Austin Energy’s analyses. We had piecemeal arguments about poor modeling of solar data (using Webberville as a price point) and how AE factored in the cost of carbon, but we never had enough to stand on to claim that all of 157 could be done affordably.

In our opinion, Austin Energy still had a stronger hand than environmental advocates would have liked to admit – a hard truth that took time for the Sierra Club team to accept.

A month after the passage of Resolution 157, Austin Energy released its own plan called the “500+” generation plan which, while ambitious (50% renewable energy, 100 MW of local solar, and 850 MW of total solar by 2025) fell well short of Resolution 157 and included 500 MW of new natural gas that would not be subject to any third-party independent review.

We and our allies saw this plan as too reliant on coal and new gas.

We struggled on how to move forward. City Council had approved ambitious goals, but there was legitimate concern from advocates for the poor, political candidates, Austin’s business community, and even some of our own members about whether we could meet those goals affordably.

We met as a team and met with our allies to let them know we would be sitting down with Austin Energy to discuss matters. We asked Councilmember Mike Martinez to invite Austin Energy leadership and our team to a sit down to discuss working together on a compromise between Resolution 157 and their “500+” plan. No one agreed to a plan, we just agreed to start talking.

We talked.

We came up with alternative scenarios that had no new natural gas, a smaller new natural gas plant, and a larger new natural gas plant. We questioned their numbers. We ran our own numbers. We discussed the role of demand response and energy storage. We advocated for strong local solar goals. And finally, we agreed on a compromise plan with numbers that worked and could be implemented affordably. This plan was presented to City Council on December 4 and was approved on December 11 with a few important amendments along the way.

The 2025 Generation Plan: A historic and strong step toward affordable action on climate disruption

The overall energy plan negotiated by our team of skilled volunteers and staff makes a best effort to balance competing goals for clean energy, affordability, the fiscal health of Austin’s cash cow (Austin Energy), and preservation of public health. It also gets Austin to 80% carbon free generation by mid 2023; something no other utility in Texas, and few across the country, can claim. But why stop at 80%? Sierra Club believes Austin can technically get to 100% carbon free electricity by 2030, and sees this plan – including the upcoming independent study of whether or not we need any new fossil fuels at all – as a key step in assessing whether or not we can do so affordably.

Fayette Coal and Dirty Decker: For all their significant accomplishments, neither Resolution 157 nor the Austin Energy Generation Planning Task Force called for the final disposition of Austin’s 800-pound dirty energy gorilla, the Fayette coal plant.

The Task Force said nothing new on Fayette – Austin Energy’s largest source of carbon emissions and nitrogen oxide pollution. It reiterated Sierra Club’s recommendation (which was shared by many other organizations) that Austin control its own destiny by restructuring its contract with LCRA to consolidate ownership and operational control of one unit (the plant has three). Beyond that, the Task Force report actually implied that Austin would continue to run and rely on Fayette coal until such time that federal carbon rules drove up the price of fuels and operations and maintenance costs, presuming that those factors would drive Fayette to be mothballed. Resolution 157 was completely silent on the matter of Fayette. Although there was talk of trying to include a retirement date between 2020 and 2025, it was not part of the resolution. For Sierra Club, our volunteer leaders did not want to accept the prospect of getting off of coal in 2025, if not later.

Both the Task Force and Resolution 157 recommended replacing Decker with solar resources. However, neither actually set a retirement date. The 2025 Generation Plan explicitly lays out the goals and mechanisms for retiring Decker by 2018 and phasing out our use of coal pursuant to Fayette’s retirement beginning in 2020 and completing by mid-2023.

It could be argued that the zero carbon by 2030 language in Resolution 157 indirectly addresses Fayette, but it would not have guaranteed that the pollution from Austin’s share of the plant would go away. In contrast, the 2025 Generation Plan explicitly states that the goal is to retire dirty Decker by 2018 and to begin phasing out our use of coal in 2020 and reducing our coal use to zero by 2023, assuming we have paid off our debts on the plant by then.

This is an actual plan to rid Austin of its dirtiest fossil fuels.

In other words, this is an actual plan to rid Austin of its dirtiest fossil fuels. With clear direction from the City Attorney’s office that the sale of Austin’s share of Fayette is more than complicated and not recommended, as it would likely result in higher emissions from the plant, the conversation will shift to developing a plan to pay off the debt associated with the plant’s sulfur dioxide pollution controls (estimated around $100 million). With seven budget cycles through 2023 and competing demands for funding all across the city, it is incumbent on all climate fighters in Austin to honor the financial challenge of retiring Austin’s largest source of carbon pollution by stepping out of our silos. We must work together to build new relationships and bridges with organizations and advocates calling for funding of critical programs for the police department, fire, EMS, parks, libraries, and public health, and identify a path forward. 

We look forward to this conversation and are committed to act in a way that prioritizes affordability and preservation public health.

Solar: Rather than 750 MW of new utility-scale solar by 2017 (our current commitment of 150 MW plus another 600 MW), the 2025 Generation Plan includes an additional 600 MW of new utility-scale solar by 2017 if an RFP (scheduled for 2015) showed it was a good idea. If the proposals are unfavorable, Austin Energy is still committed to 600 MW of new solar by 2025, to be added in tranches.

This plan puts Austin on a path to be a national leader in clean, drought-proof solar power with a total of 950 MW online by 2025.

Local Solar: The 2025 Generation Plan commits Austin Energy to 200 MW of local solar by 2025 with at least 110 MW of local solar to be in place by the end of 2020, including 70 MW of customer-sited solar. Essentially, this timeline ensures that the amount of local solar will be doubled from 55 MW to get to 110 MW by 2020, which means adding an average of at least 9 MW per year. And, the overall goal of reaching 200 MW of local solar by 2025 means adding 145 MW, or more than 13 MW per year on average for 11 years. These goals give the solar industry the kind of predictability it begs for to sustain its businesses, and should be a welcome antidote to the boom-and-bust incentive cycle that has pervaded the U.S. solar industry for years.

Moreover, we now have a local solar plan that Austin Energy feels it can meet. And the 2025 Generation Plan does not change the Value-of-Solar, solar leasing, or any of the other provisions in Resolution 157. We acknowledge this is a step back from what the Local Solar Advisory Committee and City Council have recommended in years past. However, keep in mind that after 10 years of solar rebates, Austin now has about 25 MW of local customer-sited solar and 30 MW of utility-scale solar currently online. Given that context, 200 MW of local solar is an ambitious goal to reach in five years, but ten years is a very reasonable timeline to get there.  

Renewables: The 55% renewable goal by 2025 is nothing to sneeze at and is stronger than what California is contemplating (50% clean energy by 2030). The Austin plan includes both the 950 MW of solar that was expected from Resolution 157 as well as an additional 450 MW of wind power over the next 10 years. The plan also commits Austin Energy to getting to 65% if feasible and affordable.

The 55% renewable goal is even beyond countries like Germany. In fact, only utilities that have access to large amounts of hydropower – which we clearly don’t and can’t have – have a higher percentage of renewables.

Energy Storage: The 2025 Generation Plan commits Austin Energy to 30 MW of local storage and also commits them to issuing a Request for Information (RFI) for up to 170 MW of utility-scale storage. The local storage goal ensures a critical element of clean energy is developed in Austin – distributed energy storage. We are urging Austin Energy to issue the RFI this year and if the numbers come back favorably, issue an RFP for large-scale storage.

Energy Efficiency and Demand Response: The plan recommits Austin Energy to reducing energy demand 800 MW by 2020 (from 2007 levels) and adds another 100 MW of demand reduction by 2025. It also requires Austin Energy to look at adding 100 MW more depending on future analysis and budget commitments. The plan also commits Austin Energy to ensuring that they secure at least 100 MW of demand response (which gives them the ability to reduce peak demand when needed) by 2025. This represents the first time Austin Energy will have a specific demand response goal. In contrast, Resolution 157 was silent on energy efficiency and demand response. Finally, the plan also commits Austin Energy to studying getting to 1,200 MW of demand response and energy efficiency.

Sierra Club and our allies are currently organizing a campaign parallel to the work of a low-income ratepayer task force convened by Mayor Pro Tem Kathie Tovo, and we expect recommendations for strengthening energy efficiency goals and programs to be issued this Summer.

Carbon Reduction: The 2025 Generation Plan does not set new carbon reduction goals, which defers Austin Energy to Resolution 157’s carbon goals. The 2025 Generation Plan, if implemented, would get Austin Energy approximately 75% to 80% of the way to zero carbon in 2023. That assumes that a new gas plant would be built. The reductions would be upward of 90% if no new gas were built. In other words, Austin would be three-quarters of the way there by phasing out Decker and Fayette.

Natural gas as a last resort: why we support a fair and independent study that carefully scrutinizes new gas

It is not, and has never been, the position of the Sierra Club to support a new natural gas plant in East Austin. Back during the fight against the Holly power plant, Sierra Club Clean Air Program Director Neil Carman provided community groups like PODER with emissions data and technical assistance on toxic sulfur emissions from the burning of oil at the plant. In 2014, we recognized the need to bring attention to the Decker gas plant in Colony Park and won a commitment in the 2025 Generation Plan to shut down the plant’s most polluting units. Today, we’re organizing alongside East Austin residents to demand program reform and better protections for those most impacted by high utility bills.

We don’t want to see a new gas plant anywhere in Central Texas anymore than you do. Throughout the Fall of 2014, our team of volunteers and staff met, and met, and met again, sometimes as many as four times a week to analyze our positions and chart a path guided by our three critical metrics: affordability, public health, and national leadership on combating climate disruption. Since 2013, we pressured Austin Energy at every turn to remove gas from their energy plans, and ultimately negotiated – with the help of our environmental allies – a plan that reduces Austin Energy’s proposal for more than 1,000 MW of gas down to 500 MW, and subjected the proposal for new gas to a rigorous independent third party study. We believe this study has the potential to show that clean energy and a mix of power purchases can compete as an affordable alternative to new gas generation.

Natural gas has problems. Our state and country are riddled with old and inefficient power plants that are fueled by fracking that is poisoning communities from Karnes County to Arlington to Pecos and even in nearby Fayette County. It is the responsibility of our newly elected City Council to ensure that ratepayers are provided with a fair, rigorous, exhaustive, and independent analysis of alternatives to a new natural gas plant. If an independent study finds that a new natural gas plant is still more affordable and less environmentally damaging than keeping Decker and Fayette alive alongside more renewables, then we as a community of stakeholders need to make a tough decision: 80% carbon reduction and cleaner air as soon as possible, or allowing these dirty plants to continue operating past their current retirement dates?

Here in Texas we’re in the belly of the energy beast, where there are currently more than 30,000 MW of natural gas proposed to be built, 6,000 MW of solar, and 23,000 MW of wind. We don’t support Austin Energy building a new gas plant in isolation, just as we didn’t support the 8,400 MW of gas plants the TCEQ permitted in 2014, or the 8,500 MW they anticipate permitting this year.

We want to see Austin affordably retire our dirtiest power plants and meet the value of a new plant with a mix of clean energy resources, demand response, energy efficiency, short-term power purchase agreements, and local energy storage. If, however, a fair and truly independent study shows that the only way to thread the needle is with some additional natural gas, then we will carefully consider it alongside the rest of Austin’s ratepayers.

Together, we fight fracking on multiple fronts

Neither the City of Austin nor Austin Energy can directly regulate oil and gas production. Instead, the Railroad Commission of Texas, Texas Commission on Environmental Quality, and U.S. Environmental Protection Agency regulate it. Nationally, the Sierra Club supports New Source Performance Standards (NSPS) on oil and gas facilities as well as new regulations on methane emissions. Those proposals, which would significantly improve air quality and reduce climate disruption, are under attack by the oil and gas industry, but Sierra Club supports the EPA and in some cases calls for much stronger standards. Sierra Club, along with NRDC and the Clean Air Task Force, has also recently released a comprehensive study on methane emissions from the oil and gas industry, entitled Waste Not: Common Sense Ways to Reduce Methane Pollution from the Oil and Natural Gas Industry.

Just last month, a coalition of fracktivists, clean energy advocates, public health experts, parents, and other clean air activists came together at three EPA public hearings on regional haze and smog (ozone) pollution. Hundreds of folks testified in Austin, Oklahoma City, and Arlington to demand the EPA rein in pollution from coal plants, cement kilns, refineries, and fracking sites. Will our testimony alone stop fracking and clean our air? No, but the strong show of public support should help the EPA adopt these rules, which, once implemented will do more to reduce harmful extraction of coal, gas, and oil than the 2025 Generation Plan ever could.

The 2025 Generation Plan does have a role in fighting fracking though. It requires Austin Energy to look at best practices in oil and gas development and operations and support regulations that would improve air quality and decrease fugitive methane emissions. Austin Energy and the City of Austin can apply pressure to the oil and gas industry to clean up their act.

Moreover, at the Texas Legislature we are working with our allies as well as state senators and representatives to improve air quality safeguards, increase safeguards on fracking toxic waste, and ensure local jurisdictions have the ability to prohibit fracking, injection wells, and waste pits to protect themselves.

What is our new way forward?

Moving forward on many fronts, Sierra Club continues to engage with Austin Energy, the Electric Utility Commission, and the new Mayor and Council to ensure the upcoming independent study is fair, honest, and carefully evaluates all of the many alternative scenarios to a gas plant. Our team and our allies were instrumental – with Councilmember Martinez – to get the study expanded to consider up to four alternative scenarios and we continue to work with all our allies to define what we believe are the best alternatives for that study. We do not accept that 500 MW of new natural gas is the guaranteed outcome of the study. But to ensure that clean energy gets a fair shake, the onus is on us advocates to organize more voices – the people of Austin who pay a power bill and also own the utility – and bring forward the best minds with the best ideas on how Austin can show the rest of the world how to affordably retire old coal and gas while transitioning to a system that encourages distributed solar and energy conservation.

We must remember too, Austin Energy is a “cash cow” for the city of Austin. Revenues generated from selling electricity, most of which is still produced by burning fossil fuels, are funneled into the city’s general revenue fund, which then goes to fund everything from after school care to libraries to the Austin Police Department. Year after year advocates on these issues clamor for dollars in the city budget, and it is critical that we as environmentalists engage these stakeholders in a honest conversation about how we preserve, sustain, and strengthen our utility cash cow for years to come without working against our health and environment.

The 2025 Generation Plan sets a high bar for protecting public health and ramping up clean, affordable energy, and highlights a critical piece of the energy-poverty nexus. While the plan prioritizes the right of communities directly impacted by pollution from burning fossil fuels to breathe clean air, its strong emphasis on affordability acknowledges that these same communities are most impacted by high utility bills and thus least able to absorb rate increases due to a new gas plant, retiring old fossil fuels, and even the goal of transitioning to a carbon free utility.

It’s a seldom spoken truth that marginalized communities of color and the poor in and around Austin are left out or underrepresented in conversations about the future of Austin Energy, even though they have the most to gain and lose as a result of those decisions. If we truly aim to be the greenest city in the country and serve as a shining example to our peers across the world, it is imperative that our drive toward a carbon free economy is driven by principles for a just transition that minimizes risk to those least able to absorb the health and/or financial impacts of our decisions, and empowers those whom have traditionally not been actively engaged in decisions around energy and climate disruption.

For years, we’ve demanded loudly that Austin needs to move beyond coal and other fossil fuels. We’ve organized, rallied, called, testified, and emailed. We’ve won some tremendous victories with our allies, and today, we’ve entered a transition phase not just for our utility, but for our entire city economy. The bar is now set to ramp up historic levels of clean energy and rapidly and affordably reduce harmful pollution from our dirtiest power plants, and it is incumbent on our new city council to maintain the historic gains of the 2025 Generation Plan, strengthen it where possible, and not roll back retirement dates for Decker and Fayette.

-The Sierra Club’s Austin  Beyond Coal Team (Al Armendariz, Al Braden, Dave Cortez, Jeff Crunk, Matt Johnson, Susan Lippman, Mayté Salazar, Cyrus Reed, Tane Ward)

Feb ’15 – Low Income Consumer Advisory Task Force continues to assess energy efficiency programs, while many Austinites continue to struggle with high utility bills