By Chrissy Mann and Cyrus Reed
A few weeks ago, we were surprised to see that the Gibbons Creek coal plant suddenly popped up in ERCOT (Electric Reliability Council of Texas) reports as potentially re-starting (press statement). Gibbons Creek is a traditional, dirty coal plant near Bryan-College Station that has been phased out of operation over the past several years by its current owners, and was well on its way to being permanently decommissioned. We think it should stay on that path and hope you can help by contacting the current owners and oppose any sale of this plant.
Why were we so surprised? Well, this plant was originally owned jointly by four Texas cities - Denton, Greenville, Bryan and Garland - through a legislatively-created public entity called the Texas Municipal Power Agency (TMPA). And after more than three decades, the cities began to decide that there was no future for this uneconomic coal plant. One of the cities - Greenville - actually sold its stake in the plant to the other cities, who decided it no longer made sense for them as well. After a couple of years of running it only during the summers, they announced its retirement. In fact, each of the cities has already begun setting aside money in a decommissioning fund to make sure the plant is torn down and the pollution from the mining lands and coal plant grounds are addressed.
But over the past few weeks, news started to slip out that a new buyer was interested in this coal plant and was, in fact, so far along in discussions that ERCOT (the Texas electric grid operator responsible for over 90% of Texas electricity) included Gibbons Creek as an available resource for this summer in the most recent report that outlines expected need and available electric generation resources for the grid. How and why would a coal plant which has been shut down for almost two years suddenly be available for the 2020 summer for a new owner that no one had ever heard of?
We have questions. Lots of questions. How could the economics of restarting this retired plant make sense? This plant retired because it was losing money for its current owners. The Texas market, which is currently dominated by lower-priced gas, wind, and solar and storage quickly gaining ground, is a bad bet for coal. After all, through the first four months of the year, wind and solar power produced nearly twice as much power as coal in Texas’s ERCOT market. Indeed, about 95% of all the proposed new power projects in ERCOT are solar, wind, or storage, not gas. And especially not coal.
Also, just who is involved in this project and how is it moving so quickly through ERCOT’s typical processes?
Some sleuthing by media outlets and ourselves uncovered the fact that a third party appeared to be handling the ERCOT approvals and the plant is reportedly to be sold by the Texas cities to a “technology development company” company in Arizona. Does this company have the necessary experience and funds to ensure future clean-up and safely operate a mothballed coal plant that hasn’t run full time in years?
These questions highlighted more concerns for veteran ERCOT experts. In fact, as recently as a May 28 (virtual) meeting of stakeholders in ERCOT, callers (including long standing ERCOT market participants) pressed ERCOT staff about why the proposed plant was even included in the list of plants likely to come back on-line soon in their “Capacity, Resource and Demand” report. Who is the owner? Why hasn’t the owner or their agent posted an Interconnection Agreement with ERCOT or the Public Utility Commission of Texas (PUC) as required by state law? Did the agent representing the owner really have physical control of the site to do the studies needed to get to an interconnection agreement?
ERCOT insisted that the third-party agent followed the rules, though they were unclear why the Interconnection Agreement had not been filed with the PUC as required.
Some answers came a day later, when the proposed owner’s agent finally filed the Generation Interconnection Agreement (the "Agreement") between the TMPA and the prospective operator, the newly created TEERP Power Station, LLC. And indeed, the process was a bit unusual, as the lawyer representing the owner notes “slight deviations from the Commission-approved” process. Interestingly, it doesn't appear that this is a done deal, even though this potential owner is seeking approvals to provide power to Texans, and is somehow already included in ERCOT’s planning analyses. The Agreement between TMPA and TEERP Power Station, LLC states “This Agreement is subject to and contingent on the board of directors of the TSP (Transmission Service Provider) appropriating funding for the capital improvements required of the TSP under this Agreement. If the board of directors does not approve such funding on or before June 30, 2020, this Agreement shall automatically terminate on June 30, 2020. This Agreement shall not obligate the TSP to expend any funds in the absence of such approval of the board of directors.”
What does that mean? It means that the sale of the plant is not final, and that the agreement and sale can only go forward if the eight members of the TMPA Board of Directors - and the cities - agree to fund needed capital improvements to be able to hook the plant up again to the transmission system. Apparently at issue is how the TMPA - and the four cities that still collectively own the plant, land, and transmission system - would pay for the hook-up. Would ratepayers in the four cities be responsible? Would the proposed generator ultimately pay through bonds? Would the cost be incurred by all ERCOT ratepayers through what is called TCOS (Transmission Cost of Service), which must be approved by the PUC?
What you can do
This is not a done deal. The cities making up TMPA and the TMPA Board of Directors must approve the sale and agree to pay the upfront capital improvements needed to reconnect the plant.
Ask the city council leadership in Denton and Garland, and the Utility Board in Bryan, why they are trying to sell the coal plant at all at a time when they are otherwise helping Texas transition from dirty coal to renewable energy. Indeed, Denton Municipal Electric is moving to 100% renewable energy by 2022, while Bryan Texas Utilities (BTU) and Garland Power & Light (GP&L) have signed massive solar contracts which should mean that roughly 30% of BTU and more than 40% of GP&L’s annual use would be powered by the Texas sun, instead of Wyoming coal. Thus, at the very time these public utilities are “greening” up their utilities and the Texas grid, they are proposing to pass the buck to allow a 35 year old coal plant to spew carbon dioxide, ozone forming pollution like nitrogen oxide, and dangerous sulfur dioxide into nearby communities.
On Tuesday, June 2, both the City of Denton and the City of Garland have city council meetings, and while the TMPA sale is not on the agenda, you can let your mayor and your city council know this is not the type of leadership you expect. On June 15, the Board of Directors of BTU is tentatively scheduled to hold their monthly board meeting in Bryan, and members of the public can address the board.
On Thursday, June 4, TMPA will be meeting virtually and discussing the proposed sale. You can attend via zoom and make comments. The current board of directors can be found here. They are public figures and you can tell them to do the right thing. The land that the plant sits on - once cleaned up - could be valuable for parks, developments, or preserves and make money for the cities that own it, but continuing a legacy of dirty coal for a speculative project is not the right course for Texas.
We recognize this is a fast moving, and frankly confusing, process. Be on the lookout for more information that we can share across Texas communities that will be impacted if Gibbons Creek coal plant comes back online.