Austin’s biomass power plant sat idle during Texas winter energy crisis

Investigations

AUSTIN (KXAN) – Austin Energy’s biomass power plant in East Texas, which the city purchased in 2019 for $460 million, sat idle and produced no power during one of the worst winter energy crises in state history.

An Austin Energy spokesperson confirmed to KXAN the Nacogdoches plant, which burns wood waste and can produce more than 100 megawatts of power, was not used in the past week. And, because of a plan made last year, the city did not have the option to fire the plant up, the utility said.

“According to our ERCOT-approved plan, Nacogdoches plant operates in the summer months and was not available for operation at the time of the event,” Austin Energy said in an email.

“On May 19, 2020, Austin Energy notified ERCOT that the utility will suspend year-round operations at the Nacogdoches Biomass Power Plant and shift instead to seasonal, summer operations running from May 15 to October 15,” Austin Energy said in an email Friday morning. “This change reflects how the plant has been used historically – primarily in the higher energy demand summer months. Seasonal operation will allow Austin Energy to use the biomass plant more efficiently – it will simplify operational planning.”

After KXAN published this report on Friday, Austin Energy provided a additional statement indicating it had considered operating the plant but didn’t have time to bring it up to speed safely.

“Reactivating the biomass plant was considered but determined to be unfeasible due to the time needed to return it to service. Plants that only operate seasonally are placed in a safe storage or protective mothball state during off periods and require multiple steps and time to arrange fuel and return systems to a safe operational state,” according to the utility.

It is not clear when Austin Energy first considered using the biomass plant or how long it takes to bring the facility out of a “moth ball” state.

Council Member Mackenzie Kelly said, “This low-energy biomass plant rarely produced power when it was online year-round and under contract. Now that we own it, and during our greatest hour of need in recent memory, it is not there for us.”

The power plant has been an economic thorn in the side of the city for years.

“The plant is an albatross, and they are trying to do the best they can and make it less of an albatross,” said environmental activist Paul Robbins, regarding the city’s efforts in the past to mitigate the costly energy contract.

Robbins said he did not know the specifics of how much time the plant would need to get up and running, but this unprecedented cold weather disaster would seem to be a critical time to run the plant.

“Maybe ERCOT thought they had it under control, and maybe it was not possible given the short emergency time, but it would seem to me that this (power plant) should be on call in emergencies like this,” he said.

Troubled Power Contract

The power contract called for Austin to pay over $50 million per year, but the plant rarely produced power, according to city records and media reports.

Low natural gas prices made the biomass plant too expensive to consistently operate. The city’s 20-year power agreement started in 2012, would run through 2032 and would ultimately cost $2.3 billion, according to media reports.

In Feb. 2016, the City Council agreed to pay $325,000 to hire attorneys with the law firm Jackson Walker to review the city’s contract with Nacogdoches Power LLC. The city hoped to find a way to reduce its “financial exposure to the biomass plant,” according to council documents.

Former City Council Member Don Zimmerman called the city’s power contract a “disaster” and said the city was obligated to pay an exorbitant fee regardless of whether the plant produced any energy.

“We’ve been overcharged for this project,” Zimmerman told KXAN in 2016.

Three years later, in April of 2019, the City of Austin found a way out of the costly power contract: buy the plant.

The city purchased the facility from Southern Company, its former owner, for $460 million in 2019.

Jackie Sargent, Austin Energy’s general manager, said at the time the purchase would save the city $275 million, and the city was the power plant’s only customer since 2012, according to an Associated Press report.

“Acquiring the biomass plant relieves our obligation to make escalating capacity payments to a third party and, over time, reduces the associated cost impacts to our customers,” Sargent said, according to the Associated Press.

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