Since the start of the decade (January 2000), Austin Energy’s charges for fuel have increased a shocking 166%, adding $23 on average to the monthly electric bill of every Austin household. If that rate of increase were to hold for another 10 years into the future, fuel costs would increase everyone’s electric bill by an additional $60 per month.
And there’s more. Dirty old power plants are required by federal regulations to begin reducing their toxic pollution. Just last year, about 5% of all of the money spent by Austin Energy — totaling more than $74 million — was for new pollution control equipment on old power plants.
What should utility planners do to reduce fuel and pollution risks?
To help answer this question, Austin Energy hired PACE Consulting to evaluate future options. The consultants looked at a broad range of power plants and many factors, including the cost of the plant, fixed and variable operating and maintenance costs, fuel costs, and projected emission costs for carbon. These are summarized in the graph below.
Because of the increasing cost of fuel (“orange” bars above) and carbon emissions (“green”), the lowest cost new power supply options being considered for Austin are: #1 wind, #2 coal, #3 solar, #4 biomass, #5 efficient natural gas combined cycle, #6 nuclear, #7 natural gas combustion turbines.
In fact, some new technologies are cheaper than operating the power plants that Austin already owns. For instance, investing in new wind power has an upfront cost commitment, but reduces the fuel and emissions costs of existing power plants.
Austin Energy’s consultants went further by evaluating different scenarios for meeting Austin’s future energy needs. The graph below plots the results of some of the major scenarios.
What does this graph say?
Expected Bill Impacts are Similar – With the exception of adding nuclear power (Blue Diamond) and not adding any new generation (Light Blue Circle) which are relatively more expensive, all the scenarios considered are expected to have similar cost impacts — within a few dollars of each other on a typical residential customer’s monthly electric bill.
Lowest Bill Impact (Purple Square) - PACE determined a mix of energy sources yielding the “lowest bill impacts” over the next 12 years (2009-2020). Their answer added 1,430 MW of new resources of which 965 MW were wind power, resulting in 34% renewable energy in the 2020 mix, more than the Austin Climate Protection Plan’s “ambitious” renewables goal of 30% by 2020. This scenario reduces carbon emissions by 14%.
Replace the Fayette Power Plant (coal) with Renewable Energy (Green Diamond) - This scenario adds a large portfolio of clean resources resulting in 54% renewable energy and reduces carbon emissions by 62%. It also models removing the Fayette Coal Plant entirely from Austin’s energy mix, which could be done by selling the plant, mothballing it, or shutting it down.
Staff Recommendation (Red Traiangle) - The staff recommendation keeps all existing plants, adds 300 MW of new gas generation, and adds a mixed portfolio of clean energy resulting in 35% renewable energy and reduces carbon emissions by 20%.
A significant element of Austin Energy’s actual recommendation is that Fayette Coal Plant’s output will be reduced by approximately 15% to reduce carbon emissions and other pollution. The graph above does NOT reflect this element of the Staff Recommendation but rather sells excess coal capability through off-system sales to others to reduce the cost of the plan.
When the consultants assessed the impact of removing off-system sales from their version of the “Staff Recommendation” it increased the mean levelized cost by about $3 per MWh, as shown in the extract below. This appears to make the actual “Staff Recommendation” slightly more expensive than the “Replace FPP with Renewables” scenario.
