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CPS projections on energy needs fueling debate

To satisfy San Antonio's demand for power with two plants out on hotter-than-normal June days, CPS had to buy power - very expensive power - from the operator of the Texas grid. Customers saw those higher prices reflected in their bills this summer. It's a scenario CPS doesn't want to repeat. The city-owned utility wants to have power available that can satisfy the city's demands for electricity, with a safety cushion above that.

On June 26, a transformer unit failed at CPS Energy's coal-fired plant at Calaveras Lake, prompting a cascade of unwelcome events. The part's failure sparked an explosion that blew the doors off the building.

Nobody was hurt, but it was the second accident at a CPS plant in about a week. Earlier, CPS shut down a natural gas plant at Braunig Lake when a turbine was damaged.

To satisfy San Antonio's demand for power with two plants out on hotter-than-normal June days, CPS had to buy power - very expensive power - from the operator of the Texas grid. Customers saw those higher prices reflected in their bills this summer.

It's a scenario CPS doesn't want to repeat. The city-owned utility wants to have power available that can satisfy the city's demands for electricity, with a safety cushion above that. CPS officials are steadfast in their belief that more nuclear power is the best way to meet the growing demand.

"Even with the recession, San Antonio continues to experience steady growth, and soon we must retire some older, less-efficient power plants," CEO Milton Lee said.

Although the city has an aggressive energy-efficiency program, "we still predict a shortfall - an electrical-generation gap -... more [truncated due to possible copyright]  

On June 26, a transformer unit failed at CPS Energy's coal-fired plant at Calaveras Lake, prompting a cascade of unwelcome events. The part's failure sparked an explosion that blew the doors off the building.

Nobody was hurt, but it was the second accident at a CPS plant in about a week. Earlier, CPS shut down a natural gas plant at Braunig Lake when a turbine was damaged.

To satisfy San Antonio's demand for power with two plants out on hotter-than-normal June days, CPS had to buy power - very expensive power - from the operator of the Texas grid. Customers saw those higher prices reflected in their bills this summer.

It's a scenario CPS doesn't want to repeat. The city-owned utility wants to have power available that can satisfy the city's demands for electricity, with a safety cushion above that. CPS officials are steadfast in their belief that more nuclear power is the best way to meet the growing demand.

"Even with the recession, San Antonio continues to experience steady growth, and soon we must retire some older, less-efficient power plants," CEO Milton Lee said.

Although the city has an aggressive energy-efficiency program, "we still predict a shortfall - an electrical-generation gap - around 2020."

CPS officials say San Antonio will be 700 megawatts shy of the power it needs by 2020 - the equivalent of a large coal power plant.

To fill the gap, CPS wants to partner with NRG Energy to build two new nuclear reactors at the South Texas Project near Bay City. CPS officials propose spending up to $5.2 billion for a 40 percent share of the expansion, which would provide San Antonio 1,080 megwatts of electricity.

Mayor Julián Castro says he supports a smaller investment of 20 percent in the new plant, with the savings targeted for alternative energy sources and spending on energy-saving projects.

The plant's two existing reactors supply a third of San Antonio's electricity.

Consumer advocacy groups question CPS' assumption that more electricity will be needed 11 years from now.

"A key question is whether there's a need for the power," said Tom "Smitty" Smith, director of the Texas office of Public Citizen in Austin. "Everybody else is looking at a much more modest rate of growth."

Smith concedes Public Citizen long has opposed nuclear power and would oppose the expansion even if San Antonio demonstrated a need for the electricity.

CPS' estimates of the demand have, at times, exceeded those of the Electric Reliability Council of Texas, or ERCOT, the operator of the Texas grid, Smith said.

In addition, CPS has not figured energy savings from Mission Verde, the city's 11-point plan to make San Antonio a green energy leader. Nor are the utility's estimates fully considering the effect of a slowing economy, which has prompted consumers to pull back on power usage, he said.

Stable growth

CPS Energy's interim general manager, Steve Bartley, defended the power-gap estimate, saying the utility actually uses the same assumptions as ERCOT, which forecasts demand growing by 2 percent a year through 2019.

The grid operator relies upon weather records and data it buys from Moody's economy.com that includes a range of economic and demographic data, spokeswoman Dottie Roark said.

Clarence Johnson, former director of regulatory analysis for the Texas Office of Public Utility Counsel, a state agency that represents ratepayers at state hearings, said estimating demand "is not an exact science, because it's heavily dependent on things like changes in technology and how individuals and businesses behave."

CPS twice has recalculated the year it expects the city to need more electricity using sophisticated models, Bartley said.

A year ago, the utility re-jiggered the estimate when the City Council approved funding for its efficiency and conservation program, called the Save for Tomorrow Energy Plan, or STEP. And this year, CPS recast its estimate again because of the slowing economy, saying the gap would occur in 2020.

What happened this summer is a "great example," Bartley said, of why San Antonio will need more electricity, along with a reserve margin of power.

"We have had a peak demand on our system that we were not anticipating until 2013," Bartley said. "We missed our peak demand forecast by 6 percent."

Public Citizen's Smith would like to see CPS meet its energy gap through efficiency and conservation measures, and then more deeply explore other types of renewable energy.

Smith suggests CPS examine the technology that pairs solar energy with natural gas generation. The gas generation backs up solar production when the sun goes down.

Bartley said these technologies are too expensive or unproven at present, and thus not viable alternatives now.

Smith also has questioned why a nuclear expansion is needed because CPS has said it planned to sell half its share of the power generated from the nuclear expansion.

"Does San Antonio need the two new reactors at the South Texas Project for energy or as a revenue stream?" Smith said.

CPS officials said in July that the utility planned to sell excess power from the nuclear expansion as a means of offsetting the cost of building two reactors and to keep the cost of electricity reasonable for customers.

Energy savings plan

CPS is re-examining that option at Castro's request. He has said selling big portions of nuclear power conflicts with the utility's core mission of providing electricity to local customers. Reducing CPS' share of the nuclear expansion would give the city 540 megawatts of new power.

More electricity will be generated when CPS' coal-fired Spruce 2 goes online next summer. The plant will produce 775 megawatts of electricity. (One megawatt is about enough electricity to power 500 to 700 average-size homes at a time under normal conditions in Texas, or about 200 houses in hot weather when air conditioners are running, ERCOT said.)

Spruce 2 will give CPS a reserve margin of power that will be needed in the case of an unexpected surge in demand. Such power spikes expose the utility to market-based prices, said Mike Kotara, CPS executive vice president for energy development.

Even with the additional power from Spruce 2, more generation will be needed by 2020, Bartley said.

Bartley stressed that CPS has eliminated the need to build a major power plant with STEP. The plan calls for spending $850 million on energy efficiency and conservation that will save 771 megawatts.

While consumer advocates praise STEP and CPS' commitment to renewables - the utility has 800 megawatts of renewable energy under contract - they believe CPS could wring even greater energy savings from STEP. They note that CPS officials said recently that STEP has spent $11.5 million and saved 40 megawatts.

"That's cheap" energy savings, said David Power, Public Citizen's deputy director and energy analyst. "That's only about $290 a kilowatt."

The cost of a building a natural gas plant is $739 per kilowatt, and a "generic" nuclear plant built at the STP site would cost $3,670 per kilowatt to build, according to CPS figures.

Bartley acknowledged that "it may be that we can get a little more (energy savings) than our target at a reasonable price." But STEP "is designed to go after the low-hanging fruit first, to get the biggest bang for the buck."

As STEP continues, it will get more expensive to squeeze out another kilowatt of savings, he said.

As part of STEP, the utility has a goal of reducing electrical demand from local manufacturers by 9 megawatts by 2020.

That goal is too modest, Power said.

"You walk into some of the old military complexes where they're doing aircraft maintenance, and it looks like it's 1955," Power said. "There is a huge potential for energy efficiency."

Getting more solar?

Until recently, CPS had capped its incentives for some commercial operations at $50,000. Power thinks the incentive is too small.

CPS officials acknowledged that last year, there was a $50,000 limit on most commercial STEP programs. But that cap was altered, while some key programs - such as replacing inefficient lighting with energy-saving illumination - don't have limits on incentives. Instead, CPS calculates rebates based on the amount of energy saved.

Critics also voice disappointment with CPS' goal of generating or buying 1,200 megawatts of power from renewable sources by 2020. CPS already is two-thirds of the way to reaching that goal, since it has 800 megawatts of renewables under contract, most of it in wind power.

CPS has contracted with Tessera Solar to buy 27 megawatts of solar-generated electricity. It's also a partner in a 200-kilowatt solar array atop Pearl Brewery's Full Goods building.

CPS is tiptoeing into purchasing solar power, said Lanny Sinkin, executive director of Solar San Antonio, a nonprofit that advocates wider use of solar energy. A bigger buy of solar power would bring down its cost, he said.

Bartley knows solar proponents were disappointed at CPS' current request to buy 200 megawatts of solar-generated power.

"Folks are saying that there are 400-megawatt solar projects that could be done more cheaply," Bartley said, "so the cost to us would be less. Well, someone could build a 400-megawatt plant and sell us 200 megawatts. But the bottom line is, we aren't seeking those kinds of projects."

Solar power is being offered for sale to CPS at a cost of 14 to 15 cents per kilowatt hour - "and higher," Bartley said. "We are willing to pay a little more than our current price of electricity, but not a lot more."

The current price is 9 cents per kilowatt hour.

Bartley urged the proponents of renewable energy to be patient.

"Don't be surprised," he said, "if later this year we increase our solar goals."


Source: http://www.mysanantonio.com...

AUG 23 2009
http://www.windaction.org/posts/21870-cps-projections-on-energy-needs-fueling-debate
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