Cost of utility plan worries big business

Some large businesses, among Austin's biggest power users, say an electric utility plan to buy more renewable energy would be too costly and could damage the city's economy. They also warn that it could be more expensive than projected, considering the costs of two recent renewable-energy deals.

Meanwhile, some environmental activists are lauding the proposal but say it doesn't go far enough.

Under Austin Energy's proposal, Austin would get more than 35 percent of its electricity from wind, solar, wood waste and other renewable sources by 2020. Currently, about 12 percent of Austin's electricity comes from those sources. The city's Climate Protection Plan, passed in 2007, sets a target of 30 percent renewable energy by 2020.

Jumping to 35 percent is probably too great a burden on customers, said members of the Power Improvement Action Committee, a conglomeration of Austin large businesses.

The group has not come to an official position. But Roger Wood, a corporate facilities manager for Freescale Semiconductor, said Austin Energy's plan downplays an important priority: cost.

Large industrial customers would see monthly bills in 2020 about 12 percent higher than they are now, according to an estimate from Pace Consulting, which helped shape Austin Energy's recommendation. That's lower than the 22 percent bill increase homeowners would see during that time, according to Pace.

But a letter from Wood questions whether Austin Energy is transparent about costs. Wood, who sits on the city's Renewable Energy Task Force, also notes that even a minor rate increase potentially "translates to millions of dollars per year of additional cost for a major manufacturer" and could threaten business operations.

John Sutton, another task force member and former president of the Building Owners and Managers Association of Austin, shared that concern.

He said that Austin Energy established a questionable track record by buying into two projects recently: a $250 million solar plant that will generate a relatively modest 30 megawatts and a $2.3 billion wood-fired plant in East Texas, the output of which is not public.

In both cases, officials said the deals were fiscally sound and necessary partly because the city needed to add renewable energy.

Austin Energy officials "seem to have written their plan regardless of the input they've gotten from individual stakeholders," Sutton said. "It looks like we're going to wind up either having to agree with this plan or developing one of our own."

One of the main features of Austin Energy's proposal is cutting the electricity from the Fayette Power Plant, which uses coal to generate power. The plant generates about 70 percent of Austin Energy's carbon emissions. Austin Energy is proposing it cuts its share of the power generated there by a third by 2020, then phase out the plant.

"Sierra Club applauds this recommendation," said Cyrus Reed, conservation director of the Lone Star Chapter of the Sierra Club. But Reed said the city should look into closing the plant in the next five years.

Austin Energy looked into the option but concluded it would be more expensive, Austin Energy General Manager Roger Duncan said.

Mike Sloan, a wind-energy advocate, said Austin should sell its share of the plant before anticipated federal carbon caps are enacted. Those caps would reduce the plant's value, Sloan said. He said the city should buy as much wind as possible, noting that Pace Consulting concluded wind will be the cheapest form of power by 2020.

Austin Energy is proposing the city more than double the electricity it gets from wind generated in West Texas. Wind would be the city's top source of electricity by 2020, edging out coal and nuclear power.

Sutton and Wood also questioned whether wind and solar energy are reliable enough to purchase in the amounts Austin is considering.