City leaders mum on whether they support such a deal with South Texas Project owner.

Tuesday, Feb. 1, 2011

By Marty Toohey, Staff
Austin American-Statesman

The majority owner of the South Texas Project nuclear facility is making a new pitch to Austin: fight global warming by trading coal-fired power for more nuclear.

"We know that (Austin is) focused on reducing the city’s carbon footprint and keeping rates low, and we believe we can develop an effective proposal to accomplish both goals," according to a proposal outline from NRG Energy Inc., a majority owner that is looking to double the size of the South Texas Project nuclear facility. NRG is hoping Austin will agree to a long-term contract to buy power from the two new nuclear reactors.

Nuclear is not part of a plan that the City Council approved last year to emphasize renewable sources of energy such as wind and solar.

City leaders twice in the past five years rejected proposals to invest in more South Texas Project nuclear power, although NRG said its new deal is structured to protect Austin from possible cost overruns, which was previously cited as the chief concern. Since NRG representatives first approached some City Council members two months ago, none has spoken publicly about whether they support a potential deal.

It’s not clear how much NRG’s proposal would do to combat global warming. Critics note that although the city would no longer be directly responsible for its share of a coal plant east of Austin, NRG would sell Austin’s share of the power and the plant would still be spewing greenhouse gases into the atmosphere.

It’s also unclear how NRG’s proposal would affect rates. Juan Garza , president of advanced technology for NRG, has been floating a price around 8 cents per kilowatt -hour. That is more than double what the city pays for the coal-generated electricity it would be giving up. That is also more than wind-generated power and natural gas cost.

But the proposal mentions short-term benefits. By selling its ownership stake in the coal plant, the city could immediately raise enough cash to push a major rate increase back years, instead of raising rates in 2012 , as planned, according to NRG’s initial one-page proposal, which the company made public Tuesday.

NRG could also partner with the city on a major renewable-energy project, such as an offshore wind farm or large-scale solar array.

But the proposal is light on specifics — in keeping with the approach NRG has taken since its lobbyists began meeting in November with Mayor Lee Leffingwell’s staff and City Council members.

NRG said it must have a deal in place by June 30 to meet the project timetable, under which one of the new reactors would open in 2016 and the other in late 2017 . That could be a tight window for Austin.

Austin Energy spokesman Ed Clark said the utility has to complete several high-level evaluations before serious negotiations can begin. Anything more than cursory talks are months away, Clark said.

Then there are the political considerations.

Bitterness still lingers from fights in the 1970s and ’80s, when a series of referendums ultimately left the city a 16 percent owner of the South Texas Project — the same plant NRG now wants Austin to help expand and which supplies about a quarter of Austin’s power.

The plant was supposed to cost $964 million , and the reactors were expected to open in 1980 and 1981. They ultimately opened in the late 1980s and cost $5.9 billion.

The message being pitched by Garza — who once navigated the city’s political landscape as head of the Austin Energy — probes a high-stakes fissure in environmental and public-policy circles that is playing out locally.

Some groups, such as the Sierra Club, say coal and nuclear can both cause unacceptable environmental damage.

But President Barack Obama’s administration and groups such as the Environmental Defense Fund have concluded that focusing exclusively on renewable sources is unrealistic and have suggested that nuclear power might be the lesser of two evils.

New polls by NRG and Austin Energy have found that there is great interest in and bitter opposition to nuclear power in Austin.

mtoohey(at)statesman.com; 445-3673

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