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CPS Energy’s Defense of Coal Doesn’t Hold Up

San Antonio utility should retire the Spruce coal plant ASAP

By DeeDee Belmares

This article first appeared in the San Antonio Express-News.

CPS Energy President and CEO Paula Gold-Williams recently told the San Antonio Express-News the utility won’t be able to shut down the coal-burning Spruce power plant for more than a decade because it still carries $1 billion in debt from the plant’s construction.

Gold-Williams insisted that because of that misguided investment, closing Spruce would force CPS Energy to raise electricity rates. But that logic doesn’t hold up. While it’s true the utility must pay its outstanding debt, creditors don’t care how it earns the revenue to do it. Holding that debt up as a barrier to progress is similar to an individual claiming he or she can’t accept a higher-paying job because of their mortgage. In CPS Energy’s case, clean, renewable energy — not dirty, polluting coal — is the higher paying job opportunity.

Consultants at Synapse Energy Economics have demonstrated that CPS Energy could make more money by shutting down Spruce and replacing it with wind and solar energy. While extraordinarily high electricity prices temporarily made Spruce profitable two summers ago, those conditions are unpredictable. The Synapse analysis shows that the plant was likely losing money for the utility in prior years, and it is highly unlikely to be the most profitable option in the future.

Shuttering the Spruce coal plant would allow CPS Energy to eliminate the high cost of coal imports from its balance sheet, as well as routine operations and maintenance. Investing in low-cost wind and solar and flexible and responsive battery storage would generate more revenue. That would allow quicker repayment of that outstanding debt or perhaps a rate reduction for customers.

The flood of responses to CPS Energy’s recent request for information, or RFI, on energy sources shows there are numerous companies willing and able to provide renewable energy and energy storage. Based on the enthusiasm with which CPS Energy staff presented the results of that RFI, it’s safe to say that the pricing information was very competitive. This should come as no surprise to the utility, because the vast majority of new energy resources being built in Texas are wind, solar and batteries.

Wind, solar and battery capacity in the ERCOT grid that serves most of Texas has increased by a combined 2,770 megawatts in 2020, while natural gas generating capacity increased by only 156 megawatts. Coal capacity has been in decline for several years. Six coal-burning power plants with more than 6,000 megawatts of capacity combined have shut down in the past two years. They closed because it’s no longer profitable to burn coal to make electricity.

Sunk costs can’t be changed, but CPS Energy can seize this moment to make wiser financial decisions for the utility’s owners: the people of San Antonio. Instead of facing this reality and engaging in the type of resource planning that other utilities in Texas and around the country are doing, CPS Energy is focused on public relations.

Public Citizen and our allies have spent years meeting with CPS Energy staff and attempting to work cooperatively. But these meetings don’t end with an action plan — they just end. Then we’re left in limbo for several more months until the next meeting, where we generally seem to have the same conversation all over again. As community owners of the utility, we want a collaborative partnership, but that is only possible if we can agree on a common goal. We think devising an energy transition plan to reduce environmental harm while making the utility more money — which can be used to reduce customer bills — should be that common goal.

CPS Energy’s unelected board has most of the governance authority over the utility, but the board often defers to staff leadership, leaving Gold-Williams to dictate policy. The San Antonio City Council has authority over rates, but it doesn’t play a regular role in setting policy for the utility. This leaves an accountability vacuum that doesn’t serve the community well.

The leadership challenge goes beyond closing the Spruce coal plant. It affects utility shut-off policy, bill assistance, energy efficiency and rooftop solar programs that can reduce electricity bills, and more. That’s why we and our allies are petitioning for a transition of governance authority to the City Council. CPS Energy’s leadership should be accountable to the people of San Antonio and putting more power in the hands of elected officials is how we can make it happen.

DeeDee Belmares is Public Citizen’s climate justice organizer.