Denton faces choices on energy sources as coal plant deal ends in 2018
ANDERSON — Straddling a dammed-up creek 20 miles east of College Station squats the Gibbons Creek Steam Electric Station, a massive coal-fired power plant supplying the city-owned utilities of Denton, Bryan, Garland and Greenville.
In the plant, a boiler is suspended from a steel beam like a glowing bee’s nest hanging from a giant tree limb. A conveyor feeds the boiler finely ground coal, fueling a fireball hotter than flowing lava. The fireball heats a 21-story-high maze of interconnecting pipes filled with water used to make steam. Other pipes inject air into the fireball to dampen it down, oxidize mercury and reduce the amount of nitrous oxide the combustion produces.
The control room on top of the plant is aglow with computer screens where workers in overalls press buttons to control feeders, fans and flow rates, and monitor the behavior of the fireball inside the boiler. Good behavior is determined by how much and what form of sulfur, carbon, mercury, nitrogen, particulates and other contaminates the burning coal produces.
“All this is just a giant chemistry experiment,” said Jan Horbaczewski, the plant’s regulatory compliance officer, noting “it’s not always easy” to comply with increasingly stringent federal emission regulations.
Today, the Gibbons Creek plant accounts for 44 percent of Denton Municipal Electric’s power generation. Another 40 percent of Denton’s electricity comes from a wind farm in Muenster, and 15 percent comes from natural gas. Denton also generates a tiny fraction of its power, about 1 percent, from a methane collection system at the city’s landfill.
One foot stuck in the past
Denton Municipal Electric officials say that though the utility wants to wean itself off fossil fuels and harness more renewable energy supplies for future power generation, at the moment it finds itself with one foot stuck in the past — specifically, the 32-year-old coal-fired power plant.
“If we decided tomorrow we wanted to go 100 percent renewable, we could do that,” says DME spokesman Brian Daskam. “But we’d still be paying for this power that we’re not taking from the coal plant.”
In 2018, a long-standing power sales agreement ends between Denton, Bryan, Garland and Greenville and the agency created to run the plant, the Texas Municipal Power Agency. Denton’s energy planners said they will have more flexibility in choosing the city’s energy portfolio in the future when the agreement expires.
“We call it a 2018-and-beyond plan,” says Craig York, the director of the Gibbons Creek plant.
In the next three years, Denton’s energy planners will have to make critical decisions to ensure the utility can meet the city’s growing power needs. The growing population has spurred an estimated 21.8 percent rise in energy demand and strained the city’s transmission infrastructure.
Meanwhile, recent abundant supplies of relatively inexpensive natural gas have made gas-powered generation sometimes cheaper than coal. In 2012, for example, the Texas Municipal Power Agency shut down the coal plant for 120 days because of cheap and abundant gas supplies.
“I don’t like it when I come to work and it’s quiet,” says York, the plant manager. “I like to hear the noise.”
Oil embargo revved up Gibbons Creek
After the oil embargo by the Organization of Petroleum Exporting Countries in 1973, coal became the fuel of choice for American power plants. As oil and gas imports shrank, federal energy regulators mandated no new gas-fired power plants could be built in the United States.
In 1975, Denton, Garland, Greenville and Bryan banded together to create the Texas Municipal Power Agency, investing billions of dollars to mine and produce local supplies of lignite to burn in the plant. The agency also purchased a small share of the Comanche Peak nuclear power plant in Glen Rose but later withdrew from the project after it fell behind schedule and went over budget.
By the time the coal-fired plant began producing electricity in 1983, Denton and the three other cities faced skyrocketing interest rates on the millions borrowed to buy the land, open the mine and construct the power plant.
The agency “made bad choices concerning lignite coal,” says Mike Cochran, a former Denton City Council member. “They made bad choices getting involved in nuclear power. And they made bad choices with not reducing their debt properly in a business-like manner.”
Before the plant even opened, a group of Denton residents, chafing over their rising electric bills, the growing debt and the threat of dangerous emissions from burning low-grade, high-sulfur lignite for electricity, went on the warpath. They filed a recall petition against three members of the City Council.
Bill Trantham, a Denton attorney who represented the citizens in their lawsuit, claims the TMPA partnership was “a fiasco from start to finish.” The deal, he said, put Denton residents and municipal utility customers in a bind long before the first megawatt of electricity was produced.
“I got hold of their financial statement, and we owed $1.77 billion on it and the plant hadn’t even started,” Trantham says.
The lawsuit didn’t stop Denton and its partners from building the plant or mining and burning lignite. Between 1983 and 1995, the plant burned the local fuel, filling the air with high-sulfur soot and heavy metals. But in 1995, the plant underwent its first major environmental upgrade. Gibbons Creek Steam Electric Station would burn low-sulfur coal instead, shipped from Wyoming’s Powder River Basin 1,400 miles away. The lignite mine was shut down within a year. During the past two decades, the 8,825 acres of prairie stripped to extract the lignite has been the object of reclamation efforts.
Denton Municipal Electric won’t say for sure whether it is going to leave the Texas Municipal Power Agency in 2018 and rid itself of its dependence on coal for electricity. For now, DME is obligated under “take or pay” agreements with the agency to take 21.3 percent of the electricity produced by the plant and repay the debt regardless of whether it buys the plant’s power.
The question the utility faces is, “How clean do we want our power to be, and how much are we willing to pay for that?” Daskam says.
On the other hand, the city of Bryan plans to rely on coal-fired generation from Gibbons Creek into the foreseeable future.
Once Bryan’s debt is paid off in 2018, “as long as that plant is in good shape … we will want to continue to run it because it will be significantly less expensive than it is today because of the debt,” said Gary Miller, director of Bryan Texas Utilities. “Bryan’s plan is to utilize that plant for well into the future.”
Cheap power … for now
DME customers are paying on average a few cents less per kilowatt hour for electricity than their neighbors in other markets. In Lewisville, McKinney and Argyle, electricity costs range from 5 cents to 13 cents per kilowatt hour, compared to between 3.9 cents to 5.86 cents per kilowatt hour in Denton. Unlike consumers in Dallas, Houston and other major cities, Denton utility customers cannot choose from dozens of deregulated electricity providers in Texas that offer different pricing schemes to customers.
DME said for now, its customers enjoy lower rates primarily because the coal-fired plant supplies lower-cost electricity to Denton than its neighbors obtain from their suppliers. But that price advantage could shrivel with costly federal environmental regulations that have been proposed for coal-fired plants.
The proposed regulations “are of great concern to me,” says Horbaczewski, the plant’s compliance officer, noting the Gibbons Creek plant uses best available control technology for carbon dioxide and other pollutants.
That means the plant’s only option is “to improve efficiency, to squeeze more juice out of the plant, and we’ve pretty well done that,” he says.
The agency spent $12 million to reduce the plant’s nitrous oxide emissions more than a decade ago by fine-tuning fuel and air-supply systems. In 2011, another $98.5 million was spent to refurbish the scrubber, which uses limestone to filter particulates out of the flue gas, to meet new federal standards limiting emissions of sulfur dioxide.
This year, the plant installed a $1 million system to measure mercury emissions in parts per trillion.
Ultimately, the cost of each environmental upgrade is paid for by higher electric rates.
“You’ll see it on your electric bill,” said York, the plant director.
Once the debt obligations to bond holders are paid off in 2018, Denton and the other cities in the Texas Municipal Power Agency will decide whether to pass the savings to customers or to keep some in the company kitty to cover the cost of tougher emission standards. Mayor Chris Watts said whether the savings trickle down to customers or are reinvested is yet to be determined.