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Amelia Jaycen/For the DRC

Denton waives key deadline to close coal plant

Denton joined its partner cities in waiving a key deadline for the Gibbons Creek coal-fired power plant near Bryan this week, a move that could save money as an effort to sell the plant continues. 

Last year, the cities of Denton, Bryan, Garland and Greenville decided to shed the power plant they have operated together as Texas Municipal Power Agency, or TMPA, for the past 40 years. Coal-fired power has become more expensive as wind and solar farms produce renewable electricity. Denton is buying as much wind power as it can, but local electric bills continue to rise because of the cost to run the coal plant. 

The four cities agreed last year to sell the plant or, if that was not successful, to shut it down. Over the past several weeks, each of the four cities has waived a September deadline that requires a decommissioning plan.  TMPA needs a plan to know exactly what is needed to be done and how much it would cost to properly close the plant, but that plan would cost about $100,000 to $200,000. 

Phil Williams, Denton Municipal Electric general manager, addresses the City Council about the Denton Energy Center in September 2016. Tomas Gonzalez/DRC
Phil Williams, Denton Municipal Electric general manager, addresses the City Council about the Denton Energy Center in September 2016. 
Tomas Gonzalez/DRC

If TMPA can sell the plant, a decommissioning plan isn't necessary, according to Phil Williams, general manager of Denton Municipal Electric, the city's electric department.  

In November, TMPA and the four cities accepted a $57.5 million bid for the plant from the Clean Energy Technology Association. But, so far, they haven't closed the deal. The slow pace of the talks has been frustrating, Williams said. 

"We believe continuing those negotiations are in the best interest of our ratepayers," Williams said. "But we could reach a point where we could pursue other purchasers." 

According to a March report in the Greenville Herald-Banner, David Dreiling, Greenville mayor and TMPA board member, said they were losing patience with the negotiations and ready to tell the buyer to "show us the money."

Clean Energy spokeswoman Cheryl Cockerell did not return a call for comment. The eight-year-old company is based in Fairfield, about 90 miles southeast of Dallas and about 90 miles north of the coal plant. According to its website, the company is designing a process to use coal in new ways that keep electricity costs down and adhere to emission standards. 

Because other energy companies have expressed an interest in buying the plant in recent weeks, Williams said he remains confident the city can meet its own plan to walk away from coal-fired power by summer 2018. 

That time frame is pivotal for DME's balance sheet — and ultimately, the ratepayers. DME expects to fire up its new $227 million power plant in summer 2018. The Denton Energy Center houses 12 natural-gas fired engines that will sell electricity to the Texas power grid. 

The project also allows DME to bargain for the best rates from wind and solar farms for its own ratepayers. New contracts go into effect in 2018 and 2019. 

In September 2018, TMPA transmission lines and related assets "spin off" from the coal plant and the transmission-related debt goes with it, Williams said.  

But if the coal plant doesn't sell between now and September 2018, decommissioning the plant could cost between $30 million and $40 million. And Denton's share of the plant's remaining debt — about $60 million — comes to DME's balance sheet. 

Williams remains optimistic the city can cushion that loss because the power plant has value, particularly its location in relation to the electrical grid. In addition, TMPA has restored 9,500 acres of land around the plant (it was mined for coal until 1995) and that land can be sold in 2020.

The land sale itself could wipe out much, if not all, the old power plant debt, he said. 

"It has a 6,500-acre lake and it's two hours north of Houston," Williams said. 

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. 

FEATURED PHOTO: The Gibbons Creek Steam Electric Station, located about 20 miles east of Bryan/College Station, has generated coal-fired power for Denton for more than 40 years. The power plant is for sale.
DRC file photo.