End of San Antonio’s last coal-fired power plant in sight; CPS likely to rely more on natural gas – San Antonio Express-News

The coal-fired J.K. Spruce power plant, which sits on Calaveras Lake in Southeast Bexar County, is San Antonio’s biggest source of electricity, contributing nearly a quarter of the city’s power last year.

It’s also the worst polluter among CPS Energy’s power plants — and a major generator of controversy.

For years, environmental and community groups have demanded the closure of Spruce. They want CPS to replace the plant’s production with more wind and solar power, as well as batteries. Activists also have accused utility officials of withholding information about the costs of operating the coal plant, arguing a shift to renewable power sources would be cheaper.

CPS has resisted the calls to close Spruce, citing the massive debt still owed on the plant. Utility executives say it’s necessary to run the plant alongside solar and wind farms to maintain a steady supply of power.

Now, amid increasing pressure to cut emissions, CPS is edging closer to a plan to end Spruce’s run as a coal-burning plant. But the utility’s solution may not satisfy activists.

CPS appears all but certain to convert Spruce 2 to run on cleaner-burning natural gas before the end of this decade.

Officials say they must keep Spruce 2 — which went online in 2010 — operating so that the plant can generate revenue and allow the utility to pay off nearly $1 billion in debt on the facility.

By comparison, the utility owes about $150 million on Spruce 1.

For CPS to continue burning coal past 2028 at the older Spruce 1 unit, which went online in 1992, the utility would have to spend $150 million to install new technologies to curb emissions.

CPS leaders don’t want to spend the money.

“The decision on Spruce 1 is a little clearer,” interim CEO Rudy Garza said in an interview on KLRN last month. “We‘d had to invest about $150 million in environmental equipment. So I think the decision to cease operations at Spruce 1 is probably the right call.”Garza has said since last fall that CPS and the 20-member Rate Advisory Committee would examine the future of the power plant this year and ask the utility’s five-member board of trustees to vote on a plan by the end of the year.

J.K. Spruce Power Plant under construction on Gardiner Road at Calaveras Lake. New plant is on the left, old one is at right. Man is Chris Johanson, lead mechanical engineer.

J.K. Spruce Power Plant under construction on Gardiner Road at Calaveras Lake. New plant is on the left, old one is at right. Man is Chris Johanson, lead mechanical engineer.

Bob Owen / San Antonio Express-News

Dirty power

The Spruce units spewed 8.8 million tons of carbon dioxide into the atmosphere last year and 6.3 million tons in 2020, according to the Environmental Protection Agency. The larger Spruce 2 unit produced just over two-thirds of the plant’s total CO2 emissions in 2021.

Carbon dioxide is the main greenhouse gas trapping atmospheric heat and contributing to climate change.

The Spruce plant also emits thousands of tons of harmful compounds, such as sulfur dioxide and nitrogen oxides, according to the EPA. Nitrogen oxides react to form ground-level ozone, and SO2 contributes to haze and particulates that cause respiratory problems.

The burning of coal is also responsible for 42 percent of mercury emissions in the U.S., according to the EPA. The heavy metal, which is toxic to humans, can damage nervous and immune systems, and stunt childhood development.

San Antonio’s already poor air quality is the reason CPS would have to invest in new equipment to keep burning coal at Spruce 1. Bexar County has failed to meet federal emissions and ozone standards, so the EPA requires the utility to add environmental technology at Spruce by 2028 to reduce nitrogen oxide emissions from the coal plant.

“It’s time to do what is necessary to improve the air quality in San Antonio,” said Chrissy Mann, a campaign representative at Sierra Club. “CPS Energy can do its part, as the owner of the biggest single source of ozone forming pollution in Bexar County, by following through with their commitments to quickly retire Spruce Unit 1, a coal plant that does not have modern pollution control for nitrogen oxides, a key ingredient to ozone pollution.”

In late February, CPS’ board of trustees directed management to develop a timeline to move to cleaner power sources by 2030.

But despite the calls for CPS to close Spruce, others fear the impact that closing the plant would have on energy reliability in San Antonio — and on ratepayers’ bills.

Garza said converting Spruce 2 to natural gas would extend its useful life and ease the impact on bills. In a resource plan CPS released in January 2021, it estimated a swift closure of the coal plant would cost ratepayers an average of between $6 and $12 extra per month.

And that was before the rate increase City Council granted CPS earlier this year that raised households’ bills by roughly $5 on average beginning in March.

Ratepayers “can’t afford just to take that expensive hot rod and park it on the side of the road and go out and buy another car,” Garza said in an interview. “That’s what, in essence, just shutting Spruce 2 down without converting it to natural gas looks like.”

There’s also the certainty of lost revenue. Shutting down CPS’ largest power plant would give the utility fewer opportunities to sell power on the statewide wholesale electricity market.

CPS generated $326 million in revenue from wholesale sales in 2018. At the end of that year, the utility closed the J.T. Deely coal plant — and its earnings from the wholesale plummeted.

CPS expects to average about $157 million in wholesale revenues this year and next.

But there was a big upside to shutting down Deely. The plant emitted 5.3 million tons of carbon dioxide in 2018, and its closure resulted in a large decline in CO2 pollution in San Antonio, according to the U.S. Energy Information Administration.

“When we closed down Deely, we fundamentally shifted our capability to sell power into the open market. When we replaced it with (the Rio Nogales gas-fired plant near Seguin), now we’ve got what we need and a little extra,” Garza said. “We didn’t replace the capacity one-for-one.”

Still, as CPS staffers craft budgets and forecasts for the coming years, they’re working in the assumption that Spruce 1 will go offline around 2028.

Phasing out, phasing in

Garza has been working with Reed Williams, a former council member, who is leading the RAC. The two have been sketching out a plan that the utility likely will propose to CPS trustees for a vote later this year.

The timeline for Spruce is uncertain, but CPS has to retire its 56-year-old Braunig natural gas-fired units, which sit a few miles west of Calaveras Lake, by 2026 at the latest. It also must close the 50-year-old O.W. Sommers gas plant around the same time. Both aging power stations are used sparingly, mostly in the summer.

CPS has been soliciting bids from solar and battery-storage companies since early last year to buy as much as 900 megawatts of solar power through its FlexPower Bundle program.

The utility will award solar contracts by mid-year and start getting power from a half dozen solar farms in two or three years, said Kevin Pollo, vice president of energy supply.

CPS currently has about 550 megawatts of solar capacity.

“I’m ready to sign the solar contract, like, right now,” Garza said.Solar is probably the most competitive price point-wise that we’ve ever seen. That’s why I really don’t have any pause on that 900 megawatts.”

CPS has about 5,700 megawatts of capacity at its power plants, excluding wind and solar. One megawatt is roughly enough to power 200 homes on a summer day.

In addition to buying the 900 megawatts of solar energy, CPS is looking to contract with the owner of an existing natural gas-fired power plant in South Texas to purchase electricity for a few years.

Under a so-called tolling agreement, CPS would “rent” a power plant, provide the natural gas, and take back the electricity from the plant.

“We can do a five-year term on a tolling agreement with an option to do another five-year term, and that gives us some flexibility as plants are coming offline,” Garza said.

And CPS officials say in they eventually can blend hydrogen — which only emits water vapor — with natural gas in turbines to cut emissions further.

Still, while burning natural gas produces about half the carbon emissions as burning coal, prices for gas have doubled over the last two years. And millions of Texas households experienced widespread power outages — and the loss of heat — when the flow of natural gas was disrupted during Winter Storm Uri in February 2021.

Some of CPS Energy’s gas-fired plants weren’t operating at times during the deep freeze as a result of mechanical breakdown, frozen pipes and low fuel pressure.

Spot-market prices for gas exploded during the winter storm, forcing CPS to spend more than $600 million for the fuel in one week. Ratepayers will pay about $1.26 per month for the next 25 years to pay off bills owed to energy firms’ for their high-priced natural gas.

After the winter storm, CPS said it signed more financial hedge agreements — to lock in future prices for natural gas — and put more gas in storage to protect against sharp price increases.

But after the deadly deep freeze and the utility’s ensuing financial crisis, CPS should avoid heavily relying on natural gas, said DeeDee Belmares, a climate justice organizer with Public Citizen who was also part of the Recall CPS campaign — which sought to put City Council in control of CPS instead of its board of trustees.

“I don’t understand why (CPS is) so committed to natural gas, given the volatility of the price, given that natural gas failed us during Winter Storm Uri,” said Belmares, who is also a member of the RAC. “Can we look also at energy efficiency and demand response, besides wind and solar and battery storage?”

The goal for now, Williams said, is for CPS to cut out coal in the next five years and maintain a reliable supply of electricity without spending hundreds of millions of dollars on a new power plant.

Five years from now, Williams said, that would leave CPS poised to capitalize on potential zero-carbon technologies that haven’t yet become feasible today on a large scale — such as geothermal power, hydrogen, batteries or a new generation of nuclear technology.

Getting 500 megawatts each from a gas-fired Spruce 2 unit and another gas plant “gives us 1,000 megawatts of dispatchable power that protects us in the short term while we’re making some of these technology decisions in the future,” Garza said.

diego.mendoza-moyers@express-news.net