Many Austin citizens are concerned about the expense of electricity for their homes and businesses. But while there seems to be a strong perception that Clean Energy will drive up electric bills, that is not what recent history has shown.
Lowest Cost Energy Sources for Austin - FY2008
Based on the cost to produce or encourage savings of 1 MWh of electricity (equivalent to the monthly electric use of a single household in Austin):
#1: Energy Efficiency, $24.
It is cheaper to save energy than produce it. Incentivizing utility customers to reduce their energy use averaged $23.50 per MWh in 2008.
#2: Renewable Energy, $33.
Wind and Biomass (landfill gas) contracts signed years ago were cheaper than those available today, leading to an average cost below $33 per MWh.
#3: Nuclear Power, $35.
What started as Austin’s most expensive source, is now cheaper than new power plants. Austin still owes $800 million on the 20 year old plant.
#4: Coal Power, $41 (see note below).
Coal is considered cheap, but comparing the money Austin spent last year on Fayette Coal Plant relative to its energy production, the result speaks for itself.
#5: Natural Gas Power, $66 to $126.
Austin has invested $394 million since 1998 on natural gas plants. But high fuel costs made gas power our most expensive major energy source in 2008.
Sources for Cost Information
Although it is a regulated monopoly utility, Austin Energy considers most cost information confidential. The numbers above are based on information provided by Austin Energy to the Generation Resource Planning Task Force for FY2008 and present conditions.
ENERGY EFFICIENCY: The number for energy efficiency was taken from Page 23 of the DSM Performance Measures 2008 Final Report for the utility levelized life cycle cost of all programs ( = 2.35 cents/kWh).
RENEWABLE ENERGY: The following table computes costs from fuel expenditures and energy production by fuel type. (NOTE: This table may underestimate actual fuel costs for coal, gas and nuclear due to off system sales.) The numbers at the top of the table represent “fuel only” costs for resources other than renewables (which represents “all in” cost of generation in purchase power contracts). This table is the source of the renewable energy cost number.
GAS & NUCLEAR: The graph below (provided 9-2-09 by Austin Energy) represents the “all in” cost of generation, representing fuel, operating and capital costs of Austin Energy’s power plants. This graphic was used to report numbers above for the STNP nuclear and the range of costs for natural gas plants.
COAL: The cost of Coal power in 2008 was computed by taking the reported FY2008 expenditures for fuel ($87 million), operations and maintenance ($21 million) and coal-related CIP budget ($74 million) and dividing this total ($183 million) by the total reported energy production (4.415 million MWh). This calculation yields the average $41 per MWh reported above.
In Austin Energy’s Production Cost per MWh graphic above, coal is reported with an upper range of no more than $28 per MWh. The discrepancy stems from treatment of $74.4 million of CIP improvements at Fayette. Austin Energy is including a very small portion of this as a current year expenditure because it is financing the CIP costs over 30 years. This approach appropriately reflects costs if — and only if — the coal plant runs for 30 more years (until 2038) at the same high levels of production as in 2008.
Based on Austin Energy’s Recommended Generation Plan, this is not likely to happen.
How long and how often the coal plant ultimately runs has a lot to do with its current economics. Austin’s Fayette Coal Plant had a 30 year pass to put out high levels of pollution. But to keep burning coal, Austin will now have to shell out major sums to clean up.
- Now: for SO2 scrubbers — originally estimated at $50 million, ballooning to $233 million.
- Perhaps next: for NOx controls if Austin slips into non-attainment, or mercury or particulates.
- Then the biggie: Carbon — expected to double the operating cost at Fayette.
As the recent housing bubble should have taught us, incurring major long-term debt on an asset that is declining in value can lead to an unhappy ending. As such, the question should be asked:
How much more money is Austin willing to invest into a Coal plant it wants to quit using?
