Texas municipal utility City Public Service of San Antonio warned that its ratepayers' bills could become some of the highest in the state under several scenarios for the future of the 1,345-MW J.K. Spruce coal-fired power plant.
Environmental activists have been urging the utility, also known as CPS Energy, to accelerate the closure of the two-unit facility by 2030. While utility spokespersons have said that the company has been considering the closure of the older, 566-MW unit 1 in 2030, the future of unit 2 is less clear.
Unit 2, with a nameplate capacity of 878 MW, only came online about a decade ago. CPS CEO Paula Gold-Williams cautioned in November 2020 that it would be expensive to retire it early because the public utility still holds $1 billion in total debt related to the asset. She further argued during a virtual panel discussion that turning away from fossil fuels completely is not yet feasible, as "technology is not at the place where you can run this community solely on solar."
On Feb. 5, CPS released a plan that included estimates regarding the impact to residential customers' combined electric and gas bills under two potential scenarios for the Spruce plant. The scenarios were compared to a base case under which CPS would retire unit 1 in 2029 and continue operations of unit 2, which has an expected technical end-of-life of 2065, without modification.
Under one scenario, both Spruce units would be retired by 2023, with replacement capacity coming from solar, wind or battery energy storage systems. That plan would result in the highest average bill increase for residents, according to CPS, with monthly combined residential electric and gas bills increasing approximately $12.00 on average between 2022 and 2036, compared to the base case.
Under a second scenario, unit 1 would still be retired by 2023, and CPS Energy would replace its capacity with solar, wind or battery energy storage systems. Unit 2 would be converted to run on natural gas between 2027 and 2028, at a cost of $35 million, continuing operations with a "flexible lifespan," according to the plan.
Residential monthly combined bill impacts would be lower than the all-renewable scenario, increasing by approximately $6.00 on average between 2022 and 2036.
Noting its "consistently affordable bills," CPS said the resource plan's "alternative scenarios result in a significant risk of rapidly elevating our bills to the most expensive in the state of Texas, which may also threaten our unique business model (as a public power authority) and service territory."
The utility said such increases to customer bills would have implications for how the state regards municipal utilities with regard to governance, managing customer relationships and providing affordable service.
CPS added that "no specific decision has yet been made to close either remaining coal unit early."
A request for proposals was issued by the public power authority in December 2020 for up to 900 MW of solar capacity, 50 MW of energy storage and 500 MW of all-source firming capacity. The bids were due Feb. 1.
