Could New EPA Haze Rule Push Fayette Power Plant Out of Favor?

Fayette Power Project near La Grange, which produces 72% of Austin Energy’s carbon emissions but only generates 13% of AE’s total power (Courtesy of Lower Colorado River Authority)

Austin Energy plans for 100% of its power to be carbon-free a little more than a decade from now, as part of Austin’s Climate Equity Plan to hit net zero emissions citywide by 2040.

That goal hit a serious roadblock in fall 2021 when the Lower Colorado River Authority (LCRA), which co-owns Fayette Power Project, the nation’s 10th worst carbon emitter, stalled negotiations for Austin Energy’s exit from its share of the plant, originally slated for 2022. (Fayette is responsible for 72% of AE’s carbon emissions but only generates 13% of AE’s total power.) Now, a new federal plan to reduce haze in national parks could make Fayette much more expensive to operate, and may reduce LCRA’s interest in keeping Fayette running.

More than 80% of haze-causing pollution in Texas comes from coal and gas power plants like Fayette, and it can travel miles and decrease visibility in parks as far as Big Bend. Plus, Fayette uses 5 billion gallons of water from the Colorado River a year, competing with agriculture and the city of Austin for water resources. Chemicals like sulfur dioxide can cause health effects for those who live next to the plant in La Grange – “this stuff is nasty for people to breathe,” says Emma Pabst with the Lone Star Sierra Club’s Beyond Coal campaign. “It can irritate the eyes, the nose and throat, it can inflame your respiratory system, it can worsen asthma, especially if you’re doing physical activity outdoors. Over time, high concentrations of it can actually impair your lung function, and worsen heart disease.”

The Environmental Protection Agency’s “Good Neighbor Plan,” now in its 60-day public comment period, aims to cut sulfur dioxide emissions in half, by 80,000 tons a year, by requiring older power plants to install “scrubbers,” essentially “washing machines,” that clean sulfur dioxide emissions from their smokestacks, says Pabst. (95% of AE’s sulfur dioxide emissions come from Fayette.)

Fayette got scrubbers more than 10 years ago, but the new rule also curbs nitrogen oxide emissions, which requires a different technology called selective catalytic reduction (SCR). Most plants, including Fayette, don’t have SCR, says Pat Sweeney, AE’s vice president of power production. Sweeney says there are three ways plants can comply with the new rule: add SCR, reduce emissions generally, or buy a credit from a cleaner plant – all expensive options. “From our standpoint, we’re already trying to pursue a path to exit [Fayette] and shut our share down. The rule would put significant cost pressure on maintaining and operating the plant going forward.”

Because AE is a municipally owned utility that must adhere to the city’s climate goals, it already relies on Fayette much less than LCRA does, so the increased price of operating Fayette would land more heavily on LCRA and, “may change how LCRA views the viability of the plant,” says Sweeney. Because the rule focuses more on sulfur dioxide than nitrogen oxide, which Fayette has already largely addressed, Pabst is less optimistic: “I do not think that this rule will encourage LCRA to close the plant. It’s functionally the equivalent of asking them to put a little bit more laundry detergent in a washing machine that already exists.”

Plus, outside of AE, LCRA has contracts with Pedernales and Bluebonnet Cooperatives: “I presume they couldn’t just stop operating their part of the coal plant overnight.” LCRA told the Chronicle it is “reviewing the proposed rule and determining whether to file comments with the [EPA].” However, it’s not the only stakeholder in Texas that’s worried about the new rule: The Electric Reliability Council of Texas (ERCOT) noted in its summer forecast that several power generators indicated possible “operational constraints” as soon as July that could come from complying with the rule. Texas and other states filed a motion with the Fifth Circuit Court to stay the decision due to those impacts, which was granted May 1.

Until Fayette closes, AE will continue ramping up its offset strategies such as the REACH (Reduce Emissions Afford­ably for Climate Health) program, which factors in the cost of carbon, incentivizing customers to choose renewables – it has reduced AE’s overall emissions by 43% as of this year. Still, Pabst says, “It’s outrageous that the most progressive city in the state still has a dirty old coal plant sitting around. And it’s even more outrageous that [it’s] located on the outskirts of the city in a rural area where people are often less well off than they are in Austin proper.”

You can sign up for a virtual public hearing May 19 on proposed revisions to the plan here.

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