CPS Energy Could Purchase New Gas Power as Soon as Next Summer

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The Calaveras Power Plant.

Scott Ball / Rivard Report

The Calaveras Power Plant hosts CPS Energy's Sommers natural gas units.

Faced with two natural gas plants reaching the end of their lifespan in the early 2020s, CPS Energy is prepared to begin buying power from an existing Texas natural gas plant as early as next summer. 

However, Mayor Ron Nirenberg, a CPS Energy board member in his official capacity, is among those questioning the utility’s push for a new natural gas contract. CPS Energy officials have said they plan to use an open bidding process to replace some of their soon-to-be-lost gas capacity through solar and battery storage, but negotiate a new natural gas power supply behind closed doors with a handful of as-yet-unnamed energy companies. 

At the utility’s October and November board meetings, Nirenberg questioned why CPS Energy would want to use an open bidding process to gather proposals for solar and battery storage while negotiating a separate deal for gas power. 

“If the retirements for the gas steam units aren’t for another couple of years, why are we pushing to do that right now?” Nirenberg said of the natural gas contract back in October. “Why wouldn’t we go with a [request for proposals] for the whole bundle?”

Scott Ball / Rivard Report

Mayor Ron Nirenberg

After the mayor’s questioning, CPS Energy officials seemed more open at the November meeting to alternatives on the gas power contract. They went from talking about a 10- to 15-year term to a five- to seven-year term, and Chief Operating Officer Cris Eugster said he’s open to putting out a formal request for proposals for all of the capacity CPS Energy needs, not only for solar and batteries.  

“We’ve not finalized the [request for proposals],” Eugster said. “We’re listening to our community and getting that feedback, so one concept is … maybe we put it all together.” 

The debate over how to replace the aging gas plants comes immediately after the passage of San Antonio’s Climate Action and Adaptation Plan that calls for San Antonio to reduce its emissions of greenhouse gases to net zero by 2050. 

Officials with San Antonio’s municipally owned electric and gas utility have said at its two most recent board meetings that they are looking to replace 1,700 megawatts of capacity from five gas steam units that have nearly reached the end of their useful lives. 

CPS Energy’s Braunig and O.W. Sommers units were built during 1960s and ’70s, a time of rapid growth in electric power usage in San Antonio with the rise of air conditioning, said John Bonnin, the utility’s vice president of energy supply and market operations. In recent years, the utility has been mostly the units in summer when air conditioning use drives demand to its peak. 

CPS Energy calls its replacement plan for these plants the “FlexPower Bundle.” The utility would add 900 megawatts of solar capacity to its portfolio and 50 megawatts of battery storage. It also would add 500 megawatts of natural gas capacity. 

A CPS Energy slide show energy supply and demand on a hot summer day and cold winter day under its FlexPower Bundle scenario. The blue color represents fossil fuel and nuclear generation, with “gas toll” the natural gas power the utility would buy from an existing Texas power plant. “Storage” means energy stored in batteries. “Demand response” is CPS Energy’s effort to get its customers to shave off peak demand.

One megawatt is enough to power 200 Texas homes on a hot summer day. CPS Energy set a new all-time demand record of 5,109 megawatts on Aug. 13. 

Eugster said the FlexPower Bundle is a “significant step forward” in realizing the goals of San Antonio’s climate plan with its emphasis on solar and batteries and leasing an existing natural gas plant instead of building a new one. 

“The gas toll is going to be a temporary part of this, only five or seven or 10 years,” Eugster said. “So really what’s going to last through 2050 or even 2030, when people are starting to shoot for some interim [climate] goals, it’s going to be the 900 megawatts of solar and the battery component.” 

To acquire the solar and battery power, CPS Energy plans to use a request for proposals to be submitted before the end of 2019. It expects to receive hundreds of responses from companies around the world, Bonnin said.

Eugster said there are only a “handful” of entities in Texas operating on the state’s grid that could supply natural gas power from an existing plant. Eugster did not say in meetings or in a follow-up interview which power providers CPS Energy is considering. 

Environmentalists have also pushed CPS Energy to put out a request for proposals for all the generating capacity it needs over the next few years, instead of privately negotiating for natural gas supplies. They point to other utilities like Northern Indiana Public Service Co., an investor-owned utility, that is using a request for proposals to ask the market how best to replace most of its coal assets by 2023. 

“I think that is in the best interest of CPS Energy customers, to look at all the options available in the market, regardless of what your views are on the environment,” said Kaiba White, energy policy and outreach specialist with Public Citizen. “Of course, we hope the result would be to go with something that isn’t fossil fuel-based. Even if that’s not your interest, you should be looking at all options to see what’s most affordable, and an all-source [request for proposals] will do that.”

Environmentalists also say CPS Energy should focus more resources on reducing its customers’ demand, saving them money and reducing the need to buy fossil fuel power. 

At the meetings, the conversation also focused on some of the larger issues facing CPS Energy, which has been accelerating its shift towards renewables but must maintain more than $11 billion in equipment, including the Spruce 2 coal unit completed in 2010, while also paying $345 million this year to the City. 

“I want any generation, any capacity that we add to CPS’s portfolio henceforth to be renewable,” Nirenberg said in a tense exchange at the October meeting. “We would do that if we knew it was affordable to do so and it was the best cost for the CPS customer. We would do it, right?”

CPS Energy President and CEO Paula Gold-Williams said no, because solar, wind, and batteries aren’t yet reliable enough to meet demand on its peak days. 

“If it had the same level of performance, we would run to it,” she said. “Per kilowatt-hour delivery, it is extremely cheap, but it is weather-dependent and time-of-day dependent.”  

Gold-Williams went on to address what she called an “elephant in the room,” saying that “CPS Energy does not deny climate [change].” 

“Our people go out in the elements every time – when there’s snow, when there’s rain, when there’s storms, when there’s wind,” Gold-Williams said. “And there are increasingly more [weather] systems coming at us.”  

However, she said the utility doesn’t see the path to cutting out fossil fuels as “linear,” arguing the utility is limited by current technology. 

“If the goal is net non-emissions, that doesn’t mean we have all the technology in our hand to get there,” Gold-Williams continued. “But we understand what the council has voted on and what the board has instructed us to do. … There’s a lot of time between now and 2050.”

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