Biomass or Bio-mess? Part 3: The Austin Example

Published February 22nd, 2013

GAINESVILLE, FL --

     It was May of 2009, and after almost a year of negotiations between GRU officials and members of a company known as GREC, the Gainesville city commission was ready to sign off on a power-purchasing agreement with the operators of a proposed 100 megawatt biomass plant.
     "These are extraordinarily expensive and long-term decisions, no matter what your energy supply," said Pegeen Hanrahan, mayor of Gainesville at the time.
     She says city officials toured other utilities across the country, including Ausin's public utility, early on in the process.
     "We spoke, you know, face-to-face, and visited, for example, the biomass plant that's been operating in Burlington, Vermont since the 70's. We talked to the staff and decision-makers at Austin energy, that also had a plant with the same company. That was maybe a year or so ahead of ours," said Hanrahan.
 
     Just about 9 months before Gainesville approved it's contract with GREC, the city of Austin, Texas had entered into a similar deal with the same developer.
     Although much of the Austin contract remains confidential to this day, the structure is this: Gordon's company would agree to finance and construct the plant, while the utility would pay for all power generated there. 
     "I don't know what their contract is specifically. But when we negotiated our contract, when we compared the values of their contract over their term, and our values over our term, we believe that our contract is cheaper than their contract," says GRU General Manager Bob Hunzinger.
     Today, the Gainesville plant is 85 percent complete, and on track to go online by the start of next year. But in Austin, their biomass plant, which went online last summer under new ownership, is sitting idle. It's power is not competitively priced and too expensive for their utility afford. But the city of Austin is still on the hook to pay the fixed costs of the plant. 
     Gainesville city commissioner Todd Chase, who was not on the commission when the contract was approved, worries a similar fate may be in the cards for Gainesville. 
     "Austin has the exact same biomass plant we have. The contract was signed by the same exact company," said Chase.
     If Gainesville's plant were to sit idle, then GRU ratepayers would have to absorb at-least $70 million dollars a year in fixed costs the utility would still owe to GREC. 
     But officials say a comparison of the power purchase agreement between Gainesville and Austin is unfair considering the two energy markets are structured differently.
     "Austin is unique, in that Texas has an open energy market. So in effect, all the generators bid into this open market on a day-ahead basis, of what they can generate power at, or what they'd be willing to get paid for power. That's a completely different market from Florida," said Hunzinger.
     "You can compare these two plants in terms of their technology, and the fact that they were both built by the same company. You can't compare them when you look at the rest of the energy playing field in Texas versus in Florida," said Pegeen Hanrahan.
     An assessment leaves opponents asking more questions. 
     "It doesn't make any sense that what's going on in Austin is not relevant to Gainesville. There's nuances over how the utility is run. There's all kinds of things there that I completely agree with and understand. It almost uses the expertise that they have, to sort of put it out there, and just discredit anyone that wants to have, at least a discussion," said Todd Chase.
 
     There is one more similarity between Gainesville and Austin. The elected leaders of both cities also serve as the board of trustees that oversees the public utility. The Austin city council is now considering whether to create an independent board, which would be designed to provide closer oversight of the utility's operations. There are calls for that here, but Todd Chase may be the only city commissioner who would support it.
 
 
Tags: 
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GREC
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