TENASKA PLANT STILL ONLINE? SURE, BUT NOW FOR 2020

By Juan Montoya

The on-again, off-again City of Brownsville/Tenaska power generating plant is on again, maybe.

Construction was originally was scheduled to begin in 2014 and be complete by summer 2016, but was put off by data provided by the Electric Reliability Council of Texas (ERCOT) that provides  information on market transactions, particularly electricity prices.

The agreement between the Brownsville Public Utilities Board and Nebraska-based energy company Tenaska Inc. to develop the $500 million, 800-megawatt power plant in Brownsville has yet to bear fruit, even though the deal was announced in January 2013.

Tenaska, in a yet-to-be-seen-by-the-public Memorandum with the city and the Brownsville Public Utility Board, reserved the right to delay construction if it could not sell 600 MWs of the planned 800 MW it expects the plant to produce. The city – paying for $350 million of the estimated $500 million cost – would get 200 MWs in return.

Now, Tenaska, in its 2016 Tenaska Fact Sheet on the project dated Jul 27, 2018, projects that it will be online by 2020, four years later than its construction had been announced..

Meanwhile, the 35 percent increases in electricity, and lesser ones in water and wastewater rates that were passed in 2013 and remain in place, although not one shovel of dirt has been turned on the project.

In fact, Brownsville terminated its 2013 tax abatement agreement with Tenaska at it March 20, 2018 meeting but the project is still listed in the Brownsville PUB 2017-18 annual budget as the justification for the funding for other projects. (See graphic at right. Click to enlarge.)

 Now PUB ratepayers are asking: What happened to the plan to reimburse PUB customers charged for the project after it was declared dead?

Despite the original timeline, the project received a final greenhouse gas emissions permit from the Environmental Protection Agency (EPA) two years later. Construction has not started on the project, which would be located on 270 acres at FM 511 and Old Alice Road.

In its October report, the Fitch ratings service stated that the delay reflected a lack of interest in the market for the project’s extra generating capacity, probably due to falling electricity prices in the state’s unregulated electricity market.

“Competitive market energy prices within the Electric Reliability Council of Texas market have undermined the economic incentives of adding capacity in recent years,” Fitch said.

News reports blame lower electricity prices partly due to cheaper natural gas, which makes electricity from gas-fired power plants less costly to produce and sell on the open market, making construction of new generating capacity less attractive.Fitch also noted that adding more capacity to the 578 megawatts already available locally would far exceed the area’s projected total requirement of 426 megawatts.

In January 2013, when the project was announced, BPUB General Manager and CEO John Bruciak said it was the best of available options for addressing the area’s power needs and ensuring future rate stability.

Now, in 2018, Bruciak and Tenaska are content to keep the rates artificially high and keep pushing forward the construction date. Will it ever get built, and if not, when will the PUB lower the rates as they promised?