CPS Energy wise to cut its coal losses

Two years ago, Conservative Texans for Energy Innovation, where I serve as director, called on CPS Energy to cut its losses and close the coal-fired J.K Spruce power plant.

As I wrote then, “Other technologies have made it clear the coal plant’s goose is cooked, and it is time to put a fork in it because it’s done.” Almost two years later, CPS Energy trustees voted to do just that, opting to retire its last remaining coal-fired plant by 2028.

Spruce was one of the last coal plants built in this country, and it finished construction just before the prices of natural gas, wind and solar plummeted. While it might have looked like a prudent economic investment at the time, circumstances changed. When that happens, one can either continue to throw good money after bad (keep running the plant) or adjust course and move on.

Conservative Texans for Energy Innovation, or CTEI, was critical of the previous CPS Energy leadership, but the new executive at the helm, Rudy Garza, appears to be going in a new direction.

Trustees had a suite of options to choose from and selected Portfolio 2, which isn’t the most forward-looking generation plan, but it does get the utility out of the expensive coal business. The new plan also includes more solar and energy storage, which is better aligned with market trajectories. It will allow CPS Energy to meet its 2030 goals and can be changed as newer technologies mature.

The plan calls for building more than 2,000 megawatts of new natural gas capacity, which will make some folks at the Public Utility Commission happy but may lead to highcost energy due to geopolitics and increased global trade.

It would be prudent for CPS Energy to consider this likely long-term shift upward in the price of natural gas.

CPS Energy had the option of going with another generation plan that would have reduced, not increased, the utility’s reliance on both coal and natural gas, but trustees and others cited concerns about energy production during extreme weather. However, during Winter Storm Uri, the ERCOT grid lost about half of the thermal (natural gas, coal and nuclear) fleet, and again during Winter Storm Elliott in December the grid lost a considerable percentage of the same thermal fleet. Hopefully these newer plants will perform better, but it doesn’t seem thermal power plants are as reliable during extreme weather conditions as they are often touted to be.

CPS Energy’s leadership has noted there are emerging technologies to watch. For example, the region just south of San Antonio has produced a lot of oil and gas, but heat can also be found in the rock below that could generate significant amounts of electricity via geothermal power plants. A recent report on the future of geothermal energy in Texas shows CPS Energy is close to some of the best geothermal resources that the state has to offer.

Further emphasis should also be placed on energy efficiency and demand response. These practices are often overlooked but can be powerful tools in reducing energy use during extreme events while keeping the lights on for everyone, often at a lower cost than building new power plants.

It is not always easy to cut one’s losses and move forward, but CPS Energy has found the courage to do so. We commend the city of San Antonio’s utility for taking this path, and we encourage CPS Energy to continue seeking energy solutions that will provide the cleanest, most reliable and most cost-effective electricity possible.

Matt Welch is the state director of Conservative Texans for Energy Innovation, a statewide organization that promotes free enterprise, increased competition and less government regulation in our energy economy.