CPS pursues shift from coal to natural gas

Utility will bid on 800-megawatt plant that could power 200,000 houses.

By David Hendricks
San Antonio News-Express

CPS Energy will know by year's end whether it will be successful in acquiring a natural-gas plant that would largely replace two coal-fired plants set to be retired by 2018, executives said Thursday.

Once CPS gets a plant, it will seek to buy natural gas produced by the Eagle Ford shale operations in South Texas, said Doyle Beneby, the utility's president and CEO.

The city-owned utility will place its bid in the coming weeks for an undisclosed natural-gas plant near San Antonio with a generation capacity of 800 megawatts. The buyer will be determined in December, and the sale is likely to close in the first quarter of 2012, said Cris Eugster, CPS chief sustainability officer.Eight-hundred megawatts from a natural-gas plant is enough to power about 200,000 houses, Eugster said.

Acquiring a natural-gas plant is part of the utility's policy to reduce use of carbon-emitting fuels, Beneby told several hundred people at the Forum on Entrepreneurship breakfast held by St. Mary's University's Bill Greehey School of Business.

"We'll be in the market for natural gas, and what better place than sitting on top of the Eagle Ford?" Beneby asked.

"Instead of shipping coal from Wyoming, we will be buying gas from locals," he added.

Shutting down the Deely coal units by 2018 means less particulate emissions, Beneby said.

Eugster said natural gas-fired electricity plants use one-third the water of coal-fired plants and emit about half the greenhouse gases.

The utility is in the midst of collecting bids, for the third time, on a proposed 400-megawatt solar project enough to power 80,000 homes. Bidding began Monday and concludes Dec. 7. Previous rounds were scrapped because late bids came in, reflecting quickly falling solar equipment prices.

CPS added new minimum requirements for bids, including creating at least 800 jobs, establishing a $30 million annual payroll, and making $100 million in manufacturing capital investments. The utility staged an online conference Thursday to assist companies planning to submit bids.

Beneby said that even though CPS Energy's possible investment in the expansion of the South Texas Project nuclear plant is on hold, he's hoping for more nuclear power long-term.

The 1979 Three Mile Island accident set back the U.S. nuclear industry about 25 years, and Japan's tsunami-related damage this year will set it back another three to four years, Beneby said.

If the U.S. military disarms some of its plutonium-based weapons arsenal, some of that material might be mixed with uranium to provide new domestic-source fuel for nuclear plants, he added.

Daniel Wagner is managing director of Country Risk Solutions, a political risk consulting firm based in Connecticut, and senior advisor to the PRS Group.

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