Federal emissions standards also are sending CPS Energy outside Bexar County to find a home for its next gas-powered plants because of concerns the rules could hinder its operation in the city-owned utility's home county.
"It's going to constrain the potential out there to meet this demand we're talking about," grid boss Pablo Vegas said during a panel discussion last week in San Antonio, referring to the increasing need for electricity supply. "We can't just solve this problem by lodging two hands behind our backs."
It wasn't the first time the head of the Electric Reliability Council of Texas has taken shots at regulations coming from the Environmental Protection Agency limiting emissions that can be harmful to human health and cause climate change. But this time he did it while seated alongside CPS President and CEO Rudy Garza, whose utility has made it a priority to reach net neutral carbon emissions by 2050. By the end of this decade, it plans to cut back harmful emissions by 41 percent from where they stood in 2016.
Despite CPS' stance on pollution, Garza told the crowd gathered Thursday for an energy panel that planning new generation capacity the state needs to maintain reliability around regulations was a challenge.
Those challenges are top of mind as San Antonio stares down the possibility of having its status with the EPA of ozone pollution upped to "serious" if emissions don't drop by Sept. 24. The change could affect how often CPS is allowed to run its natural gas-powered plants as federal regulations are likely to put in stricter emission controls.
That's why Garza says CPS is looking outside Bexar County to build up to 444 megawatts of new natural gas generation.
"I just don't want to invest $600 million in an asset that I'm going to be limited to run certain times of the day and certain times of the year," he said in an interview after the panel sponsored by the North San Antonio Chamber of Commerce.
Legal Battle
Fossil fuel plants across Texas already track their emissions to follow federal law — it sometimes means they've "spent" all the pollutants they can emit by the end of certain seasons or years. That's why, during a December freeze ahead of Christmas 2022, the state had to ask the EPA to allow power plants to exceed their allotments to ensure the state wouldn't have to resort to rolling blackouts as demand outstripped capacity, Vegas said.
"In cases like that, they accepted it, they allowed it, and used an exemption," Vegas said. "But it's no way to run our grid, and we have to have more flexibility."
Texas already is in a legal battle with the EPA over a plan that would require power plants and high-polluting factories in 23 states to reduce ozone emissions that can drift across borders to comply with the Clean Air Act. ERCOT supports that legal fight.
"If these rules ... go into effect as proposed, it can make it almost impossible to build a base-load power plant in the United States," Vegas said.
Making matters worse for the statewide grid, he said the regulations would likely shutter the 12,000 megawatts of coal plants now operating in Texas. The kind of carbon capture upgrades required to make them meet regulations would be too costly, he said.
Vegas made similar comments against the EPA during a June ERCOT board meeting, which prompted environmentalist group the Lone Star Chapter of the Sierra Club to respond.
"These new EPA rules are a lifeline for Texans who are being exposed to shocking levels of mercury and other carcinogens and dying because of it," chapter Director Dave Cortez said in a statement.
ERCOT's arguments that coal-powered plants ensure reliability don't hold weight, he said, as such plants failed in the 2021 winter storm that led to the deaths of at least 246 Texans. Other sources struggled, too, including gas-fired generation and wind power.
San Antonio Impact
State regulators have since put stricter inspection and weatherization plans in place to try to avoid a replay of that deadly deep freeze.
But coal, especially, continues to fall out of favor across the country as less expensive, cleaner and quicker-to-build generation including solar and battery storage boom.
In San Antonio, CPS plans to retire its remaining coal plants by 2028.
Garza said federal agencies pass rules without considering reliability issues. He'd like to see that change.
"I know one truth about my customers in San Antonio," he said. "They care about reliability above all else and they want it to be as affordable as it possibly can be. And then everything — all the good stuff — sustainability and decarbonization and all those things that they want, too, they come after the first two are met."
Despite the Public Utility Commission passing over an application from CPS for low-interest taxpayer backed loans to build new gas-fired generation, the utility is moving ahead with the plants. Garza said he is being strategic as he seeks out reasonable real estate for up to two units with roughly 200-megawatts.
He said many options are on the table: parts of Guadalupe County that have the needed transmission infrastructure to move the power, land near Seguin by the existing gas-fired Rio Nogales plant, off a line between San Antonio and the nuclear plant that goes toward Houston, or through a partnership with the Lower Colorado River Authority as that public utility embarks on building its own new gas plants.
"I just want to build where I can run the plants when they need to run," Garza said, referring to EPA regulations. "I can't ask our ratepayers to invest that kind of money and them not be able to run."
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