Following months of detailed study and analysis, CPS Energy staff reported today to the utility’s Board of Trustees that nuclear energy should continue to be given strong consideration as part of a diversified plan to satisfy Greater San Antonio’s future electrical needs.

“Expanding the South Texas Project (STP) nuclear power plant near Bay City currently has the highest probability of delivering power at the lowest cost to our customers over the long term,” said Paul Barham, senior director of electric generation research and planning.  “Our staff and consultants came to this conclusion after exhaustive research of a dwindling number of options for a large-scale, long-term source of electricity.”

CPS Energy is working hard to add more renewable energy and to actively promote energy efficiency and conservation, but that won’t be enough to meet future electrical demand.

“Our analysis shows Greater San Antonio will continue to grow and require another substantial source of electricity in the 2018 time frame,” Barham said.  “Even with our aggressive renewable energy and energy efficiency/conservation programs, we will need to fill a large electrical-generation gap.”

Barham said all options for a future supply of electricity will result in increased costs, however expanding STP “is the most cost-effective option for future electrical generation” because of affordable operating costs in the long run, no carbon emissions, manageable construction costs (versus unmanageable fuel costs such as natural gas) and reliable, safe operation. 

CPS Energy’s staff is not seeking an immediate final decision from the Board on STP expansion.  Instead, the staff is suggesting a decision be made by the Board and San Antonio City Council in fall 2009.

“That will give ample time to evaluate potential impacts such as financial market uncertainty, the new presidential administration’s energy priorities, federal incentives for energy development and Congressional action on a possible tax on carbon emissions, to name a few,” Barham explained.  “It will also enable us to conduct a public input and community involvement process.”

CPS Energy already relies on STP to meet about one-third of Greater San Antonio’s annual electrical requirements, Barham noted.  Nuclear-generated electricity is the least expensive among the company’s various sources of power and has helped keep customer bills the lowest of the nation’s 10 largest cities.

Nuclear plants cost more to build than other power plants, Barham explained, but they offer savings over the long haul because of comparatively lower fuel costs and no emissions.  Natural gas-fired plants are less-expensive to build, but the cost of natural gas is subject to volatile fluctuations.  Coal plants with carbon capture and sequestration have yet to built and proven on a large commercial scale, and not building a plant would mean purchasing gas-generated power from the unpredictable wholesale electric marketplace.

Barham said more nuclear-generated electricity is compatible with the Strategic Energy Plan, CPS Energy’s roadmap for providing reliable, affordable energy in the future.  The four-pronged plan calls for vigorously pursuing energy efficiency/conservation; increasing the supply of renewable energy; supplying low-cost, competitive electric power; and maintaining the company’s environmental commitment.

“We’re making tremendous progress in all four areas of our Strategic Energy Plan,” Barham said.  He cited the following examples:

• Energy efficiency/conservation – The Save for Tomorrow Energy Plan (STEP) aims at saving 771 megawatts (MW) – the equivalent of a large electrical generating unit – by 2020.  To achieve this ambitious goal, CPS Energy is committing millions of dollars to customer incentives and rebates for the installation of high-energy-efficiency appliances, lighting, insulation, etc.
• Renewable energy – CPS Energy’s renewable energy portfolio of wind, landfill gas and solar exceeds 500 MW and currently equates to more than 11 percent of peak demand.  Among municipally owned utilities, CPS Energy ranks number 1 nationally in wind capacity.  Meanwhile, the company plans to acquire 100 MW of solar-generated electricity.  Thus, CPS Energy is well on its way to achieving a lofty goal – renewable-energy capacity equal to 20 percent of peak demand by 2020 – that will further solidify the company’s position as a national leader.
• Low-cost, competitive electricity – CPS Energy is currently building a 750-MW coal-fired power plant with the latest in emissions-control technology at Calaveras Lake for commercial operation in 2010.  Additional natural gas-fired generating units – powered by quick-start jet aircraft engines – are being installed at Braunig Lake to help meet peak electrical demand.  Meanwhile, CPS Energy is evaluating the possible decommissioning of several older, less-efficient natural gas-fired power plants.
• Environmental commitment – In addition to equipping its new coal plant with the latest in emissions-control systems, CPS Energy is upgrading existing coal units.  The total financial commitment for these environmental initiatives exceeds three-quarters of a billion dollars.

Since June 2006, CPS Energy has been working with STP partner NRG Energy (NRG), an international power-generation company headquartered in Princeton, N. J., on the proposed addition of two 1,350-MW nuclear-fueled electrical generating units next to STP’s two existing units.

NRG owns 44 percent of STP along with CPS Energy and Austin Energy, 40 percent and 16 percent owners, respectively.  STP presently consists of two 1,250-megawatt (MW) generating units.  The first unit went on line in 1988 and the second in 1989.  The spacious STP site near the coastline in Matagorda County and the plant’s 7,000-acre cooling-water reservoir can easily accommodate additional units.

Nuclear energy has become more attractive recently because of the volatility of the world energy situation, rising fossil-fuel prices and growing concerns over greenhouse-gas emissions.

“We have been looking at every electric-supply option in view of the growth we’re experiencing in Greater San Antonio,” Barham explained.  “We continue to add almost 1,000 customers every month.

“Furthermore, we’ve been trying to determine what new source of electricity would be compatible with our fuels diversification program that presently enables us to generate electricity using nuclear fuel, low-sulfur coal, natural gas and renewables.  Through the years, we’ve benefited from a diversified fuels mix because we don’t have to rely on any one source of fuel.  We can select from a balanced ‘menu,’ so to speak, of price and supply options.”

Presentations by national energy experts and feedback from attendees at the 2007 and 2008 Energy Summits underscored the need for a balanced approach to Greater San Antonio’s energy future. 

“There is no one single solution,” Barham said, “and all energy technologies are becoming more expensive.  Yet all evidence we’ve been able to gather points to nuclear as the best currently available electrical-generation option for the long term.”