River authority appears likely to sell available supply to coal-fired plant, though rice farmers, environmental advocates joining in multipronged attack.

Wednesday, Oct. 6, 2010

By Asher Price
Austin American-Statesman

A proposed coal-fired power plant downriver of Austin is at the center of a tug-of-war over water in the Colorado River.

The $2.5 billion White Stallion Energy Center, which would be built just south of Bay City, would burn coal and petroleum coke to generate enough electricity to supply 650,000 homes.

But it would also require as much as 7 billion gallons a year of water, nearly the same amount under contract to the City of Leander, at a time when molecules of Colorado River water are increasingly valuable.

The plant proposal has galvanized opposition from rice farmers and environmental activists, who are sponsoring a benefit Sunday to "save Lake Travis" to win upriver support.

The plant, which is being developed by Houston-based Sky Energy LLC and would be within a few miles of the South Texas Project nuclear plant, got a boost in late September when the Texas Commission on Environmental Quality approved an air pollution permit over the protests of environmental groups and the agency’s own public interest counsel, as well as warnings from the U.S. Environmental Protection Agency that the plant’s pollution might violate federal environmental rules.

But the developers still need to make a deal with the Lower Colorado River Authority to buy water out of the Colorado. Power plants need water to cool their machinery and for the steam that turns turbines.

"Given the proposed careful and efficient water use, the need for our project for Texas’ growth, and as a customer of LCRA within the basin," said Randy Bird , chief operating officer of White Stallion Energy Center LLC , "we would look forward to continuing to work with LCRA, as the water provider, as it responds to our needs."

The LCRA board has long held that it is obligated to sell water as long as it has water to sell and the use is a beneficial one. And with roughly 45 billion gallons of river water available, a deal appears likely.

But over the past couple of years, the river authority pulled out of a multibillion-dollar water-sharing agreement with San Antonio on the grounds that its reserves were shaky.

The drought that stretched through 2009 alarmed authorities and led the river authority to consider temporarily cutting off new contracts. And this summer, the LCRA raised its rates for water.

No date has been set for the LCRA to take up the contract, though it is unlikely to do so before its November meeting, board chairwoman Becky Klein said.

It will hear from the rice farmers and environmental groups, who have long had different, if not opposite, visions of how the river water should be used. Rice farmers have long used vast amounts of water for their crops, and environmental groups have generally wanted to reserve water for the benefit of fish and wildlife. Now they are turning together to oppose White Stallion, which spent as much as $90,000 on lobbyists last year.

The power plant’s backers also need a permit from the U.S. Army Corps of Engineers because they plan to deepen the Colorado to bring in barges full of coal and coke, a similar carbon-heavy material.

Because the LCRA’s board members count rice farmers among the interests they represent, the water contract is where the plant is "most vulnerable," said Tom “Smitty” Smith, who runs the Texas office of Public Citizen. "It’s the place where we have the most political opportunity."

Major coalitions representing Highland Lakes residents and merchants have not taken a stance on the issue, despite exhortations from environmental groups.

"It seems like a legitimate project that serves a need," said Cole Rowland, president of the Highland Lakes Group, which puts out a newsletter on water issues to 2,500 subscribers. "Central Texas is running short on water, but it’s also running short on electricity."

Matagorda County itself appears divided on the plant. The plant "would be a very major boost" to the economy, said Owen Bludau, executive director of the Matagorda County Economic Development Corp., which aims to bring industry to the county.

The county has 12.1 percent unemployment, and the plant would draw 2,250 construction workers as the project gets off the ground and create 150 full-time, long-term jobs, Bludau said.

But County Judge Nate McDonald, dissatisfied that the plant’s backers have not provided legally binding assurances that the county will receive money or jobs and worried about stresses on the water supply, says the plant "doesn’t appear to be a very good business deal for Matagorda County."

McDonald said a majority of county commissioners are opposed to the plant.

Rice farmers, an influential group of his constituents who rely on water for their livelihood, are also suspicious of the plant’s water use.

The plant "will adversely affect future water supplies for irrigation in the lower basin," said Haskell Simon, a long-time advocate for the farmers based in Bay City.

asherprice(at)statesman.com; 445-3643