Shutting down the coal-fired plant or converting it to run on natural gas are among the options.

On the Southeast Side of San Antonio, just off Loop 1604 near Calaveras Lake Park, the J.K. Spruce Power Plant has been pumping power — and pollution — into the city since the early 1990s.

The two-unit facility, owned and operated by city-owned CPS Energy, is among the last coal-burning power plants built in the United States. This year, it has produced about 23 percent of the city’s power.

But since not long after its opening, the Spruce plant’s future has been the subject of jousting among environmental groups, utility executives and city officials. Some call for its complete closure or a retrofit of the plant that would reduce the pollution it emits. Others fear the impact its closure would have on energy reliability in San Antonio — and ratepayers.

Now, with CPS seeking approval from City Council for a rate increase, interim CEO Rudy Garza has promised the utility will examine the future of the plant over the next year.

This year, the two-unit facility, produced about 23 percent of the city’s power. But it also spews CO2 into the atmosphere, nearly 6 million tons of it last year, according to a federal agency.

“We’re going to present the community with options,” he said. “I think we can have this conversation over the next 12 months and get to a point where our board can make some decisions.”

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It’s a conversation that was thrown off course both by the pandemic and February’s winter storm. Just weeks before the deep freeze struck, CPS published a resource plan outlining scenarios for closing the plant or converting one of its units to run on cleaner-burning natural gas.

The newer Spruce 2 coal unit produces more power than any other CPS plant. But the utility owes about $1 billion in debt on it and its older Spruce 1 unit, so shuttering the plant ahead of schedule could raise customers’ bills.

In the plan issued earlier this year, CPS estimated a swift closure would cost ratepayers between $6 and $12, on average.

“Historically, coal has been really cheap compared to other energy technologies,” said Josh Rhodes, a research associate at the Energy Institute at the University of Texas at Austin. “Only recently have wind and solar started to compete competitively to coal and gas. But after investing billions of dollars into a new coal plant, it can be hard to just move away from it.”

CPS owes about $150 million on the older Spruce 1 unit, which went online in 1992, and about $750 million for Spruce 2, according to Cory Kuchinsky, chief financial officer. CPS owes another $100 million on facilities shared by both units.

Reed Williams, a former city councilman, heads the Rate Advisory Committee that has been giving CPS public input as it decides what to do with Spruce. The retired oil and gas executive has argued that a coal plant is no longer more economical than a gas-fired plant. Writing off Spruce — an accounting mechanism to reduce the value of an obsolete asset — would be the best move for CPS, he said.

If CPS wrote off Spruce, it would be recorded as a noncash charge. That means CPS would show a loss on paper but no dollars would go out CPS’ door.

The Spruce 2 plant was commissioned in 2005, before fracking drove down the price of natural gas and when renewable energy technology was still in its infancy. The plant went online in 2010.

“When we built (Spruce), we thought natural gas was going to be a lot more expensive than coal. It just hasn’t worked out,” Williams said. “So when things change economically, we have to look at changes and make a decision.”

The J.K. Spruce plant, left, is seen at the entrance to the CPS Energy Plants, on Wednesday, April 25, 2018. The Deely plant will be shut down.

Williams offered his own proposal to City Council: Convert Spruce 2 to run on natural gas and close the Spruce 1 plant within three years. Burning natural gas produces roughly half the carbon dioxide emissions as burning coal.

Garza, however, said Williams is minimizing the financial impact of doing away with Spruce. And he said it would take as long as four years to convert it to run on natural gas, much longer than Williams’ proposed 18-month conversion timeline.

“You could write it (Spruce) off, but the debt is not going away. It still needs to be paid,” Kuchinsky said. “When that stops generating, you still have the asset, but it’s not making any money for you. But you’ve still got the debt.”

CPS has sought proposals for newer zero-emission generation technologies such as hydrogen or batteries. But officials recently said CPS is likely to rely on natural gas as a primary fuel alongside renewables for decades to come.

Frank Almaraz, the utility’s executive in charge of power generation, has said CPS is also looking at blending hydrogen with natural gas at its plants to make them lower-emitting. Hydrogen can be produced using excess electricity, and it generates power when it’s burned in a turbine but creates no emissions.

“New turbines have the potential to be upgraded so they can blend hydrogen all the way to a pretty big blend, and that’s a natural way to supplement natural gas,” Almaraz said. “If we get to the point where we’re producing a lot of green hydrogen — shoot, blend it in and reduce” emissions.

The U.S. Department of Energy estimates natural gas can be blended with as much as 30 percent hydrogen.

J.K. Spruce Power Plant project manager Bill Gunst looks over construction of the new power plant in 1991. The first unit was then in its final stages of construction.

Coal-fired power plants emit numerous chemicals — mercury, sulfur dioxide, nitrogen oxide and particulate matter — that are harmful both for global climate and the long-term health of surrounding communities.

They’re especially harmful for children, the elderly and those with underlying health conditions, said Adelita Cantu, vice chair of the Climate Equity Advisory Committee for San Antonio’s climate action plan.

Burning coal is responsible for 42 percent of mercury emissions in the U.S., according to the Environmental Protection Agency. The heavy metal, which is toxic to humans, can damage nervous and immune systems, and stunt childhood development.

“The longer you are exposed to these chemicals, whether you work at the facility or live nearby, the more likely you are to experience health issues,” Cantu said. “It will impact your breathing, such as with bronchitis or chronic pulmonary disease, and either cause the development of asthma or exacerbate the symptoms if you already have it.”

In Bexar County, asthma hospitalization rates are higher than in Texas overall, according to a 2021 report by the Metropolitan Health District. Between 2018 and 2019, asthma rates in the county surpassed the state as well.

Other emissions, like sulfur dioxide, nitrogen oxide and particulate matter, are small enough to penetrate human lungs and cause chronic respiratory diseases, which can lead to pneumonia and influenza or impact the cardiovascular system. Spruce produced more than 2,000 tons of nitrogen oxide and 821 tons of sulfur dioxide in 2020.

Other pollutants include heavy toxic metals such as lead and cadmium, volatile organic compounds, which add to the ozone pollution, and carbon monoxide — a chemical that can aggravate heart disease.

But even moving to a natural gas-powered plant is hazardous for the community because it produces similar chemicals as coal, such as sulfur dioxide and nitrogen oxide, Cantu said.

Two CPS employees are dwarfed by a turbine at the soon-to-be dedicated J.K. Spruce Power Plant in this 1992 file photo. The plant was named in honor of J.K. Spruce, a former manager of the utility.

DeeDee Belmares, who serves on the CPS rate advisory committee, echoed that.

“If we truly want to address the climate crisis, if CPS energy really wants to reach its targets, its commitments to (San Antonio’s climate action plan), we can’t just convert Spruce to natural gas,” she said. “That’s not the solution.”

The Spruce plant is the sixth-highest emitter of carbon dioxide among more than 300 power plants in Texas. Last year, it spewed nearly 6 million tons of CO2 into the atmosphere, according to the U.S. Energy Information Administration.

On average, Texas power plants generate 1.4 megawatt hours of power for every ton of CO2 they emit — roughly the amount of electricity a household in San Antonio consumes in a month. But the Spruce power plant generates only 0.91 megawatt hours per ton of CO2 emitted, meaning the plant produces roughly 50 percent more emissions per unit of power generated than the average Texas power plant.

Of the nearly 400 coal plants operating in the U.S., 28 percent have committed to closing by 2035, with the number of scheduled retirements “likely to increase” in the coming years, according to the Energy Information Administration.

As CPS increasingly relies on renewable energy such as wind and solar, the utility could look to store that energy for when it’s needed most, like in the early evenings, and rely less on fossil fuel-based generation.

“Energy storage is kind of like the battery on your smartphone or in an electric car, but in a much bigger package,” said Rhodes, the UT researcher. “It can act like a buffer for how inconsistent wind and solar might be. We can’t turn renewables off and on, but we can turn batteries off and on. So if we put that renewable energy into batteries, we have the ability to switch it off and on.”

And the energy transition doesn’t have to spell the end of the coal industry, said Wen Song, a professor of engineering at UT-Austin. There are plenty of ways to use coal elsewhere.

Song has been working in her lab on the fly ash that comes from coal combustion. Across the United States, standing mountains of fly ash are an environmental hazard for the air and waterways, she said. But fly ash also carries rare earth elements, minerals used for products such as computer chips, hybrid cars or the magnets in wind turbines.

“There’s a huge demand for these elements,” Song said. “And it turns out coal and coal-related materials might be an opportunity to secure that supply chain.”

A completely carbon-free economy must to be fueled by economics, she said, not just people wanting to do good.

On ExpressNews.com: After slow start, San Antonio’s climate change plan may finally be gaining traction

CPS officials also warn that closing Spruce too quickly could affect the utility’s bond rating. Rating agencies gauge the utility’s financial health to signal to investors the safety or risk of buying the bonds it issues. A lower bond rating would mean CPS could have to spend millions more in extra interest expenses to investors each year.

At the end of 2018, CPS closed the J.T. Deely coal-fired power plant and wrote down $150 million of depreciation on the plant. Garza said the utility’s financial metrics “took a hit” as a result.

Williams “downplayed the significance of writing off a $1 billion asset, but that’s a real impact,” Garza said.

“We’ve got to be thoughtful about what the impact is on our customers,” he said. “We’re going to need firm capacity to back up renewables. There’s no way around that reality.”