Wind Power Beats Gas Price in Texas ; Austin Expects Many Users to Switch
Posted on: Friday, 13 January 2006, 15:00 CST
By EILEEN O'GRADY, BLOOMBERG NEWS
Wind power has become the cheapest electricity source in the capital of Texas, the largest U.S. gas-producing state, after costs for gas and other generator fuels soared.
The Austin City Council voted Thursday to hold a drawing in March to determine which municipal utility customers will be allowed to switch to wind power. More customers are expected to request wind power than the utility has available because the pollution-free option, which used to cost extra, will save a typical resident about $16 a year.
"It's not only better for the air, it's cheaper," City Councilman Brewster McCracken said at the meeting. He added this appears to be the first time that a renewable energy source became cheaper in competitive bidding than electricity from traditional power plants.
The Austin utility this month increased the fuel charge in its standard electricity plan after U.S. gas futures almost doubled last year. Costs for Austin's wind power are fixed under a long-term contract. The shift marks a turnabout in Texas, where gas was burned off as it came out of the ground from some oil wells until 1947 because the fuel was so cheap and abundant.
"It was deemed to be a waste," William Fisher, dean of the geosciences school at the University of Texas, said in a telephone interview. "They were trying to produce the oil."
Gas prices, already lifted by U.S. economic growth, soared to unprecedented highs after Hurricanes Katrina and Rita shut down most wells in the Gulf of Mexico in August and September. Gas futures touched a record $15.78 per million British thermal units on Dec. 13. The futures traded below $2 in 2002.
Gas fuels about 70 percent of power generation in Texas, which had more than a fourth of U.S. gas output in 2004, according to the Energy Department.
The Austin municipal utility can get enough wind power under its supply contract for about 1,400 additional residential customers and 200 businesses. Austin Energy, as the utility is named, currently has 360,000 customers.
Source: Record, The; Bergen County, N.J.
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