By Juan Montoya
The indications that the Tenaska-PUB-COB plans for a gas-fired electric plant were speculative at best, started appearing late in 2012 when the City of Brownsville commissioners dutifully approved the rate hikes pushed for by Da Mayor Tony Martinez that extended into 2016.
According to Da Mayor vaguely mentioned that the power to be generated would bring industry and manufacturers flocking to Brownsville for a, ahem, slight investment of $325 million to be paid by the rate hikes.
At that time, efforts to get the documents accompanying the agreement between the private company and the municipal utility announced on January 2013 were stymied by lawyers for Tenaska and the PUB who replied to the information requests by denying them and sending off their justifications for not releasing them to the Texas Attorney General. They claimed that releasing the documents would harm them since they contained information that was proprietary and should not be released because it would put them at a disadvantage in the "competitive" world of energy production.
At least three entities requested the full terms of the agreement, HinoGas of Harlingen, El Rrun-Rrun, and a Virginia-based company which does consulting work for the U.S. Dept. of Energy.
Despite the fact that critics pointed out that the coming online of at least two gas-powered, electric generating plants (Edinburg and Harlingen) would make the construction of the Tenaska -PUB plant unnecessary for the needs of the city, Martinez and the city commission inked the deal and raised PUB rates to meet its bond obligations.
At the time, Martinez did not mention the cost associated with the deal that never went before the voters, and the only guesstimate the PUB ratepayers got was a vague mention of incurred debt. That debt, interestingly, forced Fitch Ratings to lower its rating for PUB bonds that made it more expensive to borrow money.
About the only indication Brownsville residents were able to get was from Fitch, the only player in the mix that was not gagged by Martinez or the energy company.
The Fitch Ratings report from March 2014 stated that the Tenaska project would add an extra $362 million to the roughly $200 million BPUB was planning to spend on capital projects through fiscal year 2017. The extra capital expenditures would be funded completely with long-term debt, according to the report.
Most of that debt will be paid by "small" rate increases, PUB spokesmen said.
Those "small" increases were approved in December 2012 during a special meeting of the Brownsville City Commission and the PUB members the ratepayers were never told why. They adopted upwards rate hikes that saw city residents pay a 36 percent increase in electric rates over the next three years, a 20 percent increase in water rates over the same period, and a 6 percent hike in waste water costs over two years.
Under the plan approved by both bodies, electric rates alone went up by 14 percent by October 2013 and another 22 percent by October 2016. (Click on graphic to enlarge.)
Now that Tenaska has withdrawn its request for tax abatements from Cameron County and told the county commissioners that it was holding off on construction because they had not found the customers needed to sell the power they expected to generate, the question becomes: what about the millions already collected from suffering PUB ratepayers?
The cost to PUB was said to be some $325 million which would guarantee it 200 MW of the 800 planned production.
Bu there was a caveat. that Tenaska would not begin construction until it had found customers for the other 600 MW.
Apparently, lower energy costs and demand has stymied the company's efforts and they have moved the original scheduled to beginning construction in 2014 and to complete it by the summer of 2016.
Then, Fitch Ratings reported that adding the plant's planned capacity to the energy already available would exceed the area's projected total requirement of 426 MW.
There is a 700-megawatt plant near McColl and Monte Cristo roads in Edinburg that has pumped power into the local grid for more than a dozen years. And the South Texas Electricity Cooperative, a member-owned collective nonprofit based in Victoria, is building $200 million gas-fired power plant with capacity up to another 225 megawatts.
Additionally, the U.S. Environmental Protection Agency in November 2013 to issued a permit for the construction of a similar plant under the name of La Paloma Energy Center, LLC (LPEC). The permit authorizes LPEC to construct and operate a 637-MW to 735-MW natural gas-fired power plant in Harlingen, Texas.
That permit was challenged by the Sierra Club claiming its emissions would harm the environment, but that challenge was denied.The secrecy surrounding the use of public funds to construct the Tenaska plant is characteristic of deals involving Da MAyor (an ex-oficio member of the PUB board) and PUB legal counsel Eddie Treviño, the new Cameron County Judge.
Besides the requested information on the details of the city-private firm deal, PUB and Treviño resisted all efforts during the recent runoff for county judge on the amounts paid to the Treviño-Boden Law Firm to represet the utility as legal counsel. That information has been withheld up to today.