J.K. Spruce Analysis Update
Sierra Club retained Synapse to conduct an updated economic analysis of the J.K. Spruce coal plant, located near San Antonio, Texas. Synapse evaluated the recent economic performance of the plant, the likely performance of the plant over the next two decades, and the availability of cost-effective renewable alternatives to Spruce. Synapse found that (1) the Spruce plant likely lost more than $100 million relative to the market between 2013 and 2018; (2) Spruce is likely to continue to lose money relative to the market in the near term; (3) Spruce will only become profitable relative to the market over the long term if a series of favorable conditions hold; (4) CPS would likely save money by replacing the Spruce plant with renewable resources, even under market conditions favorable to the Spruce units; (5) replacing Spruce with renewables would reduce emissions and associated regulatory risks in addition to likely reducing costs; (6) retiring uneconomic coal units would be unlikely to harm CPS's credit rating; and (7) the current planned Spruce retirement dates are not based in a sufficiently robust and transparent planning process. We concluded that CPS should promptly engage in a thorough, public planning process to evaluate the potential near-term retirement of the Spruce units.