The Austin, Texas, City Council voted Thursday to issue $470 million in debt to purchase an East Texas biomass power plant that has only one customer, the city itself.
The debt will appear on Austin Energy's books as revenue bonds. Issuance of the bonds will not impact tax bills, but it's unclear whether the move will have any effect on customers' electric bills, Austin Energy officials have said.
The city is now set to complete its purchase of the Nacogdoches Generating Facility in June as a means to ostensibly tear up the city's one-side contract with the plant's owner, Southern Company.
The contract guarantees the plant's owner untold millions each year whether or not the city purchases electricity from the 115-megawatt, wood chip-fueled plant. Austin Energy has said buying the plant will save the utility $275 million over the remaining length of the 20-year contract.
The council voted unanimously in favor of the purchase. Before the vote, Council Member Alison Alter said she would have preferred that the item was more clearly posted on the council's agenda, which did not make any mention of the proposed purchase.
"I think it reduces costs for our taxpayers, but I would have been much more comfortable if this had been a little more transparent to the public on what we were voting on today," Alter said.
Once the purchase is complete, the city likely will seek to make the power plant, which is appraised at $328 million, a tax-exempt property. The action could have drastic impacts on Nacogdoches County and the Cushing school district. Both have come to rely on millions of dollars in tax revenue that's tied to the plant.
