'Wood Waste' Power Plant Raises Questions in Texas

"The city-run utility is on the verge of going forward with a $2.3 billion, 20-year contract for the power that includes paying for the construction of the plant, which will be fueled by wood waste.

Officials with Austin Energy say the contract could lower the average residential customer's bill as much as $1.50 or raise it as much as $2.50 per month once the plant comes online in 2012, depending on future regulation, government incentives and fluctuations in the price of traditional fuels. They did not provide rate estimates beyond 2012.

Also lingering are questions about the plant's effect on air and water quality and whether there is enough wood waste near the plant near Sacul, north of Nacogdoches, to fuel it.

Austin Energy is interested in biomass power because the plants are considered carbon-neutral. The contract would also be a hedge on traditional fuel prices, officials said: They say the price of biomass fuel, once transportation to the plant is factored in, is comparable to that of natural gas. But having a 20-year contract would make that price more stable than natural gas prices, officials said."