A debate among several Denton City Council members and city staff members on Tuesday centered around still-unanswered questions about a prospective buyer’s plans for the Gibbons Creek Steam Electric Station when it’s decommissioned.
“I think it would be helpful for the council to understand … how they are going to spend their money,” Mayor Pro Tem Jesse Davis said of the potential buyer. “We know it’s going to get cleaned up. But it would be helpful to know if they are banking on a model of putting a bunch of summer homes around the [reservoir] or if they are banking on water rights.”
That comment came during a work session after a presentation from Terry Naulty, assistant general manager of Denton Municipal Electric and interim director of the city’s water and wastewater department. Naulty’s presentation included details about the asset purchase agreement between the Texas Municipal Power Agency and Gibbons Creek Environmental Redevelopment Group, a subsidiary of Charah Solutions.
Under TMPA, Denton and three other cities co-own the mothballed coal-fired power plant about 20 miles east of College Station.
Paul Meltzer, the at-large Place 6 council member, also asked for clarification — repeatedly — on what Charah intends to do with the property. At-large Place 5 member Deb Armintor did the same, expressing concerns about Charah “flipping” the property for profit once it’s cleaned up.
“We can see the site is zoned for industrial use,” Armintor said. “The … potential uses are what I’m concerned about. I don’t agree that the economics of this are straightforward. I’m not saying the projections are disingenuous. But those are projections. It is clear there is a real will to get rid of this property.”
Meltzer’s concerns involved the possibility that the coal-fired plant will not be decommissioned as the terms of the sale dictate. Naulty said no such scenario exists. TMPA general manager Bob Kahn agreed.
“There is no scenario where they could restart it,” Kahn said. “If this deal didn’t happen, we would take it down. It doesn’t make economic sense. That’s why we shut it down to begin with. There’s no chance the site would not be cleaned up.”
TMPA approved an asset purchase agreement with Charah in December, about three months after it announced its intent to sell much of the plant. It will assume control of the offline power plant, cooling reservoir, associated landfills and ash ponds. The sale does not include the mine and transmission system.
“It is difficult to say what the site will be used for,” Kahn said. “The land is not worth all that much because of what’s there now. The estimate is about $24 million. It’s about $108 million to clean up the site.”
Before TMPA can close on the sale, it must be approved by each of its member cities: Denton, Greenville, Bryan and Garland.
“What they choose to do with it based on the restrictions we place upon them … is their business,” Naulty told council members. “Any answer I give you would be pure speculation.”
But Davis pressed for clarification from the buyer, saying he understands it may not disclose that information. Staff members said they would seek an answer.
TMPA, created in 1975, has for years unsuccessfully negotiated the sale of the plant. But it appears to be getting closer to a deal with the buyer, which plans to decommission the property in a move that would save Denton about $14 million over five years, according to a city staff report.
The Denton Record-Chronicle reported in June that officials with Denton and the other member cities thought they had a buyer for the plant. But that deal fell apart.
Four years earlier, DME announced it wanted to end its involvement in the coal-fired operation by summer 2018. Denton and the other cities were unable to sell the plant, and they delayed decommissioning for at least two more years.
Denton City Council members are expected to vote on an ordinance on the purchase agreement on Jan. 26, one day after members of the city’s Public Utilities Board consider a recommendation on the agreement.
The plant, which began operating in 1983, is on 6,170 acres. The purchase agreement provides that GCERG will make an initial payment of more than $6 million to TMPA, an escrow payment of $28.5 million and a $1.1 million performance bond.
According to Charah’s website, the Gibbons Creek Reservoir RV Park and campground will remain open.