Sandy Creek Energy Station, the last large coal plant constructed in the U.S., sits cold and idle in the prairies just outside of Riesel, 10 miles east of Waco.
The plant suffered a major equipment failure in April that is not expected to be fixed until March 2027, according to the Electric Reliability Council of Texas, which manages the state’s grid.
That means the plant could go nearly two years without producing a watt, further eroding its property value and contributions to county tax rolls.
Efforts this week to reach Sandy Creek Energy Associates, the plant’s majority owner, were unsuccessful. A spokesperson for the Lower Colorado River Authority, which owns 11% of the plant, referred questions to the plant manager, who declined to comment.
The plant cost more than $1.2 billion to build and was for years the biggest single taxpayer in the county. But over the past decade, power plant owners have succeeded in reducing the taxable value through the appraisal protest process and district court.
McLennan Central Appraisal District officials expect plant owners to leverage the shutdown to further reduce the property’s appraised value below its current level of $255 million.
That could have a significant tax impact on the tiny Riesel Independent School District, which received $2 million in taxes last year from the plant, and McLennan Community College, which received $250,000.
The 932-megawatt plant opened in 2013, providing enough power for more than 233,000 homes on a summer day in Texas, according to ERCOT estimates.
At the time, coal still accounted for about 40% of the state’s electricity production, said Josh Smith, a San Francisco-based senior attorney with the Sierra Club, which has sued Sandy Creek in the past.
Wind amounted to 10% of the state’s energy mix back then, while solar was statistically insignificant.
But Sandy Creek, like other coal-fired plants throughout Texas, has seen a stunning reversal in fortunes over the last decade as other energy sources — renewables and natural gas plants in particular — outperform coal on the basis of cost.
Coal now provides less than 13% of Texas energy, according to ERCOT’s annual energy mix report.
Solar briefly overtook coal in its share of the Texas energy market for the first time last year and is now tied with that energy source. A wave of coal plant and mine closures have nearly erased the sector from regions such as East Texas.
Smith said costly failures like those at Sandy Creek are not uncommon, and they are part of the reason why utility companies are aggressively transitioning away from coal.
“It really demonstrates that coal plants are just not the reliable resource they’re sometimes made out to be,” he said.
Coupled with the sector’s outsized impact on clean air and water, “It’s just an obsolete technology,” Smith said.
Tax breaks and tax protests
The $1.2 billion Sandy Creek project received a 10-year, 35% tax abatement from McLennan County that expired in 2022.
McLennan County Judge Scott Felton said he was most concerned with the specter of a “failing grid” when he ushered support for the project almost 15 years ago.
“It felt at the time that it would be a remedy for that until other forms of energy could be produced,” he said.
Despite the vote of confidence from local officials, attorneys representing the plant have filed lawsuits against the county’s property appraisals every year since 2014, said Jim Halbert, chief appraiser for the McLennan Central Appraisal District.
The lawsuits whittled down the plant’s appraised value from a high of $884 million, to its current level: $255 million, reducing tax revenue for the county, the city of Riesel and two school districts along with it.
“We gave them a tax abatement and cut their taxes, then they turned around and sued McLennan County because (the plant) is overvalued,” said Rick Wegwerth, an alderman in the nearby town of Hallsburg. “That’s the damndest thing I’ve ever seen in my life.”
Because industrial property is partly valued on the revenue it generates, Halbert expects Sandy Creek’s owners to argue for another drop in property value after the spring shutdown. The devaluation could be substantial, he said.
The plant brought the county $624,000 last year, with an additional quarter million dollars going to McLennan Community College.
“The biggest impact is going to be on Riesel ISD … because the school taxes are always the largest portion of a tax bill,” Halbert said.
Roughly a sixth of the rural school district’s $12.5 million in revenue comes from property taxes furnished by the Sandy Creek plant. The school district has an enrollment of about 650.
Riesel ISD did not immediately respond to a request for comment.
While the appraisal protests rubbed Wegwerth the wrong way, he believes Sandy Creek is essential for the area’s energy resilience during natural disasters, a concern reinforced by the state’s swelling population.
“We got all these folks moving into Texas, we keep closing all these plants and now this one is stuck out for at least a year, a-year-and-half,” Wegwerth said.
“I mean, if we have a cold winter, where’s the energy going to come from? That’s all I want to know.”
Judge Felton shared Wegwerth’s sentiment on the importance of on-demand electricity.
“Once they get it fixed, they’ll have a place in the grid for a while,” Felton said. “It’s probably not gonna be the profit that they told us it’s going to be, (but) dispatchable energy is highly needed when the wind doesn’t blow and it’s cloudy.”
Troubled plant
The failure in April was the second catastrophic disruption to rock operations at the Sandy Creek Energy Station.
The first happened in October 2011, just before the plant was slated to open in early 2012. A test run overheated a boiler, resulting in more than a year of repairs and a downgraded financial rating from Standard & Poor’s, according to a summary from the Institute for Energy Economics and Financial Analysis.
Two years earlier, the Sierra Club won a lawsuit against the plant that was upheld in the U.S. Fifth Circuit Court of Appeals.
The lawsuit alleged that the plant was being constructed without pollution controls for hazardous chemicals, including arsenic, selenium and hydrogen chloride. A settlement with Sandy Creek’s then-owner, Sandy Creek Energy Associates, mandated their installation.
Sandy Creek still ranks middle-pack for hazardous air pollution despite its relatively young age, because older plants have installed newer generation pollution scrubbers since 2012, Smith said.
Several Texas coal plants, including Vistra’s Big Brown and Monticello plants, have closed in recent years.
But Smith doesn’t think that is an option for Sandy Creek, despite the expensive repairs in its future.
Sandy Creek is supposed to generate revenue for another 15 years at least, Smith said, and given its high up-front capital cost, it is likely too expensive to scrap.
