History of TMPA

Texas Municipal Power Agency
Gibbons Creek Steam Electric Station
By: Gaylord White
"Taken from Employee publications dated 1984 and 1985"

Gailord M. White
July 1, 1942 - January 18, 1997

Forward:
I have long been of the opinion that to know where we are going we must have an appreciation of where we have been. Because the Agency is a very young organization, most of us do not have a real feeling of "Roots" on which to base our actions.

Through this series of articles, I will attempt to trace the events that led to the formation of the Agency and some of the highlights of the early years of its existence. I hope that you will forgive editorial errors and be patient, for I freely admit to having no scholarly talent.

I also fervently hope that this series will be of some value to you as we go about fulfilling our responsibility to provide power to our Member Cities at the lowest possible cost.

The Beginning:
The Cities of Bryan, Denton, Garland, and Greenville have been in the business of the production of electricity for many years.

(ITEM: In 1888, the City of Greenville installed their first generating unit. This action marked the formation of the first municipal utility system in Texas. The "Light Plant" operated from sundown to 10:00 p.m. daily, except on Tuesdays, when the hours were from 1:00 p.m. until 10:00 p.m., so the ladies could iron the laundry.)

Prior to 1940, they operated either isolated systems or had very limited interconnections with other utilities. As a result, service was not good, and costs were high, due to high levels of installed reserves required by isolated operation.

However, this did not prevent innovative actions by these Cities.

(ITEM: In 1937 the City of Bryan established the only non-cooperatively owned REA financed rural electric system in Texas and one of only three in the United States.)

Prior to 1950, all generation was supplied by gas or oil fueled diesel engines. Beginning in 1950, these Cities began the move to steam turbine generation. At the same time, a generation and transmission cooperative which previously had relied on hydro-electric generation and purchased power, was expanding into steam generation. This co-op, then the Brazos River Transmission Cooperative, had a service area which was adjacent to all the Cities expect Greenville. Individually, the Cities contracted for interconnections with Brazos to improve their reliability.

(ITEM: On May 8, 1942, the lines of the Brazos River Transmission Electric Cooperative, Inc. were connected to the City of Garland to allow Garland to purchase the first power generated at Possum Kingdom Dam for use by a wartime industry.)

In 1955 Greenville and Garland constructed a 69 KV line to interconnect their two cities. By 1960 all the Member Cities and Brazos were interconnected, although the capacity of the lines were not of sufficient capacity to assure reliable service and the contract terms were such that purchase of power during emergencies was so expensive that the Cities often chose to interrupt service to part of their customers during emergencies, rather than pay demand charges to purchase power supplied through Brazos Electric at Texas Power & Light Co. rates.

To be able to provide reliable service under this type of "almost isolated" operation, the Cities were limited in the size of generating units that they could install, and still be able to maintain service in the event of loss of the largest unit in a city.

Coupled with these limitations, load growth was increasing to levels that would have taxed a mature utility system. Peak loads were doubling at a rate of once every six years in all the Cities, and faster in some. Garland experienced growth in excess of 17% per year on several occasions, and growth in excess of 10% per year was the norm for all the Cities as well as Brazos.

It was clear that, in order to survive in the highly competitive atmosphere of the 1960's, the Cities must take actions that were innovative and risky. They would be required to place trust in others, in the hope that a mutual benefit would result. in retrospect, the actions taken in the early 1960's were simple and straightforward, but at the time, they were MAJOR DECISIONS.

It was the cooperation and trust displayed by these far-sighted leaders that sowed the seeds of increased joint action that has made it possible for these Cities to hold a respected and competitive position in the utility industry today, with even greater promise in the future.

During the period of 1882, when Edison opened the Pearl Street Generating Station in New York City, until 1910, utilities in Texas consisted of isolated plants, both municipal and investor-owned.

During the 'teens and '20s, the investor-owned utilities began to interconnect and to acquire, through purchase or merger, the smaller isolated plants. This period of the building of the giant utility trusts is extremely interesting, in that some of the practices developed are valid today.

However, this period is considered to be the darkest hour of our industry, since this was the era of the pyramided trusts, which contributed in no small way to the stock market crash in 1929. If anyone has an interest in this period, I can recommend several books on the subject.

The 1930's were a holding action since there was no money for expansion, and even if there had been, the customers had no money to pay for service.

In 1937, a small glimmer of hope surfaced for publicly owned electric systems with the passage of the Rural Electrification Act. This act made available Federal Loan funds to extend electric service into rural areas, which had been written off by the investor-owned utilities as unprofitable.

If you have never lived in a rural area without electricity, you should read sections of Robert Caro's "The Path to Power" to appreciate what life was like without the
product we produce.

The decade of the 1940's dawned with the promise of a return to prosperity, but the
black cloud of World War II was building. During the war years, the demand for electricity grew, but all available capacity had to be diverted to supply the war effort.

At the conclusion of the war, all of the ingredients for growth existed. The public had deprived themselves to assist the war effort, and were ready to enjoy any luxury they could afford, and they had the money and jobs to afford many luxuries. The electric refrigerator was priced in the range that most could afford. (A personal note: I can remember my own excitement when my family got the "ice cream box" in 1947.)

This pent-up growth explosion placed severe strains on the electric systems of the country. The TMPA Cities were no exception.

During the period from 1945 to 1960, the load of the cities increased more that eight-fold. Between 1950 and 1955, three of the four cities moved from diesel engines to steam turbines as a power source for generation The fourth city made the transition in 1966.

By 1960 all the cities were interconnected with Brazos Electric Power Cooperative or one another at 69 KV. However, they were unable to enjoy many of the economics of interconnected operation because each had to maintain enough excess generating capability to supply their load even when their largest unit was out of service. This method of operation required operation of inefficient units and precluded
construction of larger units which could be built and operated cheaper.

Clearly, it was time to explore avenues of cooperation which would reduce costs and provide more reliable and more economical electric service to the customer.

In 1960. the Cities of Bryan, Denton, Garland, Greenville, and Brazos commissioned a study to determine what savings, if any, could be achieved by pooled operation. This study concluded that savings of up to $30,000,000 could be achieved by pool operation during a ten year period.

By today's standards, this is not very impressive, but then, this represented a savings of 20%. These savings would be made possible by reductions in installed capacity. Under the pool plan, the pool would be required to have installed capacity sufficient to supply peak load if the largest local unit was unavailable.

In exchange for these benefits, each member had to agree to relinquish some control over their systems. They would be required to make available their own excess capacity to other members at times, in exchange for the right to other members excess capacity in time of need.

In 1963, the Cities of Bryan, Garland, Greenville, and the Brazos Electric Power Cooperative signed the agreement which formed the Texas Municipal Power Pool. In 1969, the City of Denton joined the Pool.

As a result of this cooperation, the customers of these utilities have reaped benefits far in excess of those envisioned by the architects of this agreement.

In the last installment, the Cities, Bryan, Denton, Garland. Greenville, had joined with Brazos Electric Power Co-op to share installed and spinning reserves in the Texas Municipal Power Pool. This action saved much money for the customers of these utilities.

However, the high growth rates of the 60's and increasing fuel costs made it necessary to search for more economical ways to meet the needs of the customers in a manner that would be competitive with the privately-owned utilities.

In 1968, the Member Cities and Brazos commissioned R.W. Beck, Consulting Engineering, to study Pool operation and recommend future direction. The result of this study was that the most cost effective operation was to continue the practice of each member installing the largest gas fired unit he could finance when his turn came. A close second choice was joint ownership of large generating units to meet the needs of several of the members.

While the Cities were able to achieve some of the economies of scale through pooling, the fuel crisis brought on by the Arab Oil Embargo in 1973 ended the construction of gas fueled units in the 100-200 MW range. It was clear that some other fuel would be required in the future, and the accepted minimum size for solid fueled units was 400 MW. For this reason, the Cities began to look for other sources of fuel.

Lignite from the Jackson formation was being burned in cook-stoves before the turn of the century. Lignite was used as boiler fuel for the generation of electricity in the 1920's.

However, the discovery of vast quantities of natural gas in Texas had resulted in the use of lignite for power generation to cease by 1935. Small amounts of power were generated using Wilcox lignite at the Sandow Plant form 1950 to 1970. It was only after the oil embargo that Jackson Lignite was again considered as a viable broiler
fuel.

In 1974, the Member Cities began to pursue the possibility of a plant fueled by lignite from a deposit in Grimes County. There were many questions to be answered. "Will the fuel burn?" "Is there enough to fuel a plant?" "Is this the most economical future generation source?" "How can we finance a plant that expensive?"

The risks in this undertaking far exceed any taken by these Utilities thus far in their
existence.

Then fate, in the form of the State and Federal governments, stepped in. The Texas Railroad Commission ruled there would be no new gas-fired electric generation stations. Congress ruled gas consumption for electrical generation would be reduced by 15% by 1980 and eliminated by 1990.

The Member Cities moved quickly. Studies by the Paul Weir Co. showed there was sufficient quantities of lignite to fuel a 400 MW plant for 30 years. R. W. Beck did a study that showed lignite-generated would be less expensive than any other option. The obvious answer was to build a lignite plant. The only question was ""How?"

The Cities arranged to have introduced and passed Art. 1435A in the Texas Legislature that allowed formation of a "Joint Powers Agency" that could perform all the duties of a Utility System except sell power to other than its members and acquire fuel by condemnation.

This Act allowed the Member Cities to form the Texas Municipal Power Agency. The purpose of the Agency was, and is, to provide an economical power supply to the members for resale to their customers.

This action allows the customers of our Member Cities to enjoy the advantages of large lignite-fueled generation that would not be possible if they had continued to operate independently.

By obtaining passage of Art. 1435A, the Cities of Bryan, Denton, Garland, and Greenville had the vehicle to move into levels of power production that would be competitive with the investor-owned utilities in the 1980's and 90's.

To take advantage of this vehicle, each City passed, on July 18, 1975, concurrent ordinances to create the Texas Municipal Power Agency, and to approve as a project, the
construction of Bryan Lignite No.1 (later to be known as Gibbons Creek Steam Electric Station).

In return for rights to future power from Agency generation, the Cities agreed to pay all the costs of the Agency, regardless of whether or not they received any power. With this assurance of revenue, the Agency was able to sell Bonds to finance its early expenses and the costs of construction of the plant.

The governing body of the Agency was established as a Board of Directors with two members appointed by each Member City. The Board was, and is, charged with the responsibility to provide "all the Power and Energy that the Cities may request" and to protect the financial integrity of the Agency. The financial integrity of the Agency really means to protect the ability of the Agency to pay off its debts to the bondholders.

To assist the Board and to advise them in the technical decisions facing them, a Technical Committee (later changed to the Planning and Operating Committee) composed of the Utility Directors of the Cities, was appointed.

The first action of the Board was to authorize the issuance of $10,625,000 in Bonds to finance the further study of lignite quality in Grimes County, to obtain the rights to mine some of this lignite, and to study the feasibility of participation in ownership in the
Comanche Peak Nuclear Electric Station.

The Paul Weir Co. was asked to do additional drilling and study to further prove the quality and quantity of the lignite deposits in Grimes County.

R. W. Beck, Consulting Engineers, did a study that concluded the purchase of 6.2% of Comanche Peak would reduce the future costs of power to the Cities. The Agency staff, which at that time consisted of four people and the Utility Directors, began to put in place
the roots of the of the Economic Dispatch Program to utilize the generating units with the lowest fuel costs and to calculate the price of power exchanged under the program.

Qualified people were hired to plan, design, and construct the transmission facilities necessary to deliver the power from Gibbons Creek and Comanche Peak to the Cities.

At about the same time, Brazos had committed to participate in 1/2 of the San Miguel Power Plant, a 400 MW lignite-fired unit located south of San Antonio. There were considerable negotiations to share the ownership of both these units between TMPA and Brazos, but an agreement could not be reached. However, the Agency, the Cities, and Brazos continued to cooperate in the daily operation of their Electric Systems.

As the need for money to purchase additional lignite leases, land, engineering and equipment for the plant, transmission system and for progress payments on Comanche Peak, the Agency issued additional Bonds to provide funds.

More staff people were hired as needed, and the staff (except those directly involved in construction were moved from temporary quarters in Waco to Arlington to be nearer transportation facilities.

The Agency contracted with the City of Garland to provide dispatching services to assure the most economical operation of the Cities gas-fired units (a responsibility given to the Agency in the Power Sales Contract). The Agency contracted with Texas Utilities for the purchase of "off-peak interruptible" energy to benefit the Cities.

During the period from 1975 to 1983, when on October 1, 1983, Gibbons Creek was declared in commercial operation. The Texas Municipal Power Agency grew from a dream in the minds of several far-sighted people to a successful entity that has an operating Power Plant, a major Transmission System, a qualified staff of professionals, and the promise of even greater things to come.

The credit for our success thus far belongs to the individuals who shaped our beginnings and the dedicated people who spent endless hours to mold our formation and ensure our reaching the goal of Gibbons Creek operation.

If some future historian tries to place credit for the success of the Texas Municipal Power Agency in providing electric power to its Member Cities at the lowest possible costs during the last half of the 1980's and 1990's, I feel confident that, if we are successful in reaching his goal, that historians will give all the credit to the efforts of the employees of TMPA.

I hope each of us are challenged to strive toward this goal and be worthy of this credit.

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