City Council to act on new Lake Kemp water sale deal Tuesday

The City of Wichita Falls staff recommends the city enter into a new contract to sell water from Lake Kemp via Lake Diversion to the idled Oklaunion power plant.

Wichita Falls city councilors will vote Tuesday on a deal to sell Lake Kemp water for use in a hydrogen plant.
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Wichita Falls Times Record News
Lynn Walker, Wichita Falls, Times Record News
August 13, 2023

Councilors are scheduled to act on the deal at Tuesday morning's City Council meeting.

Under the terms of the new contract, the city would sell 20,000 acre feet of water to the current owners of the decommissioned plant. That's the same volume that has been sold to the plant since an initial contract in 1977.

“It will not increase or take away any more water from the city’s water system that’s not currently obligated,” Public Works Director Russell Schreiber said of the deal.

The money the city would earn would go up from 40 cents per 1,000 gallons to $1.30 per 1,000 gallons.

While the current contract would expire in 2037, the new contract will go forward to 2063.

The power plant, which has changed hands several times in the 39 years of its existence, ceased operation in 2020. It has been sold to a group called Oklaunion Power Services (OPS) whose owners include Dallas Cowboys owner Jerry Jones and sports franchise billionaire Stan Kroenke.

Kroenke also owns the land where lakes Kemp and Diversion sit.

The big change in the deal involves how the water is used. Under the current contract, it must be used to generate electricity. The new contract would allow it to be used for other industrial purposes. It must also be approved by the board of Wichita County Water Improvement District No. 2. Although the item on the council's agenda says the district has approved the deal, the district was not scheduled to vote on the contract until Tuesday.

The item city councilors will consider Tuesday confirms OPS is in negotiations with a company to produce "green hydrogen." The company, a partnership of Air Products and AES Corp., touts its plant will be the biggest of its kind in the U.S.

It would convert the water into hydrogen fuel for big trucks and other industrial purposes. Green hydrogen is pushed by the Biden administration, although critics claim it consumes too much water.

During drought restrictions, OPS water consumption would be reduced by the same ratio as that imposed on Wichita Falls residents. If the lake drops to 50,000 acre feet, the city can cut off OPS.

Mayoral candidate Carol Murray expressed concerns about the arrangement.

“This contract has been negotiated behind closed doors with no input from any citizens, even the City’s own Water Resources Commission, which was created by the Council to advise them on matters affecting the city’s water supply,” Murray said in a press statement released Saturday.

She said the city would be obligated to sell as much water to OPS as the city uses in an entire year to a proposed hydrogen plant in Wilbarger County.

“This contract would benefit some billionaires who do not even reside in Wichita County with very little benefit to the City of Wichita Falls,” she said.

Murray urged council members to table the contract until residents have time to study it.

Her opponent in the November election also thinks it would be wise to hold off on the vote.

"While I am for economic development and growth, I don't see the need to renegotiate this contract at this time," Tim Short said in a press release. "We are still receiving $1M per year for another 15 years.  To my understanding, there is no urgency to finalize this contract at this time. I would be in favor of pausing the negotiations, and engaging with the new council and revisiting this issue at a time in the future when the city could be in a better negotiating position."

Mayor Stephen Santellana said he would be willing to consider tabling the contract.

"I think we need to hear from all parties on Tuesday. From what information I've received so far, we're already contracted to that 20,000 acre feet. We're just continuing an obligation, but we want to make sure we have some safeguards from different citizens," he said. "From what I've heard from staff it seems like a pretty good win.”

Santellana said most people he has talked to have encouraged the council to vote on the contract.

"Some of the candidates, they don't have enough information, but we're the elected officials and we've been apprised of the information for a while," he said.

The mayor said if it appears at the council meeting "that we've hit pause, I can always table it."

The Corps of Engineers indicates Lake Kemp can store 245,000 acre feet of water. On Friday it was about 74 percent full. Between 10 and 20 percent of Wichita Falls water supply comes from Lake Kemp.