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Public UC examines competing wind power  

Knowing there’s lots of energy to be had from wind is the easy part. Deciding how to collect and distribute all those gusts and breezes – that’s where you bring in the engineers.

When LSR recently reported on expansion of the Texas wind industry, the Public Utilities Commission had just conducted a study of where wind blew best.

Next step in the process: figuring out how to get the wind power in those areas (mostly rural) to places that need it (mostly urban).

“Texas has decided that we’re already the largest wind producer,” said Chris Schein, spokesman for Oncor (a transmission company that serves the old TXU service territory). “And there’s enough demand for more wind generation that we want to encourage wind development. We can encourage all we want and we can produce all of the wind generation that we would like, but it won’t do any good if we don’t have the infrastructure in place to bring it to the areas that are demanding it.”

This particular stage of the game involves a nuanced set of players, as contrasted with the first stage, which involved determining the best places to harvest wind (known as competitive renewable energy zones – CREZ).

Successful bidders for the right to build the transmission lines would own the wires but not the power that travels along them— a situation comparable to owning the highway but not the cars.

What is certain, according to a 2006 reliability report by Electric Reliability Council of Texas (ERCOT) is that the state must find a way to transmit the wind power to the demand areas or eventually face serious reliability issues. Meaning blackouts.

ERCOT’s role

To see what’s going on, LSR spoke with Electric Transmission Texas (ETT) Executive Director J. Calvin Crowder. ETT is a joint venture between national transmission companies American Electric Power (AEP) and MidAmerican Energy Holdings Company (MEHC).

“I look at ERCOT as the Commission’s expert advisor,”
Crowder said. “If you’ve ever hired a financial advisor or a technical advisor, they won’t tell you what to do. They’ll give you options and values, and then you have to decide. So the commission is the decisionmaker. They’re gonna give ERCOT direction on studies, ERCOT will bring back results, and the commission will decide.”

“One of the interesting components of this is that the state regulators are looking for the best ideas,” Schein said, “and the most efficient ideas to move that generation into the demand areas.”

Crowder thinks the ERCOT studies will be ready in January or February, but that building won’t start then because the commission wants to determine who will build what —a process that could take up to a year.

Higher prices?

Some urban interests have argued that the added cost of transmission would raise consumer energy prices. That has been the argument of a consortium of municipalities in TXU’s service territory known as TXU Cities (Cities), perhaps the most vocal critic of the wind energy initiative as outlined in PUC Chairman Paul Hudson’s memo (see July 27 LSR).

In a post-hearing brief issued on June 29, Cities argued that PUC should limit itself to building only enough CREZ transmission line to meet the mandate legislated in the 2005 session with SB 20. That magic number is 5,880 MW by 2015.

The post-hearing brief observes that there are expected to be 4,850 MW of wind generation capacity already in service by the end of this year. Cities believe this should give the PUC plenty of time to proceed slowly and deliberately in further developing a wind energy industry.

Along those lines, Cities also want no new interconnects outside of ERCOT’s coverage area.
Why the lack of enthusiasm on the Cities’ part? Transmission lines cost money. And that cost is eventually passed through to the ratepayers. Cities’ costs of contesting rate cases are paid by the rate payers whether cities win or lose. Therefore cities do not have to worry about legal fees or other costs when deciding whether to challenge proposed utility spending.

Crowder, however, suggested that building transmission lines, while adding cost, could benefit the rate payers if it gets cheaper sources of power into more places. Thus the net cost of electricity could actually decrease with the right transmission infrastructure.

The ETT Backbone Plan

AEP and Warren Buffett’s MEHC first filed a request for the PUC to grant a Certificate of Convenience and Necessity so Electric Transmission of Texas can officially enter the market. In anticipation of that, ETT has already submitted plans to the PUC for laying down new transmission lines feeding from the West Texas CREZ to the demand areas.

Under the proposal brought before PUC, AEP and MEHC would each own half of ETT.

Crowder said that ERCOT tends to think in five year increments. It plans to solve current problems with a plan that takes five years to implement. But this can be problematical, as it takes about five years to build the transmission infrastructure needed to solve current problems. By the time the transmission is built, new problems need solving through another five-year plan.

So AEP proposed a plan that Crowder described as a two-step process. The first step is to lay down a few hundred miles of transmission lines west of the I-35 corridor. These would include in large part half-loop of 765 kV wire starting in Zorn (northeast of San Antonio) and stretching north-northwest, then curving back around to the east, ending north of the DFW area.
AEP has already been using those upgraded transmission lines in the east for the last 40 years, but they have yet to be used in Texas, Crowder said. Texas uses nothing more powerful than 345 kV transmission wires. Crowder said that 765 kV lines can move six times the amount of power that 345 kV lines can. “Instead of a one-lane road, you get a six lane superhighway for 50 feet more right of way,” he said.

The second step in the process is what ETT calls the backbone plan. This plan includes looping the 765 kV wires back down through the Brazos Valley, through Katy and down into Hidalgo County.

The Oncor Plan

Larry Reiter of Oncor testified before the PUC to summarize the Oncor Plan.

Oncor’s proposal, like ETT’s, includes all the CREZ selected in Hudson’s memo, in the Panhandle, McCamey, and Morgan Creek areas. Said Reiter: “One of the primary objectives in the creation of the Oncor plan was flexibility.”

Oncor does not include 765 kV lines in their proposal. “While Oncor understands that other options such as 765 kV and HVDC [high voltage direct current] are available and may be attractive in certain circumstances,” Reiter testified, “the Company believes that 345 kV would be best way to achieve the performance necessary to interconnect the CREZ under consideration … at the most reasonable cost.”
The Oncor plan does include upgrades to existing 345 kV lines however.

“At Oncor we want to be part of this big picture solution,” Schein said. “…We feel that the proposal that we put forward is very flexible, in that it is not contingent on one or two things happening. As the scope changes, it can adapt to that changing scope. So we feel like that flexibility is an attribute and what separates ours.”

Other Players

Other transmission companies looking to lay down electric highways in Texas include Centerpoint Energy Houston Electric, Sharyland Utilities, Lower Colorado River Authority and CPS Energy.

“At the end of the day as a state we’re going to end up with something that’s good,” Schein said.

by Mark Lavergne & William Lutz/LSR

East Texas Review

30 August 2007

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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