For environmentalists, some business interests and just about anybody who cares about air quality, it must sound like the best of news.
This week, the Texas Public Utility Commission is expected to adopt plans that could increase the output of wind-generated electricity by 700 percent. And that in a state that already leads the nation in wind power.
But with regulators giving the initial green light and engineers starting to crunch numbers, some are questioning the potential expense. Although wind blows for free, the new transmission lines to move that power will be anything but.
Nobody – including regulators and the operators of the Texas power grid – knows now how much the transmission lines will cost, yet plans are moving forward aggressively. Everyone agrees that the price will be in the billions.
Advocates say the current wind rush will end up saving ratepayers money. “More wind on the grid helps lower overall electric costs,” said Susan Sloan, a spokeswoman for the American Wind Power Association.
But skeptics say that without a more thoughtful approach, customers will almost certainly end up paying more. Skeptics note that the new transmission lines’ cost won’t be borne just or mostly by the wind generators but rather by all Texas ratepayers.
“We need an overall policy that is committed to renewable sources of energy, but we have to balance that against the oppression of higher rates,” said Geoffrey Gay, an attorney for Fort Worth and other North Texas cities in utilities cases. “There is a way to do that. We don’t need to rush out and create an obligation for ratepayers that will endure for years to come.”
This week, the Texas Public Utility Commission is expected to take a final step in the creation of eight so-called Competitive Renewable Energy Zones. A product of 2005 state legislation, the energy zones will theoretically encourage the creation of more wind generation because they mark the future sites of major transmission construction. Companies in the wind business know that if they build within a CREZ, transmission lines will be promptly available.
Operators at the Texas power grid will now begin studying possible transmission routes in each zone and report back to the PUC, probably in about six months. After that, the PUC will begin soliciting bids to build the lines.
A spokesman for the PUC said only as the agency selects the most cost-effective routes, will it begin to get a clearer sense of bottom-line costs. According to some estimates, the transmission lines could cost more than $3.5 billion, or $175 for every person served by the power grid.
Dollars and cents
“What is the value of a healthy child?”
That’s how Eric Silage, vice president of Florida Power & Light for the Texas region, frames the debate. Ask him about the potential cost to consumers, and he talks about children’s health.
“We have an ability to provide at a reasonable price a clean supply of renewable energy … that doesn’t pollute our air – what’s the value of that?” asked Silage, whose company is Texas’ No. 1 wind-energy provider.
Skeptics say such emotional appeals ignore the issue’s finer points. It’s not a question of whether society should value cleaner air but whether policy-makers have considered the most cost-effective options. They note, for instance, that no state agency has undertaken an overall review of the merits and costs of pursuing alternative clean-air strategies.
Advocates say that in effect, the new transmission will pay for itself.
It will allow cheaper wind power to get pumped into the system, which will replace more expensive power. They say the switch will lead to savings for ratepayers.
They also cite a December report by operators of the power grid – the Electric Reliability Council of Texas, or ERCOT – that shows the potential for hundreds of millions of dollars in savings each year. “The more wind you introduce, you not only are burning less fuel but you have a [generating] unit that’s displacing the units” that cost the most to run, said Bill Bojorquez, ERCOT’s vice president of system planning.
However, grid engineers acknowledge that they have not completed any cost-benefit analyses for the more aggressive build-outs contemplated in the current process, nor have they estimated the cost of providing related energy services necessary with wind power. They also note that the projections are based on a lot of assumptions – many of which remain very uncertain.
ERCOT officials estimate that the wind blows only about 35 percent of the time and typically does not blow during the hottest time of the day, when Texas needs energy the most. That means that even with the expensive transmission lines and more wind generators, the state still needs plenty of other, more polluting generators to feed its energy needs.
Jeffry Pollock, testifying on behalf of the Texas Industrial Energy Customers, said it all adds up to higher prices – especially given that the PUC and the Texas power grid are contemplating $6.5 billion in transmission upgrades.
“The magnitude of these additional costs won’t be known for months – [but] what is known is higher transmission and [other] charges associated with new wind generation will increase the electricity costs paid by all consumers,” said Pollock, who also urged the PUC and operators of the Texas power grid to take a more cautious approach and delay the CREZ process.
Tom “Smitty” Smith, director of Public Citizen, which advocates on behalf of consumer and environmental interests, agrees with those who say the current CREZ process is good for Texas. He says that the new transmission lines can be used to bring sources of power besides wind to market – which should lower prices – and that Texans can expect to pay higher health costs if they ignore environmental concerns.
But Smith also says the state should more actively pursue a broader environmental energy policy, including solar and other renewable sources. What Texas needs, he said, is an energy planning cabinet.
“We don’t have anybody in charge of balancing everything out, in charge of looking for all the energy opportunities and all the impacts in term of pollution and the costs to Texans,” Smith said. “We desperately need that. The system is badly broken.”
BY THE NUMBERS
1: Texas’ ranking in the nation for the generation of wind power.
3,300 megawatts: The capacity of wind-powered electric plants now installed in Texas. That’s enough to power 1.7 million homes if all the plants were operating simultaneously at maximum capacity, which is improbable.
23,000 megawatts: The amount of wind power that could result if the state pursued an aggressive build-out of transmission lines now contemplated by Texas regulators.
$1 million: The per-mile cost of major electrical transmission line construction.
Unknown: The potential cost to ratepayers of proposed transmission line construction to support new wind power development. Everyone agrees that the cost will easily be measured in the billions of dollars.
Sources: Texas Public Utility Commission, Electric Reliability Council of Texas
Sep. 17, 2007
By R.A. DYER
Star-Telegram Staff Writer
R.A. Dyer reports from the Star-Telegram’s Austin bureau. 512-476-4294