November 19, 2007

New power lines are still in the works

Everyone agrees that one factor that has slowed the growth of wind power in Kansas is a general lack of power lines to take the power to markets.

Now, critics of the decision to deny the permit needed to build two new coal-fired power plants at Holcomb say plans to enhance transmission lines are being shelved. And that, in turn, is putting wind projects on hold.

Consider the recent comments of Sen. Jay Emler, R-Lindsborg, who is chairman of the Senate Utilities Committee and a member of the Kansas Electric Transmission Authority board. The authority was created in 2005 to ensure the state’s electric grid is modernized.

One of the most-discussed upgrades to the region’s electric grid is the so-called X-Plan, which would extend 345 kilovolt lines from Spearville and Wichita into Oklahoma. Another proposal would build a line from Spearville to Nebraska.

Emler was asked about the future of new transmission in light of the denial of a permit for new coal plants at Holcomb.

“Unless the public, through taxes, wants to pick up the tab to build what then become strictly economic projects, I would doubt seriously that KETA will build them,” Emler said. “And KETA would be the entity of last resort because no utility company or transmission company would build them.”

A combination upgrade

Actually, the upgrade isn’t a strictly economic project. It currently is classified as a combination economic-reliability upgrade – initially it will be deemed an economic upgrade, but after a few years, it will be redesignated as a reliability project.

This distinction – economic versus reliability – determines the way construction costs can be recouped. Costs for an economic upgrade are recovered from only the customers served by the power line. With a reliability upgrade, some of the costs are borne by all users on the electric grid. Thus, costs for reliability projects are spread more broadly – “peanut buttered” is the term some in the industry use – than economic projects, making them more likely to be built.

Furthermore, a private company, ITC Great Plains, already has signed commitment letters saying it wants to build most of the X-Plan upgrades, plus the Spearville-Nebraska line. ITC said in the commitment letters it assumed the lines initially would be designated as economic upgrades.

“When we made our announcement on July 19, we didn’t know whether or not Holcomb would be constructed,” said Kimberly Gencur, a vice president and spokesman for ITC. “When you are looking at load forecasts, the project is needed. Yes, Holcomb would drive that necessary investment faster, but it’s still needed.”

The Southwest Power Pool, which manages the electric grid in all of Kansas and portions of six other states, agrees.

“The Holcomb expansion … accelerated the need for a major new reliability project in SPP,” Jay Caspary, director of engineering at the Southwest Power Pool, said earlier this month. “The 2007-2017 Transmission Expansion Plan, which is being finalized now, demonstrates the need for the western half of the X-Plan to be constructed by 2020. Even conservative planning criteria determine that it is needed for reliability.”

In July and August, ITC signed commitment letters with the Southwest Power Pool to build three of the four legs of the X-Plan, plus the Spearville-to-Nebraska line. It still intends to build those lines, Gencur said.

The current expectation is that the lines will initially be classified – and costs allocated – as economic upgrades, but after several years, they will be reclassified as reliability upgrades, Gencur said.

The Colorado connection

“The decision to deny the coal plant has not changed any transmission plans that would be used for wind,” said Lt. Gov. Mark Parkinson. “Now, obviously, the coal plant decision did stop the transmission that would have headed into Colorado.”

Only some of it.

The Holcomb expansion was to bring two 700 megawatt coal-powered generators online. The bulk of the new power was to be sold into Colorado. It was to be carried on $1 billion worth of new high-voltage power lines, known as the Eastern Plains Transmission Project, most of it in eastern Colorado, with two legs extending east to Holcomb.

Most of that project is continuing, in spite of the Holcomb decision, according to Lee Boeghey, a spokesman for Tri-State Generation and Transmission, one of the partners in the Holcomb plant expansion. (Tri-State, which has its headquarters in Westminster, Colo., actually operates in Wyoming, Nebraska, Colorado and New Mexico.)

“The transmission system we absolutely will be moving forward with,” Boeghey said. “It’s part of our role to ensure reliable service to our member cooperatives.”

The project originally was going to connect Holcomb with Lamar and Burlington in eastern Colorado. Now, those legs are not in the plans.

If the Holcomb expansion had been approved – and the lines to Burlington and Lamar were left in the project – the project would have given western Kansas a new route for selling wind energy into Colorado and beyond. Boeghy said the new grid will connect with one that extends into New Mexico and Arizona.

“We need to build a robust transmission system to bring renewable energy to members,” he said.

Holcomb wind projects

Might enough new wind be proposed in western Kansas to justify extending a line to Holcomb, even without new coal-fired plants?

“That’s a good question,” Boeghey said. Tri-State is looking for new wind power. “We will issue a request for proposals for renewable resources before the end of this year.”

The initial request will be for about 50 megawatts.

That’s a tiny fraction of what is being explored already. In 2007 alone, the evaluation of a dozen new wind projects with a total capacity of 3,000 megawatts was proposed.

Demand continues rising

The Southwest Power Pool expects demand for wind power to rise dramatically. President and CEO Nick Brown sketched the outlook at a conference last month in Washington, D.C.

“In the Southwest Power Pool footprint – especially in Kansas, Oklahoma, New Mexico and Texas panhandle – there is enough high-capacity wind to potentially add more than 40,000 megawatts to the electric grid,” he said. “To give you an idea of how much electricity 40,000 megawatts is: SPP’s record demand for electricity was set this summer at just over 43,000 megawatts.”

Parkinson said that the greatest demand for western Kansas wind power is expected to come from the east.

“The real opportunity we have for wind in Kansas is to sell wind from western Kansas to eastern Kansas and then into the southeastern part of the United States,” he said. “Those are areas that have a lot of users, and they don’t have a wind resource.”

But, for that to happen, the transmission system needs to be upgraded. The area’s sparse and aging power system makes it ripe for improvement, Gencur said. ITC was established in Michigan but soon noticed Kansas’ needs.

“That’s one of the reasons why ITC is here,” she said. “We came here 16 months ago because there is a litany of transmission projects that need to be constructed in the state of Kansas, and people have been saying that for 30 years.”

In 2005, the Southwest Power Pool published a study of the Kansas/Panhandle portion of the X-Plan. That study assumed a level of wind energy sources. An addendum was released in January 2006 to reflect the rapid development of wind in the area.

Wind would pay off

The addendum examined the economic viability of the X-Plan two ways – with a new coal-fired plant at Holcomb and area wind farms, and then wind-only. (At that time, the Holcomb expansion was a single 650 megawatt coal-fired plant; the Kansas Department of Health and Environment did issue a permit to proceed, but the project was never built and the permit expired.)

The option with the larger return was the one that included a new coal-fired plant at Holcomb and wind – the 10-year benefit ranged from $379 million to $545 million.

But even if the coal-fired plant were not built and the only new power generation came from wind farms, the benefit of upgrading the grid ranged from $178 million to $275 million.

Since then, in 2007 alone, wind developers have asked that another 41 wind projects with a combined capacity of more than 9,000 megawatts be evaluated.

“Taking Holcomb off the grid does not remove the need for a stronger electric transmission grid,” said Emily Pennel, a spokesman for the Southwest Power Pool.

By Duane Schrag

Salina Journal

19 November 2007

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