Little fanfare for Texas' $7 billion clean-energy project

Staff Writer
Columbus CEO

AUSTIN, Texas -- At almost $7 billion, one of Texas' largest infrastructure projects is about to be completed with little or no fanfare.

The last legs of a 3,600-mile system of transmission lines bringing wind-generated electricity from West Texas to the state's urban areas will be finished by the end of the year.

The project -- perhaps the state's largest clean-energy investment -- is getting little public notice from state authorities because of past controversies that helped add $2 billion to the cost, or that the final verdict on the overall benefit is still out because the 18,450-megawatt system comes on-line at half capacity.

Or perhaps officials don't want to draw attention to the $5 to $10 monthly increase that is coming to the electricity bills for the millions of customers of the state's primary electricity grid, including Central Texans.

Even the author of the 2005 legislation that led to the system, Sen. Troy Fraser, R-Horseshoe Bay, says he has mixed feelings about the Competitive Renewable Energy Zones, commonly called CREZ.

''Yes, it will benefit the state," Fraser said. "But I would have preferred fewer CREZ lines be built."

The benefits and concerns were well known in 2008 when the Texas Public Utility Commission voted 2-to-1 to build what was supposed to be a 3,000-mile system built at a cost of almost $5 billion.

On one hand, wind power would diversify the portfolio of fossil-fueled power plants and be a hedge against volatile natural gas prices and tougher environmental regulations. An added benefit is that wind doesn't require large amounts of water to cool generation.

On the other hand, wind's fickle nature makes it difficult to forecast and manage on the power grid, and in West Texas it tends to blow mostly at night when the state's demand for power is at its lowest.

At the time, wind-generated electricity was sometimes "trapped" in West Texas and unavailable downstate because of transmission constraints.

''What my mission is, it is to get this wind, that has the best capacity factor in the state, down to our citizens," Barry Smitherman, then chairman of the Public Utility Commission, told the Austin American-Statesman in 2008.

The debate centered less on whether a transmission system should be built and more on what size it should be and at what cost.

Utility Commissioner Paul Hudson joined Smitherman in supporting the next-to-largest of four scenarios.

Commissioner Julie Parsley dissented, saying she worried that so much wind power might negatively affect other generation sources and threaten the reliability of the grid managed by the Electric Reliability Council of Texas.

''We will add more wind than the 14 states following Texas combined," Hudson said after the vote. "I think that's a very extraordinary achievement."

In hindsight, Hudson said last week, he does not regret his vote, but acknowledges that conditions have changed.

He noted that the price of gas, a primary generating fuel, was high and causing higher prices for electricity. Also, he said the "fracking" technology that would lead to the gas boom and cheaper prices was in its infancy.

Moreover, Hudson said the utility commission was looking at 44,000 megawatts of potential wind projects in 2008 -- more than twice today's level of future projects.

''You act with the best information that you have at the time you are called on to act," he said.

On the plus side, wind-generated electricity has helped keep prices low, but Parsley's concerns about the wind industry's impact on other generation sources and the overall reliability of the system proved prescient.

The state's consultants, The Brattle Group, have cited the state's large amount of wind as a contributing factor to long-range forecasts of power shortages.

Jeff Clark with the Wind Coalition said the CREZ lines will open up more of the downstate market to West Texas wind.

''It will turn out to be one of the most visionary infrastructure projects ever," he said. "I think it's going to pay off big for consumers."

Bill Peacock with the Texas Public Policy Foundation, a conservative think tank, disagrees.

He said consumers will be paying $7 billion -- plus interest -- for a system that is just another subsidy for the wind industry.

''It's a transfer of wealth from east of I-35 to west of I-35 and from consumers to wind developers," he said.

Peacock said wind energy is "flooding the market" and depressing the wholesale price of electricity and contributing to the debate whether consumers should pay generators additional "capacity payments" to encourage the construction of non-wind power plants.

He opposes capacity payments because he estimates it could add another $4 billion to consumer's electricity bills.

''I think the $4 billion we may face can be placed on wind and the CREZ lines," Peacock said.

Tom "Smitty" Smith, a renewable energy advocate with Public Citizen, disagrees.

He notes the CREZ lines are not restricted to wind and predicted the system will encourage the development of solar farms.

''An emerging West Texas solar play is going to fill up the CREZ lines and make the investment more valuable," he predicted.

Also, ERCOT is conducting a preliminary study whether it will need to add more lines in the Panhandle because of new interest there from wind farm developers.

Smith likened West Texas' large wind farms as being built on two-lane road before the CREZ system was envisioned.

''We needed the eight-lane super highway to get the wind where it needed to be," he said.

Smith also argued that the $5 to $10 monthly surcharge for the CREZ lines is more than offset by wind's contribution to lower electricity prices.

The cost of the CREZ system -- both politically and financially -- increased when landowners objected to the lines crossing their property.

More than 600 miles of lines were added to navigate past landowners' objections.

Mike Dail, a Mason real estate agent, led a group that successfully blocked any transmission lines crossing that Hill Country county. Instead, the power line targeted for Mason County followed the right-of-way along Interstate 10 through Kerr County.

''It's onerous enough to put it there, but less onerous than putting a new right of way through the pristine Hill Country," Dail said. Laylan Copelin writes for the Austin American-Statesman. E-mail: lcopelin(at)statesman.com.

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