Joint Venture Proposes Transmission Plan for Renewable Energy Zones in Texas

March 8, 2007
Electric Transmission Texas LLC (ETT), a proposed joint venture between subsidiaries of American Electric Power (NYSE: AEP) and MidAmerican Energy Holdings Company, today filed a transmission proposal with the Public Utility Commission of Texas

Electric Transmission Texas LLC (ETT), a proposed joint venture between subsidiaries of American Electric Power (NYSE: AEP) and MidAmerican Energy Holdings Company, filed a transmission proposal with the Public Utility Commission of Texas (PUCT) for the construction of approximately 1,000 miles of transmission lines to support development of the Competitive Renewable Energy Zones (CREZ) in Texas.

At the same time, ETT proposed for consideration by the PUCT and the Electric Reliability Council of Texas (ERCOT) an additional approximately 900-mile, high-voltage, high-capacity backbone transmission system to support long range reliability and customer growth needs facing the state. ETT made the recommendations through the CREZ docket, which will identify specific zones that are targeted for development of generation and transmission infrastructure in Texas.

In November, AEP and MidAmerican announced plans to establish ETT as a joint venture to invest in transmission projects within ERCOT. ETT is currently a wholly owned subsidiary of AEP but will become a joint venture with MidAmerican upon receipt of required regulatory approvals. ETT will operate as a transmission utility subject to the rules and regulations governing ERCOT member utilities. An AEP subsidiary initially will act as project manager for the planning, construction and operation of the transmission lines and facilities for ETT.

“There is a critical need to expand the Texas electric transmission grid,” said Calvin Crowder, ETT executive director. “Our proposal includes phased development of a high-voltage, high-capacity transmission backbone for ERCOT that will allow Texas to capture the long-term value of wind energy resources that are located in remote areas of the state and quickly interconnect those renewable resources to the load centers in the south, central and north-central parts of the state. Our proposal takes the process to the next level by also outlining a 21st century vision for the growth of the Texas transmission grid.”

The first two stages of the proposal focus on ensuring sufficient transmission capability to meet anticipated renewable energy needs. Stage One would reinforce the ERCOT transmission grid, providing access for up to eight gigawatts of existing and planned renewable energy projects in north and central West Texas. Stage Two would support an additional two gigawatts of renewable energy projects. The combined cost of these two stages is estimated to be approximately $3 billion, with completion of Stage One anticipated by 2012 and Stage Two by 2015, based upon AEP’s experience with past transmission projects in Texas.

“The third stage of the proposal, a visionary plan to establish an extra high-voltage bulk power delivery system, is much longer-term in scope and conceptual in nature. Planning must begin now, however, to ensure the future viability of the ERCOT grid,” Crowder emphasized.

ETT anticipates filing more details of its plan with the PUCT in April in accordance with the commission’s timetable in the CREZ proceeding. According to the CREZ docket procedural schedule, the PUCT is expected to release decisions about the CREZ zones, including outlining necessary transmission investment, in July 2007.

The long-range stage of ETT’s proposal, estimated to cost approximately $4 billion, is conceptual and could change significantly as part of the PUCT and ERCOT evaluation process. Definitive paths for the proposed projects have not been determined, and will not be determined without ample opportunity for public input.

“The proposal is not exclusive; other transmission developers will be welcome to participate,” Crowder said. “We want active participation and an exchange of ideas with other entities in working to refine this plan over the next several months. The key for Texas is to develop a comprehensive plan with collaboration to avoid transmission constraints and costly overlap in transmission system development.

“Now that the renewable energy developers have indicated the areas of Texas that they believe offer the most potential for renewable energy development, ETT’s proposal will reliably link those areas with load centers in the state. ETT can bring needed transmission online quickly by employing the expertise and capital of two transmission leaders,” Crowder added.

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