Skilled labor shortage among issues affecting transmission development in Texas

Texas is outpacing the rest of the nation in the development of new transmission, but the state’s competitive renewable energy zone (CREZ) transmission projects are affected by three major factors including skilled labor shortages, according to industry executives at TransmissionHub’s TransForum Texas conference in San Antonio.

Speaking on the “Executive Perspective” panel on April 25, the executives agreed that the three issues facing the industry are a shortage of skilled labor, high demand for materials, and right-of-way (ROW) acquisition.

“There’s a tremendous amount of transmission construction being built in North America creating labor constraints,” said Ben Bosco, senior vice president of Quanta Services (NYSE:PWR), a provider of constricting services for the electric power industry. “It’s a big issue.”

Adding young people to today’s line and construction crews can be challenging, according to the executives. Many members of the existing workforce came off of farms and were used to working with their hands, according to Bosco. Those values don’t necessarily resonate with members of the millennium generation, given “their experience and where they come from and their thoughts about actually doing hard work, turning wrenches, and things like that,” he said.

Electric Transmission Texas (ETT) president Calvin Crowder agreed, adding that younger members of the workforce tend to be restless. “The younger the people are, the faster they want to move,” Crowder said. “They get frustrated sitting in one spot so they want to see promotions, they want” increased responsibility, which doesn’t align well with the need for deep, hands-on experience.

Because new workers lack experience, “you have to step up your supervision and pay a lot more attention to what’s going on,” said James Checkley, Jr., vice president of Cross Texas Transmission (CTT). His company hasn’t experienced any real problems. It has “just taken more attention and more supervision than it would have otherwise,” he added.

Challenges involving materials were also cited as a major concern.

The sheer volume of materials required to build 2,600 miles of transmission simultaneously created shortages and higher costs, but the logistics of delivery was also cited as a potential issue.

If a builder is using a product manufactured “100 miles away, there’s certainty about the delivery and the timing,” said Wayne Morton, general manager of Wind Energy Transmission Texas (WETT). “If you’re getting it from half way across the world, then you need to manage that in a more structured manner.”

Others cited the challenges associated with acquiring a large amount of right-of-way as their biggest concern.

CREZ projects created “a need for a lot of right-of-way in a short period of time, and landowners and lawyers know it,” Checkley said. In some areas, “There was a concerted effort by a number of lawyers to get with landowners” and represent the landowners’ interests to the utilities involved, he said.

Morton said changes in the state’s land acquisition laws also required developers to adjust their approach to acquiring ROW land.

Checkley agreed that the revised laws stretch out the acquisition process, as do conflicts that cannot be worked out without court action. “If you don’t settle with the landowner and you go to court and there is a condemnation proceeding, then the amount of award is determined by a tribunal.”

That can result in higher costs, as well as delays to the project. “Landowner rights are important in Texas so I think you’re going to find courts landing on that side.” Crowder said.

The executives cited other challenges, including inclement weather.

Checkley said that weather has an impact on the utilities involved in developing wind energy. “We’re building in the panhandle because it’s very windy,” he said. “But when you’re erecting towers, if it’s very windy, you can’t send people up into the air. And so, ironically, the very reason we’re there – the wind – has created a lot of challenges for us.”

The bad weather doesn’t have to directly affect a CREZ jobsite to have an impact as bad weather elsewhere can have an impact on CREZ projects when line crews are called away to perform storm recovery in another part of the country.

Regardless of those challenges, however, the executives were optimistic that the CREZ projects will be completed and energized by the end of 2013, as currently forecast.

ETT is a joint venture between subsidiaries of American Electric Power (NYSE:AEP) and MidAmerican Energy Holdings Company (MidAmerican).