Total estimated cost for Texas CREZ projects continues to decline

The most recent cost estimate for completing Texas’ competitive renewable energy zone (CREZ) transmission projects dropped almost $30m during 1Q13, compared to the estimates at the end of 4Q12.

Data published in quarterly CREZ reports prepared by the Public Utility Commission of Texas (PUCT) shows that, as of the end of April, the total estimate for projects being built by 10 developers was $6.84bn, a reduction from the $6.87bn estimate in the 4Q12 report, which was based on data submitted through Jan 15.

The quarterly report includes a reduction in current estimates provided by two of the 10 active developers of CREZ projects. Electric Transmission Texas (ETT), a joint venture between subsidiaries of American Electric Power (NYSE:AEP) and MidAmerican Energy Holdings Company, and the second-largest CREZ developer by number of projects and current dollar estimate, reported a current estimate of $1.51bn, down from $1.53bn in the prior report.

“As we get closer to completion, the more accurate these estimates become,” an ETT spokesperson told TransmissionHub June 19. ETT is responsible for 36 projects, including 10 transmission lines. ETT has completed four substations, though they have yet to be energized. All other ETT projects are on track to be completed by the Dec. 31 target in-service date established by the PUCT, the spokesperson confirmed.

Sharyland Utilities, the fifth-largest CREZ developer, reported a current estimate of $628.7m, a decline from $639.9m previously reported. Sharyland is building 14 projects, including five transmission lines.

The Lower Colorado River Authority (LCRA) Transmission Service Corporation reported an increase to $585.2m from its prior estimate of $579.9m. With 35 projects, including 13 transmission lines, LCRA is the sixth largest CREZ developer by number of projects and current dollar estimate.

Differences between the numbers above and the $30m net estimated cost reduction are attributable to rounding.

Oncor, the largest CREZ developer by the same measures, proffered estimates that remained consistent from January to April, at $1.9bn for 64 projects, including 27 transmission lines. The remaining six active developers – Lone Star Transmission, Wind Energy Transmission Texas, Cross-Texas Transmission, South Texas Electric Cooperative, Brazos Electric Cooperative and Banderas Electric Cooperative – reported no change in their current estimates for project completion.

Each CREZ developer provides the PUCT with monthly updates of their current estimates, revised to more accurately reflect current costs and conditions. Those monthly updates are aggregated by the PUCT and published every three months.

The CREZ program was originally estimated to cost $4.9bn, when the PUCT ordered the projects in 2008. The $4.9bn figure resulted from the CREZ transmission optimization (CTO) study, “a planning exercise to develop multiple transmission plan scenarios from which to select the most cost effective and optimal scenario for execution,” according to the CREZ quarterly report.

Estimates steadily rose from the first revised figure of $6.56bn, which was published in the April 2011 CREZ report, until estimates leveled off early last year, then began to decline as projects neared completion.

The estimated total rose to $6.79bn in July 2011, to $6.87bn in October 2011, and to $6.95bn in January 2012. The estimated total declined slightly, to $6.93bn, in the April 2012 CREZ report, declined further to $6.9bn in the July 2012 report, and further still, to $6.87bn for the October 2012 and January 2013 reports.

The CTO estimate “included very preliminary cost estimates and designated the general locations of substations and transmission routes from a planning-level perspective,” the CREZ report said. Planners noted that the actual cost figure could be expected to range from 20% below the CTO estimate to 40% above the estimate, and that the $4.9bn figure was expected to rise.

In addition, the original plan called for a total of 2,963 miles of transmission projects; now, projected miles of transmission total 3,593. The original estimate of 109 projects has also increased to 174 total active and completed projects. An additional 15 projects have been cancelled.

According to the quarterly report, the program is still on schedule to meet the PUCT’s stated goal of completion by the end of the year.