Total estimated cost for Texas CREZ projects continues to drop

The most recent cost estimate for completing Texas’ competitive renewable energy zone (CREZ) transmission projects dropped $16.4m between mid-March and mid-June as more projects are being completed.

Data published in quarterly CREZ reports prepared by the Public Utility Commission of Texas (PUCT) shows that, based on data submitted through June 15, the total estimate for projects being built by 10 developers was $6.82bn, a 3% reduction from the $6.84bn estimate in the 1Q13 report, which was based on data submitted through March 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 estimates, reported a current estimate of $1.49bn, down from $1.51bn in the prior report.

As projects near completion, the estimates become more accurate, an ETT spokesperson told TransmissionHub in a previous interview in June.

ETT is responsible for 36 projects, including 10 transmission lines. ETT has completed four substations, though they have yet to be energized. The company has completed 369 miles of its planned 643 miles of transmission. All ETT projects are on track to be completed by the Dec. 31 target in-service date established by the PUCT, the spokesperson confirmed.

Likewise, Lone Star Transmission reported a reduction in its current estimate, to $746.2m from $768.9m previously reported. Lone Star is building a total of nine projects, including three transmission lines. Eight of those projects, including all 329 miles of transmission line, are reported complete.

The Lower Colorado River Authority (LCRA) Transmission Service Corporation, however, reported an increase in its estimate, to $594.1m from its prior estimate of $585.3m. With 35 projects, including 13 transmission lines, LCRA is the sixth largest CREZ developer by number of projects and current dollar estimate.

Oncor, the largest CREZ developer by the same measures, proffered estimates that increased from March to June, rising $150m to $1.92bn for 64 projects, including 27 transmission lines. The company reported that, as of mid-June, 45 projects were complete, including 862 miles of its planned 1,084 miles of transmisison.

Cross-Texas Transmission provided an estimate that increased $5m from March to June, rising from $427.3m to $432.7m for its six projects, including three transmission lines. As of June 15, Cross-Texas had completed four projects, including 201 miles of its planned 236 miles of transmission. <LINK TO http://transmissionhub.com/2013/03/22/cross-texas-transmission-completes-construction-on>

Sharyland Utilities also reported an increased estimate, from $628.7m at mid-March to $630.2m at mid-June for its 14 projects. Five of those projects have been completed, including 215 miles of its planned 298 miles of transmission.

Two active developers, Wind Energy Transmission Texas (WETT) and South Texas Electric Cooperative (STEC), reported no change in their current estimates for project completion. WETT has competed three of 15 projects, including 156 miles of transmission. STEC’s three projects are all in progress, with 15 of its 188 miles of transmission completed.

Brazos Electric Cooperative and Bandera Electric Cooperative both reported their projects as complete. Bandera’s projects included one substation expansion and one line totaling 15 miles. Brazos completed one substation as part of the CREZ effort.

Total miles for all CREZ projects increased from 3,593 as of March 15 to 3,595 in June because of the rerouting of Lone Star Transmission’s West Shackelford-to-Navarro/Sam Switch line to accommodate a planned airport in Eastland county.

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 then declined slightly, to $6.93bn, in the April 2012 CREZ report, declined further to $6.9bn in the July 2012 report, even further to $6.87bn for the October 2012 and January 2013 reports, to $6.84bn for the April report and $6.82bn for the July report.

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 3,595. 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, all projects that remain active [i.e., not canceled] are projected to be within budget.

“While multiple projects are projected be energized after baseline project schedules, all projects are projected to be completed before the program completion deadline of December 2013,” according to the report.

The completed CREZ transmission projects will eventually transmit approximately 18,500 MW of wind power, the report added.