Lone Star, CenterPoint and Cross Texas submit competing proposals for new line to meet Houston’s growing needs

The Houston region will encounter reliability problems by 2018 that need to be met with a transmission line, according to three companies that independently performed studies of import capacity into the area.

Lone Star Transmission, CenterPoint Energy (NYSE:CNP) and Garland Power & Light (GP&L) in joint collaboration with Cross Texas Transmission have submitted proposals to ERCOT to build a North to Houston transmission line to address the issue. ERCOT is currently conducting a combined independent review of the proposals in the Houston Import Study.

“We’re reviewing them all together and looking for shared criteria to determine the best possible approach, plus evaluating the need for additional capacity,” a spokesperson for ERCOT told TransmissionHub.

Lone Star and CenterPoint each proposed three transmission projects and Cross Texas and GP&L proposed one. The project estimates ranged in cost from $297m to $674.9m.

ERCOT was not involved in the studies the companies did, but had identified a need for additional capacity into the Houston region in the Long Term System Assessment it released in December 2012, the spokesperson said. As a result of that study, which provides a 10- to 20- year outlook, ERCOT in January said it expected Texas transmission providers to complete $8.9bn of improvement projects by the end of 2017.

“Our forecasts are based on trends we’ve seen and economic outlook,” the spokesperson said. “As far as Houston goes, it’s been on a steady growth path for quite some time and we would expect that to continue.”

Through the Houston Import Study, ERCOT will determine whether the transmission project should be designated “critical to reliability,” which would help accelerate the line’s development to be in service by 2018, and whether the import capacity issue, if valid, could be addressed through non-transmission alternatives, such as generation and demand response. The RTO also said it will use a per-mile estimate based on the cost estimates that CenterPoint submitted for new 345-kV line construction and will work with all of the companies on developing cost estimates for 500-kV line construction.

ERCOT is aiming to make a decision by the end of 2013, but it is “more likely” to wrap up the process in early 2014, the spokesperson said. 

CenterPoint identified and evaluated 25 interconnection options for improving import capacity and recommended building one of three preferred options: the 345-kV Twin Oak to Zenith 345-kV line, the 345-kV Ragan Creek to Zenith line; and the 345-kV Limestone to Ragan Creek to Zenith line. All three projects include system improvements, according to an analysis dated July 25.

The Twin Oak to Zenith line, estimated to cost $462m, would be 117 structure-miles long and increase transfer capacity by 2,701 MW; the Ragan Creek to Zenith line, estimated to cost $297m, would be 69 structure-miles long and increase transfer capacity by 1,960 MW; and the Limestone to Ragan Creek to Zenith line, estimated to cost $532m, would be 130 structure-miles long and increase transfer capacity by 2,532 MW.

“New 345-kV structure-miles include a 20% increase from their point-to-point straight-line distances to account for uncertainty in routing,” CenterPoint said in the analysis.

“It will be challenging to complete a significant new 345-kV transmission project to address the Houston Region import constraint by 2018,” the company said. “There are also various factors beyond ERCOT’s or CenterPoint Energy’s control that could cause the reliability need to be accelerated to earlier than 2018, such as additional load growth in the Houston Region, additional retirements of Houston Region generating units, or both.”

The company said the project that ERCOT ultimately chooses should be designated as “critical to reliability.” If ERCOT approves a project by November and gives it that designation, CenterPoint said it would complete the project by May 2018. 

CenterPoint Energy used the ERCOT Steady-State Working Group (SSWG) cases created in February 2013 for its case studies, and evaluated the 2015 to 2018 summer peak ERCOT base cases with varying generation dispatches to model a range of possible North to Houston and South to Houston import scenarios. “The SSWG ERCOT 2015 to 2018 base cases were modified by taking out of service the Pondera units (1,300 MW) and adding the Deer Park and Channel Energy Center expansions (415 MW total),” the company said in the analysis.

LoneStar and Cross Texas/GP&L proposals

According to Lone Star’s presentation, the company performed an analysis of the Houston area and ERCOT grid to identify projects that would increase incremental import capability into Houston, provide route diversity and grid security, allow access to North Zone generation and provide a strong link to CREZ renewable generation.

A spokesperson for Lone Star declined to comment as ERCOT is still evaluating the proposal.

Making a case for a new line, the NextEra Energy (NYSE:NEE) subsidiary said North to Houston flows in the summer of 2012 increased to 3,100 MW and exceeded ERCOT’s expected 2018 flows 27% of the time.

Three options to increase import capacity merit consideration, the company said: a Navarro to King 500-kV line; a Navarro to King 345-kV with 50% series compensation line; and a Navarro to Gibbons Creek to Zenith 345-kV line. The company’s Navarro substation should also included for the northern terminus, Lone Star said.

The Navarro to King 500-kV option, estimated to cost $674.9m, would have the highest incremental import capability, 3,558 MW; provide strong alternate routing and a link to CREZ and North Zone generation; and form the basis of a 500-kV backbone, according to the presentation. This option also would require the fewest upgrades to obtain additional incremental transfer and would be able to operate initially at 345-kV, the company said.

“A 500-kV line would provide strong benefits to Houston and the entire ERCOT grid,” the company said in the presentation.

Those benefits include lower line losses, lower impedance and an expandable backbone connecting two major load centers, Dallas and Houston, to renewable and thermal generation, Lone Star said. Furthermore, the company’s Navarro substation has room for expansion and uses 500-kV breakers on the existing lines at Navarro, Sam Switch, and West Shackelford.

The Navarro to King 345-kV option, estimated to cost about $512m, would have incremental import capability of 3,238 MW, offer strong alternate routing and links to CREZ and North Zone generation. Including the 50% series compensation would increase the project cost to $552.4m.

The Navarro to Gibbons Creek to Zenith 345-kV option, estimated to cost $417.1m, would have 2,700 MW of incremental import capability and provide a strong link to CREZ and North Zone generation, the company said.

Cross Texas and GP&L proposed a 122-mile, 345-kV line from Limestone to Gibbons Creek to Zenith. The project is estimated to cost $317m and would provide 2,517 MW of incremental import capacity.

This article was modified at 3:02 p.m. on Sept. 30, 2013, to reflect that ERCOT may not conclude the Houston Import Study process and issue a decision until early 2014.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.