ERCOT recommends $590m project to address Houston import capacity constraints

ERCOT is recommending that CenterPoint Energy (NYSE:CNP), Cross Texas Transmission and Garland Power & Light (GP&L) construct the Limestone to Gibbons Creek to Zenith 345-kV double-circuit transmission line and associated upgrades, according to a final report published Feb. 20.

Cross Texas Transmission and GP&L, in addition to CenterPoint Energy and Lone Star Transmission, a subsidiary of NextEra Energy (NYSE:NEE), conducted independent studies and separately concluded that the Houston area would begin to experience a reliability problem in 2018. To address the issue, the four companies in July and August 2013 proposed transmission solutions, with the only joint proposal coming from Cross Texas and GP&L.

After evaluating 21 options and running them through various analyses, including N-1 and G-1+N-1 conditions, ERCOT narrowed the list of projects down to eight options, which ranged in cost from $555m to $806m. The RTO chose Option 4 as its preferred project.

Option 4 requires construction of a new 129.9-mile Limestone to Gibbons Creek to Zenith 345-kV double-circuit line and includes upgrading the existing Limestone, Gibbons Creek and Zenith substations and the existing T.H. Wharton-Addicks 345-kV transmission line.

Altogether, the project is expected to cost about $590m (in 2018 dollars), although ERCOT said the cost estimate may vary as the designated providers of the new transmission facilities perform more detailed cost analysis.

The ERCOT board is expected to make a decision on April 8, spokespersons for CenterPoint and ERCOT told TransmissionHub

Cross Texas Transmission and GP&L jointly proposed the Limestone to Gibbons Creek to Zenith line. However, under ERCOT’s charter, the default providers “will be those that own the end points of the new projects” unless they delegate the new facilities or elect not to provide them.

Both CenterPoint and Texas Municipal Power Agency (TMPA) own endpoints of the new 345-kV line. TMPA delegated its portion of the project to Cross Texas Transmission and GP&L.

“Therefore, ERCOT designates CenterPoint Energy, Cross Texas Transmission and Garland Power & Light as co-providers of the new 345-kV transmission line,” ERCOT said.

CenterPoint is the designated provider of the T.H. Wharton-Addicks 345-kV line and Limestone and Zenith substation upgrades. Cross Texas and GP&L are the designated providers of the Gibbons Creek substation upgrades.

ERCOT has deemed the project as critical to reliability, in order to have the project in service before the summer peak of 2018.

“ERCOT performed extensive studies to find the most robust and cost-effective solution among the select options,” the RTO said in the final report. The studies included power transfer analysis, long-term cost analysis, impact of potential retirement of older generation units inside Houston, transmission efficiency in terms of system loss reduction, impact of sever events (NERC Category C and D) and review of congestion-related impacts.

“The project in this report is driven by reliability need, not by economic benefit,” ERCOT said. “Therefore, the cost estimate is not a driver for project justification and is only useful for comparing options.”

However, ERCOT also conducted an economic analysis, which showed the annual production cost savings of each of the eight options. The cost savings ranged from zero to $4.3m per year, with Option 4 yielding $1.7m in production cost savings.

In its analysis, ERCOT assumed a $3.78m per-mile cost to compare the construction cost of each select option.

This article was modified at 12:00 p.m. ET on March 5, 2014, to include the ERCOT board decision date of April 8.

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.