NRG Energy (NYSE: NRG), which lost an initial battle at the Public Utility Commission of Texas (PUCT) over the Houston Import transmission project backed by the Electric Reliability Council of Texas (ERCOT), will fight on.
Said NRG in a brief entry in its May 8 Form 10-Q report filed with the SEC: “At its April 8, 2014, meeting, the ERCOT Board endorsed a new 345 kV transmission line project designed to address purported reliability challenges related to congestion between north Texas into the Houston region. On November 14, 2014, the PUCT denied a challenge by the Company and Calpine Corp. regarding ERCOT’s endorsement of the project. On April 24, 2015, the transmission owners filed for approval to amend their certificates of convenience and necessity with the PUCT to obtain the authorization to move forward with the project. The Company is continuing to contest ERCOT’s recommendation that the proposed line is needed for reliability purposes.”
NRG and Calpine both say this grid project unfarily disadvantages their own plans to add new generation within the region around Houston. NRG particularly cited as endangered projects of its own: the Cedar Bayou Unit 5, 2×1 combined cycle gas turbine facility (about 700 MW net); and the SR Bertron Unit 5, 2×1 combined cycle gas turbine facility (about 700 MW net).
Cross Texas seeking approval for one part of the overall import project
On April 24, Cross Texas Transmission LLC filed an application with the PUCT for approval of the Limestone to Gibbons Creek 345-kV Transmission Line Project, which will consist of a new double circuit 345 kV transmission line between the existing Limestone and Gibbons Creek substations. The Limestone Substation is owned by CenterPoint Energy Houston Electric LLC and the Gibbons Creek Substation is owned by Texas Municipal Power Agency (TMPA).
Timothy Cook, employed by Cross Texas Transmission LLC as Director, Electric Transmission, wrote in supporting testimony: “The Proposed Transmission Line Project is needed to resolve reliability violations that occur north of Houston and to provide local system benefits. The Proposed Transmission Line Project is a component of the larger Houston Import Project, which also consists of the Gibbons Creek to Zenith 345 kV Transmission Line Project being proposed by CenterPoint (‘Brazos Valley Connection’), and several other transmission upgrades in the ERCOT system, including upgrades at the Limestone, Gibbons Creek, and Zenith Substations, which will accommodate the line terminations, as well as an upgrade to CenterPoint’s existing T. H. Wharton-Addicks 345 kV line to achieve at least 1450 MVA of emergency rating. CenterPoint will be filinga separate CCN application for approval of the Brazos Valley Connection project. The overall Houston Import Project alleviates the reliability concerns discussed above and provides additional local system benefits.
Cook added: “The Houston region represents about one quarter of the ERCOT peak system load. It is the fifth most populated metropolitan area in the United States and possesses a thriving seaport and petrochemical industry. As such, the Houston region’s electricity needs are substantial and growing. In addition to the anticipated load growth in Houston, Houston is also losing existing generation assets that are aging and being retired. Historical data indicates that approximately 1,800 MW of new generation has been added in the Houston region over the past ten years (2004 to 2013), while approximately 3,800 MW of generation has been retired over that time. The interplay between increasing load and a reduction in local generation results in the Houston region’s increased dependence on power imported from outside the region and increases the loading of the lines north of Houston. Given this situation, the transmission lines north of Houston are seen as overloading in planning cases that represent a forecast of system conditions in the near term. Overloads on one or more segments of the transmission system demonstrate that the system is stressed beyond its safe operating capacity at those specific locations, thus, creating concerns about continued reliability of service and potential equipment damage that could affect utility service not only in Houston, but in other areas within ERCOT.
“Both CTT and ERCOT studied the reliability violations and determined that significant overloads will be experienced on the transmission grid in 2018 (if not earlier).
“While reliability issues had been identified in ERCOT long-term planning studies since 2006, no project had been constructed to alleviate the concerns regarding system reliability. In 2013, CTT and several other utilities studied the consequences of Houston’s limited import capacity. The utilities all determined the need for the reliability project to be in 2018, and each proposed many alternative projects to the ERCOT Regional Planning Group (‘RPG’). CTT (in conjunction with Garland Power & Light (‘GP&L’)) made a presentation and submission to the RPG, which included the Proposed Transmission Line Project as a component of an option to address the aforementioned reliability issues.
“In response to the CTT/GP&L RPG submittal and submittals made by other utilities, ERCOT conducted an independent analysis of the identified need which included 21 separate proposed solutions, including options submitted through RPG by other utilities and other options developed independently by ERCOT. ERCOT then conducted an independent analysis of the need for the project under a variety of different modeling scenarios to (1) confirm the need, and (2) identify the optimal solution.
“Based on its Independent Review, ERCOT determined that there was a need to address reliability violations north of Houston. ERCOT reached this conclusion by conducting, among other things, a steady-state thermal analysis using as a base case the 2018 summer peak case developed for use in ERCOT’s 2013 Regional Transmission Plan, which ERCOT further refined for the purposes of its review. Under a multitude of different conditions, ERCOT’s Independent Review showed that absent substantial upgrades to the 345 kV transmission system, substantial overloads would be experienced on the existing system as soon as 2018.”
CenterPoint also pursuing approval of its end of the project
John R. Kellum Jr., employed by CenterPoint Energy Houston Electric as Division Vice President High Voltage Power Delivery, said in April 24 testimony to suport an application for PUCT approval of its end of the project: “CenterPoint Energy is asking the Commission to grant it a certificate of convenience and necessity (‘CCN’) for the Brazos Valley Connection (the ‘Application’). The Brazos Valley Connection is a 345 kV transmission line that will connect the Zenith Substation in Harris County and the Gibbons Creek Substation in Grimes County (also referred to as the ‘Project’). This project has been deemed critical to the reliability of the system by the Electric Reliability Council of Texas (‘ERCOT’).
“ERCOT identified and confirmed a need for a new transmission line from the Zenith Substation in Harris County, to the Limestone Substation in Limestone County (the ‘Houston Import Project’). The Brazos Valley Connection is the southern portion of the larger Houston Import Project. Cross Texas Transmission, LLC (‘Cross Texas’) will build the northern portion, connecting the Limestone Substation and the Gibbons Creek Substation. The entire Houston Import Project is needed to ensure the reliable operation of the grid by increasing the transmission capacity available to import needed electric supply into the Houston area no later than summer 2018. The Brazos Valley Connection will improve the capacity of the Texas electric grid and strengthen regional transmission capabilities.
“The Brazos Valley Connection is a 345 kV electric transmission line that will extend from Harris County to Grimes County. It will connect the Zenith Substation in Harris County and the Gibbons Creek Substation in Grimes County. Cross Texas is also proposing a new transmission line, which would connect the Gibbons Creek Substation with the Limestone Substation in Limestone County. Together, the two new lines will constitute the Houston Import Project approved and deemed critical by ERCOT.
“To complete the Brazos Valley Connection by the critical need date, which ERCOT determined is prior to the start of summer 2018, CenterPoint Energy must commence route acquisition by no later than October 2015.”