ERCOT board approves Houston import transmission project

Houston (Platts)--8Apr2014/330 pm EDT/1930 GMT


The Electric Reliability Council of Texas Board of Directors approved a roughly $590 million transmission line that would increase the Houston area's import capacity despite some generators objecting to the necessity and cost of the project.

At a Tuesday meeting, board members approved the Houston Import Project and deemed the new 345 kV line as critical to reliability. Several options were considered and the one recommended to the board was found to be the best alternative to address both near-term and long-term reliability needs in the Houston area, said Jeff Billo, ERCOT transmission planning manager. The new line is scheduled to be in service by 2018.

The project will entail construction of a nearly 122-mile, 345 kV double circuit transmission line from the Limestone substation in ERCOT's North zone to the Gibbons Creek substation in Grimes County and onto the Zenith substation northwest of Houston, as well as upgrades to substations at Limestone, Gibbons Creek and Zenith to accommodate the new lines, and upgrades to the existing T.H. Wharton-Addicks 345 kV transmission line.

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ERCOT's Technical Advisory Committee endorsed the project at its March 27 meeting.

ERCOT long-term transmission planning has consistently indicated a need for additional import capacity into the Houston region since 2008, Billo said. A Houston import project was found to be economically justified based on the generator revenue test in 2010.

In 2013, CenterPoint Energy, Lone Star Transmission, and the city of Garland and Cross Texas Transmission, and separately identified a reliability need to increase the import capability into the Houston area by 2018, Billo said. Each transmission service provider submitted project proposals to the Regional Planning Group. ERCOT conducted an independent review of the proposals which determine the proposals were consistent with the 2013 and previous regional transmission plans.

ERCOT has determined there will be a need for additional capacity into the Houston region by 2018, Billo said. In additional to population growth of 100,000 new residents per year, Houston also has almost 40% of the country's petrochemical manufacturing capacity. The Houston region represents about one-fourth of the total ERCOT peak system load.

In its presentation to the board, Calpine argued that the load growth expected in Houston is from industrial development, which is often served through on-site cogeneration and would not necessarily need transmission system upgrades.

Calpine also questioned why the ERCOT study did not assume the availability of Pondera King, a proposed 1,380-MW gas-fired plant near Houston included in ERCOT's Capacity, Demand and Reserves report used for resource adequacy planning.

"It may be useful to exclude the Pondera King Power Project from the [Houston Import Project] studies in order to support an apparent need for new North-Houston transmission, and it may also [be] appropriate to include that same facility in [the CDR report] for resource adequacy purposes but doing both raises an obvious question about the discontinuity between resource adequacy planning and transmission planning," Calpine's presentation argued.

Phillip Oldham, representing Texas Industrial Energy Consumers, said the Houston Import Project has been important, both in 2008 and now, and needs to move forward because what happens in the Houston area is important to the rest of the state, specifically with such a large portion of the nation's petrochemical manufacturing capacity located in the Houston area.

However, some generators raised concern over the processed used -- load scaling -- in the study.

ERCOT studied the system with loads outside the study area scaled down to reflect typical non-coincidence of regional loads, Billo said. ERCOT ran three sensitivity cases with reasonable variations in load, including a case with no load scaling. Overloaded circuits were noted in all three sensitivity cases, Billo said.

Adrian Pieniazek, NRG market policy director, said that by ERCOT decreasing the load outside Houston, it was the electric equivalent to adding generation within Houston.

NRG believes the scaling models were beyond reasonable limits and thus drive the unrealistic Houston Import Project results, Pieniazek said. For the project to work, there has to be something to transfer from the North into Houston, and there is no available data indicating more generation will be built in the northern and western portions of the state than in the coastal and southern regions.

--Kassia Micek, kassia.micek@platts.com
--Edited by Katharine Fraser, katharine.fraser@platts.com

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