CenterPoint Energy, ERCOT, others argue over Houston Import project

ERCOT requested that the PUCT "decline CenterPoint's invitation to fundamentally alter how ERCOT designates TSPs for transmission improvement projects and deny CenterPoint's complaint"

Contention continues in Texas regarding the Houston Import Regional Planning Group (RPG) Project, with CenterPoint Energy arguing with ERCOT and others on the project’s construction, according to TransmissionHub.

In its Sept. 8 brief filed with the Public Utilities Commission of Texas (PUCT), CenterPoint Energy requested that the PUCT enter an order finding that ERCOT staff violated Protocol Section 3.11.4.8 by designating Cross Texas Transmission (CTT)/City of Garland to build the Limestone–Gibbons Creek segment of the Houston Import Project.

The Houston Import Project is a new 345-kV transmission line from the Limestone substation the Zenith substation.

The company also requested that the PUCT authorize it to build these parts of the Houston Import Project:

·      The line between the Limestone and Gibbons Creek substations

·      The line between the Gibbons Creek and Zenith substations

·      Upgrades to the Limestone substation

·      Upgrades to the Zenith substation

·      Upgrades to the Addicks and T.H. Wharton substations

CenterPoint noted that Protocol Section 3.11.4.8 sets forth a sequential process for determining how to designate the transmission service provider (TSP) for a transmission project that has been recommended by ERCOT staff and endorsed by the ERCOT board. In the first step, ERCOT staff determines designated TSPs for “the recommended transmission projects,” and the default TSPs “will” be those TSPs that own the end points of those new projects, the company said, adding that since the term “will” imposes a duty under the protocols, ERCOT staff is required to designate a TSP that owns both ends of the recommended project as the default TSP for the entire project.

If, but only if, different TSPs own the two ends of “the recommended project,” ERCOT staff progresses to the second step, which is to designate the TSPs as co-providers of the recommended project and to allow them to decide between themselves what part of the recommended project they will provide.

In this case, the company said, ERCOT staff should have stopped after the first step because CenterPoint Energy owns both end points of the recommended project, or the Houston Import Project.

“It is undisputed that CenterPoint Energy owns both the Limestone substation and the Zenith substation, which are the end points of the 130-mile span of new transmission construction,” the company said. “If the system improvements at the T.H. Wharton and Addicks substations are considered, the answer remains the same, because CenterPoint Energy owns both of those substations, too.”

ERCOT staff nevertheless argues that it was justified in proceeding to the second step and awarding part of the Houston Import Project to CTT and Garland because ERCOT staff claims to have divided the Houston Import Project into six projects, and after that project was divided, different TSPs owned the end points of some of those smaller “projects.”

That argument fails for several reasons, including that Protocol Section 3.11.4.8 allows co-designation only if different TSPs own the two ends of the “recommended project,” and there was only one recommended project in this case, not six recommended projects, CenterPoint said. Also, under the protocols’ plain language, ERCOT staff has no authority to divide a project that has been submitted, studied, recommended and endorsed as a single project.

“If ERCOT staff is allowed to create ad hoc projects or to invent new factual scenarios to circumvent the language of the protocols, ERCOT staff effectively operates without rules,” the company added.

As the undisputed evidence shows and as required by the protocols, the “recommended project” includes all of the different system improvements in the Houston Import Project. Since the “recommended project” was the entire Houston Import Project, the first two sentences of Protocol Section 3.11.4.8 must be construed as such: “Upon completion of the RPG Project Review, ERCOT shall determine designated providers for the [Houston Import Project]. The default TSPs will be those TSPs that own the end points of the “Houston Import Project.”

Among other things, the company noted that arguments by ERCOT staff and CTT/Garland to justify staff’s decision to award the Limestone–Gibbons Creek segment to CTT/Garland should be rejected.

For instance, staff and CTT/Garland contend that that segment and the Gibbons Creek–Zenith segment can be operated and modeled independently of each other. CenterPoint added that it, like most TSPs, has many transmission lines that can be operated and modeled independently of each other, but that does not mean that it would be appropriate to award the ownership and operation of each such line to some other TSP.

In its Sept. 8 brief, ERCOT requested that the PUCT “decline CenterPoint’s invitation to fundamentally alter how ERCOT designates TSPs for transmission improvement projects and deny CenterPoint’s complaint.”

The core issue of dispute in the docket is whether ERCOT may identify end points for each of the component projects recommended in a regional planning group project review and separately designate TSPs for each of those projects, ERCOT said.

The plain language of Protocol Section 3.11.4.8 does not support CenterPoint’s position, ERCOT said, noting that the first sentence of that section states, “Upon completion of the RPG Project Review, ERCOT shall determine providers for the recommended transmission projects.” The use of the plural word “projects” expressly recognizes that an RPG project review may include multiple individual projects for purposes of TSP designation.

CenterPoint’s proposed application does not provide flexibility to address the wide range of scenarios that have arisen in the past and can reasonably be expected to arise in the future. ERCOT also said that the proposed application leads to absurd results, particularly as it may result in one TSP having the legal right to upgrade a substation owned by another TSP, as with the Gibbons Creek substation in this case.

“Prior to CenterPoint Energy initiating this proceeding, ERCOT had applied the TSP designation language for more than a decade without a stakeholder formally challenging ERCOT’s designations,” ERCOT said. “Given the importance and high profile nature of transmission improvement projects, it is hard to imagine stakeholders not raising the issue sooner if the intent of the language was in fact consistent with CenterPoint Energy’s position in this case.”

ERCOT said it determined that the T.H. Wharton to Addicks line ends into the T.H. Wharton and Addicks substations, which are, therefore, the end points of the project. CenterPoint owns those substations and ERCOT consequently designated the company as the provider of the upgrade to that line.

ERCOT determined that the Limestone substation is the end point of the project to upgrade the Limestone substation, which is owned by CenterPoint, and so ERCOT designated the company as the provider of the upgrade to that substation.

The Gibbons Creek substation is the end point of the project to upgrade that substation, which is owned by Texas Municipal Power Agency (TMPA). Protocol Section 3.11.4.8 states that those TSPs can agree to provide or delegate the new facilities, ERCOT added, noting that TMPA delegated its rights to Garland. That city and CTT have partnered with respect to the Houston Import RPG project and so ERCOT designated CTT/Garland as the providers of the upgrade to that substation.

ERCOT determined that the Zenith substation is the end point of the project to upgrade that substation, which is owned by CenterPoint, so ERCOT designated the company as the provider of that upgrade. ERCOT also said that it determined that the new Limestone to Gibbons Creek line will end into the Limestone and Gibbons Creek substations, which are, therefore, the end points of the new line project. CenterPoint owns the Limestone substation and TMPA owns the Gibbons Creek substation. TMPA delegated its rights to Garland and so ERCOT designated CenterPoint and CTT/Garland as co-providers of the new line project.

Furthermore, ERCOT determined that the new Gibbons Creek to Zenith line will end into the Gibbons Creek and Zenith substations, which are, therefore, the end points of the new line project. TMPA again delegated its rights to Garland for its Gibbons substation, while CenterPoint owns the Zenith substation. ERCOT designated CTT/Garland and CenterPoint as co-providers of the new Gibbons Creek to Zenith line project.

ERCOT noted that there is no express language in the Protocols compelling it to consider all of the recommended facilities in an RPG project review to be a single project for purposes of TSP designation simply because the RPG project was proposed, studied and endorsed as a single project.

The word “project” when used by engineers in a technical sense can refer to the individual transmission improvements that make up an RPG project. Applying the technical meaning of the word “project” to this case, ERCOT added, the Houston Import RPG Project is made up of six individual transmission improvement projects: two new transmission lines, three substation upgrades and one transmission line upgrade.

ERCOT said it learned in March that CenterPoint and CTT/Garland had not reached agreement regarding what parts of the new lines terminating into the Limestone, Gibbons Creek and Zenith substations they would each provide. Responses to a request for information that ERCOT issued in April indicated that CenterPoint and CTT/Garland continued to disagree regarding what parts of the new lines they would each provide.

In its Sept. 8 brief, CTT noted that precedent, the law and not even the words themselves support CenterPoint’s complaint against ERCOT.

“[T]he only support CenterPoint has offered for its claim that it is legally entitled to build the entire Houston Import [RPG] Project is the recently developed opinion that a set of system improvements consisting of multiple transmission projects that are identified in a RPG Project must be viewed as one ‘project’ that can have only two end points; and, further, that those two end points are determined by glancing at a map and considering the business philosophy of one transmission service provider,” CTT said.

Simply stated, Protocol 3.11.4.8 required ERCOT to designate co-providers for the Houston Import RPG Project because there is at least one transmission project within the recommended RPG project with more than one owner of the two end points of that project.

In its Sept. 8 brief, Garland requested that the PUCT deny CenterPoint’s complaint, affirm ERCOT’s decision to designate the city and CTT as well as CenterPoint as co-providers of the new lines for the Houston Import RPG Project.

The city said that ERCOT and the PUCT must construe the protocols as they would apply to every RPG project that comes before them, and not in an artificially construed manner to ensure that CenterPoint gets all of the project. CenterPoint’s construction, the city added, leads to the conclusion that regardless of the number of system improvements needed for a solution, every RPG project has only two end points. “This directly conflicts with the rules of statutory construction that do not allow for an interpretation of a rule that leads to ‘absurd results,’” the city said.

In its Sept. 8 comments, PUCT staff noted that this is a single-issue complaint to determine whether ERCOT violated its Protocol 3.11.4.8 in determining there were more than two end points within the Houston Import Project, which is a new 345-kV transmission line from the Limestone substation the Zenith substation, thereby selecting co-providers based on the ownership of each end point.

“Staff supports ERCOT’s decision as a reasonable interpretation of the protocol and believes it was acting within its authority to designate co-providers and that there was no violation,” staff said.

It is CenterPoint’s contention that, because the project begins at Limestone and ends at Zenith, there are only two end points. Because CenterPoint owns both of those end points, the company argues that ERCOT failed to follow its protocol requiring designation of the TSP that owns both ends of the new project. In contrast, staff added, ERCOT’s interpretation is that each of the components within the larger Houston Import Project should be evaluated to determine the designation of TSPs to build those components, and that the end points of the components are owned by various TSPs. Under ERCOT’s interpretation, therefore, the owners of those end points determine the providers to build the improvements, staff said.

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