PUCT sees need for Houston Import Project; Calpine, NRG disagree

transmission texas elp

Public Utility Commission of Texas staff on Sept. 23 released a proposed order on the Houston Import Project transmission line, agreeing with the Electric Reliability Council of Texas that the proposed line is needed to avoid reliability problems in the near future.

As they have throughout the lengthy proceeding, generators NRG Energy and Calpine opposed the idea that the project is needed, asserting that ERCOT’s analysis and projections are skewed by only forecasting a need to move power into Houston from the north.

The proposed order by PUCT staff will go to the PUCT’s State Office of Administrative Hearings, where an administrative law judge will issue a proposed decision, a PUCT spokesperson told TransmissionHub on Sept. 25. The judge’s ruling will then be taken up by the PUCT, which will address the need for the project and the possible routing for the project in separate rulings, the PUCT spokesperson said.

A CenterPoint Energy spokesperson said the company expects the PUCT to discuss the case at an open meeting in 4Q15, and the PUCT spokesperson said that is feasible, since the full commission often takes several weeks to address a judge’s decision.

CenterPoint and LS Power unit Cross Texas Transmission filed separate applications with the PUCT in April, seeking to build two transmission lines at a cost of about $600 million that would make up the Houston Import Project. CenterPoint sought to build a 345-kV, double-circuit line, dubbed the Brazos Valley Connection, to connect the Gibbons Creek substation in Grimes County, Texas, with the Zenith substation in northwest Harris County, Texas.

CTT proposed building a 345-kV, double-circuit line connection the Gibbons Creek substation with the Limestone substation, which is owned by CenterPoint, in Limestone County, Texas.

ERCOT last year concluded that the project is needed to meet reliability criteria under 2018 summer peak demand conditions and deemed the project critical to reliability as load growth and a reduction in local generation around Houston are resulting in more imports of power overloading lines north of the city. ERCOT recommended that CenterPoint, CTT and Garland Power & Light (GP&L) build the lines that make up the project, with CTT leading development and construction and GP&L and CTT each owning a portion of the Gibbons Creek-to-Limestone portion.

ERCOT’s analyses included a scenario with additional demand-side resources and new generation coming online in the Houston area, and all analyses showed transmission overloads in 2018, PUCT staff said.

In the Sept. 23 proposed order (PUC Docket No. 44547), PUCT staff said the applications of CenterPoint and CTT should be approved, as “the evidence demonstrates that there is a need for the Houston Import Project.”

The order found ERCOT’s analyses reasonable.

NRG and Calpine challenged the showing of need in their joint Sept. 23 brief, claiming that ERCOT assumes there will be excess generation elsewhere available to reach Houston only from the north and discounting possible generation development closer to the city. The higher transmission flows from the north into Houston that could trigger reliability violations “are a fantasy created by ERCOT's and the applicants' models. Those models skew the unrealistically low load levels in the north relative to the unrealistically high load levels in the coast, creating a ready, albeit imagined, surplus of generation available to flow freely from only the north to Houston,” NRG and Calpine said.

If the PUCT approves the transmission project it will set “a dangerous precedent” by “unnecessarily interfering with energy market fundamentals” by assuming that generation cannot be developed closer to Houston, and at a cheaper cost to consumers, NRG and Calpine said.

Another generator, however, disagreed with NRG and Calpine and told the PUCT that the transmission line is needed.

Luminant Generation said the need for the Houston Import Project is backed by nine analyses and the experience of more than a dozen experts involved in every aspect of generation and transmission planning in ERCOT. The evidence supporting the project “far exceeds what has been produced in any other commission proceeding to approve a transmission line,” Luminant said.

In its brief filed with the PUCT, ERCOT said it has an obligation to address possible reliability violations and it cannot assume generation will be developed in Houston, even if power prices rise in the region. The expectation that higher prices alone may encourage siting generation in the Houston load pocket “is at least somewhat questionable due to the predictably negative price impact of building generation in a load pocket,” ERCOT said.

Waiting to see if generation develops would create a risk that reliability violations would go unaddressed, and there is a clear need for the transmission project, ERCOT said.

CTT and CenterPoint made similar assertions in their briefs, with CenterPoint claiming that demand in the Houston area has grown steadily for decades, while more generation has been retired in the area than has been built. With transmission lines facing potential violations of reliability standards, “we need the Houston Import Project, including the Brazos Valley Connection, right now,” CenterPoint said.

CTT said the need for the project is clearly supported by the evidence, and a reliability problem that exists today “will only be exacerbated in the future by the combination of increasing load conditions in one of the largest cities in the country and insufficient local power generating resources necessary to meet that load.”

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