Texas power companies oppose electric reliability project

800px-PylonsSunsetIt’s a construction project that could help prevent blackouts, but that hasn’t stopped two influential electric generation companies from trying to stop it before it starts.

NRG and Calpine, both active in the Houston area, have gone to the Public Utility Commission with a request that the agency dump plans to extend transmission lines 130 miles from the Houston metro area to east-central Texas. Operators of the state’s principal power grid say the lines are needed to bring more power into Houston and improve system reliability.

Dubbed the “Houston Import Project,” the transmission network should cost about $590 million when complete.  The companies successfully blocked an earlier version of the project several years ago, but failed to stop the board of the Electric Reliability Council of Texas, the grid operator, from green lighting this latest version on April 8.

ERCOT has said the new lines are absolutely essential for reliability reasons, noting that the Houston area already is responsible for about a quarter of the state’s peak electricity demand and is growing by 100,000 people every year. “ERCOT has determined that there will be a need for additional (electricity) import capacity into the Houston region by 2018,” the organization reported.

The project also could lower average wholesale energy prices around Houston. That’s because the new transmission lines will provide a  bridge for outside generators to wheel their power into Houston. This will allow them to better compete with NRG and Calpine during those peak electricity usage hours when the local network otherwise becomes congested.

This extra competition could mean lower profit margins for NRG and Calpine, but also potential savings for Houston electricity consumers.

NRG and Calpine claim that the grid operator’s support for the transmission project is based on an inadequate review of the area’s needs. The companies also say that lowering wholesale power costs could create more reliability problems because generators will have less of an economic incentive to build new power plants in the area.

But commentators have noted that it’s currently impractical to build generation plants around Houston — with or without new transmission lines.  This is due, at least in part, to the area’s dense population and clean air restrictions.

Consumer representatives active at ERCOT — including those allied with the Texas Coalition for Affordable Power — support the transmission project. Although construction won’t be inexpensive, the additional costs will be borne by ratepayers statewide. That means the per-customer cost of construction should be nominal.

ERCOT says the project should be complete by 2018. The PUC could consider the companies’ objections later this month.

– R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.