Regulators say end is near for Texas program that boosted wind

Source: Edward Klump, E&E reporter • Posted: Monday, September 28, 2015

Texas utility regulators were adamant yesterday in declaring the coming end to a program known for aiding wind energy, even as they expressed support for completing a project in the state’s Panhandle region.

Texas’ Competitive Renewable Energy Zones, known as CREZ, have helped link remote power installations to cities via new transmission infrastructure.

The CREZ program stemmed from state legislation and was implemented by the Public Utility Commission of Texas (PUC). It sought to foster a large and relatively speedy buildout of wires over several years.

Now, according to PUC Commissioner Ken Anderson, it’s time to claim victory and move on, once a final project is finished.

“There will be no more CREZ zones approved by the commission, unless the Legislature directs it,” Anderson said, describing his thinking during an open meeting yesterday. “I think we should even open up a rulemaking to enshrine that.”

Anderson offered some qualifications to his remarks, but the tone appeared clear. His general approach was supported by Donna Nelson, who chairs the PUC, and Commissioner Brandy Marty Marquez.

The CREZ program often is cited as a key reason Texas is ranked No. 1 for installed U.S. wind capacity, as shown by the American Wind Energy Association.

The program’s cost, based on an estimate from a 2014 report, climbed to the range of $6.9 billion as projected miles topped 3,500. It was envisioned as being able to transmit more than 18,000 megawatts at times.

Yesterday, Anderson said that if wind or other generation “reaches a critical mass, then the traditional study criteria will result in transmission being built.” That can include looking at needs related to reliability or economic criteria, he said.

Nelson said she thought about the topic a lot and was “diametrically opposed to the concept of treating wind differently than every other generation asset.” She said congestion can point to where more transmission is needed.

“Our goal isn’t to always build so much transmission that we never have congestion,” Nelson said.

In a memo this week, Anderson cited a “dramatic and continued expansion of wind generation in the region” and a “need to provide regulatory certainty” in calling for completion of a second 345-kilovolt circuit on an existing line in the Panhandle.

“However, it also will be important to make clear that energizing this second 345-kV circuit completes the CREZ project and that NO further transmission projects will or even can be authorized under the CREZ Order,” Anderson wrote.

Considering CREZ language

Nelson said she was OK with the plan Anderson put forth, joking that when looking at a section in Anderson’s memo about the future she would “bold it, put it in all caps and underline it.”

A report from the PUC to lawmakers in advance of the 2015 legislative session suggested the Legislature could clarify that future proposed transmission projects in a CREZ area should fall under the same adequacy and need criteria as non-CREZ projects.

The commission said it considered CREZ language to apply to projects authorized previously, while it could be construed differently. A bill to potentially end the CREZ program didn’t succeed in this year’s regular legislative session, however.

David Power, deputy director of the Texas office of Public Citizen, said the idea of an end to CREZ projects was shortsighted. He said additional lines could help address resource adequacy and economic development, noting wind as well as solar projects. He said the CREZ process also provided a “cohesive” approach to building infrastructure.

Earlier this year, Sharyland Utilities LP said in a filing that a second circuit might be needed in the Panhandle area mentioned.

The Electric Reliability Council of Texas (ERCOT), the state’s main grid operator, recently filed an analysis of certain proposals for the Panhandle. It found a second 345-kV circuit on the line in question didn’t meet current economic criteria, but it noted that more wind generation recently went into planning models in the region and could change the economic viability of the circuit.

Other parties filed comments, and Anderson issued a memo with his thoughts, setting up yesterday’s discussion on the second circuit.

“Basically, I concluded that we ought to move forward really for the reason that this line was always part of the CREZ line,” Anderson said during the meeting.

An ERCOT representative indicated at yesterday’s meeting that if the PUC sees a second circuit as part of an overall CREZ objective, then a utility could put forward an application to the commission.

ERCOT, in an emailed statement yesterday, said it would “continue its process to consider the addition of synchronous condensers to increase transfer capability from the Panhandle region to the rest of the ERCOT grid.”