Monday, February 18, 2019

PUCT Urges 2nd Look at Freeport Project Costs

By Tom Kleckner

Texas regulators last week signaled their discomfort with the rising costs of CenterPoint Energy’s planned 345-kV transmission line to serve load in the industrial Freeport area south of Houston.

The Public Utility Commission has asked ERCOT to provide further input on CenterPoint’s project, which is part of the “Freeport Master Plan Project” addressing load growth around the Gulf Coast seaport.

ERCOT PUCT CenterPoint Energy Freeport

(Left to right) Commissioners Shelly Botkin, Chair DeAnn Walker and Arthur D’Andrea confer on a case.

“I’m not going to trust these huge shifts in costs without having ERCOT weigh in,” Chair DeAnn Walker said during the commission’s Sept. 27 open meeting.

CenterPoint’s application for a certificate of convenience and necessity presented 30 alternative routes, ranging in length from 54 to 84 miles, and in estimated costs from $481.7 million to $695.2 million. The costs at the lower end are almost double ERCOT’s estimate of $246.7 million when it approved the Freeport project in December. (See “Board Approves $246.7M Freeport Transmission Project,” ERCOT Board of Directors/Annual Meeting Briefs.)

“Some of these numbers are approaching those of a nuclear plant,” Commissioner Arthur D’Andrea said.

Warren Lasher, ERCOT’s senior director of system planning, didn’t argue that point. He explained that the grid operator made its recommendation based on “specific electrical reasons,” but it has taken a second look after CenterPoint notified it of the cost increase.

ERCOT PUCT CenterPoint Energy Freeport

ERCOT’s Warren Lasher (left) and Chad Seely

“From our very preliminary analysis, neither the need nor the timing for the need for the project has changed,” Lasher said. “When we looked at this project electrically, there were just not that many options to get to that part of the state and serve the increasing customer demand. I’m not sure we couldn’t have found another option, but it’s unlikely.”

ERCOT has projected a 92% increase in the Freeport area’s load to 1,979 MW by 2019, with a large chemical plant accounting for much of the growth. The region is expected to see an additional 300 MW of load by the end of 2022.

ERCOT PUCT CenterPoint Energy Freeport

Commission Counselor Stephen Journeay explains a preliminary order to the commissioners.

PUC staff agreed to prepare a preliminary order for the commission’s Oct. 12 open meeting. The order would incorporate ERCOT’s input on whether there are other alternatives for meeting the area’s demand.

“I am going to need that,” Walker said.

Rio Grande Electric, AEP Texas Reach Agreement

The commission canceled an Oct. 31 procedural hearing in the dispute between Rio Grande Electric Cooperative and AEP Texas over which utility will serve certain customers in a Uvalde subdivision after the companies said they had reached a settlement (Docket 47186). (See “Hearings Set for AEP Texas Legal Cases,” PUCT Reduces Rates for AEP, Others on Income Tax Cut.)

Rio Grande and AEP Texas told the commission they will resolve the dispute through requests for service area changes. They said they are finalizing maps and preparing the necessary documents to reflect “definitive boundary changes.”

The PUC gave the parties until Oct. 22 to file an agreement or a status update.

Commission Accepts IOU Earnings Review; OKs Interventions

The commissioners accepted staff’s review of the state’s 14 investor-owned utilities’ earnings reports. Staff said none of the IOUs “warrant[ed] a more detailed analysis” (Project 48158).

Following a closed session, the PUC agreed to allow Walker, who represents the PUC on SPP’s Regional State Committee, to work with outside counsel on FERC dockets involving SPP. The PUC also said it would intervene in two FERC dockets:

  • The Louisiana Public Service Commission’s complaint against Entergy Services and the corporation’s five operating companies alleging they failed to include 100% of the costs of Entergy’s transmission control centers in MISO’s Attachment O formula rate (EL18-201). The PSC said Entergy’s failure to bill MISO for all of the costs would force “native load customers to cross-subsidize the use of the Entergy transmission system by third party wholesale customers.”
  • East Texas Electric Cooperative’s complaint against American Electric Power subsidiaries Public Service Company of Oklahoma, Southwestern Electric Power Co., AEP Oklahoma Transmission and AEP Southwestern Transmission. The co-op alleges the 10.7% base return on common equity in the AEP West companies’ formula transmission rates is unjust and should be reduced (EL18-199).