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Fortnightly Magazine - February 2012

PUCT approved $4.93 billion for seven transmission service providers to construct the CREZ transmission upgrades. Several of these lines also would meet the long-term needs of the growing area west of the I-35 corridor near San Antonio and Austin. The PUCT identified three categories of CREZ upgrades: “default projects” (accounting for 19.2 percent of the expected cost), “priority projects” (20.3 percent), and “subsequent projects” (60.5 percent).

Default projects are those that refit, rebuild, or enhance the existing transmission infrastructure. The CREZ default projects were awarded to the transmission service providers that owned the existing infrastructure. A number of CREZ default projects have been completed and others are in various stages of completion.

Priority projects are those necessary to alleviate current or projected transmission congestion issues and have the highest priority for completion. CREZ priority projects were awarded to two incumbent transmission service providers: Oncor Electric Delivery and Lower Colorado River Authority Transmission Services.

Subsequent projects are the remaining CREZ upgrades. These comprise the largest cost category because they involve creating new rights-of-way.

The transmission upgrades were originally identified through the CREZ Transmission Optimization Study conducted by the Electric Reliability Council of Texas (ERCOT) in 2008. This study was a planning-level evaluation designed to identify which areas of Texas were best suited for the continued expansion of installed wind farm electrical generation and what transmission upgrades would be necessary to transmit that generation to the population centers (see Figure 2) . ERCOT applied three overarching criteria to the optimization study: system reliability, sufficient transfer capacity, and how “beneficial and cost-effective to consumers” each project would be. The optimization study included preliminary cost estimates and designated the general locations of substations and transmission routes from a planning-level perspective, with four different scenarios of various system configurations and power capacities. The PUCT selected Scenario 2 with an associated cost of $4.93 billion to accommodate 18,456 MW of wind power.

ERCOT subsequently commissioned ABB to refine the scope of transmission upgrades based on a more detailed CREZ Reactive Power Study that identified the size, type, and location of equipment needed to control, condition, and route the power through the CREZ upgrades to the existing electric grid. Results from the reactive power study, published in December 2010, are being reviewed by the transmission service providers and likely will result in additional reactive power equipment—and costs—being added to some of the CREZ projects.

Additional necessary transmission projects were identified after the optimization study was published and are being finalized as wind projects and the CREZ upgrades continue to be developed. The total cost of the CREZ upgrades is currently estimated at $6.79 billion, as unforeseen route conditions and adjustments to the rights-of-way have required design changes. The total CREZ transmission cost likely will continue changing over the next year as more detailed transmission upgrades are expected based on the reactive power study.

As in most states, a Texas transmission service provider must submit an application for a certificate of convenience and necessity (CCN) to the PUCT in order to construct a new transmission line. A CCN allows transmission