Developers launch 70,000 MW of new capacity in Texas, PJM and New York state, but how much will get built?

It's so hot down here, it isn't funny," laughed Ken Donohoo, senior transmission systems engineer at the Electric Reliability Council of Texas independent system operator. But no, he wasn't talking about last summer's scorching temperatures.

Instead, Donohoo was referring to some 30,000-plus megawatts of generation capacity proposed to be built in ERCOT between 2001 and 2003. And the projects reportedly planned for the Pennsylvania-New Jersey-Maryland (PJM) region would add another 30,000 MW, doubling the Texas total. Moreover, the two areas bear evidence of a growing trend: Standardization of power markets and transmission access across a region, through formation of an independent system operator (ISO) and (in some cases) a spot market power exchange, proves a strong drawing card for new investment in generation.

For reasons of confidentiality, Donohoo cannot reveal the names of the ERCOT project sponsors or the exact location of construction sites. Nor will PJM offer many details of plants proposed in its area, beyond the name of the substation that would link the plant to the grid. Yet at least 13 Texas projects have "gone public." These projects now list sponsors, size, location and planned completion dates, affording at least a modicum of confidence that some planned projects may in fact get built.

A year ago the Fortnightly examined merchant plant construction slated for New England and California. In New England alone, some 63 projects representing more than 31,000 MW of new capacity were proposed. (See "Merchant Plants, Coast to Coast," Public Utilities Fortnightly, Jan. 1, 1999, p. 26.) A year later, things have solidified somewhat in New England. "I think the feeling, at least from our perspective," said John Durkee, manager, energy products marketing at turbine manufacturer GE Power Systems, "is that if you're not in [New England now], you're too late."

Now, with the merchant plant scene maturing in New England and nearby PJM heating up, New York state also can be added to the list. Like New England, information on proposed projects is readily available, mostly from the state Board on Electric Generation Siting and the Environment. (In New England, the ISO provides much of the publicly available information.)

Texas: Gaining Credibility

While most of the projects in Texas remain proprietary, several sponsors, with projects a little further developed, have now gone public. (See table, p. 36.) But in spite of the lack of information on other projects, one thing is for sure: The merchant plant movement in Texas is hotter than a chili pepper, and still getting hotter. Of the 60-plus requests for generation interconnection totaling over 30,000 MW, over 6,000 MW are proposed for construction in 2000, 8,000 MW for 2001, 15,000 MW for 2002 and 1,000 MW for 2003 thus far.

And sponsors who already have announced plans apparently remain as bullish as ever. Entergy, for example, which originally announced in April that it was evaluating the feasibility of an 800-MW plant in Fairfield, has since earmarked a fourth turbine for the planned facility, upping its capacity to 1,050 MW. The project, while it hasn't reached financial closure, is moving forward, and Entergy believes it "will reach fruition."

As for how many of the proposed projects actually will be built, ERCOT ISO engineer Donohoo says that, too, is somewhat of a mystery. "You know it's not all going to be built. You just can't judge it." But the projects that have been publicly announced have a lot more credibility. "Once it goes public, it's pretty much a sure thing," he says.

PJM: First-Come, First-Served

At last count, some 88 anonymous projects totaling over 30,000 MW have queued up at PJM Interconnection LLC. PJM has created a "queue system," under which applicants are given first-come, first-served treatment. The new approval process consists of three stages. The first stage involves a feasibility study, which addresses interconnection costs and gives sponsors an opportunity to make "a reasonable decision on whether to proceed," as explained by Richard Wodyka, PJM vice president for system coordination and chief operating officer.

If a project proceeds past the feasibility study, it moves on to the next stage, the impact study, and finally to the third stage, the facilities study, which covers the more physical components of a project. PJM has split up sponsors into Queue A, for requests prior to April 15, 1999 and Queue B, for requests between April 16, 1999, and Nov. 30, 1999. The weeding-out process appears to be moving along. All projects in Queue A have completed the feasibility study, with 14 out of a total of 61 applicants having withdrawn by the end of that first stage. None have made it to the third stage, but some are about ready to do so. In the more infant Queue B, one applicant of 27 has completed the feasibility study, and another has withdrawn.

Thus far, Wodyka thinks PJM's never-before-tested system is working well. "We think we have a fair, open process¼. It's orderly, it's very systematic."

New York: Informal

Consultations are Encouraged

In New York state, the plant siting process calls for applicants first to file a "pre-application report," which lists the studies it plans to conduct to support its application. However, even before that first formal initiative, prospective project sponsors are encouraged to "consult informally early in the planning phase of its project with state agencies, municipalities, environmental organizations and other groups that may be interested in the facility."

Once the pre-application report has been filed, the New York Department of Public Service assigns a hearing examiner to mediate issues related to the scope and methodology of the proposed studies. Then public meetings typically are held. Finally, the project sponsor files an application under Article X of the state Public Service Law with the Board on Electric Generation Siting and the Environment, an agency led by the chairman of the state Public Service Commission chairman and comprising members from the Departments of Health, Environmental Conservation, Economic Development and Public Service. Eventually, the board rules on the application. Thus far, the Athens Generating Plant appears to be furthest along in the process, having received a judge's decision for recommendation in September, with a final siting board ruling expected in January.

Carl J. Levesque is the associate editor at Public Utilities Fortnightly.

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