Is Texas CREZ a model for getting transmission lines built elsewhere in the country?

Michael Giberson

Current and anticipated changes in the patterns of electric power production and consumption drive the demand for new transmission lines to help get lower-cost power from generators to consumers. The biggest changes in power production have come from growth in renewable power supplies, so the expansion of transmission is seen as critical to the growth of renewable power. But siting transmission lines is tough in the best of cases; most of the time it seems nearly impossible to get new major transmission projects built.

The Texas CREZ process – a long-term effort to identify opportunities to develop additional renewable energy resources in the state by supporting expansion of the ERCOT grid to enable delivery of power into the state’s largest population centers – has frequently been seen as a model of sorts.  At least compared to similar ideas elsewhere, the CREZ lines are moving forward through regulatory and legal processes and beginning to be built.

Well, there has been some opposition, as detailed in a three-part series by Kate Galbraith in the Texas Tribune.

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7 thoughts on “Is Texas CREZ a model for getting transmission lines built elsewhere in the country?

  1. No, I think the Texas CREZ model has some fatal flaws. It provides for one grid system, ERCOT, to go into another grid system, SPP, with the power of eminent domain for the exclusive benefit of customers of ERCOT. This violates the private property rights of the landowners and customers of the SPP grid and should be deemed unconstitutional by the Texas and U.S. Supreme Courts. ERCOT also hasn’t coordinated with SPP and is attempting to take property that should not be spoiled with a transmission line of this nature, such as the Palo Duro Canyon.

    I do not believe this country can afford to continue the assault on our fundamental individual rights. The core of our individual freedom in America lies in the right to have and to hold private property. Private property rights of landowners in wind-rich regions should be upheld and respected, too. At the very least, areas to be served outside of the wind-rich areas should be required to use transmission highways developed by the grid where the wind resources are located. This would allow for less taking of private property, better coordination and utilization of resources, less destruction of sensitive areas, and fair and equal access to the highways. All grids served by the highways could share in cost, rather than each outside grid having their own set of exclusive easements. And the customers of the wind-rich area could also receive some benefit.

    An analogy would be the Texas transportation highway system. CREZ is basically like giving the City of Dallas the right to condemn a highway through the City of Amarillo for the sole and exclusive benefit of the citizens of the City of Dallas. No one else can drive on the highway except the citizens of Dallas, not even the citizens of Amarillo, and the City of Dallas has the right to take whatever property they want for this purpose. They decide to condemn a highway that crosses back and forth across the Palo Duro Canyon, forcibly taking and destroying large portions of this scenic and unique natural treasure. It makes little sense and is fundamentally unfair to landowners and citizens in the wind-rich regions.

  2. I could nitpick some of CREZ’s points, but generally agree that this is another episode of Government Gone Wild.

  3. I’d sort through the issues raised by “CREZ” as follows:

    (a) The overlapping of SPP’s current footprint by ERCOT’s lines doesn’t violate anyone’s rights. Current customers of SPP utilities don’t have the right to stop generation units built in their region from selling power outside of the area (and the reverse is true, too).

    (b) As a former Amarillo resident, I’m also a big fan of Palo Duro Canyon. I’d lean against a route that sent transmission lines through the canyon near or within view of the state park. I’d be sympathetic to private property owners holding undeveloped property in the north part of the canyon who wished to keep the area relatively unspoiled. However, their interests are properly weighed against the interests of other property owners that will be affected if one of the other routes is selected.

    (c) Eminent domain procedures raise a host of issues – legal, ethical, economic – one reason utilities usually try to avoid resorting to such procedures. But utilities in SPP as well as utilities in ERCOT have access to the same tools; nothing special about their possible use in this case.

    (d) The CREZ lines are not for the sole benefit of consumers in ERCOT. The lines will also benefit landowners in the Panhandle who will then become able to participate in wind power development, and those benefits will spill over to the surrounding communities. Look at the Abilene-Sweetwater-Roscoe area. Landowners are benefiting, but so are merchants and schools.

    (e) Customers in the wind-rich areas can and do receive some benefit from the resource, but that doesn’t mean the area can’t benefit from exporting power downstate as well. No one would argue that all the beef produced in the Panhandle should be consumed only by people living in the Panhandle. The area exports a lot of beef to consumers elsewhere, and the benefits of that “exporting” goes not just to Panhandle cattle ranchers but the the broader communities in which these ranchers work.

  4. Michael, thanks.

    I’d like to address your points.

    As to (a), it’s not a matter of stopping wind generators in the Panhandle from serving ERCOT customers. It’s a matter of whether utilities serving ERCOT exclusively have a right to come into the SPP service region and take private property by and through the threat of eminent domain for the purpose of creating a market for wind generators that will exclusively serve ERCOT. There is no compelling state interest for using eminent domain and taking someone’s private property for this purpose. Multiple CREZ zones have been identified within the ERCOT grid, as well as other power generating potentials. It is not necessary for ERCOT to come into the SPP grid and service area with their own dedicated lines. These lines will not serve SPP customers. Also, the goals of the CREZ statutes for wind generated energy have already been met and exceeded, as well. The fact that these lines are not for wind only, is also a factor. There is no compelling state interest served by building billions of dollars worth of lines into the Panhandle for the purpose of putting coal or gas plants in the Panhandle that will serve ERCOT, hundreds of miles away. Much more economic alternatives exist.

    (b) Again, I just don’t feel that ERCOT has a right to choose which properties in the outside SPP grid region of the Panhandle they prefer to take and spoil. If they want to build private lines into the Panhandle, that is one thing. Taking private property through eminent domain in the Panhandle for lines to wind farms that don’t currently exist, which farms will exclusively serve ERCOT, is another.

    (c) Up until now, SPP and ERCOT have been able to meet the needs of their respective customers without significant intrusion into each other’s territory. This is a special and unique circumstance because it has not existed until now. CCN statutes have historically required that there by a public necessity in the past for the lines. Adequacy of existing service and need for additional service have been required considerations, as well as whether the lines lower the cost to consumers in the area. CREZ statutes omit such considerations, especially for SPP customers. And a great number of other issues arise with ERCOT having separate easements and lines deep into the SPP grid area, such as the potential interference of the ERCOT lines with the SPP grid and future plans.

    (d) I agree that while the public in SPP won’t benefit, certain private wind farm developers and landowners will benefit in the Panhandle. However this is not sufficient reason for ERCOT utilities to have the power of eminent domain for these purposes. The Texas Constitution was also recently amended to help guard against the government taking of private property for the benefit of private entities for such economic development purposes.

    (e) True, but does this mean that Panhandle beef producers should have the right to condemn a highway dedicated strictly for their sole and exclusive use to deliver their goods to various cities down south in Texas? Such roads may benefit customers further south when they purchase the beef products at lower cost but does this justify the taking of private property for this purpose? There are many legal and constitutional concerns that arise. Also, from a practical standpoint, we won’t have any land left at the end of the day in this state if public highways are not required and utilized. ERCOT should interconnect with SPP for delivery of wind energy from the SPP region at the border of ERCOT and SPP and the delivery of such power should be over highways built by SPP that also serve the SPP region.

    Good discussion. Thanks.

  5. Here are some more interesting issues with regard to the Texas CREZ plan for those interested to think about:

    (1) The CREZ areas were identified initially on the basis of the best wind resource areas with over 25 identified throughout Texas. Under Docket 33672, however, the final CREZ areas chosen were based on wind farm interest at the time. Few of these wind farms went on to make commitments to actually build wind farms in Docket 37567. It seems that it would be better to identify the best wind areas and build transmission infrastructure to these areas, rather than basing it on wind farm interest as this changes over time.

    (2) CREZ lines are being proposed and designed without regard for the wind farms that will interconnect to the lines. This is a major problem with the CREZ plan in that ERCOT did not sufficiently outline the intended purpose and use of the lines. They designated substations but did not sufficiently explain how they intended wind farms to interconnect with the system, i.e. directly to the substations or through interconnection hubs along the lines. This has lead to enormous and very expensive and inexcusable confusion with regard to planning the location of the lines in areas for wind export. Wind farms clearly intend to be able to utilize the entire CREZ areas with access along the lines. The lines builders are proceeding as if access to the CREZ areas along the lines doesn’t matter. So, is the CREZ plan a plan to limit wind development to 10 miles around a substation or is the plan to actually allow wind development within the entirety of the CREZ zones? If the plan is to only allow wind development within 10 miles around substations, what is competitive about this and why go to the trouble to draw CREZ bubbles throughout Texas? Just draw substation circles with a 10 miles radius and be done. However, I’m not sure what the logic is in building hundreds of miles of enormously expensive line to substations in arbitrary CREZ areas in remote regions of Texas on the basis of being “competitive.”

    Also, if the plan is to actually open up wind development in the CREZ zones, it is clear that the lines need to pass through the areas of wind farm development so that the wind farms can connect to the lines without having to condemn yet another expensive major line to a substation. This cuts down on expense, making these wind farms viable. It also cuts down on congestion at the substations, and it cuts down most importantly on the excess taking of private land. All of this should have been planned and understood long before they started the CREZ process. As it stands now, wind farms are being largely disregarded in the CREZ line planning process in the Panhandle.

    (3) Lastly, as stated earlier, the CREZ lines are being built to serve only ERCOT along easements devoted strictly for the use and benefit of ERCOT. This poses an additional problem for the Panhandle area, aside from the ones mentioned in my earlier post in that the lines cannot be used for interstate transmission of wind energy. This is a huge expense and taking in Texas to build these lines and it seems that the greatest benefit to the Panhandle would be for these lines to be capable of transporting energy interstate, if need be, for maximum benefit. ERCOT cannot do this, however, due to the desire to maintain exemption from FERC jurisdiction. FERC denied their request to connect to Tres Amigas recently given that this would engage ERCOT in interstate commerce. I don’t see any way for ERCOT to interconnect with Tres Amigas without engaging in interstate commerce. If the Southwest Power Pool (SPP) built these highways, they could interconnect with Tres Amigas. Delivery to ERCOT could be away from the Tres Amigas hub, on a one-way highway with limited purpose, perhaps protecting ERCOT’s FERC status. As it stands, having ERCOT own these lines could possibly stifle wind development in the Panhandle by preventing the use of these easements for this purpose, now or in the future.

    Also what happens in the future if ERCOT no longer uses these easements and lines throughout the SPP service region for wind export from the Panhandle? The lines are a permanent and huge intrusion throughout the SPP region. If SPP owned the lines, they would be able to use them to serve the SPP region and customers regardless of the future of wind energy. Given the taking of land in the area required to build these lines, this is only fair to the SPP citizens and landowners that the lines be available to serve SPP customers in the future.

  6. Forgot to mention on my last point that ERCOT can only reliably integrate a limited amount of wind energy from the Panhandle according to filings in Docket 33672. The ERCOT study contemplated only 5,584 MW of a total of 18,456 MW of wind in Texas. The GE Ancillary Services Study under Docket 33672 contemplated only a total of 15,000 MW of wind that could be reliably integrated in Texas and one commissioner dissented from the final order given the amount was increased to 18,456 MW, citing concerns over the ability of ERCOT to utilize the additional capacity. Substantial and expensive upgrades to ERCOT apparently must occur to integrate more than this, given the variability and nature of wind energy.

    Two years later, we have already met and exceeded the goals established in the statutes, with over 10,000 MW of wind in ERCOT to date. The process continues forward without regard for whether ERCOT can reliably integrate all of this wind. Can it even integrate the wind originally contemplated under the statute? The lines in the Panhandle are double-circuit ready but can ERCOT add another circuit and double the contemplated wind capacity? What expenditures and upgrades to ERCOT will be required to integrate more wind? Should ERCOT do another study under the circumstances that exist today to determine how much wind ERCOT can truly utilize?

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