FPL builds private transmission line in Texas

HOUSTON Mon Oct 26, 2009 4:55pm EDT

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HOUSTON Oct 26 (Reuters) - A unit of Florida-based FPL Group (FPL.N) has constructed a transmission line in a scenic area of Texas to boost profit from its wind farms, a move that has left some local residents in an uproar.

The Texas electric grid operator this month approved a wind generator's request to interconnect its West Texas facility to a substation about 200 miles (322 km) away, near San Antonio, an indication the line will soon be in operation.

While the state's grid agency did not name the wind farm, sources said the filing refers to a new high-voltage line that creates a direct path for power generated at the 747-megawatt Horse Hollow wind farm in Nolan and Taylor counties -- owned by FPL's NextEra Energy Resources unit -- to South Texas.

The power line crosses part of the Texas Hill Country, an area prized for scenic bluffs and rolling hills.

"It has created some animosity," said State Rep. Harvey Hilderbran of Kerrville. "Some landowners agreed to it, but a lot of people don't want it."

The construction pitted land owners, some of whom accepted large sums of money from FPL to allow the line on their property, against neighbors who rejected FPL offers but must now look at the finished line, said elected officials, real estate sources and residents familiar with the project.

"They paid some people a ton of money," said Bill Renfro of Fredericksburg, Texas, a director of a grassroots organization working to preserve the Hill Country.

NextEra and FPL officials declined to discuss the price tag or in-service date of the private line.

In Texas' wholesale market, a private line is unusual since regulated transmission companies recover costs for new lines from electric consumers, not generators.

But construction of FPL's Horse Hollow line quietly bypassed state regulation, including a public process for wind lines, dubbed CREZ, to build 2,300 miles of new transmission needed to allow Texas wind generation to grow to 18,500 MW by late 2013 at a cost of $5 billion.

Skipping the CREZ process, while costly for FPL, serves to "relocate" some wind power from a congested power area with low wholesale prices to an area with higher prices at least three years ahead of schedule, transmission sources said.

Texas leads the nation in wind capacity and NextEra is the state's largest wind farm operator, with 2,300 MW of capacity, more than one-forth of the state's total.

But rapid wind-farm construction in sparsely populated West Texas outstripped the grid's ability to move the emission-free power to large markets like Dallas and San Antonio, forcing wind generators to curtail output.

While West Texas land owners mostly welcomed an economic infusion from wind farms built by NextEra, E.ON Climate and Renewables (EONGn.DE), AES Corp (AES.N) and others, vocal opposition to turbines in the Hill Country soon discouraged developers.

Power lines face the same opposition, said Renfro. (Editing by Marguerita Choy)

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