Texas mulls power lines needed for more wind farms

HOUSTON (Reuters) - Wind-power supporters called on Texas regulators at a hearing on Wednesday to "aim high" and approve plans for nearly 25,000 megawatts of wind generation while others urged caution before companies invest billions to build new transmission.

Members of the Texas Public Utility Commission are struggling to decide how much new transmission should be built to take advantage of the state's abundant wind resource. Major power lines are needed to transfer wind generation from sparsely populated West Texas to Dallas, Houston and San Antonio, where electric demand is highest.

Commissioners are weighing the benefits and costs of four transmission-route scenarios proposed by the Texas electric grid operator to accommodate from about 12,000 MW to as much as 25,000 MW over the next four years.

Estimates from the Electric Reliability Council of Texas (ERCOT) to move wind power on new 345-kilovolt lines range from $3.4 billion to more than $7.4 billion, depending on the number of lines built.

"Wind power benefits far exceed the transmission costs," said Tom Anson, an attorney representing a coalition of wind developers and equipment makers.

Even if ERCOT's saving projections have been overestimated and construction costs underestimated, Anson said the payback could occur in about six years.

"Aim high," he told the commission and a hearing judge. "The industry is hanging on your every word."

With 5,500 MW of current wind capacity, Texas leads the nation in the number of installed wind turbines, according to the American Wind Energy Association.

ERCOT said wind capacity could grow to 9,000 MW by the end of the year.

However, the wind boom has already created congestion on Texas' existing power grid, leading to spot-market volatility and turmoil for small power retailers.

Other speakers asked commissioners to implement a gradual, phased approach by giving the green light to fewer lines initially so that more study can be done to understand what is required to integrate an increasing amount of wind on the network, such as needed back-up fossil power plants to avoid system blackouts.

Attorneys for residential and industrial customers urged the panel to look hard at promised cost benefits versus rising costs to build power lines. Transmission costs are paid by customers in areas with the most electric demand.

"There's no guarantee that any change to production costs will occur, but the transmission-cost impact will flow straight to the customer's bills," said Chris Brewster, representing small cities in North Texas.

Some fear current grid problems will be worsened by additional wind development that occurs before new power lines are built. "What we should not do is delay the build out," said George Johnson, representing CPV Renewable Energy Co.

The PUC is not expected to rule before mid-July at the earliest, an agency spokesman said.

(Reporting by Eileen O'Grady; Editing by Christian Wiessner)