HOUSTON (Reuters) - Texas regulators on Thursday approved a plan to lure $5 billion in new investment to build power lines to move electricity from the state’s windiest areas to power-hungry cities.
Texas utility regulators advanced a plan to build transmission lines to accommodate about 18,500 megawatts of wind generation by 2012.
The cost for the plan approved by the Texas Public Utility Commission in a 2-1 vote exceeds $5 billion. While the plan could add $4 a month to Texans’ power bills, regulators hope that additional wind power will reduce the state’s reliance on costly natural gas-fired power plants.
If new power lines attract that much wind generation, it would exceed the nation’s current wind generating capacity. With 5,500 MW of installed wind turbines, Texas already leads the country in its capacity to generate greenhouse gas-free electricity.
The vote demonstrates Texas’ commitment to renewable resources, said Dean Gosselin, vice president of wind development for FPL Energy, a unit of FPL Group, the largest wind developer in Texas and the U.S.
“We are hopeful the rest of America will see the light of this decision,” said Gosselin.
The commission declined to approve a more ambitious scenario, supported by many wind developers, to allow more than 24,000 MW of wind power, saying more study was needed on wind volatility and safe operation of the grid.
“This is a big bite,” Commissioner Paul Hudson said, calling the transmission plan “nothing short of extraordinary,” despite the criticism.
“Ultimately, we think they will get there (to 24,000 MW),” said Gosselin, “but it will be done in steps.”
New transmission is needed to transfer wind power from sparsely populated West Texas to the state’s biggest cities, such as Houston, San Antonio and Dallas, where demand is highest.
The amount of transmission approved Thursday “gets us ahead of the need,” said Calvin Crowder, president of Electric Transmission Texas LLC, a joint venture formed by American Electric Power Co and MidAmerican Energy Holdings, a unit of Warren Buffett’s Berkshire Hathaway Inc.
The state is expected to have 9,000 MW of wind generation by year end. At 18,000 MW, wind could supply power for about 3 million average Texas homes.
Texas’ wind boom has created congestion on the existing power grid, leading to price volatility in the wholesale market and losses for small power retailers.
Texas has some of the highest wholesale electricity rates in the nation, giving wind developers even more incentive to build.
Editing by Chris Baltimore and Christian Wiessner