EXHIBIT PH-1. TEXAS CREZ AND LONG TERM NEEDS, A COMPREHENSIVE TRANSMISSION PROPOSAL BY ELECTRIC TRANSMISSION TEXAS, LLC (ETT) February 27, 2007

Transcription

1 TEXAS CREZ AND LONG TERM NEEDS, A COMPREHENSIVE TRANSMISSION PROPOSAL BY ELECTRIC TRANSMISSION TEXAS, LLC (ETT) February 27,

2 ETT CREZ TRANSMISSION PROPOSAL I. EXECUTIVE SUMMARY II. KEY ISSUES ADDRESSED BY THE ETT PROPOSAL A. THE CREZ OBJECTIVE B. ASSESSING TEXAS INFRASTRUCTURE NEEDS AND DESIGN CRITERIA III. BASIC DEVELOPMENTAL INFORMATION SUPPORTING THE ETT PROPOSAL A. CHALLENGES WITH WIND INTEGRATION B. LOAD GROWTH C. ASSESSMENT OF INFRASTRUCTURE NEEDS D. BENEFITS OF EXTRA-HIGH VOLTAGE (EHV) 765 kv TRANSMISSION IV. DEVELOPMENT OF THE ETT PROPOSAL A. POWER FLOW PATTERN B. ALTERNATIVE TRANSMISSION PLANS FOR CREZ V. THE ETT TRANSMISSION PLAN PROPOSAL A. TRANSMISSION PLAN: COLLECTION B. TRANSMISSION PLAN: DELIVERY C. PLAN COSTS, BENEFITS AND SCHEDULE VI. CONCLUSION 2

3 I. EXECUTIVE SUMMARY Electric Transmission Texas, LLC (ETT) proposes to the Public Utilities Commission of Texas (PUCT), a long-term transmission plan for the Electric Reliability Council of Texas (ERCOT) to address the Texas Legislature s Competitive Renewable Energy Zone (CREZ) initiative and to support other generation development, an efficient and robust energy market, and the continued economic growth in the State of Texas. This comprehensive plan calls for the phased development of transmission infrastructure timed to meet the short and long term goals of Texas and the PUCT. Specifically, the plan consists of three basic segments and infrastructure improvements: 1) an estimated $1.3 billion in transmission and substation costs for the first stage of CREZ transmission development by 2012; 2) an estimated $1.9 billion in transmission and substation costs for the second stage of CREZ transmission development by 2015; and 3) the completion of the improved ERCOT Extra-High Voltage (EHV) 1 transmission backbone that will be needed by Texas in the long term, at an estimated cost of $4.2 billion. In order to facilitate an open discussion and consideration of this plan, ETT is circulating this conceptual plan early in the CREZ process. ETT is pleased that the PUCT s proceeding has spurred a high level of interest. Through advancement of this proposal at this stage in the process, ETT welcomes active participation and an exchange of ideas with other entities in working to refine this plan over the next several months. ETT believes the resulting plan should be comprehensive and could involve several transmission providers. ETT, a proposed joint venture between subsidiaries of American Electric Power Company (AEP) and MidAmerican Energy Holdings Company, Inc. (MEHC), brings sufficient capital and expertise to complete the proposed plan for Texas consumers in a timely and cost effective manner. However, the proposal is not intended to be exclusive and other transmission developers are welcome to participate. The key for Texas is to develop a comprehensive collaborative plan at the state level to avoid transmission constraints and costly overlap in transmission system development. Major design improvements in wind technology, in combination with the ability to predict and gauge the value of geographic areas for wind development are spurring the 1 Includes 345 kv and above. 3

4 growth of wind generation. As wind power penetration rates increase, so too do the challenges associated with integrating these resources into the grid. In order to harvest these vast wind resources, the transmission system needs to be configured to bring the wind energy from the point of production to the point of consumption. The focus of the ETT proposal is to provide a transmission configuration that interconnects major wind production areas to the bulk transmission grid and Texas load centers. The plan also addresses the need to integrate other anticipated generation into a longer term plan that provides for a reliable and robust transmission system. To capture the long-term value of wind resources and other anticipated generation, and to meet future load growth requirements, ETT advocates the development of an improved EHV high capacity transmission backbone. As each stage of the EHV high capacity backbone is developed, it will allow an increased level of generation (renewable and non-renewable) to reach major Texas load centers. The ETT transmission plan provides the following system and societal benefits: Enables considerable electricity production cost savings Increases system efficiency through reduced system losses Provides enhanced operational flexibility Minimizes the footprint of transmission infrastructure and right of way requirements Provides enhanced system reliability Lower long term transmission costs Reduces transmission congestion leading to a more robust and efficient wholesale energy market Enables access to future generation resources Establishes a strong backbone that accommodates system growth in both wind development and in load growth well into the future. ETT s proposal offers Texas a viable and efficient means of realizing the value of new generation. At the same time, it is designed to ensure that the overall plan is consistent with the Legislature s directive to the PUCT to develop a transmission construction plan in a manner that is most beneficial and cost-effective to customers. 4

5 II. KEY ISSUES ADDRESSED BY THE ETT PROPOSAL A. THE CREZ OBJECTIVE Through the CREZ docket, ERCOT has identified potential CREZ zones, which the PUCT will evaluate for final CREZ designation(s) based on the following primary issues: sufficiency of renewable energy resources and land areas to develop generating capacity from renewable energy technologies; the level of financial commitment by generators for each potential CREZ; and the construction of transmission capacity necessary to deliver the renewable energy to electric customers, in a manner that is cost-effective. Developing transmission plans for these CREZs which delivers the renewable power to electric consumers in the State of Texas creates a challenge. The purpose of the ETT proposal is to introduce a transmission planning concept that ETT believes will allow Texas to maximize its ability to harvest its wind resources for the benefit of Texas ERCOT customers and to facilitate it in a manner that: 1) utilizes sound system design principles, 2) is cost effective, 3) is mindful of the societal need to minimize the footprint of transmission infrastructure, and 4) provides for future electric energy needs (production and consumption). The decisions that will be made in this docket will have a significant impact on the future of Texas. Through careful consideration and anticipation of future transmission needs, design voltages, long-term land use 2 objectives and system operational needs, the most cost-effective plan which is in the best interest of ERCOT consumers of electric energy will be produced. Designing a cost effective electric power system that is in the best interest of electric consumers has been encouraged by the PUCT. B. ASSESSING TEXAS INFRASTRUCTURE NEEDS AND DESIGN CRITERIA Texas is currently at a pivotal point with respect to the design of its electric infrastructure. When considering the planning process needed for a given region, it is essential to consider the unique needs of the region. In ERCOT, these include: 2 Used for transmission right of way purposes. 5

6 Vast wind resources (almost 20 GW connected or requested as identified in the ERCOT study of CREZ dated 12/1/06) Remoteness of wind resources from load centers Lack of current transmission infrastructure for the incorporation of new generation and incremental load growth Concentrated load centers located considerable distances from the majority of generation resources In light of these aspects, it is prudent for the PUCT and ERCOT to avoid a just in time, just enough approach to transmission planning. While a short term planning horizon may work in areas where load growth is capped at a marginal rate, system infrastructure is well established through a tightly integrated grid and the location and operational characteristics of generation performance is predictable; it does not work well in areas that lack those characteristics. Given the uniqueness of the Texas system and its current level and geographic separation of generation resources, a long term planning horizon is necessary with a solution designed to meet the needs of Texas. The Texas Legislature recognized a need for modifying the planning process by directing the PUCT to establish CREZs and to identify and order the construction of the necessary transmission improvements. Given that the infrastructure in Texas is at a defining point in time where the voltage level as well as the system design philosophy are both up for debate; it is essential that Texas consider its long term needs, design objectives and environmental /land use 3 goals early on in the process. Careful consideration of all of these drivers will enable the construction of transmission upgrades that are aligned with these goals. III. BASIC DEVELOPMENTAL INFORMATION SUPPORTING THE ETT PROPOSAL A. CHALLENGES WITH WIND INTEGRATION One of the challenges with large wind farms, such as those located in Texas, is that these resources are not typically located near major load centers. If they are located 3 Land use associated with transmission right of way. 6

7 near the transmission network at all, they are more often located near facilities that need significant reinforcements/replacements to support the new generation, which poses a unique challenge. Additionally, generation from these resources lacks the control and predictability associated with traditional generation resources. This intermittent profile can present a challenge for transmission operators and planners seeking to maintain grid reliability. This raises the issue of when transmission infrastructure should be developed: should it be developed to accommodate the long-term build out of new resources or should it be just in time and just enough to meet the immediate needs of the system? A plan to meet the short-term needs of a given area must be aligned with long-term needs and the broader system requirements. The unique challenges that face Texas also provide an opportunity to tailor a long-term plan to meet the greater ERCOT needs of the 21 st century. B. LOAD GROWTH Another challenge that needs to be understood and incorporated into the determination of transmission system development is the rate and concentration of load growth within Texas. The I-35 Corridor will continue to be a major growth area of Texas. Counties that show the largest projected population growth are Harris (Houston), Collin (North Dallas), Dallas (Dallas), Denton (North Ft Worth), Tarrant (Ft Worth), Hidalgo (McAllen), and Bexar (San Antonio), only two of which are not located on the I- 35 Corridor. These seven counties compose 58% of the expected 1,476 MW annual growth on the ERCOT system. The Austin area is also experiencing significant growth. Nearly all of the counties along the I-35 corridor are experiencing electric load growth in excess of 2.5% (Bexar at 3.0%, Denton at 4.0%, Tarrant at 2.7%, and Collin at 3.7%). These areas represent most of the major load centers of Texas and are the target areas for delivery of the renewable energy in this plan. Load centers such as these, which lack bulk transmission support, need to be addressed in conjunction with defining the road map for the long term ERCOT transmission plan. 7

8 C. ASSESSMENT OF INFRASTRUCTURE NEEDS An integral part of determining the transmission improvements needed is the evaluation of the entire transmission network that is expected to provide access to lowcost generation in ERCOT and deliver the power to the consumers. The ERCOT CREZ analysis and subsequent studies pointed to the lack of infrastructure to deliver wind power from West Texas. An underlying assumption made by ERCOT was that such delivery systems are necessary to serve load and not directly attributable to the cost of delivering wind production. While this is a reasonable assumption, the evaluation of these delivery systems is fundamental to CREZ transmission plans. The industry must get out ahead of this growth and give thoughtful consideration to the amount of right of way needed to support ERCOT s transmission infrastructure. For example, the economic impact of transmission easement acquisition is already significant and is getting progressively worse. Because of this and other factors, it is not prudent to anticipate the development of electric load on a just-in-time basis. There are at least three areas of Texas within the ERCOT system that need significant infrastructure development. As evidenced in the following figures, the areas north of Dallas/Fort Worth (DFW) and west of I-35 around San Antonio and Austin lack any networked 345 kv transmission systems. The area along the border with Mexico in the lower Rio Grande Valley faces the same concern. These high load, high growth electric load areas should not continue to be addressed on a just in time basis. 8

9 North Texas DFW 9

10 Austin/San Antonio Area Austin San Antonio Lower Rio Grande Valley Area 10

11 D. BENEFITS OF EXTRA-HIGH VOLTAGE (EHV) 765 kv TRANSMISSION As part of its proposal, ETT recommends 765 kv EHV technology be considered for portions of the long-range system expansion. AEP has a proven record of success in the development of EHV technology, with a transmission grid in the Midwest consisting of over 2100 miles of 765 kv transmission. As the nation s leading developer of 765 kv infrastructure, AEP has had the benefit of experience with this voltage class since the 1960 s and brings this experience directly to ETT. Benefits of 765 kv include: Efficiency improvements through reduced line losses. Capacity comparable to three double-circuits at 345 kv (see figure below), which provides enhanced operational flexibility and current carrying capacity Inherently lower cost 4 Strength and capacity that is an ideal match to the intermittent nature of wind generation Enhanced reliability through improved availability of transmission capacity Reduced right of way requirements 4 A single 765 kv line costs about $2,600,000 per mile as compared to two double circuit 345 kv lines at $3,000,000 per mile (which only deliver 67% of the power transported by a 765 kv line) for comparable terrain and right of way. 11

12 ETT advocates establishing a twenty-year planning horizon in order to adequately recognize the factors articulated above. Since major bulk transmission lines traditionally require five to seven years from concept to in-service date, any plans for EHV systems should be incorporated into an initial system-wide solution. This longer-term approach would enable Texas to phase in expansions, anticipating future development in an orderly, efficient and planned manner. IV. DEVELOPMENT OF THE ETT PROPOSAL A. POWER FLOW PATTERN The physics of electricity invariably dictate the direction of power flow. As such, base-load generation (Source) will seek the path of least resistance to the load (Sink). Therefore, bulk transmission lines that connect Sources to Sinks provide the starting point for transmission plans. Specifically, Sources with excess generation should be 12

13 connected to the Sinks that are growing from load expansion to provide better access to low cost generation to all customers. To illustrate the power flow pattern within the ERCOT system, the following figure identifies the areas of high load density with large and overlapping brown squares that are proportional to electric load forecasted for Similarly, generation can be observed as circles of different colors and sizes proportional to name plate capacity that depict the different types of generators by fuel and technology. Larger circles represent the lower cost base-load nuclear and coal generators, which are depicted in black, and gas fired steam generators are represented by smaller purple circles. By observation, it is evident that there are three areas of load that lack base-load generation, the north side of Dallas/Fort Worth (DFW), the west side of the I-35 corridor around San Antonio and Austin, and the east side of Houston. Base-load generation, on the other hand, is concentrated along the lignite belt from the northeast corner of the State to the area south of San Antonio, and the areas near the two ERCOT nuclear plants, the South Texas Project (STP) and Comanche Peak. 13

14 Load Growth Excess Base Gen. Wind Gen. Based on this information, three paths appear to shorten the electrical distance between the identified Sources and the developing Sinks. These paths of power flow can be observed in the following figure. The excess base-load generation in the northeast corner of the State is delivered on two paths to the area north of DFW and to the east side of Houston, and the excess base-load generation west of DFW is delivered down a path south to the west side of the I-35 corridor. All three paths lack sufficient transmission to support the anticipated level of power flow beyond the ten year horizon. 14

15 The wind generation capacity in north and central West Texas is far in excess of the demand for power in that area; particularly since the wind production is greatest during off-peak periods. Therefore, it must be delivered to one of the load centers previously discussed. Since the east-side of Houston is clearly beyond the reach of the transmission system, the north side of DFW and the west side of the I-35 corridor around San Antonio and Austin are the prime candidates. Today, the wind generation produced in West Texas attempts to flow between these two prime load centers directly into DFW down the 345 kv path from Abilene. Since this existing path consists primarily of a double circuit 345 kv line, loss of this critical line causes virtually every 138 kv and 69 kv line in the same path to overload. 15

16 B. ALTERNATIVE TRANSMISSION PLANS FOR CREZ Given these basic characteristics of the ERCOT power system, the plan for interconnecting the CREZ can take two substantially different directions. If wind power is delivered to the north side of DFW power in ERCOT shifts clockwise as depicted in the first of the following two figures. On the other hand, if wind power is delivered to the area west of the I-35 corridor around Austin, then power in ERCOT shifts counter clockwise as depicted in the second of the following two figures. 16

17 Clockwise Divert excess power in the northeast corner of ERCOT to Houston Deliver West Texas wind energy to the load north of DFW Benefit Analysis: More cost / Less Power Longer path from northeast corner to Houston Less power can be delivered to north DFW 17

18 Counterclockwise Deliver excess power in the northeast corner of ERCOT to load north of DFW Transmit West Texas wind energy to the load west of Austin/San Antonio Benefit Analysis: Less cost / More Power The path from the northeast corner of ERCOT to north DFW is much shorter than the path to Houston. While the length of the path from West Texas to north DFW is comparable to the path from West Texas to the Austin/San Antonio area, ERCOT findings indicate that more power can be delivered to the Austin/San Antonio area. 18

19 ERCOT s analysis determined that almost 5 GW of wind generation that is currently and about to be placed in-service in West Texas has sufficient transmission capacity, but only under certain conservative conditions. It was assumed that all gas generation in West Texas can be displaced by wind generation. Because that assumption may make stability limitations more constraining (the combination of gas generation and wind generation impacts the level of wind generation that can be stably transmitted), at least one new line leaving West Texas will be needed. The counter-clockwise plan identified previously, provides reinforcement to the existing system and increases the export capacity of the transmission system to allow another 2 GW of wind production to be exported from West Texas. The production cost savings of wind production identified by ERCOT would support an additional 5 GW of transmission additions for a total of 10 GW wind production in West Texas (explanation of benefits are explained in the savings section of this proposal). Based on this assumption, it is cost justified to implement aspects of both the counter-clockwise and clockwise plans. The combined plans would deliver wind production to both the area west of the I-35 corridor around Austin and San Antonio, and to the area north of DFW. ETT s improved ERCOT EHV backbone proposal enables both the clockwise and counter-clockwise plans, providing an ideal system solution. V. THE ETT TRANSMISSION PLAN PROPOSAL In order to capture the long-term value of these wind resources, ETT advocates development of a high voltage, high capacity transmission backbone. This development would allow for the proper and timely integration of these resources. ETT s transmission planning horizon should avoid designing the system in a piecemeal fashion, which would result in a series of temporary fixes. A. TRANSMISSION PLAN: COLLECTION ETT endorses ERCOT s recommendations with regards to transmission projects that would provide the most effective delivery of wind production. Specifically, ERCOT found that for West Texas the path from the San Angelo area to the area west of Austin 19

20 would be the most cost-effective. The AEP Red Creek substation provides a collection point for wind production that is the shortest distance from the load west of the I-35 corridor around Austin. The termination point near Austin is represented as Buchanan in the figure below, and is anticipated to be west of the major 138 kv hub at Ferguson Power Plant near Buchanan Dam. Additionally, the existing Morgan Creek to Twin Buttes to Red Creek 345 kv line is capable of a second circuit addition, which if added would improve the collection capacity of wind production from the area of Big Spring for delivery to the Red Creek substation. Oklaunion Electric Transmission Texas, LLC 10GW CREZ Transmission Plan Spring Valley Morgan Creek Comanche Red Creek McCamey San Angelo Buchanan Zorn First stage access to 8GW of wind generation Second stage access to an additional 2GW While such a Red Creek to Buchanan 345 kv line would add considerable transfer capability out of West Texas, it would also become the worst contingency in the system. The concern can be mitigated by creating a secondary path between San Angelo and 20

21 Buchanan. By adding the second circuit on the Red Creek to Comanche kv line, and constructing a new line from Comanche to Buchanan, the second path between San Angelo and Austin will provide backup to the loss of the primary Red Creek to Buchanan 345 kv line. The new line between Comanche and Buchanan will be discussed below in connection with the ERCOT backbone transmission system. One of the next most effective paths identified by ERCOT in its CREZ study was the Oklaunion to north DFW transmission line. Wind production north of Abilene is now constrained by power flow into the Wichita Falls area. Currently there is only a single 345 kv line that transfers power into Wichita Falls from the west. However beyond Wichita Falls there are two 345 kv lines that deliver power to the west side of DFW. In its recommendations regarding the 5 GW of wind production already committed, ERCOT endorsed a second line from Oklaunion to Bowman in Wichita Falls. This line would create two complete circuits that collect power from areas north of Abilene and deliver it to DFW. The delivery point on the west end of DFW is constrained, since it is the same the delivery point of the primary 345 kv line already delivering power from Abilene to DFW. This leads to the need for a new path from Oklaunion to north DFW. This new path identified by ERCOT is proposed by ETT to terminate near the 138 kv hub north of DFW know as Spring. While the underlying 138 kv system is built up to meet the development of electric load that is expanding away from DFW into the areas south of Spring, it will be necessary to terminate the new path at Valley, an existing 345 kv hub northeast of the DFW area. The new line would, therefore, extend from Oklaunion to Spring to Valley. The section from Spring to Valley will be discussed below in connection with the ERCOT backbone transmission system. The addition of both the San Angelo to west Austin and Oklaunion to north DFW paths should facilitate an incremental 3 GW of wind production in addition to the 5 GW of wind production already committed in West Texas. This 8 GW plan offers the most effective capture of wind production from areas already being developed. The further capture of wind production in McCamey or the panhandle of Texas will require incrementally more transmission to deliver the power to load centers. Both the collection system and delivery systems will need to be enlarged. 5 Reference is to the Comanche Switch Substation. 21

22 In order to capture more wind production from the McCamey area, which already produces 755 MW of nameplate capacity, a 345 kv line would need to be constructed from the North McCamey substation, which is the 138 kv hub for wind production collection, to a new switch station located south of San Angelo. Such a line could terminate into the new Red Creek to Buchanan 345 kv line, just south of San Angelo at this new switching station. The San Angelo Switch Station could also serve as a hub for wind collection in the immediate vicinity where additional wind resources exist. The other extension to the collection system would be another path from Red Creek to Morgan Creek near Big Spring. The intent of this path would be to collect wind production from CREZ #2, which is directly north of the Morgan Creek substation. Similarly, Oklaunion would serve as the collection point of wind production from CREZ #4. B. TRANSMISSION PLAN: DELIVERY As previously discussed, it is not efficient to consider the transmission plan for CREZ without consideration of the transmission system that delivers the power to the major load growth areas that are capable of consuming the power. Further, it is not prudent to determine the quantity of power that can be delivered to an area without accounting for the power flow pattern of the base-load generation. Recognizing these basic requirements, ETT concludes that before a CREZ transmission plan can be completed which provides the most cost effective and beneficial plan to ERCOT customers, an improved long-term EHV backbone should be considered as part of that plan. The counter-clockwise and clockwise alternatives previously demonstrated, point to the formation of a high voltage, high capacity transmission backbone that encircles the load centers deficient in base-load generation and transmission infrastructure. As seen in the figure below, a backbone system would enable the delivery of power from both baseload generation and wind production injected into the transmission loop. At each point of injection, the loop provides two paths of delivery avoiding interruption due to the loss of any one section of the system. 22

23 Oklaunion Spring Valley Electric Transmission Texas, LLC Backbone Transmission Plan WICHITA FALLS Monticello ABILENE DALLAS/FT. WORTH Martin Lake MIDLAND ODESSA McCamey Morgan Creek Red Creek Comanche San Angelo WACO Buchanan Singleton Gulf States AUSTIN King SAN ANTONIO Zorn HOUSTON Coleto Creek Hilje CREZ Transmission Plan for 10 GW VICTORIA EHV High Capacity Backbone System Long-Range System Expansion LAREDO Caballo CORPUS CHRISTI Cities/Towns Substations Sol McALLEN From the standpoint of CREZ, it is particularly important to note the delivery system that is depicted. The crescent shaped section of the loop from the northern point at Valley around to the west of Dallas/Fort Worth and down to the southern point at Zorn between Austin and San Antonio principally represents the delivery system for the San Angelo and Oklaunion CREZ transmission lines. As discussed previously, the sections of the crescent from Comanche to Buchanan and from Spring to Valley were identified as part of the 8 GW CREZ plan. The remainder of the sections within the crescent from Valley to Zorn enable an additional 2 GW plan by providing access to both the north DFW and west Austin load centers from either the Oklaunion or San Angelo CREZ lines. Creation of the delivery system that these areas will ultimately require to support rapid load growth, whether or not CREZ is developed, strengthens each of the two new paths from San Angelo and Oklaunion. With this crescent section of the backbone 23

24 transmission system, the new CREZ lines have direct access to the rapid load growth areas, as opposed to the existing 345 kv line from Abilene to DFW, by bypassing the substation at Graham avoids further constraints on the line. By recognizing the need to support load growth from a long-term perspective, it is possible to take advantage of some near term benefits of a backbone delivery system to capture cost effective wind production from West Texas. While more study is required by ETT and ERCOT and other participants, the basic principles used in this proposal are time tested on other parts of the AEP system, and show promise in the analysis to date of the ERCOT system. In order to recognize these benefits, a long-term vision of the sources of generation and anticipated load growth is needed. While ERCOT has performed valuable studies to determine the benefits of CREZ, it has not been able to achieve such long-term views of the network due to a lack of time and information. By advancing this proposal, ETT describes the benefits of a long-term vision. C. PLAN COSTS, BENEFITS AND SCHEDULE As indicated in the Executive Summary, ETT s plan consists of three basic segments of infrastructure improvements: 1) an estimated $1.3 billion in transmission and substation costs for the first stage by 2012, 2) an estimated $1.9 billion in transmission and substation costs for the second stage by 2015, and 3) the completion of the improved ERCOT EHV backbone transmission system that will be needed by ERCOT in the long term, at an estimated cost 4.2 billion. The first stage plan is anticipated to support an additional 3 GW of wind production in West Texas above the 5 GW of wind production that it already committed. Of the 475 miles of transmission line associated with this stage ETT proposes192 miles of 765 kv for establishment of the backbone. 6 An additional 2 GW of wind production, for a total of 10 GW in West Texas is estimated to require an additional 538 miles of transmission lines, 307 miles of which would be part of the backbone system and therefore proposed as 765 kv. The remaining backbone system is estimated to be 907 miles in length and is also proposed as 765 kv. 6 At a minimum, ETT would recommend that the segment be built to 765 kv standards so that it could be converted to 765 kv when a substantial portion of the backbone system is ready to be placed in-service. 24

25 In support of the PUCT CREZ docket, ERCOT produced an analysis of transmission alternates that could enable CREZ development. The results of the analysis were published in the ERCOT Analysis of Transmission Alternatives for Competitive Renewable Energy Zones in Texas, dated December, In this report ERCOT identified potential production cost savings that would result from added wind energy for different CREZs. The ERCOT report shows that the typical generator production cost savings was $130,000 per year, per MW of wind. (It should be noted that the production costs savings reflect a conservative estimate of the actual savings which would be passed on to Texas consumers.) The production cost savings more than offset the construction cost of transmission plan proposed by ETT. For example, the ERCOT report found that 3.8 GW of additional wind capacity delivered from the Central Western Texas CREZ area (an area that expands from the Abilene area west towards the Odessa/Midland region and northwest towards the Lubbock region) could provide production cost savings of $495 million/year. The same study also found that 3.8 GW of additional wind capacity delivered from the McCamey CREZ area could provide production cost savings of $506 million/year. Other CREZ areas and combinations thereof showed similar annual production cost savings. The anticipated cost to consumers for the transmission facilities necessary for an additional 5 GW of wind production is estimated by ETT to be less than $500 million/year, equivalent to the $495 million/year of savings derived from 3.8 GW of new wind production in Central Western Texas. By implementing the ETT CREZ plan consumers in ERCOT would not only benefit from lower energy costs, but would have the added benefit of a robust EHV backbone transmission system that enables access to other types of generation and enhances system wide reliability. VI. CONCLUSION Large renewable resources, in the order of several thousands of MW and higher, must have access to a robust intrastate transmission highway to allow this energy to get to the market. The vast distances between wind resources and load centers in Texas poses a unique challenge that calls for a long term solution which will allow the State to maximize the energy available from these resources, while minimizing the cost and right 25

26 of way needed to bring that power to the market. The benefits of EHV systems and particularly of the 765 kv voltage class align the long-term energy objectives of Texas with societal needs of the 21 st century. By taking a long-term systematic approach to the eventual build out of the State s transmission system, Texas will reap the rewards of a well architected plan rather than suffering the limitations associated with a piecemeal approach, which will be more expensive and less efficient. 26