The city took legal action after its municipal utility, Garland Power & Light (GPL), was refused permission to build some of the new transmission lines in the north of the state, hundreds of miles away from Garland, a suburb of Dallas (see map).
The PUC must now revisit GPL's bid and decide whether to allow the utility to build a portion of the project, which could alter construction plans on lines where contracts have already been won by other utilities.
Last year the PUC decided against awarding GPL a contract, arguing that, were it to hand a deal to GPL, it would lose control over the route and construction timetable of the line.
Further, any local people who opposed the line would face sending their complaints to a distant city council, rather than to state regulators.
The lines, part of the state's $5 billion Competitive Renewable Energy Zone (Crez) plan, are expected to serve as part of a superhighway bringing wind power from gusty but sparsely populated west Texas to Dallas and other energy-hungry metropolitan areas.
All Texas utilities share the cost of Crez. But GPL, which owns its own coal power stations and other generation sources, is unlikely to derive significant benefit from the new lines. GPL had planned to offset some of the cost of Crez allocated to it by making a profit from building transmission in the Panhandle. When it was refused, it brought the lawsuit.
District Judge Stephen Yelenosky of Austin remanded the PUC's 2009 order, which awarded dozens of Crez projects to various utilities, ruling that some of the deciding factors used by the commission to reject GPL's bid were not legally relevant. The judge stopped short of issuing an injunction on any segments of the project. Meanwhile, ten so-called high-priority Crez projects, on which GPL did not bid, are unlikely to be affected.
"The PUC's concern about their authority to oversee a municipal utility's lines seems to be a valid point," says Mike Sloan, president of Texas-based renewable energy consultancy Virtus Energy. "The City of Garland may have good reasons for feeling like they need to do it. But it seems very unusual to have a municipal utility that owns major assets hundreds of miles away." Sloan expects the issue to be resolved within two months.
Texas electricity ratepayers are billed roughly $4 per month to pay for Crez, which is expected to accommodate up to 18.5GW when completed in 2013 - a boost of nearly 25% to the state's main power grid.