United States

United States

United States: Power line built in super-quick time

Premium prices to landowners could set precedent.

NextEra Energy's 325-kilometre Texas Clean Energy Express was fired up this autumn - just ten months after breaking ground. The build contravenes conventional wisdom that says power line construction timetables are measured in years. The privately owned 345 kV transmission line delivers power southward from the company's 747 MW Horse Hollow and 120 MW Callahan Divide wind projects in sparsely populated west Texas to the urban centre of San Antonio in the south-central part of the state. The accelerated pace was hastened by the use of private land. Developing on private land requires no construction permissions bureaucracy or public hearings in business-friendly Texas.

"NextEra took a 36-month project and did it in ten months," says Glen Webb, a private attorney representing west Texas landowners, and secretary of the Texas Wildlife Association. NextEra built the line partly because inadequate existing transmission has resulted in periods of curtailment, preventing the company from collecting full value in power sales and federal tax credits. In addition, low natural gas prices, which influence overall power prices in Texas, are resulting in low returns for electricity generation. The three phases of NextEra's Horse Hollow projects operate without long-term power purchase agreements (PPAs) and are therefore subject to fluctuating market prices. "This was a unique opportunity that we saw to alleviate some challenges associated with some of our west Texas wind assets," says NextEra spokesman Steve Stengel. "Pricing in the south (of the state) clears at a higher price than that in the west. Clearly, (building the line brought benefits) to us or we wouldn't have done it."

Stengel also believes that, with the new line boasting a capacity of 950 MW, significant pre-existing capacity will become available for nearby developments. Stengel says: "Others who have wind projects in west Texas, or landowners that receive a royalty payment from wind turbines on their property, those are folks other than NextEra that are benefiting from this project."

Land price hike fear

A decision by NextEra to pay landowners a premium to use their properties could set a precedent and result in the state government having to pay inflated prices for its own transmission development programme.

The Texas Public Utility Commission is continuing with its $5 billion transmission expansion plan, Competitive Renewable Energy Zones (CREZ), to construct 3700 kilometres of new wires before 2014.

Right of way for the lines will be obtained where possible through agreements with private landowners. But the utilities and transmission building companies reserve the right to use the Texan eminent domain mechanism - when the state government takes over private land with a payment - to hang the CREZ wires. "I would rather see transmission lines negotiated ... in private transactions than using eminent domain," says Webb. "I think NextEra did the right thing."

Under the eminent domain mechanism, the amount paid by the state government to take over private land is determined by comparing similar private transactions, says Webb. Observers believe that NextEra paid a premium to the landowners to host its Clean Energy Express, which could result in inflating the cost of royalties paid to landowners as the CREZ programme is rolled out. The rises will ultimately be passed on to electricity consumers. "These prices that NextEra paid are out there and that's what every eminent domain lawyer in the state is going to be pointing to," says Webb.

Furthermore, there are concerns that NextEra's new wires will cause eyesores as the company's transmission footprint moves from west Texas grazing lands to the Hill Country of central Texas, a part of the state that is home to many retirees and prized for its rugged beauty. "The CREZ transmission lines are going to have a major impact on this area to start with - so we feel strongly that we didn't need an additional private line coming through this area," says Robert Weatherford, chairman of Save Our Scenic Hill Country Environment, a coalition of landowners, business and conservation groups. "We support implementation of CREZ lines and projects with minimal impacts (but) we believe the number of routes should be minimised."

Diverging views

Webb understands that view but emphasises that landowners were free to spurn NextEra's advances. "You've got to understand Texas," he says. "It's a diverse place and there are a lot of divergent views on this wind business - it cuts a lot of different ways. The Hill Country is just a gorgeous area of the state and a totally different economy than west Texas, so people are really fearful of not only transmission lines, but of wind development. And when it starts to involve the state government taking people's land, that's a very political situation and it causes a lot of emotion."

Meanwhile, Stengel says NextEra totally supports the CREZ programme. "Our project in no way diminishes our enthusiasm for or belief in the importance of CREZ," he says. "We think Texas has done something really bold and innovative and we fully support the CREZ process."

Stengel will not disclose the price of Next Era's new line, but transmission experts generally price construction of 345 kV capacity around $650,000 per kilometre, making the project worth upwards of $200 million. "It was a pretty expensive undertaking," says a high-ranking developer at a separate wind development company.

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