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Rising Costs and the Texas Electricity Grid Expansion

September 28, 2011

Texas has always been a leader in oil and natural gas production in the country but in recent years it has once again emerged at the forefront of energy production and development, this time in the form of renewable wind energy sources. The state of Iowa and if Texas would have been a separate nation, it would rank sixth among the top wind energy can now generate Texas electricity three times as much that producing countries in the world.

There are now more than 30 grid-scale wind energy farms mostly located in West Texas and the Panhandle with still more projects coming up. This would cater to residents’ power to choose energy options, many of whom would choose clean energy sources for the electricity they use. Aside from that, establishing a reliable grid based on renewable energy sources may one day bring cheap electricity to the people.

The problem however is how to bring the generated electricity in these wind farms to the big metropolitan areas like Dallas and Fort Worth where the biggest consumers of electricity are located. The state still lack the transmission lines to make this happen and have invested a significant amount of money for grid expansion. However, new estimates have placed the cost of building these new transmission lines at a  new level that is 38 percent higher than what was projected three years ago – and will have certain implications for the Texas consumer in the coming years.

The Need for Additional Transmission Lines

The boom in wind farm development entails the need for several thousands of miles of new transmission lines that will bring the generated Texas electricity from West  Texas and the Panhandle down to the large metropolitan areas where consumption is at the highest. The project is backed by the state and the
Public Utility Commission, projecting investments of up to $4.93 billion for this project.

These new transmission lines are expecting completion byDecember of 2013 and will be completed in several stages. Several companies will take part in the project, each of whom is allocated to build hundreds or thousands of miles of transmission lines in their assigned areas of construction.

Rising Costs of Grid Expansion

As the transmission line project progress, new estimates of the total cost that this project will entail placed the total figure at $6.79 billion, significantly higher than the original $4.93 billion estimated for the project. There are several reasons why this increase happened, some of which were not expected by the Public Utility Commission.

The original cost estimate for the project was based on calculations wherein the transmission lines will be installed in straight line distances across the grid. However as the project progressed, there arose a need to minimize the intrusion on the properties where the new lines will traverse, creating several controversies and forcing the Public Utility Commission to request builders to build the lines along fences and roads instead – and this entails additional costs.

Property owners where lines will be built across will be paid a one-time sum from the transmission companies. For those who oppose these new lines from going through their properties, the transmission companies have no choice but to divert these lines, resulting in distances that are 10 to 50 percent longer than what was originally planned. Longer lines means higher build costs – not to mention that these costs will fluctuate and be affected by inflation in the next year or so adding to the cost even more.

What this imply is that the amount that will ultimately be charged back to the Texan consumer will significantly increase, reaching figures of up to $270 for every consumer, which will be charged to their Texas electricity bills at $4 to $5 per month until the total amount if paid off.

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