Several Texas transmission owners have formed a consortium to build the $5 billion in new power lines to take advantage of the state's abundant wind generation, the companies said in a regulatory filing Thursday.
The consortium, comprised of existing transmission operators, includes Dallas-based Oncor, the state's largest power delivery company, Electric Transmission Texas (ETT), units of American Electric Power Co (AEP.N: Quote, Profile, Research), the Lower Colorado River Authority Transmission Service Corp (LCRA) and Sharyland Utilities LP.
The filing comes one week after the Texas Public Utility Commission approved a plan calling for construction of 2,400 miles (3,862 km) of high-voltage power lines at a cost exceeding $5 billion. New lines are needed to move electricity from the state's windiest areas in the west to power-hungry cities.
Those new lines, dubbed by Oncor as a "renewable energy superhighway," will accommodate about 18,500 megawatts of wind generation by 2012. Texas currently leads the nation in wind capacity at about 5,500 MW.
"Texas is already a leader in wind energy and this is the next step in maintaining that leadership position," said Charles Jenkins, Oncor senior vice president.
The companies said they joined forces to speed up the selection process so that the new lines can be built in a timely manner.
However, at least a dozen other parties, including new players, also stand ready to invest in Texas' transmission expansion.
They include units of FPL Group (FPL.N: Quote, Profile, Research), Babcock and Brown (BNB.AX: Quote, Profile, Research) and ITC Holdings (ITC.N: Quote, Profile, Research), along with existing electric cooperatives and CenterPoint Energy (CNP.N: Quote, Profile, Research).
Jolly Hayden, FPL Energy's vice president for transmission development, said he was not surprised by the joint proposal from Texas' major incumbent transmission companies.
"Lone Star Transmission has said we are willing to commit a significant amount of resources to this effort," Hayden said. "We will continue to work with all transmission providers to meet that goal."
Oncor, a subsidiary of Energy Future Holdings Corp, said it would invest more than $2 billion to build about 1,000 miles of new lines power in North Texas. Energy Future Holdings, the former TXU Corp, is owned Kohlberg Kravis Roberts and Co [KKR.UL] and TPG [TPG.UL].
Austin-based ETT wants to build 710 miles of new lines at a cost of at least $1.5 billion. AEP's Texas Central and Texas North units will be responsible for 145 miles of upgraded transmission lines, under the joint proposal.
Electric Transmission Texas is a joint venture formed by AEP, the nation's largest transmission operator, and MidAmerican Energy Holdings, a unit of Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research).
LCRA proposed facilities in central Texas and privately held Sharyland, owned by members of the Hunt family of Dallas, proposed developing lines linking the Texas Panhandle to the primary Texas grid.
Texas regulators will decide which companies build the new lines. Two of the three commissioners are set to leave office by early September, meaning new members will make the selection.
"We're optimistic that the work that has been done will make it easier for new commissioners to get up to speed as soon as possible," said AEP spokesman Larry Jones.
