Everything's bigger in Texas... even the smart grid cost overruns

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By Doug Peeples

SGN News Editor

When the Texas Public Utility Commission approved a massive transmission buildout of thousands of miles of lines to carry wind energy from wind-rich West Texas to the big cities at the other end of the state the cost estimate at the time (2008) was $4.93 billion. The latest update puts that number at $6.79 billion, which is quite a jump by anyone's accounting. And that number could change over time (we think we know what that means).

The new number, according to an article in The Texas Tribune, amounts to about $270 for every Texan – or, as the PUC says – $4 to $5 a month for years. We could be wrong, but we're expecting the PUC will approve rate recovery applications for the companies building the new lines.

Why? Lots of reasons. Wind is huge in Texas. The state produces far more wind power than it can use, far more than any other state in the country. Enough to export to other, less fortunate states. Successful completion of the transmission lines means more wind farms to follow and, of course, more jobs. Wind in Texas is a goose that lays golden eggs (OK, oil is too), and has the aggressive backing of Gov. Rick Perry who, as the Tribune article notes, picks the three PUC commissioners.

So, good for them. But what happened?

Where did that almost $2 billion bulge in the cost estimate come from? Yes, some of it is inflation. But here's the deal: According to the update from engineering and consulting company RS&H, the original estimate used straight-line distances to determine cost. And the PUC frequently asked that the routes follow fence lines or roads to minimize intrusions (and objections?). The result? The actual miles of transmission lines needed are likely to be 10% to 50% more than originally projected. RS&H also said it's likely that actual costs "may fluctuate and change over the next year."

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