Pattern closer to go on Texas power line

San Francisco Business Times – Lindsay Riddell, December 23, 2011

San Francisco-based Pattern Energy is a few steps closer to building a proposed 400-mile transmission line that could export Texas wind to neighboring southern states.

The high-voltage, direct-current line, which would be the longest Pattern has ever developed, passed crucial regulatory milestones in recent weeks that will allow Pattern to start securing contracts with power plant owners who will transmit power across the line.

Pattern crossed an important milestone when the Federal Energy Regulatory Commission, which regulates interstate transmission lines like Southern Cross, said Texas transmission owners that connected to the Southern Cross line would answer to Texas rather than federal regulators.

Making Texas power producers that connect to the Southern Cross line subject to federal regulation would have been a deal-breaker, said Pattern CEO Mike Garland.

"Without this (FERC's ruling), ERCOT and Texas would be more reluctant to go forward with the project," he said. "They wouldn't want it triggering any risks associated with federal regulation of the system. That's a big deal for the project and us as well as all the other folks."

The overhead transmission line will cost about $1 billion to develop and build. With the latest rulings, Pattern can now contract with utilities and independent power providers who will want to connect their plants to the line for power delivery in Texas, Mississippi and Louisiana. With those contracts in place, Garland said the company will be able to secure the remaining financing for the project.

Texas has abundant wind — and more wind power than it can use. But its transmission system is essentially an island that doesn't link to other federal or state electric grids. Utilities, including the Tennessee Valley Authority, which provide electricity in seven southern states including Mississippi, have contracts for tons of new wind power from Texas and surrounding states set to come online in the next several years. Those deals require new transmission lines.

"So far, the existing AC transmission infrastructure has been able to accommodate that (TVA's current wind contracts), but there is limited capacity available," said Mike Bradley, a TVA spokesman. "To create more headroom, we're looking at several transmission infrastructure projects and potential additions that are going through the process to connect at the boundaries of our service area."

The Southern Cross line would enable gigawatts more in wind power generation to be developed in Texas and would improve reliability in the Texas grid.

Transmission projects face numerous challenges, among them: locating and building the lines, proving need for the lines and getting anchor tenants to sell power on the lines. There are also competing developers, including the Clean Line Energy Partners, which is developing the 800-mile Plains & Eastern Clean Line project from the Oklahoma and Texas panhandle to more southern states. But Pattern, which built the underwater Trans Bay cable from Pittsburg to San Francisco, has shown it can overcome challenges.