Current through Reg. 50, No. 13; March 28, 2025
(a)
Competitive Renewable Energy Zone Transmission Projects. In considering an
application for a certificate of convenience and necessity (CCN) or CCN
amendment for the addition of a second 345-kilovolt (kV) circuit on the
Alibates-AJ Swope-Windmill-Ogallala-Tule Canyon transmission line, the
commission is not required to consider the factors under Public Utility
Regulatory Act (PURA) §37.056(c)(1) and (2).
(b) Designation of Competitive Renewable
Energy Zones. The designation of Competitive Renewable Energy Zones (CREZs)
pursuant to PURA §39.904(g) shall be made through one or more
contested-case proceedings initiated by commission staff, for which the
commission shall establish a procedural schedule. The commission shall consider
the need for proceedings to determine CREZs in 2007.
(1) Commission staff shall initiate a
contested case proceeding upon receiving the information required by paragraph
(2) of this subsection. Any interested entity that participates in the
contested case may nominate a region for CREZ designation. An entity may submit
any evidence it deems appropriate in support of its nomination, but it shall
include information prescribed in paragraph (2)(A) - (C) of this
subsection.
(2) By December 1,
2006, the Electric Reliability Council of Texas (ERCOT) shall provide to the
commission a study of the wind energy production potential statewide, and of
the transmission constraints that are most likely to limit the deliverability
of electricity from wind energy resources. ERCOT shall consult with other
regional transmission organizations, independent organizations, independent
system operators, or utilities in its analysis of regions of Texas outside the
ERCOT power region. At a minimum, the study submitted by ERCOT shall include:
(A) a map and geographic descriptions of
regions that can reasonably accommodate at least 1,000 megawatts (MW) of new
wind-powered generation resources;
(B) an estimate of the maximum generating
capacity in MW that each zone can reasonably accommodate and an estimate of the
zone's annual production potential;
(C) a description of the improvements
necessary to provide transmission service to the region, a preliminary estimate
of the cost, and identification of the transmission service provider (TSP) or
TSPs whose existing transmission facilities would be directly
affected;
(D) an analysis of any
potential combinations of zones that, in ERCOT's estimation, would result in
significantly greater efficiency if developed together; and
(E) the amount of generating capacity already
in service in the zone, the amount not in service but for which interconnection
agreements (IAs) have been executed, and the amount under study for.
(3) The Texas Department of Parks
and Wildlife may provide an analysis of wildlife habitat that may be affected
by renewable energy development in any candidate zone, and may submit
recommendations for mitigating harmful impacts on wildlife and
habitat.
(4) In determining whether
to designate an area as a CREZ and the number of CREZs to designate, the
commission shall consider:
(A) whether
renewable energy resources and suitable land areas are sufficient to develop
generating capacity from renewable energy technologies;
(B) the level of financial commitment by
generators; and
(C) any other
factors considered appropriate by the commission as provided by PURA,
including, but not limited to, the estimated cost of constructing transmission
capacity necessary to deliver to electric customers the electric output from
renewable energy resources in the candidate zone, and the estimated benefits of
renewable energy produced in the candidate zone.
(5) The commission shall issue a final order
within six months of the initiation by commission staff of a CREZ proceeding,
unless it finds good cause to extend the deadline. For each new CREZ it orders,
the commission shall specify:
(A) the
geographic extent of the CREZ;
(B)
major transmission improvements necessary to deliver to customers the energy
generated by renewable resources in the CREZ, in a manner that is most
beneficial and cost-effective to the customers, including new and upgraded
lines identified by voltage level and a general description of where any new
lines will interconnect to the existing grid;
(C) an estimate of the maximum generating
capacity that the commission expects the transmission ordered for the CREZ to
accommodate; and
(D) any other
requirement considered appropriate by the commission as provided by
PURA.
(6) The commission
may direct a utility outside of ERCOT to file a plan for the development of a
CREZ in or adjacent to its service area. The plan shall include the maximum
generating capacity that each potential CREZ can reasonably accommodate;
identify the transmission improvements needed to provide service to each CREZ;
and include the cost of the improvements and a timetable for complying with all
applicable federal transmission tariff requirements.
(c) Level of financial commitment by
generators for designating a CREZ.
(1) A
renewable energy developer's existing renewable energy resources, and pending
or signed IAs for planned renewable energy resources, leasing agreements with
landowners in a proposed CREZ, and letters of credit representing dollars per
MW of proposed renewable generation resources, posted with ERCOT, that the
developer intends to install and the area of interest are examples of financial
commitment by developers to a CREZ. The commission may also consider projects
for which a TSP, ERCOT, or another independent system operator is conducting an
interconnection study; and any other factors for which parties have provided
evidence as indications of financial commitment.
(2) A non-utility entity's commitment to
build and own transmission facilities dedicated to delivering the output of
renewable energy resources in a proposed CREZ to the transmission system of a
TSP in Texas or a deposit or payment to secure or fund the construction of such
transmission facilities by an electric utility or a transmission utility to
deliver the output of a renewable generation project in Texas is an indication
of the entity's financial commitment to a CREZ.
(d) Plan to develop transmission capacity.
(1) After the issuance of a final order in
accordance with subsection (b)(5) of this section, entities interested in
constructing the transmission improvements shall submit expressions of interest
to the commission. The commission shall select the entity or entities
responsible for constructing the transmission improvements, establish a
schedule by which the improvements shall be completed, and specify any
additional reporting requirements or other measures deemed appropriate by the
commission to ensure that entities complete the ordered improvements in a
timely manner.
(2) The commission
shall develop a plan to construct transmission capacity necessary to deliver to
electric customers, in a manner that is most beneficial and cost-effective to
the customers, the electric output from renewable energy technologies in the
CREZ.
(3) In developing the
transmission capacity plan, the commission may consider:
(A) the estimated cost of constructing
transmission capacity necessary to deliver to electric customers the electric
output from renewable energy resources in the candidate zone;
(B) the estimated cost of additional
ancillary services; and
(C) any
other factors considered appropriate by the commission as provided by
PURA.
(e)
Certificates of convenience and necessity.
(1) Not later than three years after a
commission final order designating a CREZ, each TSP selected to build and own
transmission facilities for that CREZ shall file all required CREZ CCN
applications. The commission may grant an extension to this deadline for good
cause. The commission may establish a filing schedule for the CCN
applications.
(2) A CCN application
for a transmission project intended to serve a CREZ, except an application
filed pursuant to paragraph (1) of this subsection or subsection (a) of this
section, shall address all the criteria in PURA §37.056, including the
criteria in PURA §37.056(c)(1) and (2).
(3) In determining whether financial
commitment for a CREZ is sufficient under PURA §39.904(g)(3) to grant CCNs
for transmission facilities for the CREZ, the commission shall consider the
following evidence of financial commitment by renewable generators:
(A) capacity represented by installed
generation located in one or more of the counties that lie in whole or in part
within the CREZ;
(B) capacity
represented by generation projects under construction that are located in one
or more of the counties that lie in whole or in part within the CREZ and that
will be operational within six months of the final order in a financial
commitment proceeding. Evidence that the project will be operational within six
months may include documentation showing that a construction contractor has
been hired, that preliminary site work has begun, that the project financing
has closed, or similar indicators of the status of the project;
(C) capacity represented by planned
generation projects that are located in one or more of the counties that lie in
whole or in part within the CREZ and that have a signed IA with a TSP that has
been defined in subsection (a)(2)(E) of this section designated to build and
own transmission facilities for that CREZ; and
(D) capacity represented by collateral posted
by generators for the CREZ that complies with paragraph (7) of this
subsection.
(4)
Financial commitment for a CREZ is sufficient under PURA §39.904(g)(3) to
grant CCNs for transmission facilities for the CREZ if the sum of the renewable
generating capacity under any combination of paragraph (3)(A), (B), (C), and
(D) of this subsection is at least 50% of the designated generating capacity
for the CREZ. Fifty percent of the designated generating capacity for the
Panhandle A CREZ approved by the commission in Docket Number 33672 shall be
considered to be 1,595.5 MW. Fifty percent of the designated generating
capacity for the Panhandle B CREZ approved by the commission in Docket Number
33672 shall be considered to be 1,196.5 MW.
(5) Installed renewable generation, renewable
generation projects under construction, and planned renewable generation
projects with signed IAs in the McCamey, Central, and Central West CREZs
approved by the commission in Docket Number 33672 satisfy the financial
commitment test set forth in paragraph (4) of this subsection for those CREZs
and therefore financial commitment by renewable generators for those CREZs is
sufficient under PURA §39.904(g)(3) to grant CCNs for transmission
facilities for those CREZs. This finding of sufficient financial commitment
shall be recognized in the CCN proceedings for transmission facilities for
those CREZs and shall not be addressed further in those proceedings.
(6) Commission staff shall initiate a single
proceeding for the commission to determine whether there is sufficient
financial commitment under PURA §39.904(g)(3) by renewable generators for
the Panhandle A and Panhandle B CREZs approved by the commission in Docket
Number 33672 to grant CCNs for transmission facilities for those CREZs. If the
commission determines that there is sufficient financial commitment for one of
those CREZs, that finding shall be recognized in the CCN proceedings for
transmission facilities for that CREZ, as identified in the commission's order
in the proceeding initiated pursuant to this paragraph, and shall not be
addressed further in the CCN proceedings. If the commission determines that the
Panhandle A or Panhandle B CREZ does not satisfy the financial commitment test
in paragraph (4) of this subsection, the commission may:
(A) consider other evidence of financial
commitment that the commission finds relevant under PURA
§39.904(g)(3);
(B) find that
the financial commitment requirement for that CREZ has been met if the
commission determines that significant financial commitment exists in that CREZ
and that the CREZ is sufficiently interrelated with a CREZ that has satisfied
the financial commitment test;
(C)
delay the filing of CREZ CCN applications for that CREZ until the commission
conducts a subsequent proceeding in which it finds sufficient financial
commitment for that CREZ in accordance with the financial commitment provisions
of this subsection; or
(D) take
other appropriate action.
(7) A renewable generator that elects to post
collateral pursuant to paragraph (3)(D) of this subsection shall comply with
the following requirements:
(A) The renewable
generator shall provide a letter of intent to post collateral in a proceeding
conducted pursuant to paragraph (6) of this subsection. The renewable generator
shall then post the collateral no later than 30 days after the commission
issues an interim order finding sufficient financial commitment by renewable
generators for the CREZ. If the renewable generators post sufficient
collateral, the commission may enter a final order with findings that reflect
the adequacy of the financial commitment for the CREZ. If the renewable
generators do not post sufficient collateral, the commission may enter a final
order with findings that reflect the inadequacy of the financial commitments
for the CREZ.
(B) A renewable
generator shall post collateral equal to $15,350 per MW of its planned project
capacity, or $10,000 per MW if the capacity is supported by leasing agreements
with landowners that convey a right or option for a period of at least 20 years
to develop and operate a renewable energy project based on a conversion factor
of 60 acres per MW for a wind energy project.
(C) A renewable generator planning to build a
project in a CREZ shall post collateral with the TSP with which it will
interconnect in the CREZ or, if the TSP with which it will interconnect has not
been determined, with any TSP that has been designated to build and own
transmission facilities for that CREZ.
(D) A renewable generator may post collateral
by providing a cash deposit, letter of credit, or guaranty agreement from an
entity with an investment-grade credit rating. A TSP shall require a renewable
generator that posts a guaranty agreement to provide another form of collateral
if the guarantor loses its investment-grade credit rating or declares
bankruptcy. If the renewable generator does not provide another form of
collateral, the commission may take appropriate action including seeking
administrative penalties.
(8) A TSP that receives collateral from a
renewable generator pursuant to paragraph (7) of this subsection shall handle
that collateral in accordance with the following provisions.
(A) If a renewable generator signs an IA with
the TSP and posts any collateral required by the TSP to secure the construction
of collection facilities, the TSP shall return to the generator all collateral
received from that generator.
(B)
If a renewable generator does not sign an IA with the TSP and post any
collateral required by the TSP to secure the construction of collection
facilities within 90 days after the TSP notifies it that the transmission
system is capable of accommodating the renewable generator's renewable energy
facility, the TSP shall retain the collateral received from the generator as an
offset to the cost of the transmission facilities the TSP constructs for the
CREZ and shall take all reasonable measures to execute any non-cash
collateral.
(9) In a
CREZ CCN application, a TSP may propose modifications to the transmission
facilities described in a CREZ order if such improvements would reduce the cost
of transmission or increase the amount of generating capacity that transmission
improvements for the CREZ can accommodate. The commission may direct ERCOT to
review modifications proposed by the TSP.
(10) Findings in Docket Numbers 33672, 35665,
and 36146 and the commission's finding in paragraph (5) of this subsection
establish that the level of financial commitment is sufficient under PURA
§39.904(g)(3) to grant CCNs for transmission facilities designated as a
Default Project in ordering paragraph 1 of the Order in Docket Number 36146 and
for transmission facilities designated as a Priority Project in finding of fact
136 in the Order on Rehearing in Docket Number 33672. This finding of
sufficient financial commitment shall be recognized in all pending and future
CCN proceedings for Default and Priority Projects and shall not be addressed
further in those proceedings.
(f) Excess development in a CREZ. If the
aggregate level of renewable energy capacity for which transmission service is
requested for a CREZ exceeds the maximum level of renewable capacity specified
in the CREZ order, and if the commission determines that the security
constrained economic dispatch mechanism used in the power region to establish a
priority in the dispatch of CREZ resources is insufficient to resolve the
congestion caused by excess development, the commission may initiate a
proceeding and may consider limiting interconnection to and/or establishing
dispatch priorities regarding the transmission system in the CREZ, and
identifying the developers whose projects may interconnect to the transmission
system in the CREZ under special protection schemes.