CenterPoint Project Aims to Bring Congestion Relief to Power, Prices

RYAN HANDY / March 2, 2017 Read more

It was an unusually hot Texas day in late February and, per usual, Houston was causing trouble.

By late afternoon on Feb. 22, temperatures around the state had climbed into the 90s, and the demand for power surged. In Houston, where midday wholesale power prices typically hover around $25, the price spiked to $4,000 per megawatt-hour - a sign that the market was short of supply.

The problem, though, likely wasn't production; generators were making plenty of electricity. They just couldn't get it to Houston because transmission lines didn't have the capacity to carry it all.

The solution to that bottleneck is coming, as CenterPoint Energy, the monopoly distribution company, begins construction on a $310 million transmission line that will stretch nearly 60 miles through Grimes, Waller and Harris counties, and help bring more power to Houston when the region really needs it. The cost of the project is expected to add 20 to 25 cents to monthly bills, CenterPoint said, but that additional cost could be offset over the longer term by moderating the spikes in wholesale prices that eventually trickle to retail customers.

"When demand gets higher, the (new line) could minimize the congestion costs that we saw," said John Kellum, the vice president of CenterPoint's transmission operations.

The start of the project comes for CenterPoint after nearly three years of holding public meetings, acquiring hundreds of private property easements, meeting regulatory requirements and battling with Houston power companies NRG Energy and Calpine, both of which made unsuccessful bids to stop the project.

Higher electricity prices usually mean higher profits for generators. NRG did not respond to a request for comment; Calpine declined to comment.

The Electric Reliability Council of Texas, which oversees most of the state's power grid, supported the project as a way to increase the reliability of the system and avoid price spikes.

For the past two years, the transmission bottleneck in Houston has been the worst in ERCOT's power grid.

The problem has intensified as Houston's population has grown, adding to demand that overloads the transmission lines.

Studies by ERCOT have found that transmission lines could become so congested - think freeway gridlock that brings traffic to a halt - that blackouts at times of peak demand could hit Houston by 2018.

The new line, scheduled for completion next year, should ease congestion, but more lines will be needed as the region's population grows, Kellum said.

"I just don't see the demand slowing down," he said.

Houston's bottleneck problem is well-known in the control room of ERCOT, where a group of nine works 12-hour shifts around the clock watching and managing power fluctuations on the grid.

Half of Houston's power comes from areas outside the city, which means Houston leans on a handful of transmission lines that can quickly get congested.

The price spike on Feb. 22 is not uncommon when electricity can't get into the market fast enough to keep up demand.

At 3 p.m. that day, a giant, digital map of Texas mounted on a wall of the control room showed color-coded power prices around the state.

The Gulf Coast was bright red, signaling very high wholesale electricity prices.

The $4,000 per megawatt-hour price lasted for about five-minutes intervals while prices climbed into the hundreds in North Texas.

Since ERCOT settles on wholesale prices based on 15-minute averages, final prices came in around $1,600 - still more than 50 times above normal.

Read More Here