Key points:
* $1.5 billion transmission system
* $10 billion power plants
* 3 years
* 800 miles
* TX currently 2,849 megawatts of capacity.
* 1,800 MW Airtricity proposal
* Other partners would add another 2,400 megawatts of wind power,
2,000 megawatts of gas-fired electric power and 1,800 megawatts of
coal-fired power.
* TXU proposed $10 billion to build 11 coal-fired 8,600 MW power
plants.

http://www.dallasnews.com/sharedcontent/dws/bus/stories/021607dnbuswi...
Texas companies plan wind, gas, coal power plants

Bid to connect state to Panhandle energy a contrast to TXU effort

08:17 AM CST on Friday, February 16, 2007

By JIM LANDERS and ELIZABETH SOUDER / The Dallas Morning News

Several Texas energy companies offered Thursday to build a string of
wind, gas and coal-fired power plants and transmission lines across
the Panhandle that could lessen the state's future dependence on coal
while supplying enough electricity for more than a million Texas
homes.

More than 15 proposals were filed with the Public Utilities Commission
to meet a Thursday deadline for competitive renewable energy zones,
mostly in the Panhandle and West Texas.

The largest proposal, called the Panhandle Loop, involves a $1.5
billion transmission system and $10 billion in power plants. Project
sponsors say the entire system could be available within three years.

Sharyland Utilities LP of McAllen, owned by the Hunt family of Dallas,
is the lead company in the Panhandle Group.

It would build 800 miles of electric transmission lines to connect
Panhandle power producers with customers in the Dallas-Fort Worth
area, Austin and San Antonio. The plan to use diverse energy sources
represents a challenge to TXU Corp.'s proposal to build 11 coal-fired
power plants in Texas to meet what state officials call a critical
need for more electricity in the near future.

"We feel the best way to address that is through our comprehensive
plan of building 11 coal plants using the best available technology,"
said TXU spokesman Tom Kleckner. "We feel our plan offers the best
chance of meeting the shortfall we are looking at in 2009 to 2010."

Pat Wood, the former chairman of the Public Utilities Commission,
represents one of the partners in the Panhandle Loop - Airicity Inc.
of Ireland.

Mr. Wood said the group did not design its package as an alternative
to TXU's coal plants but was keenly aware of the environmental
concerns surrounding the state's increased reliance on coal.

"I honestly don't know whether or not customers will view this project
as an alternative to TXU, but I do know that a kilowatt-hour from the
Panhandle is one that doesn't have to be generated somewhere else,"
said Mr. Wood, also former chairman of the Federal Energy Regulatory
Commission.

Mr. Wood said the five partners in the Panhandle Loop have plenty of
capital and a track record of getting projects built quickly.

BP Wind Energy of North America Inc., Invenergy Wind of North America
LLC, Mesa Power LLC, Shell Windenergy Inc., Mesa Power LLC and several
other companies filed different proposals for renewable energy
projects with the Public Utilities Commission on Thursday.

Most filed proposals about five to 15 pages long. The Panhandle Loop
proposal numbers 272 pages.

Mr. Wood said the Panhandle Loop group expects several of the other
projects to seek a link with their transmission lines.

"This process is, 'If you build it, they will come,' " he said. "Wind
won't get built if the transmission isn't there. We're generating good
wind in Texas, but not from the best possible places."

Texas leads the nation in wind-generated electricity with 2,849
megawatts of capacity. State law requires utilities to get 5,000
megawatts of their power from renewable sources by 2015, and wind
generators expect to pass that goal much sooner.

Airicity expects to build 1,800 megawatts of wind-turbine generation
by 2010 to link to the Panhandle Loop, Mr. Wood said. Other partners
would add another 2,400 megawatts of wind power, 2,000 megawatts of
gas-fired electric power and 1,800 megawatts of coal-fired power.

TXU last April proposed a plan to spend $10 billion to build 11 coal-
fired power plants. That amounts to 8,600 megawatts of capacity that
would run almost all the time.

TXU has said it can build the plants quickly and cheaply enough to
address Texas' growing demand for electricity, while lowering
wholesale power costs.

The Electric Reliability Council of Texas has predicted that, by 2008,
demand on the peak power usage days will get dangerously close to
supply, leaving little margin for hiccups. TXU would begin operating
its plants as soon as 2010.

Coal is one of the cheapest power generation fuels. Adding more coal
plants, TXU says, will lower average wholesale prices, which would
trickle down to consumers if electricity suppliers choose to lower
rates.

Power experts say the problem with wind is that it doesn't blow in a
predictable way. That's why ERCOT only counts a small portion of wind
capacity into its calculations of reliable generating capacity.

Mr. Wood said the Panhandle Loop partners believe the coal- and gas-
fired generating plants in the Panhandle would provide base stability
to the system while wind would provide the bulk of the electricity.

Panhandle electricity users are outside the state electricity grid
operated by ERCOT, which means none of the power generated there can
reach the rest of Texas. The Panhandle Loop group says its proposal
would allow power produced in the state's far north to be fed to the
rest of the state.

"Quite simply, this proposal will bring the ERCOT grid to the
Panhandle. That way, the entire state can enjoy the benefits of the
tremendous wind resources located there, as well as the substantial
gas and coal resources," said Hunter Hunt, president of Sharyland
Utilities. "Once this project is approved by the PUC, Sharyland
Utilities is committed to moving forward expeditiously with a goal of
project completion by 2010."

Celanese Corp. of Dallas, a chemicals manufacturer that has a
production plant in Pampa, is one of the Panhandle Loop partners. The
chemical plant includes a 150-megawatt, coal-fired power unit.
Celanese has said it is looking for other uses for the Pampa site,
which is one of the older and more expensive chemical plants in the
company's global network.

Babcock & Brown Renewable Holdings Inc. of Australia and Occidental
Energy Ventures Corp. are the other partners.

The proposals for renewable energy zones filed Thursday and, in some
cases, last month will be evaluated by the Public Utilities Commission
and face contested hearings, said PUC spokesman Terry Hadley.

One area of concern is cost, since the transmission lines included in
the proposals would be passed along to the state's electricity
consumers.

The State Office of Administrative Hearings will hold air permit
hearings beginning Wednesday on some of the TXU plants.

The Texas Commission on Environmental Quality will ultimately decide
whether to grant permission for the plants.

TXU has faced opposition to its plans from environmentalists,
politicians, business leaders and competitors, largely over concern
about air pollution. Coal plants generate more pollution than other
types of plants.