Why did Texas not approve? Found this online.
Thompson & Knight attorney Rex VanMiddlesworth, who represented the Texas Industrial Energy Consumers trade group, said SWEPCO’s “unnecessary $4.5 billion investment of ratepayer money” was built on a series of improbable assumptions that included $4.75/MMBtu gas prices in 2021
“I don’t believe I could approve the PFD, because I don’t believe it provides sufficient safeguards for the ratepayers,” said PUC Chair DeAnn Walker. “The costs are known. The benefits are based on a lot of assumptions that are questionable.”
“They’re asking us for $4.5 billion in taxing authority against the people of Texarkana and Longview,” Commissioner Arthur D’Andrea said during the PUC’s open discussion, referencing the major cities in SWEPCO’s East Texas footprint.
“It’s one thing when the story is, ‘We need this generation to go forward,’” D’Andrea said. “But when the question is, ‘We don’t need it, and we think it will lower the rates, and we think it’s a good deal and it’s a financial play.’ … You have a burden to show the taxpayers and businesses of Texarkana and Longview really have something to gain from that. I don’t think [SWEPCO has] met that burden.”
The PUC in May approved a 478-MW wind farm for Southwestern Public Service, following a settlement agreement between SPS and various parties. (See Texas PUC Issues Final Order for SPS Wind Farm.)
SWEPCO was never able to reach a settlement with its intervenors.
“The only reason it worked in the SPS case was because everyone agreed to [customer protections],” Walker said. “We don’t have that situation here, where everyone could agree to what I believe are reasonable conditions.”
Thompson & Knight attorney Rex VanMiddlesworth, who represented the Texas Industrial Energy Consumers trade group, said SWEPCO’s “unnecessary $4.5 billion investment of ratepayer money” was built on a series of improbable assumptions that included $4.75/MMBtu gas prices in 2021, a federal carbon tax by 2026 and the cancellation of most other wind projects in SPP’s interconnection queue. The Energy Information Administration predicts Henry Hub gas prices will be $3.66/MMBtu in 2021, not reaching $4.75/MMBtu until 2046.
VanMiddlesworth also said Wind Catcher was “burdened” by the $1.6 billion generation tie across Oklahoma.
“That made the project 40% more expensive to construct than other wind projects, while delivering 8% less energy,” he told RTO Insider. “The commission properly found that this was not a risk that should be imposed on Texas ratepayers.”
Here, in NW LA, the industry ran some really skewed tv ads. They created an entity, Protectourpocketbooks.com, and rolled out a disinformation campaign. SWEPCO (AEP) took a while to get ads out refuting the claims but a lot of people were suspicious of the money behind protectourtocketbooks. After a little digging I confirmed, to my satisfaction, that it was the O&G industry. There is a reason that the LA PSC, the AR PSC and FERC signed off on the proposal, it was a reasonable plan to add future capacity to the SWEPCO system. SWEPCO has low rates. I know as I am serviced by the company. A portion of the electricity I receive is, and has been, generated by wind.
What do you want to bet that the Texas Industrial Energy Consumers trade group is a front. The EIA is no more successful at predicting future natural gas prices than SWEPCO or any person or entity for that matter. I follow natural gas prices closely and do not find anything wrong with prices in the $3.50 to $4.50/mcf range two and a half years out. It would be suspicious if SWEPCO made a case for $3.66 prices in 2021. That would be overly optimistic. What many miss, and it is easy to miss, is the growth in demand. I encourage members to read some of the recent energy media articles concerning natural gas storage, injection rates and exports. "U.S. exports to Mexico via pipeline were 3.3 BCF/d in the first quarter 2016, 4.1 BCF/d in the first quarter 2017 and 4.4 BCF/d in the first quarter 2018. Exports to Mexico are expected to continue to increase as more natural gas-fired power plants come online in Mexico and more pipeline infrastructure within Mexico is developed." EIA Short-Term Energy Outlook, July 10, 2018.
LNG export volumes are expected to increase incrementally until the early 2020s when a number of major projects should begin operations. For those reading the storage reports, there are signs that fuel switching and exports are increasing demand. I expect natural gas prices to stay range bound through 2021 but after that it is highly likely that demand may tighten the market to the point that the new normal price range is $3.50 to $4.50. I will readily admit that my crystal ball is no better than most of the pundits writing energy articles but the increasing demand is worth noting considering just how many are making it the subject of their analysis.