Texas House Speaker Tom Craddick has told the House Regulated Industries Committee to spend the legislative interim reviewing the state’s energy generation capacity and the fuel diversity of the electric market. In the first of a series of meetings to be held over the upcoming year, Chairman Phil King (R-Weatherford) invited policy makers and industry leaders to discuss a wide range of energy issues from natural gas prices to diversifying energy sources.

High natural gas prices
As the price of natural gas has skyrocketed, lawmakers are beginning to take a serious look at diversifying Texas’ energy resources.  “We need to break our addiction to natural gas,” said Gordon Slack, energy business director for Dow Chemical Co. at a legislative meeting this week. “The underlying problem that we have, and this is not just a Texas problem, this is a national problem…is that natural gas has become the fuel of choice for electric power generation.”  About 46 percent of Texas’ electricity is generated from natural gas. As the price of natural gas is expected to increase substantially over the short-term, the cost of generating electricity is likely to increase as well. “There’s really no cheap natural gas left,” said King, adding that in the coming months the committee will look at the prospects of renewable sources.

Diversifying fuel mix
To lessen Texas’ dependence on natural gas for electric generation, the state has plans to diversify its fuel mix.

Wind power

Texas has committed to the first off-shore wind power project in the Gulf of Mexico. General Land Office commissioner Jerry Patterson, who announced the project last month, told committee members the state is leasing 11,355 acres southeast of Galveston for the construction of 50 wind turbines, 260 feet above sea level and located 5-10 miles off-shore. The project is expected to supply 150 megawatts of electricity to at least 20,000 Texas households.  “It’s a very significant development for the United States – the first lease ever,” Patterson said. 

Transmission cables would be laid on the sea bottom. Patterson said generation and transmission of this type of wind power is more dependable than wind sources obtained on land. Off-shore wind blows during peak consumption times. If all goes as expected, the project could be online as soon as 2010.

No taxpayer dollars would be used in the project, said Patterson. The $300 million Texas project, to be built by Galveston Offshore Wind LLC, would add jobs to the economy and the state would receive a minimum of $26 million in royalties over thirty years. 

The downside to having wind turbines in the Gulf is the possibility of hurricane and storm damage. “But we don’t think that’s a problem,” Patterson said. The company building the wind turbines has 50 years of experience in constructing offshore platforms built to withstand category 5 hurricanes. 

Clean Coal. 

With newer technologies that control harmful emissions, coal is re-emerging as a valuable source of energy. In 2003, the Texas Commission on Environmental Quality (TCEQ) issued its first coal-fired permit in over 15 years.  “There’s much renewed interest in coal-fired power plants,” said TCEQ chairman Kathleen Hartnett White.  Stricter federal and state clean air requirements over the last decade limited the TCEQ from issuing permits for traditional coal-fired power plants that typically emit large quantities of CO2 and other harmful pollutants. Since 1999, new plants in Texas have been mostly gas-fired.

However, clean coal technology has brought on a new wave of investment. Six clean coal permit applications are presently pending at TCEQ.  In addition, Texas is one of many states that the U.S. Department of Energy is considering for a $1 billion clean coal-fueled power plant. It’s a public/private partnership called FutureGen. The nearly emission-free power plant would produce electricity and hydrogen. 

Liquefied natural gas (LNG)

As demand for natural gas outpaces domestic supply, the U.S. is beginning to import more natural gas from other countries. To transport natural gas from far away as Africa or Indonesia the gas must be condensed into a liquid, by chilling it at extremely low temperatures. The liquefied natural gas must be reheated and turned back into gas for it to be used.  ConocoPhillips and Cheniere Energy are constructing an LNG regasification terminal in Freeport and it is expected to be completed by 2008. According to the Railroad Commission, there are 7 other proposed LNG terminals on the drawing board.

Generation capacity
Public Utility Commission Chairman Paul Hudson reported that Texas’ generation capacity is adequate to meet the state’s electricity needs. Last summer, when energy needs were highest, electric generation peaked (called “peak load”) at 60,000 megawatts. Texas power plants within the Electric Reliability Council of Texas (ERCOT) region have the capacity to generate up to 80,000 megawatts.

ERCOT,  an independent organization that manages 85 percent of Texas’ electric grid, projects the peak load for electricity to increase 1.6 percent each year from 2006 through 2011.  ERCOT is monitoring several proposed plants on the drawing board that would potentially add about 17,000 megawatts of electricity to the power grid over the next six years. Tom Schrader, president and CEO of ERCOT cautioned that the figure was just an estimate because competition and other market factors will determine if private companies choose to build or not build a particular facility.

It’s about energy conservation

The lone voice for energy conservation at the meeting was Tom “Smitty” Smith of Public Citizen, a nonprofit consumer watchdog group.  Studies indicate that consumers can typically save up to 30 percent in energy costs by using energy efficient measures like insulating and re-lamping buildings, installing cool roofs and light pavements, according to Smith. The City of Frisco, for example, was the first U. S. municipality to mandate a “green-building” program that requires new home builders to use similar energy saving measures. As a result, the city saves 30 percent in energy costs for every newly built home.

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