The growth of renewable energy has caused major challenges for electricity transmission, particularly with the integration of generators that are scattered around one region and provide energy to other distant regions. Construction of transmission lines that cross large areas of land or multiple states in order to reach significant populations can be another issue because of the many stakeholders involved. Accordingly, new renewable energy generators are met with a multitude of regulations at the regional, state, and federal levels.
The Grids
The Energy Reliability Council of Texas (ERCOT, sometimes referred to as the Texas Interconnection), the Eastern Interconnection, and the Western Interconnection are the three power grids that provide electricity in the continental United States. ERCOT provides most of Texas’ energy, and wind energy consumed on ERCOT has nearly doubled since 2014. One reason for the success of wind energy in ERCOT is that it is uniquely located within one state, which reduces regulatory and infrastructure issues.
The separation of Texas’ energy grid from the rest of the country’s grid has roots back to 1935 when the Federal Power Act was passed. It provided that the federal government would oversee interstate electricity. Over time, as small Texas utility companies began to link up to create a bigger, more reliable grid, they did not cross the Texas border. Eventually this larger grid became known as ERCOT, which is an intrastate grid, and thus not subject to federal regulation. The Eastern and Western grids traverse many states and are therefore subject to federal regulation. The image below provides a glimpse of the lands encompassed by ERCOT, which includes most of the populated areas of Texas, except El Paso, Amarillo, Beaumont, and Lubbock (However, Lubbock is scheduled to join ERCOT in 2021). We note that there have been a few interstate connections, but those have not caused ERCOT to fall under the full purview of federal jurisdiction. Additionally, because ERCOT is located entirely within Texas, renewable generators generally benefit from fewer stakeholders that have similar regional goals. For example, many parties were able to get a large transmission project completed for ERCOT (see our previous CREZ Highlight). The opportunity for a smaller grid to focus on making rules that benefit Texas and not a larger region is a unique asset.
Significance
While all new generators across the country will likely run into regulatory and transmission hurdles, ERCOT’s uniqueness within Texas generally alleviates some issues. Being an intrastate grid has allowed ERCOT to avoid complete federal regulation, deal with fewer stakeholders, and complete large infrastructure projects.
Authors
Table of Sources
ERCOT Celebrates 75 Years as Interconnected System, 20 years as ISO, ERCOT, http://www.ercot.com/about/profile/history/ (last visited Aug. 6, 2020).
Kase Wilbanks, One Year Away from Joining ERCOT Grid, Lubbock Power & Light Transmission Line Project Underway, KCBD (June 1, 2020, (9:01 PM), https://www.kcbd.com/2020/06/01/one-year-away-joining-ercot-grid-lubbock-power-light-transmission-line-project-underway/.
Image and Content Source: Kate Galbraith, Hey, Texplainer: Why does Texas have its own electric grid?, Texas Tribune (Feb. 8, 2011), https://www.texastribune.org/2011/02/08/texplainer-why-does-texas-have-its-own-power-grid/.
Image and Content Source: U.S. Electricity Grid & Markets, U.S. EPA, https://www.epa.gov/greenpower/us-electricity-grid-markets (last visited Aug. 6, 2020).
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McCarn & Weir, P.C. is comprised of attorneys and professional staff highly experienced in transactions and litigation involving the Energy, Real Estate, Corporate, Banking and Finance industries. Our firm has multiple attorneys Board Certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization, along with attorneys licensed in Texas, Oklahoma, New Mexico and California. Our goal is to provide high quality and cost-effective legal services, while maintaining the flexibility to adapt to the ever-changing needs of the industries we represent.
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