HOUSTON: Independent power producer Tenaska is working with the Brownsville, Texas, public power agency to develop an 800-megawatt, natural gas power plant to help the state avoid a looming electricity shortage, according to a statement.
Under an agreement, the Brownsville Public Utility Board would take an ownership interest in the proposed Tenaska Brownsville Generating Station equivalent to 200 MW.
Tenaska is working to sell the remaining capacity to other companies that serve the Rio Grande Valley, one of the fastest-growing areas of Texas.
The state is facing a rising chance of rolling outages in coming years as the supply of electricity fails to keep pace with growing power demand.
"We are pleased to have the Brownsville Public Utilities Board as an anchor customer for the plant," said Greg Kelly, Tenaska's vice president of development.
If Tenaska is able to find buyers for the remaining capacity and obtain necessary permits, construction on the proposed plant could begin as early as 2014 with completion as early as 2016, the company said.
Tenaska has submitted an electric transmission interconnect request to the Electric Reliability Council of Texas (ERCOT) and is in the process of seeking various state and federal permits to meet a 2016 commercial operation target, Kelly said.
The plant location north of Brownsville was chosen for its proximity to gas supply from the Eagle Ford Shale as well as transmission system improvements in the Rio Grande Valley, Tenaska said.
Omaha-based Tenaska owns and operates three gas-fired plants that can sell power into the Texas market. Tenaska affiliates have worked with the Brownsville utility board since the late 1990s.
Tenaska has also proposed an advanced 765-MW, coal-fired power plant near Sweetwater, Texas, but the Trailblazer Energy Center needs federal incentives in the form of a loan guarantee, grant or tax credit to help offset the high cost of installing equipment to capture carbon dioxide before proceeding, Tenaska said.
With increased scarcity pricing and decreased operating reserves in Texas, the Brownsville plant is well-positioned, the power generator said.
A lack of new power plants under construction and extreme weather strained power supplies in Texas in 2010 and 2011, adding urgency to ongoing regulatory efforts to encourage new generation.
The Texas Public Utility Commission has raised the price cap for wholesale power in times of scarcity, but some developers have said the changes have not been enough to raise prices to a level that would allow investment in new power plants.