CenterPoint Energy Awaits ERCOT Decision on Freeport, Texas, Transmission Expansion

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Researched by Industrial Info Resources (Sugar Land, Texas)--The area around Freeport, Texas, remains one the busiest sites in the U.S. for large-scale industrial project activity. Several new projects are making their way into the area, necessitating increased power infrastructure for operations. CenterPoint Energy Incorporated (NYSE:CNP) (Houston, Texas) is in the process of awaiting a decision on a $250 million power transmission buildout in the area to help feed this industrial growth.

Among the projects under construction in Freeport is Dow Chemical Company's (NSYE:DOW) (Midland, Michigan) 3 billion-pound-year ethylene unit, which is part of the company's Gulfstream Projects program. The project began construction in mid-2014 and is expected to be completed this quarter. Along with the ethylene unit, Dow also is constructing a low-density polyethylene (LDPE) unit, which is planned to be completed later this year, and a linear low-density polyethylene (LLDPE) unit, which is planned for completion in 2018. For more information, see Industrial Info's project reports on the ethylene, LDPE and LLDPE units.

A joint venture of Dow, MEGlobal Americas Incorporated (Midland), is developing a monoethylene glycol plant in Freeport, which is planned to be completed in the second quarter of 2019. For more information, see Industrial Info's project report.

In addition to Dow, other chemical companies are also developing projects in the area, including an ammonia unit by Yara International (Oslo, Norway) and BASF SE (Ludwigshafen, Germany) and a methyl methacrylate (MMA) plant by Mitsubishi Rayon Company Limited (Tokyo, Japan).

These represent only a some of the area's industrial projects planned to be in service in the coming years. Of course, no plant can operate without power, and this is where CenterPoint is stepping in. In April, CenterPoint submitted a proposal to the Electric Reliability Council of Texas (ERCOT) requesting endorsement for new transmission infrastructure in the area, which includes new and committed load expected to total approximately 1,340 megawatts (MW).

CenterPoint Chief Executive Officer Scott Prochazka spoke of the pending project during the company's first-quarter earnings presentation: "The proposed project includes capital expenditures of approximately $250 million. ...We anticipate a decision from ERCOT later this year. If approved, we will then make the necessary filings to seek approval from the PUCT [Public Utilities Commission of Texas]. We anticipate the majority of capital expenditures will occur in 2019, '20 and '21."

To accommodate the increased transmission, CenterPoint plans to construct a new substation in Wharton, Texas. The 345-kV (kilovolt) Bailey Substation will probably begin construction in the first quarter of 2020 and finish construction in the second half of 2021. The project has an estimated total investment value of $60 million. For more information, see Industrial Info's project report.

The company is also planning upgrades to its Jones Creek substation in Freeport by adding transformers and brakes. For more information, see Industrial Info's project report.

The largest part of the project is the planned 48 miles of 345-kilovolt (kV), overhead double-circuit transmission line from the Jones Creek substation to the new Bailey substation. The project has an estimated total investment value of $160 million. For more information, see Industrial Info's project report.

CenterPoint estimates capital expenditures of $7 billion over the next five years, including $1.5 billion this year. The company reported first-quarter 2017 net income of $192 million, compared with $154 million in first-quarter 2016.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.