ERCOT approves $9.4B grid ‘superhighway’ crossing Houston region. Here’s what it means for your bill.

A $9.4 billion network of long-distance power lines will be built across the eastern swath of Texas to create a new “superhighway” for the state’s power grid, after state officials voted unanimously to approve the plan this week.

The project, made up of more than 1,100 miles of power lines and transmission towers, would cut through the Houston area, though exact routes haven’t been determined yet. 

Once completed in the early 2030s, the 765-kilovolt power lines would be able to carry more than twice as much electricity as the existing 345-kilovolt power lines across the state. 

DEEP DIVE: Texas makes grid history with new ‘superhighway’ power lines

This new “superhighway” is needed so that the state’s power grid can keep the lights on amid an expected boom in electricity demand in the coming years, said Kristi Hobbs, vice president of system planning for the Electric Reliability Council of Texas. 

ERCOT manages the power grid that serves most of the state’s electricity demand. By 2031, that demand could increase more than 70%, according to ERCOT’s forecasts, primarily because of electrification in the oil and gas industry and an influx of data centers powering artificial intelligence technologies. 

“We realized we could not keep planning the system the way we always had,” Hobbs told ERCOT’s board during the grid operator’s quarterly meeting this week.

READ MORE: These charts reveal the daunting challenge facing the ERCOT power grid in the next five years

The $9.4 billion project, and the billions of dollars of projects to come, would be an unprecedented upgrade of Texas’ electric grid. State leaders say the expansion is necessary to support the oil and gas industry and to welcome new data centers, as the Trump administration embraces Big Tech’s AI push. 

Even if concerns of an AI bubble bode true — in other words, if the huge numbers of data centers that have applied to connect to the Texas grid aren’t actually built — ERCOT’s modeling still found that the $9.4 billion project on the eastern side of the state is needed, Hobbs said.

But without policy reform, everyday residents and businesses could be on the hook for a disproportionate share of the power lines’ costs  — at a time when many consumers are already increasingly upset with rising electricity prices.

Cost concerns over transmission lines

The cost of new transmission lines is spread out across all ERCOT customers in the state, because these projects are viewed as a public good. 

But, under the current formula for allocating costs, large industrial customers such as refineries and cryptocurrency mines can strategically reduce their electricity usage at key times to avoid paying for new power lines. 

This concerned Texas lawmakers, who worry that the industries driving the need for new grid infrastructure could shift the costs onto everyday residents and businesses. 

READ MORE: Everyday residents, businesses could pay for bulk of $33B in new power lines without reform

Gov. Greg Abbott signed a new law earlier this year directing state regulators to re-evaluate the current formula. A wave of lobbyists from various industries are already fiercely arguing in front of state regulators about what the new formula should be, or if a new formula is needed at all. 

In her Tuesday presentation, ERCOT’s Hobbs said the $9.4 billion price tag for the approved project is an estimate that has a markup built into it, since past transmission projects have seen cost overruns. And it does have a higher upfront construction cost than alternative grid expansion projects that would require more land. 

But she said the approved project is expected to save customers more money over time — approximately hundreds of millions of dollars per year — because the additional capacity will more efficiently move electricity across the state.

“If you have a system where power can flow freely without congestion… that gives us more flexibility,” she said.

A transmission line through the Houston area

Now that ERCOT has approved the $9.4 billion power line project, the next step is for utilities to map out potential routes and submit them to the state regulator for review.

Though exact routes will be determined next year, a preliminary map of the project shows that the transmission lines are expected to cut through the west side of the Houston region as they run north from Corpus Christi to Longview. 

CenterPoint Energy, the primary utility for the Houston area, is one of four Texas companies that will build the 1,100-plus miles of transmission lines. 

READ MORE: ERCOT expects little chance of blackouts this winter, though a 2021 repeat still poses significant risk

Analysts expect such transmission projects to be a windfall for the participating utilities, as the ones that are publicly traded earn a near-guaranteed profit on the large infrastructure projects they build.

In a statement, Keith Stephens, CenterPoint’s chief communications and marketing officer, said the $9.4 billion network of power lines are “critical infrastructure projects” that represent “a historic statewide initiative.”

“These vital projects will increase electric capacity to meet our customers’ future energy needs and, most importantly, help deliver affordable energy for years to come,” he said. “Simply put, this is a win-win for our customers, our communities, and our great state’s energy future.”

The $9.4 billion project is the second step of ERCOT’s long-term plan to expand the state’s power grid. Earlier this year, state regulators approved a $13.8 billion plan to bring more electricity to the Permian Basin, where oil and gas companies have long clamored for greater access to the grid. 

In total, Texas needs an estimated $33 billion in new transmission lines snaking across the state to keep pace with “an unprecedented amount of economic growth,” ERCOT says.