aect electricity 101: august 2010
DESCRIPTION
An overview of the structure of the competitive electric market in Texas, as well as an update on generation investment, transmission & distribution investment and retail performance in the market.TRANSCRIPT
Electricity 101:
Operations and Recent Statistics
August 2010!
Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc. 1005 Congress, Suite 600 • Austin, TX 78701 • phone 512-474-6725 • fax 512-474-9670 • www.aect.net
2
AECT Principles!
• AECT is an advocacy group composed of member companies committed to:
- Ensuring a modern, reliable infrastructure for the supply & delivery of electricity.
- Supporting efficient competitive markets that are fair to customers and market participants.
- Supporting consistent and predictable oversight and regulation that will promote investment and ensure the stability of Texas’ electric industry.
- Promoting an economically strong and environmentally healthy future for Texas, including conservation and efficient use of available resources.
• AECT member companies remain dedicated to providing Texas customers with reliable service and are committed to the highest standards of integrity.
The Association of Electric Companies of Texas, Inc. (AECT) is a trade organization of investor-owned electric companies in Texas. Organized in 1978, AECT provides a forum for member company representatives to exchange information about public policy, and to communicate with government officials and the public. For more information, visit www.aect.net.
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U.S. Divided into Eight!Reliability Regions!
• Electric systems in Texas are located within four separate reliability regions: - Texas Regional Entity (TRE), which oversees participants in the Electric Reliability Council of Texas (ERCOT) (green shading); - SERC Reliability Corporation; - Southwest Power Pool (SPP); and - Western Electricity Coordinating Council (WECC).
• The eight reliability regions in the continental U.S. are subject to the oversight and enforcement authority of the North American Electric Reliability Corporation (NERC), which is subject to the Federal Energy Regulatory Commission’s (FERC) oversight. NERC is responsible for developing standards to ensure and improve reliability for delivery of electricity on the bulk power system.
FERC
NERC
(ERCOT)
4
AECT Member Companies!Within ERCOT!
Generation Companies
Transmission and Distribution Utilities
Retail Electric Providers
5
AECT Companies!Outside of ERCOT!
Western Electricity Coordinating Council (WECC)
Southwest Power Pool (SPP)
SERC Reliability Corporation
6!
Slide 7: AECT Member Companies
Slide 23: Electric Market Structures in Texas
Slide 36: Texas’ Wholesale Electric Market
Slide 46: ERCOT Generation Mix
Slide 53: Types of Generation: Benefits and Challenges
Slide 63: Emissions and the Environment
Slide 75: Transmission and Distribution Utilities
Slide 85: Energy Efficiency
Slide 93: Competitive Retail Electric Market in ERCOT
Contents!
7!
AECT Member Companies!
8!
AEP SWEPCO!Vertically Integrated Utility!
Southwestern Electric Power Company, headquartered in Shreveport, LA, serves 460,000 customers in East Texas and the Texas Panhandle, Northwest Louisiana, and the western edge of Arkansas. SWEPCO has been providing low-cost, reliable electricity to customers since 1912. SWEPCO is a vertically integrated company operating as a member of the Southwest Power Pool.
9!
AEP Texas!Transmission & Distribution Utility!
AEP Texas is connected to and serves more than 900,000 electric consumers in the deregulated Texas marketplace. As an energy delivery company, AEP Texas delivers electricity safely and reliably to homes, businesses and industry across its nearly 100,000 square mile service territory in south and west Texas.
10!
CenterPoint Energy!Transmission & Distribution Utility!
CenterPoint Energy maintains the wires, poles and electric infrastructure delivering service to more than 2 million consumers in its 5,000-square-mile electric service territory in the Houston metropolitan area. While CenterPoint Energy employees ensure the reliable delivery of electricity from power plants to homes and businesses, the company neither generates power nor sells it to retail customers.
11!
El Paso Electric Company!Vertically Integrated Utility!
El Paso Electric is a vertically integrated utility serving approximately 357,000 customers in the Rio Grande Valley in west Texas and southern New Mexico. El Paso Electric is an operating member of the Western Electricity Coordinating Council.
12!
Entergy Texas!Vertically Integrated Utility!
The Entergy Texas service area starts at the southeast Texas/Louisiana border and stretches up into the piney woods of east Texas, down to the Gulf of Mexico and across to the lake country north of Houston. Entergy Texas serves approximately 385,000 customers in 26 counties.
13!
Exelon Generation!Electric Generation Company!
Exelon Generation owns and controls about 33,000 megawatts of electricity generation capacity from a diverse portfolio that includes the nation’s largest fleet of nuclear power plants. The company maintains strong positions in the Midwest and Mid-Atlantic regions. In Texas, it owns or controls about 3,700 megawatts of natural gas-fired generation, with plants in Dallas, Fort Worth and LaPorte. Exelon has also announced plans to submit a combined Construction and Operating License application for the possible construction of a nuclear power plant in Victoria County.
14!
First Choice Power!Retail Electric Provider!
First Choice Power began serving customers as a retail electric provider across Texas on Jan. 1, 2002, when deregulation of the electric industry was introduced in Texas. First Choice Power is one of the largest retail electric providers in the state. It is led by a management team with experience in the deregulated markets in Texas and throughout the nation.
Competitive Areas of Texas
15!
Luminant!Electric Generation Company!
Luminant is a competitive power generation business, including mining, wholesale marketing and trading, construction and development. It has over 18,300 MW of generation in Texas, including 2,300 MW of nuclear and 5,800 MW of coal-fueled generation capacity, and is the largest purchaser of wind-generated electricity in Texas and fifth largest in the U.S.
16!
NRG Energy!Electric Generation Company!
NRG Texas is the second largest electrical generator in Texas with more than 1,100 professional employees operating a diverse generation portfolio of almost 11,000 megawatts of power. NRG Texas also has an extensive repowering program including a new combined cycle gas plant at the Cedar Bayou plant east of Houston, a coal unit at Limestone; two wind projects in West Texas and the first new nuclear units proposed for the United States in more than 29 years.
17!
Oncor!Transmission & Distribution Utility!
Oncor is a regulated electric distribution and transmission business that delivers reliable electricity to consumers. Oncor operates the largest distribution and transmission system in Texas, providing power to more than 3 million electric delivery points over more than 115,000 miles of transmission and distribution lines.
18!
Optim Energy!Electric Generation Company!
Optim Energy is a joint venture of PNM Resources and Cascade Investment, L.L.C. It provides wholesale generation and marketing and trading services in the ERCOT region. The company owns two generation assets, both in Texas, representing 920 megawatts. In addition, the company and NRG are jointly developing a 550-megwatt combined cycle natural gas unit near Houston.
19!
Reliant Energy!Retail Electric Provider!
Reliant Energy, Inc., based in Houston, Texas, provides electricity and energy-related products to more than 1.8 million retail and wholesale customers in Texas and in the Mid-Atlantic Region. As one of the largest electricity providers in Texas, Reliant works hard to provide its customers with competitive electric prices, innovative products and unmatched customer service for their homes and businesses.
Competitive Areas of Texas
20!
Texas-New Mexico Power Co.!Transmission & Distribution Utility!
Currently, TNMP provides electric service to 76 cities and more than 226,000 customers throughout Texas. TNMP is owned by PNM Resources, an energy holding company based in Albuquerque, New Mexico.
21!
TXU Energy!Retail Electric Provider!
TXU Energy is a market-leading competitive retailer that provides electricity and related services to more than 2 million electricity customers in Texas. TXU Energy offers a variety of innovative products and solutions, including 24/7 customer service, competitively priced service plans, energy efficiency options and renewable energy programs.
Competitive Areas of Texas
22!
Xcel Energy!Vertically Integrated Utility!
Xcel Energy owns Southwestern Public Service Company, a regional electric utility that provides retail and wholesale service to about 1 million persons in a 45,000 square-mile area comprised of the South Plains and Panhandle of Texas, and eastern New Mexico.
23!
Electric Market Structures in Texas!
24!
Pre-1975 • Cities regulated electric utility service and rates. • Generally, a declining cost industry – rate applications most often filed to decrease rates.
1975 • Inflation, construction costs and fuel costs drive electricity rates up. • 64th Texas Legislature enacts Public Utility Regulatory Act (PURA) to implement state regulation of
electric utility service and rates (Cities permitted to retain original jurisdiction). – Service area, transmission line and generating plant certification. – Rate regulation (based on cost of service plus reasonable return on investment). – Rates based on historical test year costs and original costs of infrastructure, less depreciation. – Service quality regulation. – Customer protection.
History of Electric Utility Regulation in Texas!
25!
1976-1995
• 1978 U.S. Fuel Use Act required utilities to discontinue use of natural gas and encouraged the use of coal and nuclear for fuel.
• Inflation, volatile fuel costs and the need to add new generating capacity continue to increase electricity rates.
• Rate proceedings at PUC become increasingly adversarial. – Consumer groups concerned about frequency and amount of rate increases.
– Utilities concerned about increasingly large PUC cost disallowances that are at odds with the regulatory compact and erode rates of return.
• Large customers tire of subsidizing other ratepayers seek opportunities to by-pass regulated rates and obtain choice of suppliers.
– Cogeneration/self-generation.
– Advocate wholesale competition and transmission open access.
– Advocate “retail wheeling”. • Natural gas was favored again when the 1978 U.S. Fuel Use Act was repealed in the 1990s.
History of Electric Utility Regulation in Texas!
26!
Wholesale competition legislation passed (SB 373)
May1995
Jan. 2002
Retail competition legislation Passed (SB 7)
June 1999
Sept. 1999
ERCOT Electric rates frozen
Jan. 2005
July 2001
Texas Choice pilot program begins
Affiliate REPs allowed to offer non-price-to-beat prices
Steps to Electric Competition!In Texas!
Retail choice begins in ERCOT
Jan. 2007
End of price-to-beat
27
Wholesale and Retail Electric Competition Were Passed !With Broad, Bipartisan Support!
• Senate Bill 373, which opened the wholesale electricity market in Texas, passed in 1995 when the Democrats were the majority party in the House and Senate.
– The Speaker of the House and the Lieutenant Governor were both Democrats, and the bill sponsors and authors were both Democrats.
• Senate Bill 7, which opened the competitive market, passed in 1999. – The Senate and the Lieutenant Governor were Republican, but the House
was still majority Democrat. The House sponsor and author of the bill and the House Speaker in 1999 were both Democrats.
– Senate Bill 7 passed the House with a vote of 144 Ayes and 4 Nays.
• It was a bipartisan measure: 74 of the Aye votes were from Democrats, while 68 were from Republicans.
– The bill passed the Senate with a vote of 28 Ayes and 3 nays.
28!
• Senate Bill No. 373 enacted in May 1995
– Required utilities to provide non-discriminatory open access transmission to support wholesale competition in ERCOT.
– Recognized new, unregulated participants in ERCOT wholesale market.
Exempt wholesale generators
Power marketers
– Allowed non-utility wholesale market participants to offer market-based prices in ERCOT.
– Deregulated electric cooperative distribution rates.
Note: Non-ERCOT areas are subject to FERC jurisdiction for wholesale services, including transmission services.
Steps to Competition:!Wholesale Competition!
29!
• ERCOT market restructuring legislation, Senate Bill 7, passed in 1999
– Initiated competition in ERCOT retail markets beginning January 2002. – Municipally-owned utilities and electric cooperatives allowed to “opt-in”. – Included environmental and energy efficiency provisions.
• Required reduction of nitrogen oxide (NOx) emissions from older power plants by 50%, and sulfur dioxide emission from coal-fired facilities by 25%.
• Utilities required to fund energy efficiency programs equal to at least 10% of each year’s annual growth in demand.
– 1999 - 2001 – Preparation for retail competition. • Electricity rates frozen. • ERCOT develops systems required to support competition. • PUC promulgates competition rules. • PUC determines rate unbundling cases.
– July 2001 – Retail competition pilot project begins.
Steps to Competition:!Retail Competition!
30!
Steps to Competition:!Transition Period!
• January 2002-2006 Transition Period – “Affiliated” generators
• Required to make 15% of their power available to non-affiliated retail providers • During first two years, limited to guaranteed market price for power as projected by
PUC • Given incentives to install environmental clean-up equipment
– Transmission and Distribution Utilities • Initial rates set using estimated/generic costs • Recovery of stranded and other transition costs authorized but delayed until 2004
True-up proceeding – Securitization bonds lower cost to customers
– “Affiliated” retail electric providers • Required to lower base rates by six percent (Price to Beat)
– Adjustable only for increases in natural gas prices – Price to Beat remains in place until 12-31-06
• No price competition allowed in former service area until 2005
31!
• Incumbents required to separate business activities into the following units.
– Power generation company. – Retail electric provider. – Transmission and distribution utility.
• Generation and retail businesses are not regulated utilities. – Power Generation Companies must be registered with PUC. – Retail Electric Providers must be certified by PUC.
• Transmission and distribution businesses remain regulated utilities.
• Methods for separation of business activities. – Creation of separate non-affiliated companies. – Creation of separate affiliated companies owned by a common holding
company. – Sale of assets to a third party.
• Each ERCOT utility chose different models.
• Code of conduct rules enforce separation requirements.
Structural Unbundling!
32
ERCOT: Separate companies provide retail, transmission & distribution and generation services!
• In competitive markets, consumers have multiple retail electric providers (REPs) and service plans to choose from.
• Wholesale and retail prices are set by competitive market forces, while the PUC sets transmission and distribution rates.
Power Flow Financial Flow
Regulated
33
ERCOT: Separate companies provide retail, transmission & distribution and generation services!
• Because wholesale electric prices are set by the competitive market, the risks associated with the cost of construction, operations and maintenance of a generation plant are borne entirely by the generator and its investors, not by end-use customers.
Power Flow Financial Flow
Regulated
34
Outside ERCOT: A single company provides retail, transmission & distribution and generation services in each area!
• In fully regulated markets, the PUC sets retail rates charged to end-use customers.
• Each of these service areas is part of multi-state electric grids, with differing regulations. In many cases, vertically integrated utilities purchase wholesale power from certain unregulated entities.
Power Flow Financial Flow
Regulated
35
• New power plants in these regions can be built by both regulated entities and certain unregulated entities or qualifying facilities.
• Regulated utility power plants, however, must be approved by the PUC after a rigorous review of need and siting.
Outside ERCOT: A single company provides retail, transmission & distribution and generation services in each area!
Power Flow Financial Flow
Regulated
36
Texasʼ Wholesale Electric Market!
37!
The Competitive Wholesale Market: A Success Story !
Competition has brought greater efficiency to the wholesale market
– Generators shoulder the risk of building new power plants, bringing efficient, cost-effective generation to consumers.
– New power plants produce more electricity per unit of fuel. – New power plants include modern environmental emissions controls.
The competitive market is in the public interest – Operational efficiency of a competitive market helps push wholesale prices
downward. – No market structure is more effective at ensuring efficient operations than a
competitive one.
Policy decisions should be focused on maintaining vibrant competition
– Texas leaders should support policies that maintain the competitive market. – The competitive market will bring forward the right mix of technology and fuel
type based on environmental choices by policymakers.
38!
Permitted and Operating Electric Generating Units in Texas
39!
ERCOT Wholesale Market Management!
• System Reliability – ERCOT oversees system reliability. – ERCOT is part of national reliability council. – ERCOT protocols, approved by PUC, mandate system reliability standards that all
market participants must follow.
• Statute and Rules Address “Market Power” and Generation Merger Issues – Independent Market Monitor oversees wholesale market operations. – Generating capacity owned and controlled by a Power Generation Company limited to
20% of installed generating capacity capable of delivering power to a power region. – Administrative penalties for market power abuse were reviewed and updated during the
79th Regular Session. – Mergers of Power Generation Companies subject to PUC review.
• Market Design – ERCOT will transition to a Nodal Market in 2009 as a result of PUC rulemaking. – The change is expected to bring cost-savings and additional efficiency to the market by
enhancing market transparency and allocating costs more accurately to market participants.
40!
Wholesale Market !Management Outside ERCOT!
• System Reliability – Larger, multi-state Councils (SERC, SPP, WECC) oversee system reliability. – Each is part of national reliability council. – Protocols, approved by the Federal Energy Regulatory Commission (FERC), mandate
system reliability standards that all market participants must follow.
• Wholesale market operations overseen by FERC
41!
Increased Population DrivesFuture Electric Consumption!
Source: Texas State Data Center
0
5
10
15
20
25
30
35
40
45
50
Texas’ Projected Population Growth Assuming Net Migration Equal to 2000-2004
(median scenario)
30.3 million
25.1 million
43.6 million
2010 2020 2030 2040
• To meet increases in electric load created by Texas’ rapid population and economic growth, Texas will require additional power, transmission and distribution, customer demand response and energy efficiency.
36.3 million
42!
Electric Consumption Continues to Grow in ERCOT!
Source: ERCOT, “Report on Existing and Potential Electric System Constraints and Needs,” December 2009
Note: The peak in electric consumption in 2000 was due to an exceptionally hot summer.
43!
Peak Demand Also Growing, Requiring Additional Investment Long-Term!
Source: ERCOT, “Report on Existing and Potential Electric System Constraints and Needs,” December 2009
44!
ERCOT Restructuring Spurred !Massive Generation Investment!
• The competitive market has steadily added new generation and greater efficiency to the wholesale market.
• Generators in the competitive market shoulder the risk of building new power plants, bringing efficient, cost-effective generation to consumers.
45!
Update on ERCOT Reserve Margins
• ERCOT will need additional generation by 2014.
46
ERCOT Generation Mix!
47!
ERCOT Generation Mix!
• The generation technology mix is an outcome of a robust competitive wholesale market and environmental policy decisions.
• In addition to the price of fuels and the cost of technology, environmental and siting issues impact choices made by generation developers.
• Coal, including lignite, is an important fuel in the ERCOT electric generation mix.
– Coal is the most abundant fossil fuel in the United States, with an estimated 200 year supply remaining (per the Energy Information Administration (EIA)).
– Electricity produced from Texas lignite exceeds the entire generation of 28 states individually.
• Texas lignite accounts for about 45% of the coal used in the state for electricity. • Texas’ lignite mining industry is a key part of the state economy, providing over
33,000 permanent jobs and contributing about $10.5 billion in annual Total Expenditures.
• The existing framework of Texas’ competitive wholesale electric market has helped lead generators to invest in and announce plans for over 27,000 MW of new generation, including natural gas, coal, nuclear and renewable power.
Sources: EIA, National Mining Association, The Perryman Group
48!
ERCOT Generation Mix!In 2009
Source: Public Utility Commission of Texas (PUC) Chair Barry Smitherman Presentation to the Gulf Coast Power Association, Oct. 6, 2009
49!
ERCOT Generation Mix!In 2013
Assuming 18,000 MW of wind, approximately 5,600 MW of new coal, 4,300 MW of new natural gas
Source: Public Utility Commission of Texas (PUC) Chair Barry Smitherman Presentation to the Gulf Coast Power Association, Oct. 6, 2009
50!
Gas on the Margin in ERCOT Year-Round
Demand Curve - Summer Scenario
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Lo
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Nuclear Coal Wind Natural Gas
Examples are purely illustrative
Demand Curve - Winter Scenario
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Nuclear Coal Wind Natural Gas
• There are multiple types of power plants with different operations in ERCOT that are operated on different schedules.
– Because of their lower marginal costs, nuclear and coal-fired power plants in ERCOT operate approximately 90 percent of the time.
– In contrast, natural gas-fired power plants are ramped on and off, depending upon demand. – Wind-generated electricity is only intermittently available, depending on wind conditions.
• Some natural gas-fired generation is required to operate at all times in the ERCOT region to meet demand.
– Natural gas-fired generation sets the market price of wholesale electricity in ERCOT. – Natural gas-fired units that are used to meet peak demand tend to be older units that cost more to
operate.
51!
Business Climate for Generators in ERCOT
• In ERCOT, generation companies assume all of the financial risk included in a new generation projects.
• The decision to build new generation thus depends upon whether the generator believes the electricity can be sold at a price to recoup construction costs, cover operations and maintenance costs and achieve a profit.
• Market forces have been effective in bringing new generation to the state, with over 37,063 MW of generation constructed since the advent of wholesale competition in 1995. Another 4,433 MW of new generation is under construction, according to the PUC.
• While not all is expected to the built, the PUC reports 25,756 MW of new generation has been announced:
– 6,389 MW of new coal-fired generation – 6,002 MW of new nuclear generation – 8,012 MW of new wind-powered generation – 5,253 MW of new natural gas-fired generation
• Though such news is positive, market forces and legislative and regulatory certainty will ultimately dictate how much of the announced new generation is actually built.
Data source: PUC, “New Electric Generating Plants in Texas,” as of November 17, 2007
52!
Texas Has the Most Installed !Wind Energy Capacity
Source: American Wind Energy Association, 7/20/10 (www.awea.org/projects)
27% of the nation’s installed wind generation capacity is located in Texas.
53
Types of Generation:Benefits and Challenges!
54!
Three Key Factors Affecting Choices for New Generation
Wholesale Market
Cost of Construction and Fuels
55!
Coal-Fired Generation
Type of Generation + Coal-fired plants provide baseload generation, by running
approximately 90 percent of the time.
Environmental Issues - Greater air emissions than natural gas-fired plants, including
rate of about twice the CO2 per kWh generated. - Risk of higher costs due to future carbon-capture
requirements.
Cost of Construction and Fuels + Currently, pulverized coal generation is economical to build based on current
natural gas prices. + Long-term domestic supply of coal, including lignite. + Fuel cost is relatively low - High initial capital costs relative to natural gas-fired plants.
56!
Natural Gas-Fired Generation
Type of Generation - Natural gas plants, such as combined-cycle plants, can
provide baseload generation, but demand conditions in ERCOT result in a lower capacity factor than for coal-fired or nuclear-powered generation.
+ Other simple-cycle natural gas plants have quick start-up and shut-down times to allow them to meet peak demand.
Environmental Issues + Lowest air emissions among fossil fuels. + Newest power plants operate more efficiently, burning less
fuel per MWh of generation.
Cost of Construction and Fuels + Low initial capital costs. - When natural gas prices are high, gas-fired power plants are expensive to operate.
57!
Nuclear-Powered Generation
Type of Generation + Nuclear-powered plants provide baseload generation by
running approximately 90 percent of the time.
Environmental Issues + No air emissions. - Long-term storage of waste needs to be implemented. - Historic concerns regarding public perception of safety of
nuclear power.
Cost of Construction and Fuels + Lowest fuel cost of all large-scale generation. - High capital costs. - Longest permitting and construction times among generation types.
58!
Wind-Powered Generation
Cost of Construction and Fuels + No fuel cost. - Limited ability to replace other generation to satisfy reserve margins. - Imposes other costs on the system, such as increased ancillary service
requirements, backup capacity and the need for transmission lines to reach rural wind farms.
Type of Generation + Wind is plentiful in certain parts of Texas. - Wind blows intermittently, making it a less reliable power
source.
Environmental Issues + No air emissions. - Can affect migratory birds. - Concerns about aesthetic impact.
59!
Solar Generation
Type of Generation + Solar power is generally reliable, but intermittent, as it
depends on certain levels of sunlight. - Plants are generally small in scale.
Environmental Issues + No air emissions. - Large areas of land needed for effective solar arrays.
Cost of Construction and Fuels - Can have 15 to 20 times the capacity cost of natural gas-fired generation + No fuel cost. - Cannot be used to replace other generation to satisfy reserve margins. - Imposes other costs on the system, such as the need for transmission lines, since
large-scale solar power plants would be located in areas far from population centers.
60!
Biomass and Landfill Gas Generation
Type of Generation + Biomass and landfill gas generation generally operates
reliably. - Plants are generally small in scale.
Environmental Issues - Plants burning biomass can have high CO2 emissions. + Landfill gas facilities reduce methane greenhouse gas
emissions. - Generation is difficult to permit and site.
Cost of Construction and Fuels - Requires high capital and operating costs when compared with fossil fuel-fired
generation - Often located far from population centers, requiring high transmission costs
61!
Hydroelectric Generation
Type of Generation + Hydroelectric power is reliable to operate, except during
drought. - Texas has very little potential for new hydroelectric power
generation.
Environmental Issues + No air emissions. - Can kill fish.
Cost of Construction and Fuels + Once built, hydroelectric power is among the least expensive forms of power, as it
has no fuel costs. - High capital costs
62!
Energy Efficiency and Demand-Side Management
Type of Technology + Several cost effective solutions available. - Success requires broad implementation.
Environmental Issues + Reduces emissions that would otherwise accompany fossil
fuel usage.
Cost of Construction and Fuels + Can improve cost levels for residents and customers. + Reduces need for building new power supply.
63!
Emissions and the Environment!
64!EPA Clean Air Markets Division – 2009 Acid Rain Program Data
Area
2009 NOx Emission Rate Averages (lbs/
mmBtu) National 0.159 Texas 0.098
0.351 NM
0.098 TX
0.234 OK 0.198
AR
0.142 LA
Texas Is Already Leading the Way in Clean Power Plants
Texas has the largest emissions of any state since it produces ~80% more power than the next ranked state.
65!
– HGA SIP- 86% overall reduction from 1997
– DFW SIP- 88% overall reduction from 1997
– Beaumont SIP- 45% reduction from 1997
– East Texas SIP- 51% reduction from 1997
Electric Generator- NOx Reductions Achieved UnderTCEQ 1-hr Ozone SIP Rules!
Between 2000 and 2005, electric generating companies in Texas spent over $1 billion on NOx
emission reductions alone.
66!
Texas’ Electric Generating Plants Among Cleanest NOx Emitters in the Nation
EPA Acid Rain Database, 2009
Texas has the 11th cleanest average NOx emissions rate.
NO
x (
lb/
MM
Btu
)
U.S. Average-0.159 lb/mmBtu
67!
Average Emission Rates of Nitrogen Oxides from Existing Texas and U.S. Power Plants
Notes: NOx Emission Rates for New Coal-Fired Power Plants range from 0.05 to 0.08 pounds per million Btu NOx Emission Rates for New Gas-Fired Power Plants are approx. 0.015 pounds per million Btu
Source: EPA Acid Rain Database, 2009
NO
x (
lb/
MM
Btu
)
68!
Texas’ Electric Generating Plants Among Cleanest SO2 Emitters in the Nation
EPA Acid Rain Database, 2009
Texas has the 24th cleanest average SO2 emissions rate.
SO
2 (
lb/
MM
Btu
)
U.S. Average-0.458 lb/mmBtu
69!
1995-2009 Emission Rate Trends
Sulfur Dioxide (SO2)
lb./mmBtu
Nitrogen Oxides (NOx)
lb./mmBtu Year Nation Texas Nation Texas 1995 1.086 0.517 0.551 0.313 1996 1.096 0.527 0.518 0.314 1997 1.093 0.523 0.509 0.310 1998 1.058 0.485 0.481 0.307 1999 0.999 0.481 0.440 0.286 2000 0.875 0.380 0.399 0.261 2001 0.843 0.385 0.373 0.221 2002 0.794 0.384 0.348 0.173 2003 0.815 0.390 0.320 0.142 2004 0.779 0.353 0.286 0.124 2005 0.753 0.349 0.268 0.116 2006 0.702 0.338 0.255 0.111 2007 0.644 0.321 0.237 0.103 2008 0.564 0.316 0.222 0.103 2009 0.458 0.309 0.159 0.098
1995 - 2002 data are from the Acid Rain Program Scorecard Table B1 2003 - 2009 data are from the Clean Air Markets Division database for the Acid Rain Program
70!
A common refrain is that CO2 emissions generated in Texas are higher than in other states. However, it is critical to view that in the context of other truths:
− Texas generates more electricity than any other state; in fact, Texas produces almost 80% more electricity than the next most generating state.1
− Much of the CO2 emitted in Texas results from the generation of “products” that are very significant to our state and nation. For example, Texas produces about:
− 60% of petrochemicals produced in the U.S. − 30% of gasoline and diesel refined in the U.S. − 10% of electricity generated in the U.S.
− The dollars of gross product produced in Texas per ton of CO2 emitted is high, and it increased by more than 1000% between 1963 and 2001.
− The ratio of the amount of CO2 emitted per MWh of electricity generated in Texas is lower than half of the states that have more than a nominal amount of coal-fired or oil-fired electricity generation (see previous slide).
CO2 Emissions in Context of Texasʼ Economy!
1Source: EIA, 2008 State Electricity Profiles
71!
Technical Feasibility of CO2 Reductions!
Technology EIA 2008 Reference Target
Efficiency Load Growth ~ +1.05%/yr Load Growth ~ +0.75%/yr
Renewables 55 GWe by 2030 100 GWe by 2030
Nuclear Generation 15 GWe by 2030 64 GWe by 2030
Advanced Coal Generation
No Heat Rate Improvement for Existing Plants
40% New Plant Efficiency by 2020–2030
1-3% Heat Rate Improvement for 130 GWe Existing Plants 46% New Plant Efficiency
by 2020; 49% in 2030
CCS None Widely Deployed After 2020
PHEV None 10% of New Light-Duty Vehicle Sales by 2017; 33% by 2030
DER < 0.1% of Base Load in 2030 5% of Base Load in 2030
Chart Source: EEI and EIA
72!
Federal Clean Air Interstate Rules (CAIR) − Requires additional NOx and SO2 emissions reductions from power plants in
2009, 2010, and again in 2015, with a cap and trade program. − The NOx and SO2 emissions from all new units must “fit” under the 2009, 2010,
and 2015 caps; such emissions are not in addition to those caps. − TCEQ has recently revised its rules to implement CAIR.
Regional Haze − Requires reductions in NOx, SO2, and Particulate Matter (PM) emissions based on
best available retrofit technology (BART) for different types of facilities, including electric generating units, industrial boilers, and refineries.
− EPA has decided that NOx and SO2 emissions reductions made for CAIR will suffice for the NOx and SO2 emissions reduction requirements under Regional Haze.
− The TCEQ is developing rules to implement BART.
Additional Emission Reductions
73!
Giving Back to the Environment
• AECT member companies help to improve our environment through stewardship, support for new technologies and partnership with other agencies.
Environmental Stewardship!- Reducing releases of chlorofluorocarbons from electrical equipment - Recycling coal combustion products - Educating schools and communities about renewable energy - Designating land and reservoirs for public recreational use - Preserving and restoring forests by planting millions of trees - Helping other industries adopt pollution-prevention plans - Launching education campaigns to help communities save energy - Creating wetlands and wildlife habitats on company properties - Reclaimed water utilization - Offering renewable energy products to retail customers
Environmental Partnerships
- Climate Challenge Program - Energy Star - Energy Smart Schools - Environment Research Program
- EPA SF6 Partnership program
- Mickey Leland Internship Program - TCEQ Teaching Environmental Science - Green Lights - Habitat Protection - Learning From Light! - Millennium Council - Million Solar Roofs - National Energy Education Development (NEED) Project - Natural Gas Star
74!
Selected Environmental Programs and Fees
• The electric industry is among the most heavily regulated in the nation, complying with hundreds of regulations and paying millions of dollars in fees annually.
Selected Current Environmental Programs - Compliance with National Ambient Air Quality Standards - State Implementation Plan - NOx reductions for electric generating units - Clean Air Interstate/Clean Air Mercury Rules - New Source Review (NSR)���Prevention of Significant Deterioration - Non-attainment NSR, including offset - State Minor NSR - Title V and Acid rain permits - Compliance Assurance Monitoring - Continuous Emissions Monitoring Systems - Toxic Release Inventory - Monitoring cooling water - Mass Emission Cap and Trade Program
Selected Current Environmental Fees
- Title V federal operating permit fees ���- Air inspection fees ���- Air quality permit fees ���- Air quality permit renewal fees ���- Wastewater inspection fees ���- Wastewater permit application fees ���- Water quality fees ���- Potable water fees ���- Water use permit application fees ���- Hazardous waste generation fees ���- Non-hazardous waste fees - Low level radioactive waste fee - Injection well fee
75!
Transmission and Distribution Utilities!
76!
• Transmission and Distribution Utilities: – Provide reliable delivery of electricity on a 24-7 basis. – Invest in and build infrastructure (e.g., transmission lines, Smart Grid) to support
the needs of Texas’ growing economy. – Manage their transmission networks under the direction of ERCOT; coordinating
with ERCOT on transmission planning activities. – Respond to outages (e.g., storms, natural disasters) that affect the grid and restore
service as quickly as safely possible. – Provide key market information, such as premise information and metering
services to facilitate successful operation of the ERCOT deregulated market. – Provide regulated transmission and distribution services to facilitate operations of
wholesale and retail business entities.
– Charge regulated delivery rates to REPs Rates based on a historical cost of service including a PUC-established return on capital
investment
Allocation of ERCOT-wide transmission costs
Non-bypassable charges include the cost to deliver electricity, System Benefit Fund, recovery of true-up costs and nuclear decommissioning expenses for existing nuclear facilities
TDUsʼ Role in the Competitive ERCOT Market!
77!
• ERCOT Transmission – 1995 amendments to the Public Utilities Regulatory Act (PURA) required PUC to
ensure open access to transmission grid, allowing new independent generators to utilize transmission network.
– TX76RSB 7 adopted “postage stamp” transmission pricing structure and eliminated impact of location on transmission rates.
– Transmission Cost of Service (TCOS) ratemaking structure implemented and billed to distribution service providers (DSP).
– DSPs recover TCOS through the TDSP delivery rate and transmission cost recovery factor (TCRF), approved by PUC.
– New transmission investment is coordinated through the ERCOT regional transmission planning process and requires PUC facility certification.
T&D Market Design:!ERCOT!
78!
Transmission Investment in Texas
• Since 2008, TDUs have invested about $1.4 billion in the ERCOT transmission grid.
• ERCOT estimates that the electric grid will require adding or improving 5,729 circuit miles of transmission lines at a cost of about $8.2 billion from 2009 through 2015.
• This investment includes the cost of integrating Competitive Renewable Energy Zones (CREZs) into the competitive ERCOT market.
Source: ERCOT, “Report on Existing and Potential Electrical System Constraints and Needs,” December 2009
79!
Continued Transmission and Distribution Investment Needed Throughout Texas
• According to the Texas State Data Center, 5 million new residents are expected in Texas by 2020.
• New generation must be delivered effectively and efficiently to population centers of the state.
• Texas must provide regulatory certainty and fair rates of return to ensure appropriate capital investment.
• Though not shown here, areas of Texas located outside the ERCOT grid are also growing, both in terms of population and economic development.
Source: ERCOT, “Report on Existing and Potential Electric System Constraints and Needs,” December 2009
80!
• While certain types of generation can be constructed quickly -- often as short as 12-18 months -- transmission lines typically take between three and five years. Generation can be brought into the market more rapidly if the siting takes advantage of the existing transmission infrastructure.
• Building long transmission lines can affect many landowners, often requiring a lengthy and extensive easement acquisition effort.
• The transmission line siting process must take into account the impact of those lines on environmentally sensitive and historically significant lands.
• Utility is not typically allowed to begin recovering costs until year 5 or 6.
Challenges of Transmission Line Construction
Example of Transmission Construction Process in ERCOT
81!
Distribution Investment Also Needed
• The need to replace an aging distribution infrastructure to meet population and demand growth will require continued investment.
• It is becoming more evident that rising construction material costs are an increasingly important driver contributing to the higher actual and planned utility industry infrastructure investments.
• Nationwide, distribution investment is expected to be almost triple the size of projected transmission spending, according to the Edison Electric Institute. Distribution investment is likely to exceed generation and environmental capital spending, as well.
82!
• Non-ERCOT Transmission – Wholesale open access transmission rights subject to Federal Energy
Regulatory Commission (FERC) jurisdiction.
– FERC transmission pricing reflects location of generation.
– FERC requires generators to bear higher cost relative to the ERCOT system of connecting with the transmission grid.
– Certification in Texas is with the PUC.
– Recently adopted PUC rules allows most non-ERCOT utilities to recover transmission investments between rate cases through a transmission cost recovery factor (TCRF).
T&D Market Design:!Non-ERCOT!
83!
Competitive Renewable Energy Zones:!Legislative and Regulatory Steps
• The Texas Legislature mandated steady increases in renewable power in TX76RSB 7 (1999) and TX791RSB 20 (2005).
– Starting Line: 880 MW in 1999 – Old Goal 1: 2,880 MW by 2009 (Achieved by 2007) – New Goal 1: 5,880 MW by 2015 – New Target 1: 10,000 MW by 2025 – New Target 2: 500 MW non-wind renewable generation
• TX791SB 20 (2005) also required PUC to: – designate Competitive Renewable Energy Zones (CREZs) in areas in which renewable
energy resources and suitable land areas are sufficient to develop generating capacity from renewable technologies;
– develop a plan to construct necessary transmission capacity in a manner that is most beneficial and cost effective to customers; and
– take into account transmission constraints, the need for generation and the level of financial commitment by generators when defining CREZs.
• PUC adopted Substantive Rule 25.174 in December 2006, which creates framework for determining CREZs.
• Texas currently has 9,707 MW of installed renewable generation capacity (Oct 2009).
84!
Map of Adopted!Competitive Renewable Energy Zones!
85
Energy Efficiency!
86!
Energy Efficiency in Texas:!Overview
• Texas continues to be an energy leader through policies designed to improve the stateʼs energy efficiency programs and bring improved technologies to the electric market.!
– Utility-run programs have reduced customer consumption, thereby reducing the need for the construction of new generation.!
– Advanced metering provides information and opportunities that enable customers to take better control of their energy consumption and bills.!
– Houston and Dallas-Fort Worth ranked 1 and 2 nationally in number of homes that qualified for EPAʼs “Energy Star” designation.!
• The Texas Electric Choice Act requires electric utilities to provide energy efficiency programs and incentives, including efficiency programs for low-income customers.!
– TX80RHB 3693 raised the energy efficiency goal for electric utilities from 10% of annual demand growth to 15% in 2008 and 20% in 2009.!
– The recent PUC recently passed a rule requiring utilities to offset 30 percent of their projected growth in demand by 2013.!
• ERCOT competitive retailers are developing innovative plans and products that will help customers use less energy (e.g., customer education programs, energy audits, Internet-controllable thermostats, etc.)!
87!
Energy Efficiency ProgramsHave Exceeded Goals
• In 2009, utilities in Texas exceeded their statewide legislative energy efficiency goals for the seventh straight year. Utilities achieved 240 MW of peak demand reduction in 2009, which was 82% above the132 MW goal.
• Energy savings from standard offer programs and market transformation programs resulted in an equivalent reduction of 827,409 pounds of nitrogen oxide emissions per year.
• Since the start of the state’s energy efficiency program in 1999, utilities have achieved 1,365 MW of peak demand reduction and 3,574 GWh of electricity savings.
Total Energy Savings by Investor-Owned Utilities 2003 - 2009!
Source: Frontier Associates LLC, “Energy Efficiency Accomplishments of Texas Investor Owned Utilities, Calendar Year 2009”
88!
TX80RHB 3693: Enhancing Energy Efficiency
TX80RHB 3693 included a host of programs designed !to help reduce electricity usage in Texas.!
• Raises energy efficiency goal for electric utilities from 10% of annual demand growth to 15% in 2008 and 20% in 2009.!
• PUC will study energy efficiency programs by January 15, 2009, and submit a report to the legislature. !
– The study shall address whether utility energy efficiency programs should continue and whether energy efficiency programs are best provided by the competitive market.!
– The findings of the study will determine whether a goal increase to 30 percent is achievable by 2010 and 50 percent by 2015.!
• PUC will work with ERCOT to develop a method to account for projected energy efficiency impacts in ERCOTʼs forecasts of future capacity, demand, and reserves. !
89!
TX80RHB 3693: Enhancing Energy Efficiency!
• The bill also includes:!– an energy efficiency cost recovery factor;!– a utility financial incentive for exceeding goals; and!– the ability for utilities under a rate freeze to defer recognition of these costs.!– Provisions aimed at reducing energy consumption by schools and government
buildings.!– Stronger, more energy-efficient building standards for low-income housing.!– Creates an annual sales tax holiday during Memorial Day weekend for energy efficient
products that bear the designation of the nationwide “Energy Star” program.
90!
Benefits of Advanced Metering
• Advanced meters and other new technologies and associated infrastructure will provide information and opportunities that will enable customers to better understand the impact of controlling their energy consumption.
• By controlling their energy consumption, customers can better manage their bills and lessen their environmental impact.
• Advanced meters will allow for more automation of utility functions such as meter reading and connections/disconnections, which help to reduce costs.
91
The Smart Grid Transforms the Way We Buy, Deliver and Use Electricity
Key Stakeholder
Consumers
Electric Utility
Retailers
• Automated meter reading • Improved system reliability and greater ease/timeliness of power restoration • Improved line fault detection and diagnostics • Real time grid feedback allows for more effective loading of utility assets • Enables increased monitoring and diagnostics to enhance the life of utility assets
• Electric reliability improvements • Friendly access to detailed consumption information to make informed choices
and enable faster transactions • Enables and promotes energy conservation • Efficient switching and connections/disconnections
• Expands retailer’s ability to offer new products • Establishes platform to offer future home appliance monitoring and control • Allows retailers to offer pre-payment programs • Efficient switching and connections/disconnections
Environment
• Enables demand-side management • Facilitates integration of solar and wind generation into grid • Promotes energy efficiency through immediate energy consumption awareness • Facilitates reduced electric consumption which leads to reduced power plant
emissions
Benefits
92!
Advanced Metering Activities in Texas
• The approved deployment plan for CenterPoint Energy calls for installation of advanced meters over five years beginning in March 2009. In 2009, CenterPoint Energy was named as a recipient of a Federal Smart Grid Investment Grant that should enable installation of all meters by late 2012. Through year-end 2009, CenterPoint Energy installed 152,275 advanced meters, and another 42,815 were installed in January 2010.
• Oncor’s approved deployment plan initiated in late 2008 will have installation of advanced meters completed by the end of 2012. To date, Oncor has installed 709,435 meters.
• The AEP Texas deployment plan was approved in December 2009 and installation of advanced meters will be completed by the end of 2013. To date, nearly 5,000 meters have been installed in Portland, Texas, in order to conduct a system acceptance test. Full-scale deployment will begin in the second quarter of 2010.
• The cost for the meters and associated communications and computer equipment will be recovered through a monthly surcharge, which can be adjusted over time to reflect both the inclusion of AMS costs in future base rates and variances between the estimated versus the actual cost of implementing the deployment plan. The respective surcharges for both Oncor and CenterPoint Energy take into account the savings advanced meters are expected to bring each company.
93!
Competitive Retail Electric Market !in ERCOT!
94
The ERCOT Competitive Retail Electric Market is Providing Strong Customer Benefits!
Key Takeaways
– Price offers are lower than they were one year ago, and, when adjusted for inflation, substantially lower than prices available just before competition began.
– Retail electric price offers have improved, despite the increased price of energy commodities, such as gasoline, crude oil, natural gas and coal.
– Among states, like Texas, that depend heavily on natural gas for power generation, Texas prices compare favorably, with even lower prices available to those in the competitive market.
– Since January 2007, the average offer price in the competitive market has fallen by 22 percent, while prices have risen substantially in most of the rest of the country.
– The System Benefit Fund (SBF) provided benefits for low-income Texans during the summer. Several retailers, including AECT member companies, also offer additional low-income customer assistance programs, so customers should also contact their REP to learn more about the options that might be available to them.
95
Better Prices Available Today Than One Year Ago
Source: www.powertochoose.org; prices are a simple average among service territories.
96
Lower inflation-adjusted prices available today than before competition began
Sources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of August 11, 2010
97
Every Competitive Area in ERCOT Has Variable and 1-Year Lock Offers Available that are Lower than the National Average Price
Sources: powertochoose.org, U.S. Energy Information Administration
98
Retail Electric Prices Have Grown Far Less Than Other Energy Commodities
Sources: Public Utility Commission of Texas, U.S. Energy Information Association, NYMEX Commodity Exchange, Bureau of Labor Statistics. Notes: Commodity prices latest available as of August 11, 2010; coal percentage increase is approximate. Inflation covers period from 2001 to 2009
Percentage Change in Commodities
December 2001 – August 2010
99
ERCOT Generation Mix More Gas-Heavy than U.S. Average!
Note: Oil-fired generation is negligible in ERCOT, accounting for less than 0.1% of ERCOT capacity and load; numbers may not add up to 100% due to rounding.
Sources: ERCOT (2009 summer data), EIA (2008 data, latest available)
Cap
acity
(MW
) En
ergy
(MW
h) ERCOT U.S. Average
Natural Gas
Coal
Nuclear
Renewable (Mostly Hydro)
Oil
39%
31%
10%
14%
6%
Nuclear
Natural Gas
Coal
Renewable (Mostly Hydro)
Petroleum
21%
48%
20%
9% 1%
Coal
Nuclear
Natural Gas
Other
40%
36%
15%
2%
Coal
Natural Gas
Nuclear
Wind
65%
16%
6%
10% 3%
Other
Wind 7%
100
Texas Market Compares Favorably to Other States Utilizing Natural Gas as the Primary Generation Source!
Sources: Energy Information Administration (data as of April 2010); EIA natural gas-intensive states; powertochoose.org as of 4/19/10.
Average Lowest Available Price in ERCOT Competitive
Market In April 2010: 8.3¢/kWh
Note: Texas statewide average price includes prices from both competitive and regulated areas of the state.
101
Texasʼ National Price Ranking Has Improved With Competition Despite Input Fuel Cost Increases AND Customers Can Choose Plans To Meet Their Needs
0
2
4
6
8
10
12
14
16
18
KY WA ID WV
OR TN ND NE UT
WY
MT IN MO AL OK
MS
SD CO
MN KS MD SC AR GA
DC VA WI
LA NC MI
AZ
OH IA FL DE IL NM TX NV PA NJ CT
CA AK RI
MA
NH VT
ME
NY HI
Source: EIA average annual residential rates for 2001 and April 2010 monthly data (latest available information). Average lowest available price from powertochoose.org Web site as of 4/19/10 for a residential customer using an average of 1,000 kWh per month.
¢/kW
h ¢/
kWh
2001 State Ranking (Pre-Competition)
April 2010 State Ranking (Latest Available)
Average lowest available offer in
competitive market in
April 2010: 8.3¢/kWh
102
Competitive Residential Electric Price Offers !Have Fallen Since Full Competition Began!in January 2007!
Source: http://www.powertochoose.org (1/1/07 & 8/11/10)
AEP Texas North Service Territory
Change in Average 1yr Fixed-Price Offer:
28% decrease
Since January 2007, competitive price offers for residential customers have fallen in every service area.
Texas-New Mexico Power Co. Service Territory
Change in Average 1yr Fixed-Price Offer:
24% decrease
AEP Texas Central Service Territory
Change in Average 1yr Fixed-Price Offer:
18% decrease
Oncor Service Territory
Change in Average 1yr Fixed-Price Offer:
22% decrease
CenterPoint Energy Service Territory
Change in Average 1yr Fixed-Price Offer:
22% decrease
103
Since Just Before the Full Market Opened, Texasʼ Prices Have Remained Steady While Others Have Risen
Source: EIA average annual residential rates for January 2007 and April 2010, powertochoose.org for January 2, 2007 and April 19. 2010
Texas 2%
Gas-Dependent States (excl. TX)
4%
US Average (excl. TX)
19%
Restructured States
(excl. TX) 23%
Competitive Offers in Texas
-22%
104
Offers in Competitive Areas Compare Well With Prices in Other Areas of the State With Other Market Structures
0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
0.1400
0.1600
0.1800
0.2000
Upshur R
ural E
lec
Coop Corp
Mag
ic V
alle
y Ele
ctric
Coop In
c
Baile
y County
Ele
c Coop A
ssn
HILCO E
lect
ric C
ooperat
ive,
Inc.
Med
ina
Elect
ric C
oop, Inc
Fort Bel
knap
Ele
ctric
Coop In
c
Southwes
t Tex
as E
lec
Coop, Inc
Colem
an C
ounty E
lec
Coop, Inc
Tri-C
ounty E
lect
ric C
oop, Inc
Big C
ountry E
lect
ric C
oop, Inc
North P
lain
s Ele
ctric
Coop In
c
Wis
e Ele
ctric
Coop In
c
CoServ
/ Den
ton C
ounty E
lec
Coop, Inc
Victo
ria E
lect
ric C
oop, Inc
Blueb
onnet E
lect
ric C
oop, Inc
Centra
l Tex
as E
lec
Coop, Inc
Bartle
tt Ele
ctric
Coop, I
nc
Hamilt
on County
Ele
c Coop A
ssn
Concho V
alle
y Ele
c Coop In
c
San P
atric
io E
lect
ric C
oop Inc
Green
belt E
lect
ric C
oop, Inc
Trin
ity V
alle
y Ele
c Coop In
c
Peder
nales
Ele
ctric
Coop, I
nc
Fannin
County
Ele
ctric
Coop
Rio G
rande
Elect
ric C
oop, Inc
Grays
on-Colli
n Ele
c Coop, I
nc
Cooke C
ounty E
lec
Coop Ass
n
Oncor S
vc A
rea
- Lowes
t 1-Y
r Fix
ed O
ffer
AEP North
Svc
Are
a - L
owest 1
-Yr F
ixed
Offe
r
TNMP S
vc A
rea
- Lowes
t 1-Y
r Fix
ed O
ffer
Cente
rPoin
t Svc
Are
a - L
owest 1
-Yr F
ixed
Offe
r
Oncor S
vc A
rea
- Avg
1-Y
r Fix
ed O
ffer
AEP Cen
tral S
vc A
rea
- Lowes
t 1-Y
r Fix
ed O
ffer
AEP North
Svc
Are
a - A
vg 1
-Yr F
ixed
Offe
r
TNMP S
vc A
rea
- Avg
1-Y
r Fix
ed O
ffer
Cente
rPoin
t Svc
Are
a - A
vg 1
-Yr F
ixed
Offe
r
AEP Cen
tral S
vc A
rea
- Avg
1-Y
r Fix
ed O
ffer
San A
ntonio
- CPS E
nergy
New B
raunfe
ls U
tiliti
es
Lubbock P
ower &
Lig
ht
City o
f San
Mar
cos
Dento
n Munic
ipal
Ele
ctric
Bryan
Tex
as U
tiliti
es
Brownsv
ille
Public U
tiliti
es B
oard
Austin
Ener
gy
Green
ville
Ele
ctric
Util
ity S
ervi
ce (G
EUS)
City o
f Sch
ulenburg
Kirbyv
ille
Light &
Power
Co
City o
f Jas
per
City o
f San
August
ine
Garla
nd Power
& L
ight
Wea
ther
ford
Mun U
tility
Sys
tem
City o
f San
ger
City o
f Hea
rne
City o
f Bas
trop
City o
f Bowie
City o
f Robst
own
City o
f Bar
tlett
City o
f Sey
mour
City o
f Cole
man
Enterg
y Te
xas
AEP SW
EPCO
Xcel E
nergy
- SPS
Cap R
ock E
nergy
AEP SW
EPCO North
Tex
as
El Pas
o Ele
ctric
Sources: Phone surveys conducted October 2009; Power to Choose Web site, January 20, 2010; AECT
* ¢/kW
h
*El Paso Electric Co. residential customers typically use about 40% less power than the state average of usage.
105
The ERCOT Competitive Market is Responding to Recent Drops in Natural Gas Prices
1 Electric price offers for residential customers using an average of 1,000 kWh per month Sources: NYMEX; www.powertochoose.org
106
Protections in the Market forRetail Customers
• Make Spanish-language support available to customers
• Place customer deposits in interest-bearing accounts and return that interest to customers when the deposit is returned
• Follow a mandated timeline for disconnection of customers
• Provide notice in case of disconnection • Investigate any customer complaint within 21 days • Provide a Terms of Service Statement detailing
contract terms, cancellation penalties, deposit requirements, fees, payment arrangement options, how to cancel service, and other obligations of the REP
• Allow a customer to cancel a service agreement within three federal business days after receiving the terms of service
• Allow a customer to cancel the switch upon receiving notification that the switch will occur
• Register with the PUC and meet financial requirements set by the Commission
• Communicate clearly with consumers regarding notice of contract expiration
• Demonstrate creditworthiness to purchase power to serve its customers
• Demonstrate the technical ability to supply electricity
• Maintain privacy of customer information • Not discriminate among customers • Not add charges to a customer’s electric bill for
services not requested by the customer • Provide a “Your Rights as a Customer” disclosure • Provide an Electricity Facts Label to allow for an
“apples-to-apples” comparison among REPs • Make deferred payment plans available for those
expressing an inability to pay • Provide the LITE-UP discount for low-income
Texans during summer months
Among other requirements, REPs serving residential customers must:
Even this brief sampling of regulations highlights that customers are protected
107
Benefits for Qualified!Low-Income Customers:!The System Benefit Fund!
• The System Benefit Fund (SBF) was enacted as part of the Texas Electric Choice Act in 1999. It is intended to provide funding specifically for:
– assistance to low-income customers through reduced electric rates; – weatherization programs; and – administrative funding.
• The PUC approved the utilization of the $80 million of SBF funds authorized by the 80th legislature.
– These funds will be used to provide a discount to low-income customers in the competitive areas of the state.
– During the months of May through September, eligible low-income customers will receive an approximate 20 percent discount through the “LITE-UP Texas” electric discount program.
108
Benefits for Qualified!Customers: REP Programs!
• Several retail electric providers across the state also provide additional, voluntary programs to assist low-income customers. Examples of programs include:
– Since May 2003, the Neighbor-to-Neighbor program has helped tens-of-thousands of Direct Energy, CPL Retail Energy, and WTU Retail Energy customers with their home energy expenses. The program was created to assist families experiencing financial emergencies with up to $200 in bill payment assistance, as much as twice during a calendar year. The program is administered by more than 30 community action agencies across the state.
– The Care to Share Fund provides bill payment assistance to eligible First Choice Power residential customers in need of emergency funding. Customers can donate to the Care to Share Fund and assist residential customers who need a little extra help by providing extra emergency assistance through the Care to Share Fund.
– The CARE Energy Assistance Program was created by Reliant Energy to help Reliant customers during a difficult time. Customers who qualify may receive this one-time annual assistance through non-profit social service agencies in communities that are served by Reliant Energy. These agencies review customer cases and qualify them based upon the agency’s designated hardship criteria.
– TXU Energy has committed $25 million per year for 5 years to fund a 10% low-income discount, and an additional $5 million per year for 5 years for low-income bill assistance through its TXU Energy Aid program. In addition, TXU Energy has established the Low Income Advisory Committee and works collaboratively with over 400 agencies across the state to assist customers in need.
– Since September 2006, several REPs have participated in the low-income credit program resulting from CenterPoint Energy’s 2006 rate case settlement. This program is currently providing a credit of $7.68 per month to eligible customers.
• Texans can check their electric provider’s Web site or call their provider to see what other programs are available.
109!
Q&A!