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Legislative Staff Briefing: Update on the Texas Electric Industry


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Update on the Texas Electric Industry: Winter Weather, Sharyland Transition to Competition, TDU Issues

Update on the Texas Electric Industry: Winter Weather, Sharyland Transition to Competition, TDU Issues

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  • 1. Update  on  the  Texas  Electric  Industry     Legisla)ve  Staff  Briefing   March  20,  2014   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 •
  • 2. 2 AECT  Principles   •  AECT  is  an  advocacy  group  composed  of  member  companies  commiHed  to:      -­‐  Ensuring  a  modern,  reliable  infrastructure  for  the  supply  &  delivery  of          electricity.      -­‐  Suppor)ng  efficient  compe))ve  markets  that  are  fair  to  customers  and          market  par)cipants.      -­‐  Suppor)ng  consistent  and  predictable  oversight  and  regula)on  that  will          promote  investment  and  ensure  the  stability  of  Texas’  electric  industry.      -­‐  Promo)ng  an  economically  strong  and  environmentally  healthy  future  for          Texas,  including  conserva)on  and  efficient  use  of  available  resources.     •  AECT  member  companies  remain  dedicated  to  providing  Texas  customers  with        reliable  service  and  are  commiHed  to  the  highest  standards  of  integrity.     The  Associa+on  of  Electric  Companies  of  Texas,  Inc.  (AECT)  is  a  trade  organiza+on  of  investor-­‐owned   electric  companies  in  Texas.  Organized  in  1978,  AECT  provides  a  forum  for  member  company   representa+ves  to  exchange  informa+on  about  public  policy,  and  to  communicate  with  government   officials  and  the  public.  For  more  informa+on,  visit  
  • 3. 3 AECT  Companies   Within  ERCOT   Transmission  and  Distribu)on  U)li)es   Retail  Electric  Providers   Genera)on  Companies  Total ERCOT Capacity: >74,000 MW
  • 4. 4 AECT  Companies   Outside  of  ERCOT   Western  Electricity  Coordina)ng   Council  (WECC)   Southwest  Power  Pool  (SPP)   Midcon)nent  Independent   System  Operator  (MISO)  
  • 5. 5   Market  Update       Winter  Weather  Causes  Higher  Usage     Sharyland  Moves  to  Compe))on     TDU  Issues  
  • 6. 6 51 49 46 60 66 52 42 50 54 60 53 44 34 33 51 63 67 62 57 59 67 3636 3535 38 33 32 34 51 53 55 49 56 34 30 27 28 35 29 30 32 45 4040 34 36 39 55 67 45 39 32 31 41 39 45 40 36 35 36 39 33 28 42 34 2222 40 53 57 48 46 43 37 39 40 43 37 45 46 38 37 27 2626 43 34 2727 31 5555 35 34 42 31 26 29 37 41 35 3333 32 47 42 59 58 55 63 57 41 48 62 55 52 36 31 44 53 28 24 30 38 43 39 44 39 50 56 49 37 49 62 0 10 20 30 40 50 60 70 80 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 1 3 5 7 9 11 13 15 17 19 21 23 25 27 1 3 5 7 9 11 13 15 Daily Low Temperature (Austin) 11/1/13 - 3/15/14 - Compared With Average Average 13-14 December JanuaryNovember February March Cold  Texas  Weather     Has  Con)nued  into  March   Source: Weather Underground Two  out  of  every  three  days   below  historical  average  
  • 7. 7 Unusually  Cold  Winter  Temperatures     Mean  Higher  Electricity  Use   •  ERCOT  net  system  demand  met  new  monthly  record   peaks  in  October,  November  and  December  last  year   •  ERCOT  set  a  new  winter  peak  demand  record  of   57,277  MW  on  January  7   •  ERCOT  set  a  new  monthly  peak  demand  record  for   March  of  54,549  MW  –  more  than  11,500  MW  higher   than  the  previous  record  set  in  March  2002   –  By  this  )me  of  year,  many  power  plants  are  undergoing   necessary  maintenance,  since  it’s  normally  the  )me  of   lowest  demand  in  Texas   •  Extended  cold  weather  affects  Texans  more  than   most:  about  half  of  Texas  households  use  electricity   for  hea)ng,  compared  with  34%  na)onwide   –  Electric  heaters  use  three  )mes  as  much  energy  as  air   condi)oners   •  Download  the  ERCOT  app  for  iPhone  and  Android  to   receive  ERCOT  weather  alerts  and  calls  for   conservaAon  
  • 8. 8 Low  Electric  Rates  x  High  Usage   =  Increased  Bills   •  The  largest  por)on  of  customers’  electric  bills  are  calculated  based  on  the  price  of   electricity  and  the  amount  consumed,  so  even  though  generally  electric  prices  have   not  risen  over  the  past  year,  customers  may  s)ll  see  increased  electric  bills  due  to   higher  consump)on.   •  The  prices  shown  above  are  illustra)ve.  The  actual  bill  will  depend  on  the  customer’s   electric  rate  and  actual  monthly  usage.     Electric  Rate     10.5¢/kWh   Monthly   Electric  Usage     1,200  kWh   Monthly   Electric  Bill     $126.00   Average  of  all  offers  in     the  market  in  February   Higher-­‐than-­‐normal     February  electric  usage  
  • 9. 9   Market  Update       Winter  Weather  Causes  Higher  Usage     Sharyland  Moves  to  Compe))on     TDU  Issues  
  • 10. 10" Sharyland  U)li)es   Service  Area  Open  to  Compe))on   Customers  in  the   Brady,  Celeste,   Colorado  City,  and   Stanton  service  areas   of  Sharyland  U)li)es   are  now  able  to  shop   for  electric  services   from  compe))ve  REPs.     Sharyland  Customers  in   McAllen  are  not   affected  by  the   transi)on,  as  they  were   already  part  of  the   compe))ve  market  
  • 11. 11" Shopping  for  Electricity  in  the   Sharyland  U)li)es  Service  Territory   •  The  move  to  electric  compe))on     provides  electric  customers  the     opportunity  to  shop  for  electric     plans  via  REP  websites  or  the     PUC's  Power  to  Choose  website.   •  The  compe))ve  market  offers     consumers  a  choice  of  a  variety  of     service  op)ons  from  numerous     retail  electric  providers.  Retail     compe))on  has  given  consumers  the  ability  to  choose  from  innova)ve  specialty   plans  that  meet  their  needs  —  including  green  power,  )me-­‐of-­‐use  rates,  and  other   promo)ons  and  incen)ves.   •  Further,  certain  Sharyland  customers  will  be  able  to  qualify  for  benefits  that  are   available  in  compe))ve  areas—for  example,  the  LITE-­‐UP  Texas  program  offers   assistance  with  electric  bills  to  qualified  low-­‐income  customers  living  in  Texas'   compe))ve  areas.    
  • 12. 12   Market  Update       Winter  Weather  Causes  Higher  Usage     Sharyland  Moves  to  Compe))on     TDU  Issues  
  • 13. 13" Compe))ve  Renewable  Energy  Zones   Lines  Completed   •  In  December   2013,  ERCOT   reported  the   comple)on  of  the   CREZ  build-­‐out   •  ERCOT  is   expected  to  have   over  16,500  MW   of  wind  power   installed  by  the   end  of  2016   CREZ  Lines  Completed  
  • 14. 14" Advanced  Meter     Opt-­‐Out  Cases  at  the  PUC   •  The  PUC’s  rule  allowing  customers  to  opt-­‐out  of  advanced   metering  service  was  adopted  on  August  9,  2013.     –  AEP  Texas,  CenterPoint  Energy,  Oncor  and  Texas-­‐New  Mexico  Power  Company   have  filed  compliance  tariffs  outlining  proposed  costs  for  non-­‐standard   metering  service  and  ongoing  service.     •  Based  on  typical  procedural  schedules,  it  is  expected  that  the  opt-­‐ out  process  will  begin  this  summer.   –  Each  TDU’s  tariff  is  undergoing  a  contested  case  hearing  at  the  PUC.     –  45  days  ajer  adop)on  of  tariffs,  customers  who  have  requested  to  remain   without  an  advanced  meter  will  receive  a  no)ce  of  costs  and  instruc)ons  for   op)ng  out.  They  must  give  no)ce  and  provide  payment  within  60  days  of   no)ce.   –  Customers  who  choose  to  replace  their  advanced  meter  in  the  future  will  pay   the  up-­‐front  costs  and  have  a  meter  installed  within  30  days.  
  • 15. 15" Physical  Security  of     Electric  Grids   •  While  electric  u)li)es  and  regulators  cannot  publicize  their  individual  and  collec)ve   security  ac)vi)es,  all  recognize  that  maintaining  the  physical  security  of  the  electric   grid  is  of  paramount  importance.       •  Maintaining  the  physical  security  of  substa)ons,  transformers  and  other  assets   keeps  the  power  flowing  to  the  neighborhoods  and  businesses  who’ve  come  to   expect  a  high  level  of  electric  reliability  in  Texas.     •  U)li)es  par)cipate  in  industry  groups  and  discussions  with  regulators  to  remain   current  on  emerging  threats  and  mi)ga)ng  techniques.     –  These  groups  include,  but  are  not  limited  to:  the  US  Cyber  Emergency  Response  Team,  the   Na)onal  Electric  Sector  Cyber  Security  Organiza)on,  the  Department  of  Homeland   Security,  the  US  Nuclear  Regulatory  Commission  and  NERC.     –  U)li)es  also  apply  the  knowledge  gained  by  con)nuing  to  invest  in  technology,  processes   and  services  to  detect,  mi)gate  and  protect  our  physical  and  cyber  assets.  These   investments  include  upgrades  to  network  architecture,  regular  intrusion  detec)on   monitoring  and  compliance  with  emerging  industry  regula)on.  
  • 16. 16" Geomagne)c  Disturbances  and   Electric  Grids   •  A  geomagne)c  disturbance  (GMD),  such  as  a     solar  flare,  can  affect  electric  systems,  typically     in  the  far  northern  or  southern  hemisphere.   •  GMDs  have  never  caused  a  blackout  of  U.S.  power     systems,  though  they  may  have  contributed  to     isolated  outages.   •  NERC  has  developed  and  con)nues  to  develop  reliability  standards   to  mi)gate  the  risks  of  GMDs.  
  • 17. 17" Electromagne)c  Pulses  and   Electric  Grids   •  Some  have  recently  cited  concern  about  the  poten)al  for  the  U.S.   power  grid  to  be  harmed  by  an  Electromagne)c  Pulse  (EMP)   aHack.   –  An  electric  grid  saboteur  would  have  to  either  use  a  portable  EMP  emimng   device  located  in  close  proximity  to  electrical  equipment  or  detonate  a  nuclear   bomb.   •  There  is  not  a  clear  consensus  regarding  the  likelihood  and  impact   of  man-­‐made  EMP  threats  to  power  grids.   –  Protec)ng  against  the  smaller,  portable  variety  is  part  of  electric  companies’   broader  security  ac)vi)es.   –  A  nuclear  detona)on  would  have  other  severe  impacts  unrelated  to  EMP,  and   its  EMP  impacts  could  affect  all  electrical  systems.  
  • 18. 18" Emergency  Preparedness   Throughout  Texas     •  Texas  is  prone  to  a  wide  array  of   inclement  weather.  The  state  faces   thunderstorms  with  high  winds,   tornadoes  and,  as  seen  recently,  ice   storms.   •  Transmission  and  distribu)on  u)li)es  in   each  part  of  the  state  work  to  ensure   that  the  power  grid  func)ons  as   normally  as  possible.       •  Each  u)lity  maintains  emergency  preparedness  plans  to  mi)gate  impacts  from  the  most   common  inclement  weather,  while  maintaining  crisis  response  teams  to  quickly  respond   to  these  emergencies  and,  if  necessary,  emergencies  in  other  parts  of  the  state  or   country.     •  U)li)es  perform  reviews  ajer  actual  ac)va)ons  of  their  emergency  plans  and  make   revisions  based  on  lessons  learned  in  order  to  beHer  prepare  for  future  emergency   events.  
  • 19. 19" Mutual  Assistance  Groups   Texas  Mutual  Assistance  Group        Midwest  Mutual  Assistance  Group   Members   AEP   CLECO     CenterPoint  Energy     Entergy  Texas     Mississippi  Power  Company     Oklahoma  Gas  and  Electric  Company     Oncor  Electric  Delivery     Texas-­‐New  Mexico  Power  Company   Members   AEP   CenterPoint  Energy     Empire  District  Electric  Company     Entergy  Texas   Exelon     Kansas  City  Power  &  Light  Co.     LG&E  Energy     Oncor  Electric  Delivery     We  Energies     Xcel  Energy  Inc.   Southeastern  Electric  Exchange      Texas  Members   CenterPoint  Energy     Entergy  Texas   Texas-­‐New  Mexico  Power  Company      
  • 20. 20" Emergency  Opera)ng/Restora)on  Plans:     U)li)es  Prepare  Year-­‐Round   •  The  goal  of  a  u)lity’s  emergency  plan  is  to  restore  service  to  its  customers  –   safely,  quickly  and  efficiently.     •  In  addi)on  to  linemen  and  local  contractors,  an  emergency  plan  typically   includes  virtually  every  company  employee  -­‐  even  those  who  do  not   tradi)onally  work  in  the  field.     •  Through  electric  u)lity  mutual  assistance  programs,  most  u)li)es  have  access   to  thousands  of  linemen  and  tree  trimmers  from  around  the  country.     •  The  u)li)es  also  work  to  ensure  access  to  lodging,  fuel,  food,  supplies  and   equipment.  
  • 21. 21" Basic  Priority  Restora)on    In  compeAAve  areas  of  the  state,  restoraAon  of  power  is  not  affected  by  a   customer’s  choice  of  retail  electric  provider.  A  typical  plan  consists  of  four   phases  of  restoraAon:       •  Service  to  facili)es  vital  to  safety,  health  and  welfare,  such  as  hospitals,  water   treatment  plants  and  public  service  facili)es.   •  Service  to  customers  whose  power  is  out  due  to  damage  to  major  power  lines,   which  serve  thousands  of  customers.   •  Service  to  customers  whose  power  outage  was  caused  by  damage  to  smaller   sec)ons  of  power  lines  serving  hundreds  of  customers.   •  Service  to  customers  who  have  outages  caused  by  damage  to  equipment  that   typically  serves  less  than  ten  customers.   The  )meline  for  restora)on  is  heavily  dependent  on  the  severity  of  the  weather   event  and  the  extent  of  the  areas  affected.  An  extremely  severe  storm  can   result  in  outages  las)ng  a  number  of  weeks.  
  • 22. 22" Web: Twitter: Facebook: AECT Advocacy Email: