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Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
Summer 2012 Update on the Electric Industry in Texas
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Summer 2012 Update on the Electric Industry in Texas

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Legislative Staff Briefing

Legislative Staff Briefing

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  • 1. Update on the Electric Industry in Texas: Summer 2012 Recap ! Legislative Staff Briefing! September 20, 2012 ! 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. 2
  • 3. U.S. Divided into Eight!Reliability Regions! •  The eight reliability regions in the FERC continental U.S. are subject to the oversight and enforcement authority of NERC 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.•  Electric systems in Texas are located within four separate reliability regions: - Texas Reliability Entity (TRE), which oversees participants in the Electric Reliability Council of Texas (ERCOT); - SERC Reliability Corporation; - Southwest Power Pool (SPP); and - Western Electricity Coordinating Council (WECC). (ERCOT) 3
  • 4. AECT Companies!Within ERCOT! Retail Electric Providers Transmission and Distribution Utilities Generation Companies 4
  • 5. AECT Companies!Outside of ERCOT! SERC Reliability Corporation Southwest Power Pool (SPP) Western Electricity Coordinating Council (WECC) 5
  • 6. Summer 2012: !ERCOT Reliability Update and! Resource Adequacy! 6
  • 7. Peak Demand in Texas on the ! Upswing!  340,000     Annual  Energy  and  Peak  Demand    70,000      335,000      Annual  Energy   Peak  Demand    68,379      330,000      68,000      319,097      320,000      65,776      66,000      312,401      307,064      308,278      310,000      305,715      64,000      63,400      299,227      300,000      62,339      62,174      62,000      62,188     GWh   MW    60,095     89,113      2  60,274      290,000      60,000      284,954      58,531      280,000      58,000      270,000      56,000      260,000      54,000      250,000      52,000     2003   2004   2005   2006   2007   2008   2009   2010   2011   Year  Source: ERCOT presentation at AECT legislative staff briefing, May 17, 2012 7
  • 8. Resource Adequacy Concerns!Over the Next Several Years! Mid-Term Projections 2013 2014 MW.Currently.Installed.Resources 2015 2016 MW.under.Interconnection.Agreements 2020 2017 2018 2019 2021 2022 Coal.Projects.under.FIS Coal Projects under FIS 0 0 0 0 0 850 850 850 850 850 Natural.Gas.Projects.under.FIS Other.Fuel.Projects.under.F IS Solar.Projects.under.FIS Natural Gas Projects under FIS 89 1133 1733 1744 1744 1744 1744 1744 1744 1744 Wind.Pro jects.under.FIS 316 Other Fuel Projects under FIS 316 316 Forecast 316 316 316 316 Forecast.+.Reserve 316 316 316 Solar Projects under FIS 260 *.FIS.=.Full.Interconnection.Studies 441 481 481 481 481 481 481 481 481 95,000 Wind Projects under FIS 379 1005 1196 1227 1227 1227 1227 1227 1227 1227 MW under Interconnection Agreements 1106 1157 2664 4824 5484 6724 6724 6724 6724 6724 Source: ERCOT Capacity, Demand MW Currently Installed Resources 73914 73933 73959 73933 74224 74160 73315 73315 73315 73315 Forecast and Reserves Report, May 22, 2012 65649 68403 71692 73957 75360 76483 76769 78524 79682 80694 Forecast + Reserve 74676 77808 81550 84126 85722 86999 87324 89321 90638 91790 90,000 85,000 80,000 75,000 70,000 65,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022•  ERCOT reported sufficient capacity for Summer 2012, but concerns over the next several years.•  CSAPR stay also impacted forecasts. 8
  • 9. ERCOT and PUC Outreach on Need toConserve! 9
  • 10. Additional Resources on EnergyEfficiency and Conservation!•  Customers in the ERCOT competitive retail electric market can contact their retail electric provider or visit www.powertochoose.org to learn more about available options.•  All customers can contact their electric company to find out what programs are available, or to find a contractor or vendor who participates in the state energy efficiency programs.•  Customers can also call 2-1-1, the Texas Health and Human Services Commissions information and referral network, to learn about programs available in the area.•  Additional resources –  Texas Department of Housing and Community Affairs: www.tdhca.state.tx.us/assist_repair.htm –  U.S. Department of Energy: www.energy.gov/energyefficiency –  Get Energy Active: www.getenergyactive.org 10
  • 11. Summer 2012 Has Again! Been Warmer Than Average! Summer Temperature Comparison (Austin) - Historical Average vs. 2012 115 110 109 107 106 105 105 103 103 103 103 102 102 102 102 102 102 101 101 101 101 101 101 101 100 100 100 100 100 100 100 100 99 99 99 99 99 99 99 98 98 98 98 98 98 98 97 97 97 97 97 97 97 97 9797 9797 97 96 96 96 96 9696 96 96 95 95 95 95 95 95 95 95 94 94 94 94 94 94 9393 93 92 9292 92 92 91 91 90 90 90 90 89 88 88 85 80 1 2 3 4 5 6 7 8 9 11 21 1 2 3 4 5 6 7 8 9 11 21 31 1 2 3 4 5 6 7 8 9 11 21 31 10 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 10 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 10 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 High Temperature July June Aug Average 2012Source: Weather Underground 11
  • 12. But With Few Exceptions Summer 2012! Has Been Cooler Than Summer 2011! Summer Temperature Comparison (Austin) - 2011 vs. 2012 115 110 109 107 106 105 105 103 103 103 103 102 102 102 102 102 102 101 101 101 101 101 101 101 100 100 100 100 100 100 100 100 99 99 99 99 99 99 99 98 98 98 98 98 98 98 97 97 97 97 97 97 97 97 9797 9797 97 96 96 96 96 9696 96 96 95 95 95 95 95 95 95 95 94 94 94 94 94 94 9393 93 92 9292 92 92 91 91 90 90 90 90 89 88 88 85 80 1 2 3 4 5 6 7 8 9 11 21 1 2 3 4 5 6 7 8 9 11 21 31 1 2 3 4 5 6 7 8 9 11 21 31 10 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 10 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 10 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 High Temperature July June Aug 2011 2012Source: Weather Underground 12
  • 13. ERCOT Fall Forecast Shows Sufficient Capacity! ERCOT Seasonable Assessment of Resource Adequacy Includes installed capacity, capacity from private networks,Total Resources 74,516 MW other sources and adjustments for effective capacity of windTotal Forecasted Peak Calculated based on data from the Climate Prediction 53,227 MW CenterDemandReserve Capacity 21,289 MW Resources minus Peak Demand Includes power plant maintenance and unexpected plantRange of Risks 8,601-17,998 MW outagesRange of Reserve Capacity 3,291-12,688 MW Reserve capacity minus riskBeyond Risks •  “While it is always possible for unique conditions (such as much higher than expected peak demands or higher than normal forced generation outages) to occur that would require ERCOT to declare an Energy Emergency Alert (EEA), ERCOT does not anticipate calling for rotating outages.” 13 Source: ERCOT Seasonable Assessment of Resource Adequacy, September 9, 2012
  • 14. PUC Activity on Resource Adequacy!•  On June 28, 2012, the PUC voted to increase the system-wide energy offer cap. Power market lurches along, Higher electric costs with peril dead ahead not justified July 1, 2012 June 28, 2012•  While there were concerns that retail prices would be adversely affected, offer prices available in the competitive market have remained steady over the past seven weeks. –  From August 1 to September 17, the average 12-month fixed price offer fell from 10.1¢/kWh to 10.0¢/kWh. –  The average lowest-available offer fell from 8.1¢/kWh to 6.9¢/kWh. 14
  • 15. Summertime PUC and ERCOT Activity !on Resource Adequacy!•  Open Meetings and Workshops on Resource Adequacy Projects: June 13 and 28; July 13 and 30; August 8 and 17; September 6, 13 and upcoming on September 28•  Brattle Report: Released June 1, provided analysis of five key scenarios for consideration•  System-Wide Offer Cap: Raised by PUC and implemented by ERCOT on August 1•  Power Balance Penalty Curve: Studied and adjustments considered by PUC•  Demand Response and Load-Management Initiatives: Bolstered by ERCOT•  Compensation for Reliability Unit Commitments: Addressed by ERCOT 15
  • 16. Resource Adequacy Options from!The Brattle Group!•  The Brattle Group was asked to analyze ERCOT’s options for increasing its ability to attract electric generation and bolster its reserve margin. It developed five key concepts, forming the basis of discussion on the issue. –  Option 1: Current energy-only market –  Option 2: Energy-only market with adders to support a target reserve margin –  Option 3: Energy-only market with a backstop procurement requirement to meet minimum accepted reliability –  Option 4: Market in which load-serving entities contract for capacity to meet a resource adequacy requirement –  Option 5: Capacity market to meet a resource adequacy requirement 16
  • 17. Advanced Meter Deployments, ! New REP Products and !Current Prices Available in the Market ! 17
  • 18. 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. 18
  • 19. 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 received a Federal Smart Grid Investment Grant that enabled the deployment to be completed in 2012. CenterPoint completed installation of approximately 2.2 million meters throughout its service territory in mid-2012.•  Oncor’s approved deployment plan initiated in late 2008 will have installation of advanced meters completed by the end of 2012. As of August 31, 2012, Oncor has installed over 3 million meters.•  The AEP Texas deployment plan was approved in December 2009 and installation of advanced meters will be completed by the end of 2013. Over 600,000 meters have been installed as of August 31, 2012.•  TNMP began installation of advanced meters in September 2011. As of August 31, 2012, over 57 thousand have been installed. 19
  • 20. Advanced Meters Have been!Proven to be Accurate, Safe and Reliable•  Accuracy: Advanced meters are rigorously tested and must be independently certified to prove their measurements are accurate. In fact, repeated tests confirm that advanced meters are often more accurate than analog meters.•  Beneficial: Increased reliability, restoration after a power outage, remote meter reading are among the immediate cost-savings for advanced meters.•  Secure: Advanced meters are a technological leap, much like cell phones and other evolving industries. Utilities use advanced encryption technology to safeguard consumer data.•  Safe: Digital meter radio frequency (RF) emissions are well below FCC standards and are minimal compared to the RF emissions of many commonly used household devices. The extensive scientific literature reflects that there is no credible evidence of negative health impacts from the low level of RF emissions from digital meters.•  Private: Utilities adhere to strict policies, following Texas laws that regulate the use of personal information for business functions like billing and customer service. 20
  • 21. Smart Meters in Action:!Reliant e-Sense Plans and Products!•  Keep Your Cash Nights & Weekends plan - All electricity used on weeknights from 8 p.m. and 8 a.m. and all weekend long is discounted.•  Time-of-Use plan -- Customers receive a lower price during off-peak hours. Higher-priced Summer Peak hours are only 3% of the total hours in the year. By minimizing usage in this period, a customer can maximize savings.•  Reliant’s Learn & Conserve PlanSM featuring the Nest Learning ThermostatTM – Nest learns customer preferences and even adjusts itself when the customer is away, or allows remote adjustment via mobile app, so electricity isn’t wasted cooling an empty home.•  Degrees of Difference – participants receive optional requests to conserve when high electricity demand is anticipated; customers who use less during the requested conservation hours receive a credit on their next electricity bill.•  Reliant also offers information between monthly bills, via home energy monitor, weekly summary e-mail, text alerts, and mobile app 21
  • 22. Smart Meters in Action:!TXU Energy’s Innovative Plans & Products!•  TXU Energy Free Nights plan -  Customers pay nothing for Energy Charges at night (10 pm – 6 am). -  Customers receive ~25% of their Energy Charges for free1 -  Guaranteed price protection for a full 12, 18 or 24 months•  TXU Energy MyEnergy DashboardSM -  A web-based information service that helps customers better understand how and when they use electricity so they can reduce usage and save money on electricity bills -  A free service available to all TXU Energy customers ®•  Brighten iThermostat -  A touch-screen programmable thermostat that helps customers monitor and manage their homes temperature via the Internet -  Customers also participate in the Brighten® Conservation Program, which allows air conditioner cycling during high demand periods•  A sampling of other TXU Energy programs and services: -  Personalized electricity usage reports and budget alerts -  Personal energy advisor for energy-saving tools, tips, and projects -  Account access and compare bills/usage through iPhone or Android apps1 Estimated savings based on average Texas household’s annual electricity usage between 10 p.m. and 6 a.m.. Results will vary depending on actual usage. 22
  • 23. Price Offers Remain Low in the ERCOT Competitive Market September 2012 December 2001 Average Fixed- Lowest Fixed-Price Lowest Price Dec. 2001 prices, Dec. 2001 prices, Service Area Price Offer Offer Offer not adjusted for adjusted for inflation (12-month term) (12-month term) Available inflation AEP Texas Central 10.6¢/kWh 9.4¢/kWh 7.4¢/kWh 9.6¢/kWh 12.2¢/kWh AEP Texas North 9.8¢/kWh 8.1¢/kWh 7.0¢/kWh 10.0¢/kWh 12.7¢/kWh CenterPoint Energy 10.2¢/kWh 9.1¢/kWh 6.9¢/kWh 10.4¢/kWh 13.2¢/kWh Oncor 9.4¢/kWh 8.0¢/kWh 6.1¢/kWh 9.7¢/kWh 12.4¢/kWh TNMP 10.0¢/kWh 8.1¢/kWh 7.0¢/kWh 10.6¢/kWh 13.5¢/kWhSources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of September 17, 2012 23
  • 24. Environmental Update! 24
  • 25. Other Factors: !Federal Environmental Regulation!•  On August 21, a federal court vacated the Cross-State Air Pollution Rule (CSAPR), which would have required generation units to significantly reduce emissions on a short time frame. -  CSAPR would have impacted the ability of many coal-fired generation units in Texas to operate, creating additional resource adequacy concerns.•  On September 13, a federal court agreed to hold in abeyance challenges to the EPAs Mercury and Air Toxics (MATS) standards while the agency reconsiders parts of the rulemaking.•  Meanwhile, as subsequent slides show, Texas generators perform well in comparison with the nation as a whole. 25!
  • 26. Texas’ Electric Generating Plants Among Cleanest NOx Emitters in the Nation! 0.7 0.6 Texas has the 12th cleanest average NOx emissions rate 0.5NOx (lb/MMBtu) 0.4 0.3 U.S. Average 0.2 Outside Texas 0.161 lb/mmBtu 0.1 0 IL AL FL UT MT VT CT WV SD ND NE DC KS CO IN MO MD MS NC WI TN DE SC NJ ID ME RI OK OH NH NV MI NM MN AR OR CA PA WA AZ LA TX VA WY IA KY GA NY MA 26!Source: 2011 EPA Air Markets Program Database, Acid Rain Program Only
  • 27. Texas’ Electric Generating Plants AmongCleanest SO2 Emitters in the Nation! 1 0.9 Texas’ SO2 0.8 emissions rate is well below the SO2 (lb/MMBtu) 0.7 national average 0.6 0.5 U.S. Average Outside Texas 0.4 0.365 lb/mmBtu 0.3 0.2 0.1 0 IL AL FL WV MT UT CT VT NV OH DC SD IN NH ND MI TN NE MO WI DE SC OK MD MS NC KS CO ME ID MN NM RI AR OR WA TX LA AZ VA NJ WY IA KY GA NY MA CA PA 27!Source: 2011 EPA Air Markets Program Database, Acid Rain Program Only
  • 28. Web: AECT.netBlog: AECTnet.wordpress.comTwitter: @AECTnetFacebook: AECT AdvocacyEmail: info@aect.net 28!

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