AECT Electricity 101 - May 2011 Update


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AECT Electricity 101 - May 2011 Update

  1. 1. Electricity 101: Operations and Recent Statistics May 2011Legislative 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 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 2
  3. 3. U.S. Divided into EightReliability 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 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). (ERCOT) 3
  4. 4. AECT Member CompaniesWithin ERCOT Retail Electric Providers Transmission and Distribution Utilities Generation Companies 4
  5. 5. AECT CompaniesOutside of ERCOT SERC Reliability Corporation Southwest Power Pool (SPP) Western Electricity Coordinating Council (WECC) 5
  6. 6. Contents Slide 7: AECT Member Companies Slide 23: Electric Market Structures in Texas Slide 36: Texas’ Wholesale Electric Market Slide 46: ERCOT Generation Mix Slide 51: Types of Generation: Benefits and Challenges Slide 61: Emissions and the Environment Slide 73: Transmission and Distribution Utilities Slide 83: Energy Efficiency Slide 91: Competitive Retail Electric Market in ERCOT 6
  7. 7. AECT Member Companies 7
  8. 8. AEP SWEPCOVertically 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. 8
  9. 9. AEP TexasTransmission & 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. 9
  10. 10. CenterPoint EnergyTransmission & 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. 10
  11. 11. El Paso Electric CompanyVertically 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. 11
  12. 12. Entergy TexasVertically 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. 12
  13. 13. Exelon GenerationElectric 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. 13
  14. 14. First Choice PowerRetail 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 14
  15. 15. LuminantElectric 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. 15
  16. 16. NRG EnergyElectric 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. 16
  17. 17. OncorTransmission & 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. 17
  18. 18. Optim EnergyElectric 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. 18
  19. 19. Reliant EnergyRetail 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 19
  20. 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. 20
  21. 21. TXU EnergyRetail 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 21
  22. 22. Xcel EnergyVertically Integrated Utility Xcel Energy owns Southwestern Public Service Company, a regional electric utility that provides service to about 400,000 persons in a 45,000 square- mile area comprised of the South Plains and Panhandle of Texas, and eastern New Mexico. 22
  23. 23. Electric Market Structures in Texas 23
  24. 24. History of Electric UtilityRegulation in TexasPre-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. 24
  25. 25. History of Electric Utility Regulation in Texas1976-1995•  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. 25
  26. 26. Steps to Electric Competition In Texas Jan. 2007 Jan. End of 2005 price-to- Jan. Affiliate beat 2002 REPs July Retail allowed to 2001 choice offer non- price-to- Sept. Texas begins in beat prices 1999 Choice ERCOT June ERCOT pilot Electric program 1999 begins rates May frozen Retail 1995 competitionWholesale legislationcompetitionlegislation Passed (SB 7)passed (SB 373) 26
  27. 27. Wholesale and Retail ElectricCompetition 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. 27
  28. 28. Steps to Competition: Wholesale Competition•  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. 28
  29. 29. Steps to Competition: Retail Competition•  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. 29
  30. 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 30
  31. 31. Structural Unbundling•  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. 31
  32. 32. ERCOT: Separate companies provideretail, transmission & distribution andgeneration services Power Flow Financial Flow Regulated •  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. 32
  33. 33. ERCOT: Separate companies provideretail, transmission & distribution andgeneration services Power Flow Financial Flow Regulated •  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. 33
  34. 34. Outside ERCOT: A single companyprovides retail, transmission & distributionand generation services in each area Power Flow Financial Flow Regulated •  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. 34
  35. 35. Outside ERCOT: A single companyprovides retail, transmission & distributionand generation services in each area Power Flow Financial Flow Regulated •  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. 35
  36. 36. Texasʼ Wholesale
 Electric Market 36
  37. 37. The Competitive Wholesale Market: ASuccess 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. 37
  38. 38. Permitted and Operating ElectricGenerating Units in Texas 38
  39. 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. 39
  40. 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 40
  41. 41. Increased Population Drives
Future Electric Consumption Texas’ Projected Population Growth Assuming Net Migration Equal to 2000-2004 (median scenario) 50 • To meet increases in electric 45 43.6 million load created by Texas’ rapid 40 population and economic 36.3 million 35 growth, Texas will require 30.3 million additional power, transmission 30 and distribution, customer 25 25.1 million demand response and energy efficiency. 20 15 10 5 0 2010 2020 2030 2040 Source: Texas State Data Center 41
  42. 42. Electric Consumption Continues to
Grow in ERCOT Note: The peak in electric consumption in 2000 was Source: ERCOT, “Report on Existing and Potential due to an exceptionally hot summer. Electric System Constraints and Needs,” December 42 2010
  43. 43. Peak Demand Also Growing, Requiring
Additional Investment Long-Term Source: ERCOT, “Report on Existing and Potential Electric System Constraints and Needs,” December 43 2010
  44. 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.Sources: Energy Velocity, NERC, PUC 44
  45. 45. Update on ERCOT Reserve MarginsSource: ERCOT, “Report on Existing •  ERCOT recently raised its target reserve margin to 13.75% ofand Potential Electric SystemConstraints and Needs,” December generation available above peak summer demand. To meet this2010 goal, ERCOT will need additional generation in upcoming years 45
  46. 46. ERCOT Generation Mix 46
  47. 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 23,000 MW of new generation, including natural gas, coal, nuclear and renewable power. Sources: EIA, National Mining Association, The Perryman Group, PUC 47
  48. 48. Gas on the Margin in ERCOTYear-Round Demand Curve - Winter Scenario Demand Curve - Summer Scenario 60000 60000 50000 50000 40000 40000 MW Load MW Load 30000 30000 20000 20000 10000 10000 0 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Hour Hour Nuclear Coal Wind Natural Gas Nuclear Coal Wind Natural Gas Examples are purely illustrative•  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 48 operate.
  49. 49. Business Climate for Generatorsin 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 substantial new generation has been announced, including: –  4,815 MW of new coal-fired generation –  5,900 MW of new nuclear generation –  7,172 MW of new wind-powered generation –  8,418 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,” updated April 30, 2009 49
  50. 50. Texas Has the Most Installed Wind Energy Capacity 24% of the nation’s installed wind generation capacity is located in Texas.Source: American Wind Energy Association, Through Q1 2011 50
  51. 51. Types of Generation:
Benefits and Challenges 51
  52. 52. Three Key Factors Affecting Choicesfor New Generation Wholesale Market Cost of Construction and Fuels 52
  53. 53. Coal-Fired GenerationType 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. 53
  54. 54. Natural Gas-Fired GenerationType 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. 54
  55. 55. Nuclear-Powered GenerationType 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. 55
  56. 56. Wind-Powered GenerationType 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.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. 56
  57. 57. Solar GenerationType 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. 57
  58. 58. Biomass and Landfill GasGenerationType 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 58
  59. 59. Hydroelectric GenerationType 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 59
  60. 60. Energy Efficiency andDemand-Side ManagementType 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. 60
  61. 61. Emissions and the Environment 61
  62. 62. Texas Is Already Leading theWay in Clean Power Plants Texas has the largest emissions of any state since it produces ~80% more power than the next ranked state. 0.234 0.351 OK 0.198 NM AR 0.142 0.098 LA TX 2009 NOx Emission Rate Averages (lbs/ Area mmBtu) National 0.159 Texas 0.098 62 EPA Clean Air Markets Division – 2009 Acid Rain Program Data
  63. 63. Electric Generator-NOx Reductions Achieved Under
TCEQ 1-hr Ozone SIP Rules–  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 Between 2000 and 2005, electric generating companies in Texas spent over $1 billion on NOx emission reductions alone. 63
  64. 64. Texas’ Electric Generating Plants Among Cleanest NOx Emitters in the Nation Texas has the 11th cleanest average NOxNOx (lb/MMBtu) emissions rate. U.S. Average-0.159 lb/mmBtu 64 EPA Acid Rain Database, 2009
  65. 65. Average Emission Rates of Nitrogen Oxides from Existing Texas and U.S. Power PlantsNOx (lb/MMBtu) 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 65 Source: EPA Acid Rain Database, 2009
  66. 66. Texas’ Electric Generating Plants Among Cleanest SO2 Emitters in the Nation Texas has the 24th cleanest average SO2SO2 (lb/MMBtu) emissions rate. U.S. Average-0.458 lb/mmBtu 66 EPA Acid Rain Database, 2009
  67. 67. 1995-2009 Emission Rate Trends Sulfur Dioxide Nitrogen Oxides (SO2) (NOx) lb./mmBtu 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 67 2003 - 2009 data are from the Clean Air Markets Division database for the Acid Rain Program
  68. 68. CO2 Emissions in
Context of Texasʼ EconomyA common refrain is that CO2 emissions generated in Texas are higher than inother 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 2001.2−  The amount of CO2 emitted per MWh of electricity generated in Texas is lower than that of half of the states that have more than a nominal amount of coal-fired or oil- fired electricity generation.31Source: EIA, 2008 State Electricity Profiles2Source: “Global Warming: What Should Texas Do?” Texas Public Policy Foundation, April 20073Source: EPA Acid Rain Database, 2009 68
  69. 69. 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 15 GWe by 2030 64 GWe by 2030 Generation No Heat Rate Improvement 1-3% Heat Rate Improvement Advanced Coal for Existing Plants for 130 GWe Existing Plants Generation 40% New Plant Efficiency 46% New Plant Efficiency by 2020–2030 by 2020; 49% in 2030 CCS None Widely Deployed After 2020 10% of New Light-Duty Vehicle PHEV None 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 69
  70. 70. Additional Emission Reductions  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. 70
  71. 71. Giving Back to theEnvironment•  AECT member companies help to improve our environment through stewardship, support for new technologies and partnership with other agencies. Environmental Stewardship Environmental Partnerships
 -  Reducing releases of chlorofluorocarbons from -  Climate Challenge Program electrical equipment - Energy Star - Recycling coal combustion products - Energy Smart Schools - Educating schools and communities about - Environment Research Program renewable energy - Designating land and reservoirs for public -  EPA SF6 Partnership program recreational use -  Mickey Leland Internship Program - Preserving and restoring forests by planting - TCEQ Teaching Environmental Science millions of trees -  Green Lights - Helping other industries adopt pollution- - Habitat Protection prevention plans - Learning From Light! - Launching education campaigns to help - Millennium Council communities save energy - Million Solar Roofs - Creating wetlands and wildlife habitats on - National Energy Education Development company properties (NEED) Project - Natural Gas Star -  Reclaimed water utilization -  Offering renewable energy products to retail customers 71
  72. 72. Selected EnvironmentalPrograms 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 
 Selected Current 
 Environmental Programs Environmental Fees - Compliance with National Ambient Air Quality - Title V federal operating permit fees Standards - Air inspection fees -  State Implementation Plan - Air quality permit fees -  NOx reductions for electric generating units - Air quality permit renewal fees -  Clean Air Interstate/Clean Air Mercury Rules - Wastewater inspection fees -  New Source Review (NSR) - Wastewater permit application fees Prevention of Significant Deterioration - Water quality fees -  Non-attainment NSR, including offset - Potable water fees -  State Minor NSR - Water use permit application fees -  Title V and Acid rain permits - Hazardous waste generation fees -  Compliance Assurance Monitoring - Non-hazardous waste fees -  Continuous Emissions Monitoring Systems -  Low level radioactive waste fee -  Toxic Release Inventory -  Injection well fee -  Monitoring cooling water -  Mass Emission Cap and Trade Program 72
  73. 73. Transmission and Distribution Utilities 73
  74. 74. TDUsʼ Role in the Competitive ERCOTMarket•  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 74
  75. 75. TD Market Design:ERCOT•  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. 75
  76. 76. Transmission Investment in Texas •  Since 2009, TDUs have invested over $2.0 billion in the ERCOT transmission grid. •  ERCOT estimates that the electric grid will require adding or improving 5,993 circuit miles of transmission lines at a cost of over $9.0 billion from 2011 through 2016 and beyond. •  This investment includes the cost of integrating Competitive Renewable Energy Zones (CREZs) into the competitive ERCOTSource: ERCOT, “Report on Existing and Potential Electrical System market.Constraints and Needs,” December 2010 76
  77. 77. Continued Transmission and DistributionInvestment 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 2010 77
  78. 78. Challenges of TransmissionLine Construction Example of Transmission Construction Process in ERCOT•  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. 78
  79. 79. Distribution InvestmentAlso 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. 79
  80. 80. TD Market Design:Non-ERCOT•  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). 80
  81. 81. 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 9,727 MW of installed renewable generation capacity (September 2010). 81
  82. 82. Map of AdoptedCompetitive Renewable Energy Zones 82
  83. 83. Energy Efficiency 83
  84. 84. 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.) 84
  85. 85. Energy Efficiency Programs
 Have Exceeded Goals Total Energy Savings by Investor-Owned Utilities
 2003 - 2009 •  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.Source: Frontier Associates LLC, “Energy Efficiency Accomplishments of Texas Investor Owned Utilities, Calendar Year 2009” 85
  86. 86. 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. 86
  87. 87. 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. 87
  88. 88. 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. 88
  89. 89. The Smart Grid Transforms the Way 
We Buy, Deliver and Use ElectricityKey Stakeholder Benefits •  Automated meter reading Electric •  Improved system reliability and greater ease/timeliness of power restoration •  Improved line fault detection and diagnostics Utility •  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 Consumers 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 Retailers •  Allows retailers to offer pre-payment programs •  Efficient switching and connections/disconnections •  Enables demand-side management •  Facilitates integration of solar and wind generation into grid Environment •  Promotes energy efficiency through immediate energy consumption awareness •  Facilitates reduced electric consumption which leads to reduced power plant emissions 89
  90. 90. 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 enables the deployment to be completed by late 2012. Through October 2010, CenterPoint Energy has installed 789,857 advanced meters.•  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 over 1.4 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. To date, nearly 5,000 meters have been installed in Portland, Texas, in order to conduct a system acceptance test. 90
  91. 91. Competitive Retail Electric Market in ERCOT 91
  92. 92. The ERCOT Competitive Retail ElectricMarket is Providing Strong CustomerBenefits 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 fixed offer price in the competitive market has fallen by 29 percent, while the average U.S. electric price outside Texas has risen by 23 percent. –  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. 92
  93. 93. Better Prices Available TodayThan One Year AgoSource:; prices are a simple average among service territories. 93
  94. 94. Lower inflation-adjusted prices available today than before competition beganSources: PUC Historical Data, Bureau of Labor and Statistics, offers as of May 9, 2010 94
  95. 95. Competitive Residential Electric Price Offers Have Fallen Since Full Competition Beganin January 2007 Texas-New Mexico Power Co. AEP Texas North Service Territory Service Territory Change in Average Change in Average 1yr Fixed-Price Offer: 1yr Fixed-Price Offer: 36% decrease 29% decrease Oncor Service Territory Change in Average 1yr Fixed-Price Offer: 28% decrease CenterPoint Energy Service Territory AEP Texas Central Change in Average Service Territory 1yr Fixed-Price Offer: 26% decrease Change in Average 1yr Fixed-Price Offer: 28% decrease Since January 2007, competitive price offers for residential customers have fallen in every service area.Source: (1/1/07 5/9/11) 95
  96. 96. Texasʼ National Price Ranking Has Improved With Competition Despite Input Fuel Cost Increases AND Customers Can Choose Plans To Meet Their Needs 18 2001 State Ranking (Pre-Competition) 16¢/kWh 14 12 10 8 6 4 2 0 KY WA WV WY MT MO OK MS GA VA WI MI AZ IA TX PA AK MA VT ME ID OR AL LA NJ TN NE UT IN SD CO MN KS MD SC AR OH FL DE IL NM NV CT CA RI NY HI ND DC NC NH January 2011 State Ranking (Latest Available) Average lowest available offer in competitive market in Jan. 2011: 7.1/kWh¢/kWh Source: EIA average annual residential rates for 2001 and September 2010 monthly data (latest available information). Average lowest available price from Web site as of 1/11/11 for a residential customer using an average of 1,000 kWh per month. 96
  97. 97. Every Competitive Area in ERCOT HasVariable and 1-Year Lock Offers Availablethat are Lower than the National Average Price Sources: offers as of January 11, 2010, U.S. Energy Information Administration, latest available data 97
  98. 98. Offers in Competitive Areas Compare Well With Prices in Other Areas of the State With Other Market Structures¢/kWhSources: Phone surveys conducted September 17, 2010; Power to Choose 98Web site, September 20, 2010; AECT member company data
  99. 99. Retail Electric Prices Have Grown Far Less Than Other Energy Commodities Percentage Change in Commodities December 2001 – May 2011Sources: Public Utility Commission of Texas, U.S. Energy Information Association, NYMEX Commodity Exchange, Bureau of Labor Statistics.Notes: Commodity prices latest available as of May 9, 2011. Inflation covers period from 2001 to 2011 99
  100. 100. ERCOT Generation Mix More Gas- Heavy than U.S. Average ERCOT U.S. Average Other Energy (MWh) Wind Renewable Petroleum 8% 1% (Mostly Hydro) 1% Natural Gas Nuclear 9% 21% Nuclear 13% 38% 20% 40% Natural Gas 48% Coal Coal Other Wind Oil 2% Renewable 11% (Mostly Hydro) 6% Capacity (MW) Nuclear Natural Gas 6% 14% 39% 22% Nuclear 10% Coal 59% 31% Natural Gas CoalNote: 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 (2010 data), EIA (2009 data, latest available) 100
  101. 101. ERCOT far More Dependent On Gas Than Neighboring PowerRegions % MWh from Natural Gas % MWh from Coal % MWh from Nuclear % MWh from Hydro % MWh from Other 101
  102. 102. Texas Market Compares Favorably to Other 
States Utilizing Natural Gas as the Primary 
Generation Source Average Lowest Available Price in ERCOT Competitive Market In January 2011: 7.1¢/kWh Sources: Energy Information Administration (data as of January 2011); EIA natural gas-intensive states; as of 1/11/11. Note: Texas statewide average price includes prices from both competitive and regulated areas of the state. 102
  103. 103. Competitive electricity prices still track natural gas, but enable customer choice and lower prices NYMEX Average 12-Month StripNatural Gas vs. Texas Residential Retail Average Lowest OfferElectricity Prices In Areas Now Open to Before Electric With Electric Average Competitive OfferCompetition Competition Competition1992 – 2011 YTD; $/MMBtu and ¢/kWh Residential Electricity Price NYMEX Natural Gas, 12-month Strip Annual Average (¢/kWh)1 ‘02-11 Natural Gas Avg: Annual Average ($/MMBtu) $6.65/MMBtu (+215%) ‘92-99 Natural Gas Avg: $2.11/MMBtu1Average annual residential electric prices at 1000 kWh/month in the 5 TDU areas opened to competition in 2002; pre-competition prices based on filed tariffs; post-competition prices based on Power to Choose offerings and PUC data 103 103Sources: NYMEX, PUC, Power to Choose website (latest data as of 2/7/11)
  104. 104. Since January 2007, Texasʼ Prices HaveFallen While Others Have Risen US Average (excl. TX) Gas-Dependent Restructured 23% States (excl. TX) States 0% (excl. TX) 12% Texas -9% Lowest Competitive Offer Prices in Texas -29% Source: EIA average annual residential rates for January 2007 and January 2011 (latest available usage data), for January 2, 2007 and January 11. 2011 104
  105. 105. Protections in the Market for
Retail CustomersAmong other requirements, REPs serving residential customers must:•  Register with the PUC and meet financial •  Make Spanish-language support available to requirements set by the Commission customers•  Communicate clearly with consumers regarding •  Place customer deposits in interest-bearing notice of contract expiration accounts and return that interest to customers when•  Demonstrate creditworthiness to purchase power the deposit is returned to serve its customers •  Follow a mandated timeline for disconnection of•  Demonstrate the technical ability to supply customers electricity •  Provide notice in case of disconnection•  Maintain privacy of customer information •  Investigate any customer complaint within 21 days•  Not discriminate among customers •  Provide a Terms of Service Statement detailing•  Not add charges to a customer’s electric bill for contract terms, cancellation penalties, deposit services not requested by the customer requirements, fees, payment arrangement options,•  Provide a “Your Rights as a Customer” disclosure how to cancel service, and other obligations of the REP•  Provide an Electricity Facts Label to allow for an •  Allow a customer to cancel a service agreement “apples-to-apples” comparison among REPs within three federal business days after receiving•  Make deferred payment plans available for those the terms of service expressing an inability to pay •  Allow a customer to cancel the switch upon•  Provide the LITE-UP discount for low-income receiving notification that the switch will occur Texans during summer months Even this brief sampling of regulations highlights that customers are protected 105