Update on the Electric Industry in Texas: Summer Recap


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Topics include: effects of summer weather, use of water by generation facilities, offers available in the competitive retail electric market and the CSAPR rule

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Update on the Electric Industry in Texas: Summer Recap

  1. 1. Update on the Electric Industry in Texas: Summer Recap Legislative Staff Briefing! September 28, 2011 ! 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. 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. 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. 4. AECT Member Companies!Within ERCOT! Retail Electric Providers Transmission and Distribution Utilities Generation Companies 4
  5. 5. AECT Companies!Outside of ERCOT! SERC Reliability Corporation Southwest Power Pool (SPP) Western Electricity Coordinating Council (WECC) 5
  6. 6. Unrelenting Summer Heat Affected! the Entire State! 6
  7. 7. Texas Faced Extreme Heat 
This Summer! Summer 2011 has been one of the hottest and driest on record in Texas. In Austin, for example, high temperatures were above average nearly every day from June through August 7
  8. 8. August Heat Wave!Particularly Harsh!•  A statewide heat wave during the week of August 1 presented particular challenges to grid operators because of high demand•  Temperatures well in excess of 105 combined with high humidity led to afternoon heat indices of more than 110 in several cities•  During that week, ERCOT demand peaked on August 3 at 68,294 MW (4,396 MW more than predicted), triggering emergency reliability actions•  Other AECT member companies across the state also experienced demand records during the heat wave, including: –  El Paso Electric: 1,711 MW on August 8 –  Xcel Energy: 5,936 MW on August 2. Xcel Energy exceeded 2010 peak demand 33 times this summer –  AEP SWEPCO: 2,687 MW on August 3. AEP SWEPCO exceeded the 2010 peak demand 16 times 8
  9. 9. ERCOT Demand 
Records in August!•  New Peak Demand Records This Year –  August 3, 2011: 68,379 MW –  August 2, 2011: 67,929 MW –  August 1, 2011: 66,867 MW•  Prior to this year, the all-time peak demand record was 65,776 MW (set on August 23, 2010) ERCOT Demand Monthly Records 2011 2010 May: 57,356 MW May: 56,344 MW June: 63,102 MW June: 62,278 MW July: 65,195 MW July: 63,400 MW August: 68,379 MW August: 65,776 MW Source: ERCOT 9
  10. 10. Texas Particularly Challenged
Throughout the Past Year! Change in 52-Week Year-On-Year Electric Output For Electric Utilities By EEI Region August 2009-2010 Compared With August 2010-August 2011 +1.0% -0.9% +2.5% +0.5% +0.7% -0.3% +0.5% -1.0% +4.7% Comparing the past year to the previous year, nationwide electric output has risen by 0.6%. Output in the South Central region, including Texas, has risen by 4.7%. 10 Source: EEI
  11. 11. Long-Term Drought Could 
Impact Electric Generation !•  AECT member companies represent the largest private owners, builders, and operators of reservoirs in Texas.•  Water supply is essential to the reliable generation of electricity. –  Water supply is generally obtained in the form of water contracts/ rights, prior to the construction of an electric generation station. –  Water contracts/rights are secured at a level to ensure a reliable water source during future drought periods. 11!
  12. 12. How Texasʼ Power Plants
Use Water! Fuel•  Most power plants heat water until it becomes steam, then pressurize that steam to turn a generating turbine.•  The steam is then routed to a condenser, where the water is condensed and reused in the steam cycle.•  Water from one or more reservoirs or cooling towers is used to cool the condenser, making it possible to recycle the water to make steam. 12!
  13. 13. How Texasʼ Power Plants
Use Water!•  The heat added to the water as it flows through the condenser must be allowed to dissipate from the system in some way.•  One way the cooling can occur is when cooling water is pumped from a reservoir through a condenser and is returned to the reservoir.•  If the heat is dissipated in a cooling tower, the heat dissipation occurs almost entirely by conduction and convection, or by evaporation, depending on the type of cooling tower. 13!
  14. 14. High Consumption Means Potentially Higher Electric Bills Though Prices Remain Low ! 14!
  15. 15. Potentially High Summer!Electric Bills!•  Typically, the bulk of customers’ electric bills is calculated based on the price of electricity and the amount consumed.•  So even though electric prices have declined substantially in recent years, residents may still see increased electric bills due to higher weather-driven consumption.•  Some residents may also see increased electric bills due to multiple months of consumption included on a single bill. This is an impact of disconnection moratoria that were in place to help protect customers during the hot summer months. 15!
  16. 16. Benefits for Qualified!Customers: REP Programs!•  Several retail electric providers across the state also provide additional, voluntary programs to assist low-income customers. –  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. –  In 2011, nearly $800,000 in bill payment assistance was committed to Reliants CARE program. Non- profit social service agencies review customer cases and qualify customers CARE funds based upon the agencys designated hardship criteria. In addition, more than a dozen Beat the Heat Centers were offered by Reliant in Corpus Christi, Dallas and Houston to provide heat relief in high-need areas. –  Below is information on several programs offered by TXU Energy. –  TXU Energy operates TXU Energy Aid, the largest bill-payment assistance program among electricity companies in the nation. The company committed $25 million over 5 years (through 2012) to this program which has helped over 390,000 Texas families since 1983. –  TXU Energy also works collaboratively with ~1,000 agencies across the state to assist customers in need. –  In addition, TXU Energy uniquely provides a self-funded, year-round low-income customer discount of ~10 percent. The company committed $125 million over 5 years (through 2012) for this program which assisted over 150,000 customers this summer. Since 2008, the company has also helped 18,000 low income households reduce their energy consumption through grants invested in energy efficiency improvements. –  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. 16!
  17. 17. Lower Bills Through!Choice and Energy Efficiency!•  Customers in the 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 Service 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 –  Texas Is Hot: www.texasishot.org –  U.S. Department of Energy: www.energy.gov/energyefficiency –  Get Energy Active: www.getenergyactive.org 17!
  18. 18. Competitive Market BringingSustained Lower Prices Prices in the competitive market remain at low levelsSource: www.powertochoose.org; prices are a simple average among service territories. 18
  19. 19. Lower prices available today than before competition beganSources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of September 26, 2011 19
  20. 20. Every Competitive Area in ERCOT HasVariable and 1-Year Lock Offers Availablethat are Lower than the National Average Price Sources: PowerToChoose.org offers as of May 17, 2011, U.S. Energy Information Administration, latest available data 20!
  21. 21. 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 TN NE UT IN AL SD CO MN KS MD SC AR LA OH FL DE IL NM NV NJ CT CA RI NY HI ND DC NC NH May 2011 State Ranking (Latest Available) Average lowest available offer in competitive market in May 2011: 6.1/kWh¢/kWh Source: EIA average annual residential rates for 2001 and May 2011 monthly data (latest available information). Average lowest available price from powertochoose.org Web site as of 5/17/11 for a residential customer using an average of 1,000 kWh per month. 21!
  22. 22. Federal Environmental Regulation!Raises Concerns Over Resource Adequacy! 22!
  23. 23. Texas Unexpectedly Included in 
Cross State Air Pollution Rule (CSAPR) ! 23!
  24. 24. Texas Unexpectedly Included in 
Cross State Air Pollution Rule (CSAPR) !•  Power plants in Texas as a whole, based on 2010 emissions, will have to make about a 50% reduction in SO2 emissions and an 11% reduction in NOx by the end of 2012. •  Coal units collectively, will have to make a 51% and 21% reduction respectively. •  Gas units collectively, will be allocated a surplus of 65% and 45% respectively, over their 2010 emissions.•  Compliance options available within this short timeframe include fuel switching, environmental dispatching, reducing load, seasonal operation, temporary mothballing and retirement. All of which could impact reliability in Texas.•  As subsequent slides show, Texas generators perform well in comparison with those in other states. 24!
  25. 25. Texasʼ Electric Generating Plants Among Cleanest NOx Emitters in the Nation! 0.800 0.700 0.600 Texas has the 12th cleanest average NOx emissions rate.NOx (lb/MMBtu) 0.500 0.400 0.300 0.200 U.S. Average-0.156 lb/ 0.100 mmBtu 0.000 IL AL FL WV NV UT VT SD ND NE DC KS OK CO MI IN MN DE OH MS MO MD TN WI NC NH SC RI ID NJ MT ME CT WY IA KY GA NY NM MA AR OR CA PA WA AZ LA TX VA 25! EPA Acid Rain Database, 2010
  26. 26. Texasʼ Electric Generating Plants Among Cleanest SO2 Emitters in the Nation! 1.000 0.900 0.800 Texas has the 27th 0.700 cleanest average SO2 emissions rate.SO2 (lb/MMBtu) 0.600 0.500 U.S. Average- 0.387 lb/mmBtu 0.400 0.300 0.200 0.100 0.000 AL IL FL MT UT CT VT WV NV OH NH ND SD IN DC DE MO TN NE WI SC NC OK MS KS MD CO ME ID MI MN NM RI AR OR WA TX LA AZ VA NJ WY IA KY GA NY MA CA PA 26! EPA Acid Rain Database, 2010
  27. 27. 1995-2010 Emission Rate Trends! Sulfur Dioxide (SO2) Nitrogen Oxides (NOx) lb./mmBtu lb./mmBtu Year Nation Texas Nation Texas 1995 1.088 0.526 0.537 0.319 1996 1.103 0.535 0.53 0.325 1997 1.093 0.524 0.509 0.311 1998 1.055 0.482 0.481 0.307 1999 0.999 0.481 0.441 0.284 2000 0.875 0.381 0.399 0.261 2001 0.843 0.385 0.373 0.221 2002 0.793 0.384 0.348 0.173 2003 0.815 0.389 0.321 0.143 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 0.32 0.237 0.103 2008 0.564 0.315 0.222 0.103 2009 0.458 0.309 0.159 0.098 2010 0.387 0.304 0.156 0.095 27! EPA Clean Air Markets Division – 1995- 2010 Acid Rain Program Data
  28. 28. Web: AECT.netBlog: AECTnet.wordpress.comTwitter: twitter.com/AECTnetFacebook: Association of Electric Companies of Texas, Inc.Email: info@aect.net 28!