Update on the Electric Industry in Texas
Legislative Staff Briefing!February 18, 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
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AECT Principles!
• AECT is an advocacy group composed of member companies committed to:
- Ensuring a modern, reliable infrastructure for the supply & delivery of electricity.
- Supporting efficient competitive markets that are fair to customers and market participants.
- Supporting consistent and predictable oversight and regulation that will promote investment and ensure the stability of Texas’ electric industry.
- Promoting an economically strong and environmentally healthy future for Texas, including conservation and efficient use of available resources.
• AECT member companies remain dedicated to providing Texas customers with reliable service and are committed to the highest standards of integrity.
The Association of Electric Companies of Texas, Inc. (AECT) is a trade organization of investor-owned electric companies in Texas. Organized in 1978, AECT provides a forum for member company representatives to exchange information about public policy, and to communicate with government officials and the public. For more information, visit www.aect.net.
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AECT Member Companies!Within ERCOT!
Generation Companies
Transmission and Distribution Utilities
Retail Electric Providers
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AECT Companies!Outside of ERCOT!
Western Electricity Coordinating Council (WECC)
Southwest Power Pool (SPP)
SERC Reliability Corporation
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February Outages!
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February 2:!Controlled Outages Throughout Texas!
• On February 2, a day when each major city in Texas faced morning temperatures below 25 degrees, 82 generation units either went offline or were unable to start.
• At the height of the outages, over 8,000 MW of generation was unavailable.
• ERCOT, the electric grid operator that covers most of the state, and each utility have procedures governing emergencies like this, and as the problem rapidly worsened, Texans faced a series of controlled outages.
• As designed, the controlled outages prevented much more widespread and long-lasting blackouts.
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More than 8,000 MW of Generation Dropped Off Overnight!
Source: ERCOT Presentation to Joint Senate Committees, February 15, 2011
February 2, 2011
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Learning from the Power Outages!
Severe Weather Was the Cause • February 2-4 saw the coldest sustained temperatures in Texas in 20
years. • From mechanical failures to pressure drops in natural gas supply lines to
inoperable equipment, each reported cause of a generation outage or reduction in output was related to the severe cold.
Different Types of Power Plants Were Affected • Coal and natural gas power plants were among the units affected.
Plants Were Affected Throughout the State • Power plants were affected throughout the state, and the power supply
was constrained to the Rio Grande Valley all the way to El Paso. • Plants affected were operated by both competitive and regulated owners.
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The generation loss was system-wide and covered units of all ages and multiple types of fuel!
Source: ERCOT Presentation to Joint Senate Committees, February 15, 2011
0 – 99 MW
100 – 199 MW
200 – 399 MW
400 – 799 MW
≥ 800 MW
Generation Range
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Learning from the Power Outages!
Rolling Outage Protocols Successfully Protected the Grid • The ERCOT and utility rolling outage protocols are designed to prevent
the entire grid from failing. – ERCOT directs the utility to shed load; the utility then select customer areas (feeders) to
perform rolling outages.
• The protocols attempt to minimize the impact on individual consumers while ensuring the electric grid remains stable, resulting in no further harm.
There Are Lessons to Be Learned • Winterization procedures, communications protocol and regulatory
oversight of natural gas for power generation have all been discussed at recent hearings.
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Prices in the Competitive Electric Market in ERCOT!
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Potentially High Winter !Electric Bills!
• Typically, the largest portion of customers’ electric bills are 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 consumption.
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Lower Bills Through!Choice and Energy Efficiency!
• Customers in the competitive retail electric market can visit www.powertochoose.org to learn more about available options.
• All customers can contact their electric utility 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 Commission's 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
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Natural Gas Prices Have Been Volatile Since 2000!
• Through 1999, natural gas prices were relatively stable, but the cost of this key commodity has fluctuated greatly since 2000, with three exceptionally large peaks during the past decade.’
• While prices have fallen over the past 18 months, natural gas prices today are still double the price of gas in 1999.
• Despite this volatility, consumers have offers available in the market lower than before competition began.
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ERCOT Generation Mix More Gas-Heavy than U.S. Average!
Note: Oil-fired generation is negligible in ERCOT, accounting for less than 0.1% of ERCOT capacity and load; numbers may not add up to 100% due to rounding.
Sources: ERCOT (2010 data), EIA (2009 data, latest available)
Cap
acity
(MW
) En
ergy
(MW
h) ERCOT U.S. Average
Natural Gas
Coal
Nuclear
Renewable (Mostly Hydro)
Oil
39%
31%
10%
14%
6%
Nuclear
Natural Gas
Coal
Renewable (Mostly Hydro)
Petroleum
21%
48%
20%
9% 1%
Coal
Nuclear
Natural Gas
Other
38%
40%
13%
1%
Coal
Natural Gas
Nuclear
Wind
59%
22%
6%
11% 2%
Other
Wind 8%
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Regions Outside ERCOT Part of !Larger, Multi-State Grids!
(ERCOT)
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ERCOT far More Dependent !On Gas Than Neighboring Power!Regions!
% MWh from Natural Gas
% MWh from Coal
% MWh from Other
% MWh from Hydro
% MWh from Nuclear
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Competitive electricity prices still track natural gas, but enable customer choice and lower prices
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Natural Gas vs. Texas Residential Retail Electricity Prices In Areas Now Open to Competition 1992 – 2011 YTD; $/MMBtu and ¢/kWh
NYMEX Natural Gas, 12-month Strip Annual Average ($/MMBtu)
With Electric Competition
Before Electric Competition
Residential Electricity Price Annual Average (¢/kWh)1
Average Competitive Offer
Average Lowest Offer
NYMEX Average 12-Month Strip
‘02-11 Natural Gas Avg: $6.65/MMBtu (+215%)
‘92-99 Natural Gas Avg: $2.11/MMBtu
1 Average 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
Sources: NYMEX, PUC, Power to Choose website (latest data as of 2/7/11)
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5
7
9
11
13
15
17
19 LO
WEST DALLAS/FT W
ORT
H PRICE
LO
WEST HOUSTON PRICE
LO
WEST LEWISVILLE PR
ICE
LOWEST ABILENE -‐ 1
YR FIXED
LOWEST ABILENE PR
ICE
Idaho
LOWEST CO
RPUS CH
RISTI PRICE
North Dakota
Utah
Washington
LOWEST DALLAS/FT W
ORT
H -‐ 1 YR
FIXED
LOWEST LEWISVILLE -‐ 1
YR FIXED
Louisiana
Neb
raska
Arkansas
LOWEST HOUSTON -‐ 1 YR
FIXED
Wyoming
Oregon
LOWEST CO
RPUS CH
RISTI -‐ 1 YR
FIXED
Missouri
South Dakota
West V
irginia
Kentucky
Oklahom
a Mon
tana
Geo
rgia
New
Mexico
Kansas
Arizona
North Carolina
Tenn
essee
Indiana
Virginia
Colorado
Mississippi
Iowa
Minne
sota
Alabama
South Carolina
Ohio
US AV
ERAG
E Florida
Illinois
Michigan
Nevada
Penn
sylvania
Wisconsin
District o
f Colum
bia
Maryland
Delaw
are
MassachuseT
s California
Maine
Ve
rmon
t Rh
ode Island
New
Jersey
Alaska
New
Ham
pshire
New
York
Conn
ecVcut
Haw
aii
CE
NT
S PE
R K
WH
RESIDENTIAL RETAIL ELECTRICITY PRICES All Data from November 2010
Na;onal Average
Every Competitive Area in ERCOT Has Variable and 1-Year Lock Offers Available that are Lower than the National Average Price
Sources: Energy Information Administration, www.powertochoose.org
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Texas competitive electric prices compare well to the rest of the nation
¢/kW
h ¢/
kWh
2001 State Ranking (Pre-Competition)
November 2010 (Latest Available) Average lowest offer in
Texas competitive areas in February ‘11 – 6.7¢/kWh
Average lowest offer November‘10 – 7.3¢/kWh
Sources: EIA average annual residential rates for 2001 & Nov. 2010 monthly data (latest available information). Average of lowest available prices in the 5 competitive TDU areas from www.powertochoose.org (11/16/10 and 2/14/11) for residential customers using an average of 1,000 kWh per month
State Price Rank Improved by 8 Spots
with Competition
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Web: AECT.net
Blog: AECTnet.wordpress.com
Twitter: twitter.com/AECTnet
Facebook: Association of Electric Companies of Texas, Inc.
Email: [email protected]