Electricity 101:

Retail Update

October 27, 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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The ERCOT Competitive Retail Electric Market is Providing Strong Customer Benefits!

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.

–  From January 2006 to July 2011, the average fixed offer price in the competitive market has fallen by 33 percent, while the average U.S. electric price outside Texas has risen by 21 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.

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Competitive Market Bringing Sustained Lower Price Offers

Source: www.powertochoose.org; prices are a simple average among service territories.

Prices in the competitive market have remain low

over the past year

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Lower Prices Available Today than Before Competition Began

Sources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of October 27, 2011

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Competitive Residential Electric Price Offers !Have Fallen Since Just Before Full Competition Began in January 2007!

Source: http://www.powertochoose.org (12/31/06 & 10/27/11)

AEP Texas North Service Territory

Change in Average 1yr Fixed-Price Offer:

35% decrease

Since December 2006, competitive price offers for residential customers have fallen in every service area.

Texas-New Mexico Power Co. Service Territory

Change in Average 1yr Fixed-Price Offer:

29% decrease

AEP Texas Central Service Territory

Change in Average 1yr Fixed-Price Offer:

39% decrease

Oncor Service Territory

Change in Average 1yr Fixed-Price Offer:

37% decrease

CenterPoint Energy Service Territory

Change in Average 1yr Fixed-Price Offer:

35% decrease

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Texasʼ National Price Ranking Has Improved Since 2001

0

2

4

6

8

10

12

14

16

18

KY WA ID WV

OR TN ND NE UT

WY

MT IN MO AL OK

MS

SD CO

MN KS MD SC AR GA

DC VA WI

LA NC MI

AZ

OH IA FL DE IL NM TX NV PA NJ CT

CA AK RI

MA

NH VT

ME

NY HI

Source: EIA average annual residential rates for 2001 and July 2011 monthly data (latest available information). Average lowest available price from powertochoose.org Web site as of 7/30/11 for a residential customer using an average of 1,000 kWh per month.

¢/kW

h ¢/

kWh

2001 State Ranking (Pre-Competition)

July 2011 State Ranking (Latest Available)

Average lowest available offer in

competitive market in July 2011: 5.1/kWh

Average lowest 12-month fixed price

offer in competitive market in July 2011: 8.8¢/kWh

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Every Competitive Area in ERCOT Has Variable and 1-Year Lock Offers Available that are Lower than the National Average Price

Sources: PowerToChoose.org offers as of July 30, 2011, U.S. Energy Information Administration, latest available data

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Texas Generation Mix Compared to U.S. Average!

Note: Numbers may not add up to 100% due to rounding. Source: EIA (2009 Data)

Sum

mer

Cap

acity

(MW

) En

ergy

(MW

h) Texas U.S. Average

Natural Gas

Coal

Nuclear

Renewable (Mostly Hydro)

Other (Mostly Petroleum)

39.1%

30.7%

9.9%

12.4%

7.7%

Nuclear

Natural Gas

Coal

Renewable (Mostly Hydro)

Other (Mostly Petroleum)

23.3%

44.5%

20.2%

10.1% 0.9%

Coal

Nuclear

Natural Gas

Petroleum

47.6%

35.0%

10.5% 0.4%

Coal

Natural Gas

Nuclear

Renewable (Mostly Wind)

64.9%

19.7%

4.8% 9.9%

0.2%

Petroleum

Renewable (Mostly Wind)

5.6%

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Texas Market Compares Favorably to Other States Utilizing Natural Gas as the Primary Generation Source!

Sources: Energy Information Administration (data as of July 2011); EIA natural gas-intensive states; powertochoose.org as of 7/30/11.

Average Lowest Available 12-Month Fixed Price Offer in ERCOT Competitive Market

(July 2011): 8.8¢/kWh

Note: Texas statewide average price includes prices from both competitive and regulated areas of the state.

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-30

-20

-10

0

10

20

30

40

50

60

70

TX C

ompe

titiv

e

MA

TX S

tate

wid

e RI

CT

ME

NV

Nat

ural

Gas

Sta

tes

(-TX)

LA

FL

CA NH

DE

AR

MS VT

NC

NY

US

(-TX)

WA

Res

truc

ture

d St

ates

(-TX

) IL

SC

UT WI

MT

OR

DC

AK

IA

NJ

AL

KY

PA

WY IN

MN

TN

CO

OK

MD

SD

MI

VA

NM

OH

AZ

GA ID

WV KS

ND

HI

NE

MO

Residential Price Changes (%) - Jan 2007 - July 2011

Since January 2007, Texasʼ Prices Have Fallen While Others Have Risen

Source: EIA average annual residential rates for January 2007 and July 2011 (latest available data), powertochoose.org for January 2, 2007 and July 30. 2011

Texas -6%

Gas-Dependent States (excl. TX)

5%

US Average (excl. TX)

21%

Lowest Competitive Offer Prices in Texas

-34%

Restructured States

(excl. TX) 22%

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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 Reliant's CARE program. Non-profit social service agencies review customer cases and qualify customers CARE funds based upon the agency's 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.

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Web: AECT.net

Blog: AECTnet.wordpress.com

Twitter: twitter.com/AECTnet

Facebook: Association of Electric Companies of Texas, Inc.

Email: info@aect.net