the electric industry in texas: summer wrap-up

7/27/2019 The Electric Industry in Texas: Summer Wrap-Up

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The Electric Industry in Texas:Summer Wrap-Up

!Legislative Staff Brieng

October 3, 2013

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 andmarket participants.

- Supporting consistent and predictable oversight and regulation that willpromote 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 withreliable 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 Companies !Outside of ERCOT !

Western Electricity CoordinatingCouncil (WECC)

Southwest Power Pool (SPP)

SERC Reliability Corporation

ERCOT Electric ReliabilityCouncil of Texas

SPP Southwest Power Pool

SERC Southeastern ElectricReliability Council

WECC Western ElectricReliability Council

Total ERCOTCapacity:

>74,000 MW


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Texas Among the Leadersin Low Power Plant Emissions Rates


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EPA Releases Proposed Rule on CO 2 Emissions from New Power Plants !

On September 20, the EPA issued a proposed CO 2 emissions ruleapplying to new power plants:

1,000 lb/MWh for natural gas-fired units

1,100 lb/MWh for smaller natural gas-fired units 1,100 lb/MWh for coal-fired units

Based on existing technology, these restrictions would require anynew coal-fired generation plant to use carbon capture and storagetechnology.

Proposed CO 2 restrictions on existing power plants are expectedto be announced in 2014.


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Texas is Among Nationwide Leaders !in Low Emissions Rates !

States&With&NOx,&SO2&and&CO2&Emissions&Rates&Below&the&Na9onal&Average

Source: EPA Air Markets Program Data (2012)


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Texas Electric Generating Plants RemainAmong Cleanest NO x Emitters in theNation !



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Area

2012 NO x EmissionRate Averages (lbs/

mmBtu)

National 0.137

Texas 0.083

0.348NM

0.083TX

0.207

OK0.158

AR

0.121LA

Texas electric generators have the lowest rate of NOx emissionsin the region

Texas is Already Leading theWay in Clean Power Plants Regionally



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13&Northeast&States& &DC Texas

Sources: CO 2, NO x, SO 2: EPA Air Markets Program Data (2012); Land Area: US Census Bureau, 2010

Land Area 247,175 mi 2 261,232 mi 2

Tons of CO 2 420,297,141 251,073,135

Tons of SO 2 747,926 338,853

Tons of NO x 354,786 128,251

Comparison of Electric Utility GenerationEmissions: Texas vs. the Northeast !!


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Recent Activity at the PUC


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Project 40000: !Resource Adequacy !

ERCOT supplied adequate power during summer 2013.

The PUC and ERCOT continue assessing ways to enhancedemand response programs, improve scarcity pricing and other

resource adequacy-related enhancements.

Recent activity August 29: PUC directed ERCOT to develop a protocol of the scarcity pricing

proposal known informally as interim solution B+ September 18: ERCOT released an analysis of scarcity pricing September 20: ERCOT filed first draft of scarcity pricing protocol

Upcoming activity October 8: PUC workshop on resource adequacy


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13.2 13.811.6

10.4 10.5 9.47.4 6.5

35.6

26.725.2

16.5 16.414.6 13.8

16.8

21.4

17.5

13.9

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Resource Adequacy: !Investment Still Needed in ERCOT !

ERCOT summer reserve margin 12002-2020E; percent

13.75%'target'reserve'margin' provides'a'buffer'against'de8rates,' forced'outages,'wind'variability,' forecast'error,'and'weather'related'spikes'

1 Based on ERCOT Capacity, Demand and Reserves (CDR) Reports, as amended2 Historical reserve margins based on projections for each year prior to summer peak season, based on the formula in effect at the time3 CAISO is the California Independent System Operator; MISO is Mid-West ISO; NYISO is New York ISO; PJM is ISO for 13 state region including PA, NJ, MD.

Other targetreserve margins 3

CAISO 15.0%

MISO 17.4%

NYISO 15.5%

PJM 15.5%

ERCOT 13.75%

Historical forecasts 2

Latest forecast (May 2013)


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Project 41111: !Advanced Metering Options !

The cost of serving a customer who opts-out is expected to beborne by that customernot subsidized by other residents andbusinesses.

Recent activity August 9: PUC adopted advanced metering opt-out rule

Upcoming activity September 30: Advanced meter opt-out compliance tariff filing December 28: Target for advanced meter opt-out tariffs to be set; notice to be

provided to REPs

Q1 2014: Based on the current timeline, customers will have an opportunity tochoose non-standard metering service


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Project 41622: !Revisions to Ratemaking Proceedings !

The PUC is reviewing expenses incurred by electric utilities andother parties during rate cases.

Issues being studied under Project 41622 include:

Are there ways to mitigate municipality participation expenses? How to reduce expenses of the discovery process including possible limits to

data requests? Should the PUC hire outside consultants to review rate case expenses? Are there ways to revise the rate making filing requirements to reduce

expenses?

Should there be caps to legal and consultant rates?

Reducing rate case expenses has also been suggested as a topicfor an interim legislative study.


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Newest PUC Commissioner !Brandy Marty !


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Weather Update


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Slow Start !To Hurricane Season !

In August, the National Oceanic and Atmospheric Administration predicted an above normalhurricane season.

The first hurricane of the season (Humberto) appeared on September 11 one day short of the record for latest hurricane in a given season.

Source: National Weather Service Data Storms shown as of September 20, 2013


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Drought Conditions Remain in Much ofTexas But The Electricity System HasBeen Holding Up Well !

According to LCRA, Lake Travis and Lake Buchanan combined are only 32 percent full.

As an example, Central Texas would need nearly 11 inches of rain for the agricultural droughtto end; far more would be needed to fill up local lakes.

Source: United States Drought Monitor September 17, 2013


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Prices Remain LowIn the Competitive

Retail Electric Market


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Service AreaLowest Fixed-Price

Offer(12-month term)

LowestAvailable

Offer

Dec. 2001prices, not

adjusted forinflation

Dec. 2001prices, adjusted

for inflation

AEP Texas Central 8.5/kWh 7.2/kWh 9.6/kWh 12.7/kWh

AEP Texas North 7.8/kWh 6.7/kWh 10.0/kWh 13.2/kWh

CenterPointEnergy 8.1/kWh 6.8/kWh 10.4/kWh 13.8/kWh

Oncor 7.8/kWh 6.0/kWh 9.7/kWh 12.8/kWh

TNMP 8.5/kWh 6.7/kWh 10.6/kWh 14.0/kWh

Lower Prices Available Today thanBefore Competition Began

Sources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of October 1, 2013


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Texas National Price Ranking HasImproved by 17 Spots Since 2001

0

2468

1012

1416182022

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W V L A O

K A R K

Y I L O R

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T N I D

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Source: EIA average annual residential rates for 2001 and July 2013 monthly data (latest available information). Average lowest available price frompowertochoose.org Web site as of July 1, 2013 for a residential customer using an average of 1,000 kWh per month.

/ k W h

/ k W h

2001 State Ranking (Pre-Competition)

July 2013 State Ranking (Latest Available)Average lowest 12-month fixed price

offer in competitivemarket in July 2013:

8.9/kWh


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RESIDENTIAL&RETAIL&ELECTRICITY&PRICES"All&Data&from&July&2013&

Na?onal&Average&

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 July 1, 2013U.S. Energy Information Administration, latest available data


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Web: AECT.net

Twitter: @AECTnet

Facebook: AECT Advocacy

Email: [email protected]

the electric industry in texas: summer wrap-up

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