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Archive for the ‘Deregulation’ Category

Homeowners could save money and help the state’s power grid maintain its integrity during the hottest summer days under a new pilot program offered by the Electric Reliability Council of Texas.
The ERCOT board approved the program last week as a way to reduce electricity demand in the late afternoons during the summer months. The grid operator has warned that electricity could be in tight supply and there’s a significant chance that alerts could be issued.
To participate, residential customers should contact their retail electric provider or Oncor.
Homeowners will be pooled with other customers with the goal of cutting 100 kilowatts of electricity usage during a targeted 30-minute period.
Robbie Searcy, communications manager for ERCOT, explained it would take about 65 to 70 homes raising the thermostat and halting the use of appliances to make up the necessary 100 kilowatts.
Homes make up about 51 percent of ERCOT’s power consumption during peak periods.
“This really opens it up to a different type of consumer,” Searcy said. “We hope to see increased participation in residential consumers.”
Paul Wattles, senior analyst for ERCOT, said in most cases homes need special equipment on the thermostat or air conditioner so they can be controlled remotely. When it’s needed, the electricity demand can be reduced by the entity the homeowner signed up with. Then, the customer is compensated for reducing the load during the peak time.
“Whatever you give us, whenever we call you, we’re going to pay you for that,” Wattles said.
The pilot program is separate from the commercial incentive program where ERCOT pays big industrial users to cut back when the gap between load and demand shrinks. The businesses get paid for reducing their electricity usage during that period. The new pilot program runs from June to September and is weather and load related so it goes into effect when it’s most needed.
To explain the program, she used the following example:
It’s a hot summer morning with high temperatures expected to reach 105 to 115 degrees in the ERCOT service area.
Generators are working at full capacity but ERCOT keeps an eye on the margin between generation and load.
If the gap reaches 2,300 megawatts, an Energy Emergency Alert goes out, asking consumers to voluntarily cut back usage from 3 p.m. to 7 p.m.
Consumers who are participating in the pilot program will be asked to cut back usage mostly by raising the thermostat and not using big appliances.
ERCOT will distribute money to the company that aggregated the consumers in the pilot program, in some cases a retail electric provider.
The company will return those savings to consumers based on how much power they saved.
ERCOT expects to pay out between $34,000 to $86,000.
The staff report for the pilot program shows the potential the program has for the state this summer and in the future.
“If the pilot demonstrates that participating loads can provide meaningful demand response during peak summer conditions at a reasonable price, the potential long-term reliability benefits could be substantial, given the best demand response potential associated with residential loads at summer peak.”

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ERCOT is forecasting healthier generation reserves for 2014 and beyond, which has been a major concern facing Texas for the past couple years. Anyone reading this blog knows that Texas has been slipping closer and closer to the accepted Reserve Margin, or the minimum amount of accepted generation ahead of the estimated electricity needs of the entire state for some years now. In fact, the vote to raise the Market Cap from 3,000 to 9,000 over the next few years is a direct response to the dwindling reserve margins. The hope was that by increasing the market cap during peak demand times, the state would be able to lure new investments in energy generation to Texas. Texas, because of massive population growth and industrial growth, has been ticking closer to the point where generation assets become dangerously low and unfortunately no new private industries have invested in new plants because they aren’t sure they’ll see the profit they’d like from new natural-gas fired plants.

The article from ERCOT, while it sounds rosy, is a bit misleading. Texas is still getting dangerously close to their Reserve Margin, however forecasts beyond 2013 aren’t AS LOW as they were back in May. So things are just slightly improved in what is still a fairly grim landscape. Nonetheless, any new is good news for the Texas electricity market at this point. Additionally, the report apparently didn’t include some new generation projects that are set to go online in 2015, which might add as much as 2,000 megawatts to the grid, so thing might be slightly rosier still. But that doesn’t mean Texas doesn’t still need new investment in generation in a VERY bad way.

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From time to time, information comes to light that’s very important to all our Servant Partners and friends.

Below is a link that explains what the Texas Public Utility Commission just voted on, that takes effect 8-1-12.

Frankly, many don’t and most don’t seem to care, as we’re all busy. But this will 100% have effect on anyone paying an electric bill, from now on.

http://www.mysanantonio.com/business/article/Texas-PUC-votes-to-raise-cap-50-3671505.php

If the link doesn’t work, just use your browses and enter in “Texas PUC raises rate cap to $4500” and it will pop up.

In simple terms, the wholesale rate during peak times, typically 7-25 to 8-28 each summer, the PUC will allow wholesale suppliers to charge $4500 per megawatt hour, for those hours. For those of us who like “cents” better, that’s 45 CENTS per kilowatt hour.

This is being done to help save the power grid, increase reserves, encourage curtailment of usage during high demand periods, attract investors to build new plants, etc.

We have already heard from the REPs (Retail Electric Providers) that they ARE building this into their future pricing models after 8-1-12. That’s 3.5 weeks from today.

They are telling us “You will spend hundreds if not thousands MORE on the same electricity in 3.5 weeks unless you do something about it” They have warned us. As consultants, we’re bound to share this information with all those we know. It’s been in the news as well. Again, most missed it or don’t really understand it.

Bottom line, all rates of “today” say a nickel, will soon be a “nickel PLUS”. That can be 6, 5.5 or 7. Who knows? It will vary by locale, size, provider, product and term.

So, when we turn on that light switch, just a day after 8-1-12, will all see a difference on the next round of pricing, so we might as well minimize it before then and avoid it for as long as we can.

So, if you have a contract that expires in 2012 OR 2013, it’s not too late to get a price for “next time” and lock it down.
This is the only way to lock rates and avoid this increase for up to 2-3-4 years, as long as you want to avoid it.

With 1300 people to notify, it would take me 26 days at 50 dials per day to get this message out, hence the email.

If you have any questions or comments or want a price or to talk about it, now would be a good time to do so.

For those of you, who have done this either with us or someone else, please know that the right thing was done and this message is only intended for those who have not yet acted.

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Texas grid operator to pay for four mothballed plants to return to service
The Texas grid operator signed contracts with two power generation companies to put four mothballed units back into service for the rest of the summer to keep the lights on.

The Electric Reliability Council of Texas said Tuesday in a news release that it will pay NRG Energy Inc. and Garland Power & Light the cost of turning on the natural gas-fired generators to keep them on standby. High temperatures have boosted demand for electricity across the state, and the drought could soon put power plants out of commission for lack of cooling water.

“This has been a highly unusual year for ERCOT, with record-breaking temperatures starting as early as May plus an increasing demand for electricity as the state’s economy and population growth fuel greater energy use,” ERCOT chief executive Trip Doggett said in a public statement.

“Without rainfall in the near future, we anticipate increased generation outage rates because of power plant cooling water issues,” he said.

The move calls into question whether ERCOT’s competitive market can ensure reliability on its own when the weather surprises.

The units returning to service amount to an additional 400 megawatts of capacity, about half the size of a new coal-fired unit, but hopefully enough to keep Texas out of rolling outages in an emergency.

ERCOT estimates the cost to keep the units on call at $5.85 million. If the plants must generate power, ERCOT would also pay for fuel. The contract ends in October. ERCOT costs are shared by member electricity companies, which tend to pass along those costs to customers.

ERCOT will use the units only in an emergency. That avoids interfering with the competitive electricity market.

“We don’t know if or how much these units will be needed, but if needed, the cost will be minor when divided by the 23 million consumers in the region and when compared to the much higher costs and problems from statewide rolling blackouts,” Doggett said.

The Public Utility Commission had instructed ERCOT to consider all available options to ensure reliability after grid emergencies earlier this summer. In early August, ERCOT came close to calling for rolling outages across the state as hot weather boosted demand for electricity and many power plants struggled in the heat.

The ERCOT deregulated electricity market is designed to make sure Texas has enough power plants at the lowest possible price. The free market is supposed to allow generators to respond to price changes to build generators or shut them down, thus keeping supply and demand in balance.

That’s why NRG already brought one mothballed plant back into service during the spring.

“It made the right business decision, and looking at the weather, it made the right decision for taking care of customers,” said NRG spokesman Dave Knox

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Electricity Deregulation

Below are some common questions and answers related to deregulated states across the country. Although rules and regulations vary by state, many are consistent on a national level.

Q. What has stayed the same in electric service?

A. Your current Transmission and Distribution Utility, or “local wires company,” continues to deliver electricity to your business. Your local wires company still responds to service interruptions and continues to maintain the poles and wires. You will continue to receive the same reliable service you are used to with your local wires company, regardless of which Retail Electric Provider you receive service from

Q. What has changed in electric service?

A. You can choose to buy your electricity from a different electric provider than the original incumbent provider for your area. These companies are commonly referred to as Retail Electric Providers (REP’s) or Electric Service Providers (ESP’s). Additionally, your bill now looks different than bills you have received in the past, but each REP or ESP provides the same standard information. Transmission and Distribution charges are passed through without markup to the consumer by your REP or ESP.

Depending upon the state in which your business resides, you may receive one bill including both supply and delivery charges, or separate bills from both your energy provider as well as your local transmission and distribution company.

Q. Do all companies have the ability to choose their electric provider in a deregulated state?

A. No. Each state has different rules and regulations. In some states, city-owned utilities and member-owned electric cooperatives have the option of giving their customers a choice of providers, or keeping their grid closed to outside competition. To see if competition is active in your area, please contact a representative at Servant Energy.

Q. What are the benefits of Electric Choice?

A. Competition in other industries has often brought lower prices and innovative, new products and services. Having more control over your buying decision should make it easier to determine what matters most to you, whether it’s price, renewable energy, customer service, or simply a name you know.

Electric competition also should help the environment because energy providers must offer some energy from renewable energy sources. Renewable energy – such as wind, solar, hydroelectric and biomass (gas released from landfills) – produce less air pollution than sources that rely on burning coal or natural gas.

Q. How does Electric Choice affect electric rates?

A. Energy commodity rates fluctuate based upon supply, demand, weather and generation resources within each region. Typically, eastern states have more traditional coal based generation sources, while many southern states such as Texas, are more heavily fueled by natural gas fired plants. Regardless of where your company resides, electric deregulation has resulted in extreme volatility since electricity cannot be stored like other traded commodities.

Electricity is the most volatile of all traded commodities, and, as a result requires more in depth risk management strategies. As many companies in the airline industry have recently experienced, minimal or improper hedging strategies can result in extreme variances in energy costs from one year to the next.

Q. With competition, will the reliability of my electric service change?

A. No. No matter which energy provider you choose, your electricity will continue to be delivered safely and reliably by the local wires company, a company regulated by the PUC within each state.

Q. Do I have to switch from my current electric utility?

A. No. If you decide not to choose a new energy provider, your service will be provided by the incumbent or default provider at what is known as the default or standard offer rate as defined by each state’s rules and regulations. The incumbent or default provider is the electric provider that was part of the original electric company that generated and sold electricity in your area, that now only sells electricity and provides customer service.

In most cases, the default or standard offer rate is set higher than competitive market rates to encourage competition. Although, based upon market movement in each region, there are situations in which the default or standard offer rate will be lower than current market rates. Your Servant Energy representative can help guide you through the process comparing various price options and terms to the default and standard offer rates in your area.

Q. Should I choose an index based or fixed price energy contract?

A. Contact your Servant Energy representative to discuss the pros and cons of index-based versus fixed rate pricing. Each customer has different needs and levels of risk tolerance. A well-informed account manager can help you to determine the product option that is best for you.

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