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Looking back on 2015, there have been a lot of things going on with Servant Energy 2016respect to the energy business and how it affects different industry sectors, as well certain areas like my home state of Texas! Natural gas prices lumbered at historical lows and with oil prices still on a downward spiral since June 2014, into the $36.00 range, some analysts predict that prices could fall below $30.00. Consumers have been able to benefit from the price drop at the pump, while some oil companies have started to feel the heat from declining oil prices.

In Texas, construction is finishing the year off strong, especially in the DFW area, where we continue to see a significant rise in construction and job creation. Houston, although not able to keep up the pace it had for the last few years, still has cranes in the air and new developments are coming online. Driving around the DFW area, cranes have been popping up all over town due to the construction of corporate relocations, office buildings, multifamily buildings, mixed use, and manufacturing additions. This has been a great sign for DFW! The construction companies and developers are enjoying some good times that can hopefully last another two to three years.

While these construction companies and large building owners continue to build, their power needs become great and more complex. Getting power for projects is not just a cost of doing business; it really is a way to more effectively managing the project by planning ahead of time. My firm, Servant Energy Partners, truly believes that by involving power needs at the beginning of the construction process a company can save large amounts of time and costs, plus add savings to the bottom line. Our firm takes the approach that every project is unique. Finding out time frames, challenges, and the load can help a company put a road map plan in place, ensuring that power is ready and available when needed for the project. Additionally, ensuring that there is a long term process in place to handle the power needs for the duration of the project, all the way through transition to the ownership group.

Servant Energy Partners, which includes a team of skilled former utility personnel, helps our construction, developer, and building owner’s partners through the process, so they will have peace of mind when they start a project and ensure that they will be prepared to handle any challenges and obstacles that may arise. All while saving money on the power they use. We have been fortunate to be a part of some of the largest projects in the DFW area in 2015, including State Farm (Austin Commercial), Raytheon Headquarters (A & P), Parkland Hospital (BARA), and Liberty Mutual (Balfour Beatty). What a blessing and a pleasure it has been to be involved in these projects.

Our goal, at Servant Energy Partners, has always been to serve our clients and help them save on the energy. As our 2015 journey is coming to an end, we want to thank all of our partners who have help make our 5th year in business a year of exciting growth and rewards, both personally and professionally. We hope that you will allow us to help you on your journey, as your energy partner in the coming years. “Power Up for 2016” and Beyond!

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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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March 1, 2012, AUSTIN – Generation capacity for the state’s wholesale power system is expected to be tight this summer, according to a preliminary summer assessment released today by the Electric Reliability Council of Texas (ERCOT), the state grid operator and manager of the wholesale electric market.

“Based on the National Weather Service’s three-month outlook, we are expecting above-normal temperatures this summer – though not as extreme as last summer’s,” Vice President of Grid Operations and System Planning Kent Saathoff said. “If that’s the case, we expect to be able to meet the peak demand on the grid, unless we have above-normal generation outages,” he said.

Saathoff noted that initiatives are underway to increase voluntary demand reduction during peak summer hours.

“We are working with the Public Utility Commission to increase our load management options – or voluntary interruptible load that is paid to be curtailed in an emergency situation,” Saathoff said. “These are typically a mix of large industrial companies, but we’re now including smaller industrial and commercial companies and trying to facilitate the ability for these smaller customers to aggregate their load for this emergency interruptible load service,” he said.

The projected summer peak demand has been increased to 67,492 megawatts (MW) – 1,297 MW higher than would be expected with “normal” summer temperatures, based on the Climate Prediction Center’s 40 percent chance of hotter-than-normal weather for summer. The new forecast is 887 MW less than ERCOT’s all-time record-peak demand of 68,379 MW which occurred Aug. 3, 2011, during extreme weather conditions. (One megawatt is roughly enough electricity to power 200 average homes during hot weather when air conditioners are running for longer periods of time.)

“If we have a higher-than-normal amount of generation outages or if we experience record-breaking electricity demand because of extreme temperatures – like we had last summer – we may have to ask the utilities to initiate rotating outages to protect the grid from a state-wide blackout,” Saathoff said.

“Overall, we expect our reserves may get low enough to put us into the initial stages of our emergency procedures on some days, but not necessarily rotating outages,” he said.

Consumer conservation can play an important role, Saathoff noted.

“Although we implemented emergency procedures on six days last August due to low reserves, the consumers and businesses helped us reduce the demand by responding to our requests for conservation,” Saathoff said.

Recent rains have improved the drought conditions for the near term, Saathoff said.

“We don’t anticipate the drought to be a major factor this summer, but we will continue to monitor how it’s affecting capacity due to its impact on cooling water resources available for generation units,” Saathoff said. The recent rains have improved the current situation, and given our latest information, we don’t expect to have significant generation loss due to the drought this summer.”

Initiatives underway to address capacity concerns

In addition to the load management options, a number of other initiatives are underway to address capacity shortages for the short term.

The ERCOT board recently approved a process governing ERCOT’s use of emergency authority to recall idled units for capacity. Approximately 2,600 MW is currently mothballed; including about 1,500 MW which could be returned to service with one to four months notice. Although this preliminary assessment has not caused ERCOT to implement this option at this time, it is available if conditions change.

ERCOT and the Public Utility Commission have also made administrative changes to ensure that market rules align with ERCOT’s need to bring on maximum generation during peak periods.

ERCOT management also announced at the Feb. 21 board meeting that they were close to selecting a consultant on another resource adequacy initiative – a project to identify factors that influence investment decisions related to generation development. The project will consider both supply-side and demand-side resources from a wholesale and retail perspective, as well as, include suggestions for ways to enhance investments for long-term resource adequacy in ERCOT. The report is expected to be completed by June 1.

“We’re also participating in Public Utility Commission Chair Donna Nelson’s meetings with market participants concerning how to ‘get the message out’ for conservation,” Saathoff said. The preliminary summer assessment anticipates approximately 750 MW of demand reduction due to the effects of price-responsive demand, conservation appeals and other demand response programs managed by market participants, based on estimates of the results of those appeals last summer.

BACKGROUND

The preliminary summer assessment, which will be updated May 1, is a new ERCOT report – the Seasonal Assessment of Resource Adequacy – designed to improve the assessment of near-term conditions. The seasonal assessments are based on the most-current available data on seasonal weather, the status of power plants, and the impact of factors like economic activity and the ongoing drought.

The ERCOT region includes 23 million people and represents about 85 percent of the state’s electric load. ERCOT does not include the El Paso area, the Texas Panhandle, Northeast Texas and Southeast Texas.

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A new “nodal” electricity grid system could put your retail electricity provider out of business.

The Electric Reliability Council of Texas, which operates the state electricity grid, is switching to a fundamentally different operating system. The new system assigns the cost of congestion to the companies creating that congestion. This is supposed to prompt companies to find ways to relieve power line congestion and cut electricity costs.

The switch happens Dec. 1. Several experts at the Gulf Coast Power Association conference this week predicted that the transition to the complex nodal system won’t be entirely smooth. Some retailers might go out of business. Others might charge customers fees to cover new costs.

“I would expect some retailers to default in 2011,” said Chris Brewster, an attorney with law firm Lloyd Gosselink who represents cities.

Mike Cleary, ERCOT’s chief operating officer, said: “People are going to struggle. It’s the nature of the beast.”

But they won’t struggle because of any technical issue at ERCOT, he said. ERCOT is ready for the switch. The problem is that some electric providers may not be ready.

“We’re going to have issues with the market,” Cleary said.

Remember summer 2008, when several retailers went bust because they hadn’t protected themselves against the risk that wholesale power prices could spike?

At first, one retailer, National Power, tried to simply break fixed-price contracts with customers. When regulators put the kibosh on that idea, National closed shop, dumping customers on expensive providers. Several other companies shut down for the same reason.

A similar situation could happen early next year if retailers haven’t educated themselves about the new market or if the change brings surprises to everyone.

ERCOT’s new chief executive, Trip Doggett, said the council has offered training sessions for electric companies.

“We’re doing our best to educate the retail electric providers,” he said.

Brad Jones , vice president of government relations for Luminant, the power generation unit of Energy Future Holdings, said he worries that ERCOT’s collateral requirements may clash with some nodal rules. Some companies could face billions of dollars in credit calls, making it difficult for them to trade effectively, he said.

ERCOT was supposed to switch to a nodal system in early 2009, but technical and management problems delayed the move and doubled the cost to about $660 million.

At the time, the Public Utility Commission ordered an outside study of the cost benefit of the system. The study found that Texas consumers would save $5.6 billion during the first 10 years of nodal operation.

Brewster said at the conference this week that he doubts consumers will save that much. He said some retailers are adding language to their contracts that could allow them to charge customers for nodal-related costs.

“In my mind, that is very telling,” he said.

What can an electricity customer do? Watch your bills and read any bill inserts, he said.

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