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Demand Response in Texas Peak Load Management Alliance Conference Commissioner Barry T. Smitherman The Public Utility Commission of Texas November.

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Presentation on theme: "Demand Response in Texas Peak Load Management Alliance Conference Commissioner Barry T. Smitherman The Public Utility Commission of Texas November."— Presentation transcript:

1 Demand Response in Texas Peak Load Management Alliance Conference Commissioner Barry T. Smitherman The Public Utility Commission of Texas November 8, 2006

2 North American Electric Reliability Council

3 Texas Electric Service Area Map
SPP SPS SPP SWEPCO Cap Rock ERCOT AEP TX -Central AEP TX -North CNP Sharyland TNMP TXU (Plus municipals and co-ops) WECC EPEC SERC EGS ERCOT - Electric Reliability Council of Texas SERC - Southeastern Electric Reliability Council SPP - Southwest Power Pool WECC - Western Electricity Coordinating Council

4 The ERCOT Market Structure
Generation T&D (“Wires”) Retailers End Users REP REP Competitive Production Regulated Open Access Competitive Sales

5 Successes of the ERCOT Retail Market
CERA: ERCOT is most competitive market in the US, third in the world Peace Software-VaasaEmg Utility Customer Switching Research Project “Texas at number one in the United States [for customer switching activity] and number four worldwide” PUC Report, January 2006 “A residential customer in the Houston area who switched to a competitive Retail Electric Provider in January 2002 and switched annually thereafter to the lowest-cost provider would have saved about $1440, compared to the estimated regulated rate, over the four-year period retail competition has been in effect.” Electric Power Supply Association “Natural gas used in electricity production in Texas decreased by 50 Bcf from 1999 to 2003, while the electricity produced from this gas increased by 13,000 GWh.” “Residential rates are getting close to where they were before competition began despite a >200% increase in the price of natural gas over the same period of time”

6 Successes of the ERCOT Retail Market (cont.)
Technological Innovation Advanced “Smart” Metering (TXU Electric Delivery rolling out throughout DFW) Enables BPL; time-sensitive pricing; remote meter-reading; and automatic outage detection Rooftop Wind Turbines (Mag-Wind Co. rolling out in downtown Dallas) Can generate kW/h per month (Avg DFW household usage/month = 1272 kW/h) HVAC System Services and Appliance Repair Plans (Direct Energy rolling out) Latest example of retail electric provider product differentiation Pre-Paid Plans with advanced billing and metering functions (REPower rolling out) Unprecedented generation improvements since 1998: 26 GW of new gas-fired generation capacity installed (versus only 3.6 GW in ) Merchant generators on the financial hook; not ratepayers Aggressive retro-fit of older units with newer, more efficient technology 22 GW new generation recently announced; more announcements anticipated 3 GW under construction 2 GW of wind generation installed and growing Environmental benefits, : 8,700 MW of inefficient, high-heat-rate units mothballed Texas SO2 and NOx emissions down (DFW and Houston-Galveston down more than rest of state)

7 Unprecedented Residential Switching Rates

8 www.powertochoose.org: 77002 (Houston) November 8, 2006
                                                                                                                                                                                                                                                                                                                                                                                                                                                        Provider Offer Cost Per Month Save First Year Min. Term (Mo.) Average Price per kWh (1000 kWh) YOUR AFFILIATE REP IS: Reliant Energy Price to Beat $163 1 $0.163/kWh Stream Energy Residential Service Three-Year Fixed Rate $138 15% 36 $0.1375/kWh Stream Energy Residential Service Two-Year Fixed Rate 24 Stream Energy Residential Service Month to Month $146 10% $0.1455/kWh Stream Energy Residential Service One-Year Fixed Rate 12 TXU Energy PriceGuarantee 24sm $152 7% $0.152/kWh TXU Energy Freedom Plan $155 5% $0.155/kWh TXU Energy PriceGuarantee 12sm $154 6% $0.154/kWh TXU Energy SummerSavings 24 sm $150 8% $0.15/kWh Gexa Energy Gexa Guaranteed Gexa Energy Power Plan $143 12% $0.143/kWh Gexa Energy Gexa Green - 100% Pollution Free $161 1% $0.161/kWh Texas Power Texas Power Plan $137 16% $0.137/kWh Texas Power Texas Power Hurricane Benefit Plan $140 14% $0.14/kWh Texas Power Texas Power Hurricane Relief Pre-Pay Plan ECONnergy Energy Company, Inc. Tex Flex Plan $149 9% $0.149/kWh Reliant Energy 2007 Secure Wind Plan $162 $0.162/kWh Reliant Energy 2007 Secure Plan 15 Spark Energy, L.P. Spark Online Advantage 12 $132 19% $0.132/kWh Spark Energy, L.P. Spark Online Advantage 06 $120 26% 6 $0.12/kWh Dynowatt Residential Service $0.138/kWh Green Mountain Energy Company Pollution Free $157 4% $0.1574/kWh Amigo Energy Truly Fixed Price 6-mo Commitment Program $127 22% $0.127/kWh (Houston) November 8, 2006

9 www.powertochoose.org: 77002 (Houston) November 8, 2006
Provider Offer (CONTINUED) Cost Per Month Save First Year Min. Term (Mo.) Average Price per kWh (1000 kWh) Amigo Energy Truly Fixed Price 12-mo Commitment Program $144 12% 12 $0.144/kWh Amigo Energy Seasonal Fallback Savings Program $120 26% 4 $0.12/kWh Commerce Energy Residential Variable Product $158 3% 1 $0.1582/kWh Commerce Energy Residential Price Stopper $130 20% $0.13/kWh Green Mountain Energy Company Pollution Free - Reliable Rate $154 6% $0.1542/kWh Direct Energy, LP Price Protection Plan $146 10% $0.146/kWh First Choice Power, Inc. Simply Better Renewable $0.154/kWh First Choice Power, Inc. Simply Better Plan $137 16% $0.137/kWh Reliant Energy Basic Flex Plan $157 4% $0.157/kWh StarTex Power Star Seasonal Savings 1 Year Plan $135 17% $0.135/kWh StarTex Power Star Seasonal Savings 2 Year Plan $138 15% 24 $0.138/kWh StarTex Power Super 3 Star Savings 3 Month Plan $122 25% 3 $0.122/kWh StarTex Power Super 6 Star Savings 6 Month Plan $121 6 $0.121/kWh StarTex Power Star Seasonal Savings Month to Month Plan StarTex Power Star Seasonal Savings 3 Year Plan $141 13% 36 $0.141/kWh StarTex Power StarSavings 1 Year Plan $150 8% $0.15/kWh StarTex Power StarSavings 2 Year Plan $147 $0.147/kWh StarTex Power StarSavings 3 Year Plan StarTex Power StarSavings Month to Month Plan $124 24% $0.124/kWh National Power Company Fall Savings Plan Cirro Energy Residential Electric Service Ambit Energy, LP. Residential Electric Offer $0.1464/kWh (Houston) November 8, 2006

10 Recent Observations of the Texas Market
“It’s mind-boggling bills are so high” (Wall Street Journal) “It’s a great deal…having rate payers cover your managerial mistakes” (New York Times) “Still, Texas and New England stand out as being most at risk for power grid failures if significant changes aren’t made...Both regions ‘have had numerous incidents in the past few years of having to call on customers to reduce demand.” (UPDATE: Texas, N England At Risk For Power Failures-NERC, SmartMoney.com, 10/16/06; Report sees power problems ahead for Texas, Austin American Statesman.com, 10/17/06)

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12 Initial Settlement Data by Fuel Type
ERCOT Peak Day August Initial Settlement Data by Fuel Type

13 ERCOT Settlement Data by Fuel Type
for August 17, 2006 Installed Dispatched Wind 2,300 342 Hydro 552 157 DC Ties 855 459 Gas/Coal/Nuclear 58,573 57,376 Private Network 6,419 6,397 LaaR 1,180 1,150

14 April 17 Event: Root Causes
100+°F in April (DFW 26° above normal) ERCOT’s load forecast (approx 49,000 MW) badly short of actual demand (53,000+ MW) Nearly 14,500 MW of generation unavailable due to planned maintenance Not unusual for April An additional 2440 MW of generation became unavailable throughout the day due to unplanned outages 1683 MW lost within 30 minutes around 4:00 PM

15 April 17 Event: Forecast vs Actual Load

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19 Reserve Margins Over 26,000 MW of new generation added after passage of Senate Bill 7 Announced generation without interconnection agreements (excludes wind) Since 1999: 2,800 MW retired 8,700 MW mothballed* Future generation is officially counted only if interconnection agreement completed 12.5% 2008 is a major concern Percentage difference between peak load forecast and available generation/resources 12.5% is the target minimum reserve margin established by ERCOT stakeholders and Board *1,100 MW of mothballed units have been returned to service

20 PUCT Project No. 31972 “Resource Adequacy” Rule Price Cap Transition Timetable
10/06 $1,000 $300 shame cap expires 3/07 $1,500 3/08 $2,250 3/09 $3,000

21 Recent Generation Announcements
CPS (San Antonio): New 750 MW JK Spruce coal-fired Unit 2 announced LS Power: 800 MW Sandy Creek pulverized-coal plant announced NRG: 2 new nuclear facilities at STP announced June 2006 (2700 MW) Also announced new 800 MW coal plant, 500 MW expansion of existing coal and gas plants, and new wind projects in Texas Navasota Energy: 2 new gas plants under construction, totaling 1100 MW Both combined-cycle; one in Odessa, one SW of Houston TXU: 11 coal-fired plants announced in 2006, totaling 9000 MW 2 existing gas plants to be shuttered/converted to coal Governor Perry announces $10 B investment in wind generation

22 Demand Response FERC defines as:
“Changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.” (Assessment of Demand Response & Advanced Metering, FERC Staff Report at viii, Docket No. AD , Aug. 2006)

23 Transmission Level Customers Reduce Consumption on Probable
4CP Days to Mitigate Next Annual Load Ratio Share Allocation Gap of 600MW on a probable 4CP day Source-ERCOT

24 Advanced Meters Proposed P.U.C. Subst. R. 25.130, Project No. 31418
Texas defines as: “A system, including advanced meters and the associated hardware, software, and communications devices, that collects time-differentiated energy usage and performs the functions and has the features specified in this section.” Features include: 2-way communications automated, remote meter reading remote disconnect & reconnect capability dynamic pricing options 15-minute interval data industry standard, nonproprietary software

25 Current PUC Actions Emergency Interruptible Load Program – parallel rulemaking (Project No ) to ERCOT stakeholder process TFR - Commission researching increased participation, ERCOT conducting study Project No , Evaluation of Demand Response Programs in the Competitive Electric Market, examining ways to eliminate barriers to Load participating in these AS markets Replacement Reserve Service Balancing Up Load 12/8 Workshop on BUL market and LaaR participation in RPRS


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