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

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Presentation on theme: "1 Demand Response in Texas Peak Load Management Alliance Conference Commissioner Barry T. Smitherman The Public Utility Commission of Texas November 8,"— Presentation transcript:

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

2 2 North American Electric Reliability Council

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

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

5 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 6 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 SO 2 and NOx emissions down (DFW and Houston-Galveston down more than rest of state) Successes of the ERCOT Retail Market (cont.)

7 7 Unprecedented Residential Switching Rates

8 8 : (Houston) November 8, 2006 Provider Offer Cost Per MonthSave First Year Min. Term (Mo.)Average Price per kWh (1000 kWh) YOUR AFFILIATE REP IS: Reliant Energy Price to Beat$16301$0.163/kWh Stream Energy Residential Service Three-Year Fixed RateResidential Service Three-Year Fixed Rate$13815%36$0.1375/kWh Stream Energy Residential Service Two-Year Fixed RateResidential Service Two-Year Fixed Rate$13815%24$0.1375/kWh Stream Energy Residential Service Month to MonthResidential Service Month to Month$14610%1$0.1455/kWh Stream Energy Residential Service One-Year Fixed RateResidential Service One-Year Fixed Rate$14610%12$0.1455/kWh TXU Energy PriceGuarantee 24 smPriceGuarantee 24 sm $1527%24$0.152/kWh TXU Energy Freedom Plan$1555%1$0.155/kWh TXU Energy PriceGuarantee 12 sm $1546%12$0.154/kWh TXU Energy SummerSavings 24 smSummerSavings 24 sm $1508%24$0.15/kWh Gexa Energy Gexa GuaranteedGexa Guaranteed$1508%1$0.15/kWh Gexa Energy Power PlanPower Plan$14312%1$0.143/kWh Gexa Energy Gexa Green - 100% Pollution FreeGexa Green - 100% Pollution Free$1611%12$0.161/kWh Texas Power Texas Power PlanTexas Power Plan$13716%0$0.137/kWh Texas Power Texas Power Hurricane Benefit PlanTexas Power Hurricane Benefit Plan$14014%0$0.14/kWh Texas Power Texas Power Hurricane Relief Pre-Pay PlanTexas Power Hurricane Relief Pre-Pay Plan$13716%0$0.137/kWh ECONnergy Energy Company, Inc. Tex Flex PlanTex Flex Plan$1499%0$0.149/kWh Reliant Energy 2007 Secure Wind Plan2007 Secure Wind Plan$1621%0$0.162/kWh Reliant Energy 2007 Secure Plan2007 Secure Plan$1546%15$0.154/kWh Spark Energy, L.P. Spark Online Advantage 12Spark Online Advantage 12$13219%12$0.132/kWh Spark Energy, L.P. Spark Online Advantage 06Spark Online Advantage 06$12026%6$0.12/kWh Dynowatt Residential ServiceResidential Service$13815%1$0.138/kWh Green Mountain Energy Company Pollution FreePollution Free$1574%0$0.1574/kWh Amigo Energy Truly Fixed Price 6-mo Commitment ProgramTruly Fixed Price 6-mo Commitment Program$12722%6$0.127/kWh

9 (Houston) November 8, 2006 Provider Offer (CONTINUED) Cost Per MonthSave First Year Min. Term (Mo.)Average Price per kWh (1000 kWh) Amigo Energy Truly Fixed Price 12-mo Commitment ProgramTruly Fixed Price 12-mo Commitment Program$14412%12$0.144/kWh Amigo Energy Seasonal Fallback Savings ProgramSeasonal Fallback Savings Program$12026%4$0.12/kWh Commerce Energy Residential Variable ProductResidential Variable Product$1583%1$0.1582/kWh Commerce Energy Residential Price StopperResidential Price Stopper$13020%12$0.13/kWh Green Mountain Energy Company Pollution Free - Reliable RatePollution Free - Reliable Rate$1546%12$0.1542/kWh Direct Energy, LP Price Protection PlanPrice Protection Plan$14610%12$0.146/kWh First Choice Power, Inc. Simply Better RenewableSimply Better Renewable$1546%12$0.154/kWh First Choice Power, Inc. Simply Better PlanSimply Better Plan$13716%12$0.137/kWh Reliant Energy Basic Flex PlanBasic Flex Plan$1574%0$0.157/kWh StarTex Power Star Seasonal Savings 1 Year PlanStar Seasonal Savings 1 Year Plan$13517%12$0.135/kWh StarTex Power Star Seasonal Savings 2 Year PlanStar Seasonal Savings 2 Year Plan$13815%24$0.138/kWh StarTex Power Super 3 Star Savings 3 Month PlanSuper 3 Star Savings 3 Month Plan$12225%3$0.122/kWh StarTex Power Super 6 Star Savings 6 Month PlanSuper 6 Star Savings 6 Month Plan$12126%6$0.121/kWh StarTex Power Star Seasonal Savings Month to Month PlanStar Seasonal Savings Month to Month Plan$13517%1$0.135/kWh StarTex Power Star Seasonal Savings 3 Year PlanStar Seasonal Savings 3 Year Plan$14113%36$0.141/kWh StarTex Power StarSavings 1 Year PlanStarSavings 1 Year Plan$1508%12$0.15/kWh StarTex Power StarSavings 2 Year PlanStarSavings 2 Year Plan$14710%24$0.147/kWh StarTex Power StarSavings 3 Year PlanStarSavings 3 Year Plan$14412%36$0.144/kWh StarTex Power StarSavings Month to Month PlanStarSavings Month to Month Plan$12424%1$0.124/kWh National Power Company Fall Savings PlanFall Savings Plan$12424%0$0.124/kWh Cirro Energy Residential Electric ServiceResidential Electric Service$14412%12$0.144/kWh Ambit Energy, LP. Residential Electric OfferResidential Electric Offer$14610%1$0.1464/kWh

10 10 Its mind-boggling bills are so high ( Wall Street Journal ) Its 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 arent 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,, 10/16/06; Report sees power problems ahead for Texas, Austin American, 10/17/06) Recent Observations of the Texas Market

11 11

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

13 13 ERCOT Settlement Data by Fuel Type for August 17, 2006 InstalledDispatched Wind 2, Hydro DC Ties Gas/Coal/Nuclear 58,57357,376 Private Network 6,4196,397 LaaR 1,1801,150

14 14 April 17 Event: Root Causes 100+°F in April (DFW 26° above normal) ERCOTs 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 15 April 17 Event: Forecast vs Actual Load

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19 % Reserve Margins 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 Over 26,000 MW of new generation added after passage of Senate Bill 7 Since 1999: 2,800 MW retired 8,700 MW mothballed* Future generation is officially counted only if interconnection agreement completed Announced generation without interconnection agreements (excludes wind) 2008 is a major concern

20 20 PUCT Project No 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 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 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 23 Gap of 600MW on a probable 4CP day Transmission Level Customers Reduce Consumption on Probable 4CP Days to Mitigate Next Annual Load Ratio Share Allocation Source-ERCOT

24 24 Advanced Meters Proposed P.U.C. Subst. R , Project No 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 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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