Texas Coalition for Affordable Power

Archive for the ‘ERCOT’ Category

In the News: Could Be a Close One for Blackouts This Summer in Texas

Today the group that monitors the Texas Electric Grid came out with a new assessment of the state’s power reserves heading into the summer. The Electric Reliability Council of Texas (ERCOT) says Texas is still at risk of rolling blackouts. But the likelihood has diminished as conservation has ramped up and more energy companies have brought “mothballed” power plants back online.

…article continues at stateimpact.npr.org….

Not everyone is happy with the idea of raising prices. “This report suggests the need for continued careful deliberation, but not rushed short-term changes that could shock the market and increase prices,” Dr. Randy Moravec, executive director from the Texas Coalition for Affordable Power, said in an email to StateImpact Texas.

In the News: ERCOT: Summer blackouts not likely, but concerns still linger

Managers of the state’s primary electricity grid expect to avoid rolling blackouts this summer but not without calling on Texans to turn up their thermostats and conserve power during peak usage on the season’s hottest afternoons.

The Electric Reliability Council of Texas is also bringing back mothballed power plants — some 35 to 40 years old — to give itself a larger margin of error than last summer’s near-miss on rolling blackouts.

..article continues on www.statesman.com…

A consultant’s report on how to address the lack of investment in new generation is expected June 1.

Randy Moravec is executive director of the Texas Coalition for Affordable Power, a group of 160 cities and other political subdivisions that purchase electricity in the competitive market.

He said ERCOT’s summer power forecast should give state policymakers a little breathing room.

“This report suggests the need for continued careful deliberation but not rushed, short-term changes that could shock the market and increase prices,” Moravec said.

Report: $15.5 Billion in Excess Electric Costs under Texas Electric Deregulation

New Study from the Texas Coalition for Affordable Power: $15.5 Billion in Excess Electric Costs under Texas Electric Deregulation

Coalitions Representing More Than 150 Cities Send Letter Calling for Action by Texas Legislature

AUSTIN, Texas–(BUSINESS WIRE)–Excessive electricity prices under electric deregulation have cost Texans an additional $15.5 billion, according to a comprehensive new report on the deregulated market.

Judged in terms of increases in average electricity prices, the deregulated market in Texas has been one of the nation’s poorest performing, according to the report. It also cites evidence that Texans in deregulated areas consistently pay more for electricity than Texans in areas exempted from deregulation.

Citing the findings, the chairman of the two city coalitions that commissioned the report distributed a letter to state lawmakers this week calling for important reforms. The coalitions that commissioned the study, the Steering Committee of Cities Served by Oncor and the Texas Coalition for Affordable Power, represent more than 150 cities and political subdivisions in Texas with more than 3.5 million residents.

“This report shows that it’s time to fix deregulation,” said Jay Doegey, who chairs both coalitions. “We support electric competition — but competition that works for Texas residents and businesses. Years of electricity prices above the national average needlessly have cost Texans billions of dollars. These high prices have taken a toll on personal finances and the state’s economy. It’s money that could have been used for other priorities.”

The report, delivered this month to all members of the Texas Legislature, documents recent declines in electric prices in Texas (currently average residential prices are slightly below the national average), but found no evidence that those declines have compensated for years of inefficiency in the market. Judged in terms of changes in the average price of electricity, the deregulated market in Texas has performed worse than residential electricity markets in most other states — including most states with deregulation, the report shows.

Key findings include:

• In terms of increases in average residential electricity prices between 1999 and 2010, Texas ranks ninth nationally, fourth among 15 states with electric deregulation and third among 22 states with a reliance on natural gas to fuel generation plants.
• Since the Texas electric deregulation law took effect, Texas residential consumers have paid more than $11 billion in excess costs resulting from electricity prices above the national average. Prior to the adoption of the deregulation law, Texans consistently paid below the national average.
• All classes of Texas electricity consumers — that is, residential, commercial and industrial — would have saved $15.5 billion had prices remained at the national average since the beginning of retail electric deregulation. In the ten years leading up to the deregulation law, all groups of Texas consumers collectively paid $17.6 billion less than the national average.
• For every year there is data to make a comparison, residential consumers in areas of Texas with retail electric deregulation (such as Houston and Dallas) have paid average electricity prices higher than residential consumers living in areas of the state outside deregulation (such as San Antonio and Austin). Texans outside deregulation consistently pay below the national average, while Texans inside deregulation consistently pay above it.
• Recent declines in the price of electricity in Texas relate largely to changes in the commodity cost of natural gas, which is used to fuel many generation plants. However, data cited by the report show that the declines in average electricity prices have been less pronounced in deregulated areas, as compared to areas of Texas outside deregulation. This suggests that the deregulated market in Texas is much less nimble in its response to changing conditions, as compared to areas of the state exempt from deregulation.

Based on these findings, the city coalitions recommend the following action:

• The Texas Legislature should reject proposals to create new “streamlined” or “one-way” ratemaking rules. Such regulatory gimmicks will increase electricity prices in Texas and contribute to bloated utility spending. Texas utility lobbyists are currently pressing for such changes.
• Regulators should be given authority to assess higher fines for anti-competitive activities in the wholesale electricity spot market. A loophole that allows relatively small generators to engage in anti-competitive behavior should be closed.
• Electric generation companies that bid their power into the wholesale spot market at excessive prices should be promptly identified after they submit their bids. Such disclosures will discourage anti-competitive bidding practices. Texans ultimately must pay for this electricity and have a right to know where their money is going.
• Retail electric providers should be required to offer standardized fixed-rate products among their selection of other electricity products. This will make it easier for Texas residential consumers in deregulated areas to make apples-to-apples price comparisons when shopping for electricity.

The Story of ERCOT is based on months of research, including a review of journalistic accounts, regulatory documents, academic studies and data from the United States Energy Information Administration. It includes separate findings relating to the Electric Reliability Council of Texas, which is the organization that manages the state’s power grid. Those findings were detailed in an earlier press release.

The Story of ERCOT is available for download at www.tcaptx.com.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6623921&lang=en

Contacts

for the Texas Coalition for Affordable Power
R.A. “Jake” Dyer, 512-322-5898

New Study Finds History of Mismanagement at ERCOT

Ordinary Texans Lack Representation in Organization at the Center of the Recent Blackouts

AUSTIN, Texas–(BUSINESS WIRE)–The Electric Reliability Council of Texas, the organization now under fire for the recent blackouts in Texas, has a history of missteps, mismanagement and broken deadlines, according to a new study released Monday to all members of the Texas Legislature.

Commissioned by two non-profit municipal coalitions, The Story of ERCOT documents an alarming increase in borrowing and spending by the organization and a lack of accountability to state officials and regulators. The report shows that self-interested industry players dominate the ERCOT board while Texas consumers, who indirectly or directly pay the entire cost of the organization and the electric market that it helps oversee, have only a limited voice.

The twin coalitions that commissioned the study, the Steering Committee of Cities Served by Oncor and the Texas Coalition for Affordable Power, represent more than 150 cities and political subdivisions in Texas. Jay Doegey, who chairs both coalitions, said the report shows that missteps at ERCOT have needlessly cost Texans hundreds of millions of dollars.

“Texans deserve better than this,” said Doegey. “Residential consumers and businesses — those who actually foot the entire bill for this organization — should have more representation on the ERCOT board. The out-of-control spending, mismanagement and lack of accountability must end.”

ERCOT’s performance during the recent blackouts is expected to become the subject of a key legislative hearing this week. ERCOT also came under fire during rolling blackouts in 2006.

Report also identifies problems with rules governing the wholesale electricity market

Separately, the report also includes important findings relating to the deregulated electricity market in Texas. The market is largely overseen by the state’s Public Utility Commission.

For instance, the report found that a legal loophole allows some electric generation companies to engage in anti-competitive activities. Another loophole prevents the PUC from ordering restitution to consumers or entities harmed by improper market manipulation.

The report also documents instances in which electric generators have sold power at levels well above their marginal cost, a sign that the Texas market is insufficiently competitive. Policymakers have rejected rules that would limit excessive prices in the wholesale market.

“Texans have paid billions of dollars in excess costs because of inefficiencies in the deregulated market,” said Doegey. “We support competition in the electricity market — but competition that works. It’s time to close the loophole on anti-competitive activities and time to fix the broken enforcement process. Big generators must not profit through deceit.”

Based on the findings, the city coalitions recommend the following legislative reforms:

*The Public Utility Commission should be granted greater authority over ERCOT’s borrowing and spending.

*Consumers ultimately pay all costs in the electricity market, but only control a minority of seats on the ERCOT board of directors. This should change.

* The PUC should be granted authority to order restitution to parties harmed by anti-competitive activities. A loophole that allows relatively small generators to engage in anti-competitive behavior should be closed.

The Story of ERCOT is based on months of research, including a review of journalistic accounts, regulatory documents, academic studies and years of data from the United States Energy Information Administration. It is available for download at www.tcaptx.com.

ERCOT CEO under fire for Blackouts

ERCOT CEO Trip Doggett is under fire. During a meeting Thursday of the Texas Public Utility Commission, he was made aware that his job may be on the line. As part of a routine review of ERCOT rules, Commissioner Donna Nelson proposed “adding language that says the commission at its own discretion and without ERCOT board approval may terminate the employment of the chief executive officer.”

Nelson said there was clear evidence that ERCOT should have been aware there were problems before the blackouts last week. You can see the exchange in the TV report, above.

Texans deserve answers to questions raised by blackout

The cold weather has been blamed for the blackouts in Texas this week. But questions remain. Photo Courtesy: David R. Tribble

Wholesale electric prices spiked 3,000 percent

The cold weather has been blamed for the blackouts that left thousands of Texans without heat and power this week. ERCOT, the organization that operates the Texas power grid, said it had lost about 7,000 megawatts of generation — a massive amount, the equivalent of more than two big nuclear plants. Many questions remain.

• Texas homeowners were prepared for the cold snap and knew enough to wrap their pipes. But what about the state’s big electric generators? The temperature dropped overnight Tuesday — but not to unprecedented levels. And the quick drop should not have come as a surprise to anyone. And yet it’s been reported that 50 of the state’s 550 power plants had been knocked offline by severe weather. What could have been done to prevent such a massive loss?

• Wholesale energy prices spiked dramatically shortly before the rolling blackouts, and then remained at nearly unprecedented levels for several hours afterward. Were these prices warranted? A review of ERCOT data shows that for much of the evening spot energy was selling at below $75 to $125 per megawatt/hour. That’s a bit high, but nothing too far out of the ordinary. But then at 3:45 a.m. — nearly two hours before the rolling blackouts began — prices spiked to more than $1,100, an increase of approximately 1,000 percent. At 5:15 a.m., 15 minutes before the rolling blackouts, spot prices shot past the $3,000 mark. And they stayed there for much of the morning.

Obviously, someone within the electric industry made hundreds of thousands or even millions of dollars during the blackouts. Were those high prices justified, or was there a breakdown in the competitive market? It’s also clear that Texas lost a massive amount of generation, but it’s not clear why.

The Public Utility Commission and the state’s Independent Market Monitor (an entity that’s charged with playing a watchdog role in the wholesale electricity market) should take a long hard look at the blackout and the circumstances surrounding it. Texans deserve answers.

– R.A. Dyer

Hey North Texans: Oncor would like some more to become even MORE profitable

Today Oncor Electric Delivery is asking state regulators for permission to increase your electric bill… Again.

The state’s largest electric transmission company is requesting an increase that would total $350 million in additional revenue each year. Broken down, that’s about $60 annually for each of Oncor’s residential customers.

The proposed hike comes on the heels of Oncor’s 2009 hike that increased bills by $3 a month. That earlier request flooded company coffers with an extra $115 million annually.

So, when do the rate hikes stop? Oncor, a company with very little financial risk, would see its profit margin on capital investments increase from 10.25 percent to 11.25 percent under the new proposal. And when combined with the effects of the previous hike, the proposed new hike could mean Oncor’s customers could soon be shelling out nearly a half billion dollars more each year to the company.

Oncor serves approximately 7 million people in a service territory that includes large areas of North, West, East and Central Texas. The hike would become part of all bills for electric service in that territory, regardless of the customers’ individual retail electric provider.

The Public Utility Commission is expected to rule on Oncor’s request later this year.

Make your voice heard. Sign the petition at RechargeTexas.com or follow us on Facebook.com/RechargeTexas to find out what you can do.

Read the Dallas Morning News article.

Read the Fort Worth Star Telegram article.