The Players in Texas Electricity

Understanding the Important Players in Texas Energy and their

Role and Influence in the Electricity Market

So It Begins ...Understanding the Texas electricity market as a direct result of deregulation and the introduction of competition is a daunting task.

Just ask any of your fellow Texans what exactly is deregulation and you’ll likely be met with a blank stare.

Why Educate?

Granted, not all Texans live in areas of the state where choosing an electricity provider is an option, but regardless, understanding the working pieces that drive Texas electricity will make all of us more informed energy consumers.

What is Vital Information?• The Public Utility Commission of Texas and its

role in protecting your electricity rights, in addition to specific responsibilities and regulations therein.

• The role of the Retail Electric Provider (REP).

• Transmission and distribution of electricity and its relationship to the power generators, REPs and the consumer.

Continued …• Power generators and their role in producing

electricity and placing it on the grid.

• The Electricity Reliability Council of Texas and its role in the management of Texas electricity.

The Public Utility Commission of Texas (PUCT)

Regulating Texas Utilities and Telecommunications

What is the PUCT?

A local state agency responsible for the regulation of electric and telecommunications services.

Primary Mission:Ensure consumer protections are in place, foster healthy competition and promote high quality and safe energy and telecommunication infrastructures.

File Under: Did You Know?

In addition to operating a consumer information hot line, The PUCT also regulates rates and services of all investor-owned electric and local telephone companies, sets and maintains ongoing standards of service for regulated electric companies, and issues statewide franchises for cable TV and video services.

The PUCT Regulates:• Long distance• Wireless telecommunications service• Gas• Water• Cable TV rates and content• Rates established by municipal electric utilities• Rates established by electric cooperatives• Internet• ISDN

PUCT and Texas Electricity

The PUCT is quite simply a consumer advocate for choice in the Texas electricity market.

The PUCT is primarily responsible for regulating rates and terms of service for both transmission and distribution in Texas’ deregulated areas, oversight of the ERCOT market, managing renewable energy resources and ensuring consumer protections for retail electric service.

What the PUCT Does Not Do!

Does not endorse particular electricity providers over another, which helps to foster competition and protect consumer rights that would not survive otherwise.

The PUCT and Texas Electric Choice

The PUCT operates the Texas Electric Choice Web site that is devoted to providing information for consumers looking to switch electricity providers.

Power to ChoosePUCT Web site:

• The basics of deregulation and the retail market in Texas.

• General information about the PUCT and a link to their site.

• The process of switching electricity providers

And …

• Questions to ask potential electricity providers.• Understanding the choices consumers have

when comparing providers.• Offer information from Texas Retail Electric

Providers (REPs).

Retail Electricity Provider

The Texas REP has the closest relationship with the customer, a.k.a. YOU

What is an REP?The REP handles the customer relationship:

• Provides you with the billing and customer service aspects of your electricity service.

• Facilitates turn on and turn off service with your local transmission company.

• Competes for your business by offering a variety of rate plans, incentives and specials for new customers, renewable energy options and more.

Life Cycle: REP to Customer

• Customers call up an REP (EX: Bounce Energy, TXU, Reliant) and place an order for electricity service.

• The REP is then responsible for logging that order with the local TDSP (Transmission/Distribution Service Provider). This is done through the neutral third party – ERCOT, ensuring that electricity service will be turned on and ready at the specified date on the order.

Continued …• Service is turned on, so it is now the

responsibility of the REP to monitor and bill a customer for their electricity usage and any additional fees associated with their service.

• It is also the REP’s role to field any calls regarding customer dispute and work to find the most satisfactory resolution possible.

What Makes an REP Unique?Service:

• Competition - Companies work harder to bring value to their customers in order to retain and attract new business.

+• Value - Lower prices, better incentives to sign up

for new service & versatile energy plans.

=

Directly benefits the Texas energy consumer by offering the power to shop and choose a provider based on value!

The TDSP in Texas

Your Local Transmission and Distribution Company

Before …Electric companies provided full scale electricity service, which included maintenance of the electricity infrastructure and getting electricity from the plants to the customers, from start to finish.

After …The introduction of deregulation and competition paved the way for the TDSP and REPs to each handle different responsibilities, namely the billing and customer service versus the transmission and distribution of electricity.

Role of the TDSP• Maintains the infrastructure for electricity

transmission or distribution.• Repair transmission lines during a power

outage.• Middle man between power generators and

REP, ensuring electricity that is generated is safely and reliably transmitted to Texas homes and businesses.

TDSPs You May Recognize• Centerpoint (split from Reliant)• Oncor (Splint from TXU) • Texas New Mexico Power Company• AEP North• AEP Central

Texas Power Generators

The source that feeds the Texas electricity market.

Why Texas?Texas not only provides a quarter of the nation’s refining capacity with nearly 5 million barrels of oil processed per day, but also accounts for a quarter of total natural gas production as the nation’s leading producer.

Needless to say … there are more than just a few large-scale, essential power generation companies in Texas.

What is a Texas Power Generator?

Power generators or power generation companies use natural gas, coal, wind, nuclear, biomass and hydro to produce the power that Texas businesses, residents and commercial facilities count on.

Continued …Power generation companies own and operate the power plants responsible for producing energy sold on the wholesale market to Retail Electric Providers in Texas, who of course turn around and package it for the consumer.

Major Texas Power Generators

Here is a brief overview of the major power generators in Texas who help drive the market by providing the nearly 62,000 megawatt hours per day that Texans consume.

Luminant• A subsidiary of Energy Future Holdings (EFH),

formerly TXU Corp.• Generates more than 16,100 megawatts (MW) of

energy in Texas, including 2,300 MW of nuclear and 5,800 MW of capacity generated from coal.

• Luminant also happens to be the largest purchaser of clean electricity generated from wind in Texas and fifth largest in the United States.

NRG Energy, Inc.• Founded in 1989, NRG currently has a

capacity of more than 24,000 MW across the globe, including nearly 11,000 MW in Texas.

• NRG also has full or part ownership in 44 power generation plants.

Suez Energy• Suez Energy Generation is located in the heart of

energy land in Houston, Texas. • Suez owns and operates 72 power, cogeneration,

steam, and chilled-water facilities, with a total power capacity of more than 7,750 MW.

• Suez power generation facilities use various fuels to produce electricity, including renewable resources.

Shell• Providing the world’s first commercial gas

liquification plant in 1964, Shell is one of the largest energy producers in the world

• Shell is active in everything from gas-to-liquids, wind and solar energy to coal gasification technology

• Shell is also heavily involved in building and operating natural gas pipelines, and developing wind and solar technology.

Electricity Co-OpThere are also dozens of local electricity co-ops that provide service to rural parts of Texas. Many of these co-ops fall under Touchstone Energy, a nationwide alliance of 680 local electricity cooperatives located in 80% of the nation’s counties that serve more than 40 million members.

Continued …An electricity co-op is owned by the members it serves, with Touchstone co-ops providing electricity service to 75% of the country, including more than 40 co-ops in the state of Texas.

The Role of ERCOT in Texas

The Electricity Reliability Council of Texas

What is ERCOT?The Electricity Council of Texas (ERCOT) is a nonprofit corporation entity under NERC/FERC, which manages the flow of electricity and power to over 22 million Texas electricity consumers, a large portion of the State’s deregulated markets.

What Role does ERCOT play in Texas Electricity Market?

• ERCOT schedules power to an electric grid that covers over 38,000 miles of Texas Electricity Transmission, equivalent to 85% of the state’s electric load.

• Manages 75% of the deregulated electricity market in the state.

• Oversees financial settlements for the wholesale bulk-power market in Texas as well as customer switching for more than 6.5 million Texans in deregulated areas.

Ensuring Reliable ServiceERCOT performs this role by constantly monitoring and analyzing all power grid components every 2-4 seconds for status updates.

ERCOT also directs the flow of electricity in conjunction with the local Transmission and Distribution Service Provider (TDSP) so every Texan can have safe and reliable energy.

ERCOT and the PUCTERCOT is overseen and regulated by The Public Utility Commission of Texas (PUCT). The PUCT aids ERCOT in performing its role in the Texas electricity market by helping manage the power grid and ensuring that market rules are in place to protect consumers.

The Texas Electricity Market in 2009

Deregulation provides not only unique benefits to the Texas electricity consumer, but also unique structural and logistical needs in order to ensure that electricity service across the state remains safe and reliable.

Moving Forward …Moving forward in 2009 and beyond, the continued growth of deregulation in the Texas electricity market only serves to increase competition and foster more opportunity for affordable and reliable electric service.

Helpful Links• PUCT• ERCOT• Power to Choose• Bounce Energy Education Center• Luminant• NRG Energy, Inc• Suez Energy• Shell U.S.