PowerPoint PresentationTexas’ Electric Industry
September 23, 2009
Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc.
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AECT Principles
• AECT is an advocacy group composed of member companies committed to:
- Ensuring a modern, reliable infrastructure for the supply & delivery of
electricity.
- Supporting efficient competitive markets that are fair to customers and
market participants.
promote investment and ensure the stability of Texas’ electric industry.
- Promoting an economically strong and environmentally healthy future for
Texas, including conservation and efficient use of available resources.
• AECT member companies remain dedicated to providing Texas customers with
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within four separate reliability regions:
- Texas Regional Entity (TRE),
Electric Reliability Council of
- Western Electricity Coordinating
Council (WECC).
The eight reliability regions in the continental U.S. are subject to the oversight and enforcement authority of the North American Electric Reliability Corporation (NERC), which is subject to the Federal Energy Regulatory Commission’s (FERC) oversight. NERC is responsible for developing standards to ensure and improve reliability for delivery of electricity on the bulk power system.
FERC
NERC
(ERCOT)
Southwest Power Pool (SPP)
Retail Market Changes
Changes Related to Electric Bills and Promoting Switching in the Market
REPs must now include on a residential customer’s bill a statement that customers can receive more information about residential electric service at www.powertochoose.org. (HB 1799)
The PUC adopted revised rules that require an improved Electricity Facts Label to help customers understand the terms of the service being offered and to compare different companies’ service. (PUC Project No. 35768)
Customers can now switch to a new REP within seven business days. (PUC Project No. 36536)
Changes to Ensure Continued Reliable Service to Customers
The PUC has strengthened the qualifications required to provide retail electric service in the ERCOT market. (PUC Project No. 35767)
The PUC modified the Provider of Last Resort (POLR) rule to:
include a decrease to the pricing formula for residential customers;
encourage POLR providers to offer market-based prices when there is a POLR event;
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Changes Related to Electric Contracts
The PUC will define terms common to the telecommunications and electric industries, which will be labeled uniformly on each retail bill sent to a customer by a REP or electric utility, providing an additional tool for customers to assess their electric service and make informed decisions. (HB 1822)
REPs must now comply with standard definitions for fixed, variable and indexed pricing plans to better define what prices, terms and conditions apply to the plans, when the plans may be changed and what notifications the customer will see. (PUC Project No. 35768)
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Changes Related to Emergency Storm Response
Electric utilities may now file with the PUC for recovery of storm costs through "securitization,” which is a utility financing cost recovery process that will result in lower prices than traditional means of cost recovery. (SB 769)
Each electric utility in Texas will file with the PUC a report on its infrastructure improvement and maintenance activities, including identifying areas susceptible to damage, vegetation management and distribution pole inspections, as well as its preparation for emergency operations. (HB 1831)
The PUC is now authorized to require electric entities to sell electricity to another electric entity that loses power during a natural disaster or declared emergency, including the requirement to interconnection service if necessary. (HB 1831 and SB 1492)
Changes Related to Reliability Performance Review
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Full Retail Competition Begins
ERCOT Long-Term Projections Show
Substantial Investment Still Needed
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September 4, 2009
“Thanks to plunging natural gas prices, many Texans can secure electric rates that are 25 to 40 percent lower than what they were paying last summer. Rates had soared as a result of spiraling prices for natural gas, which is burned to generate much of Texas’ electricity.
Competition delivers lower power prices in Texas
September 3, 2009
“Electricity is being offered for less than 10 cents per kilowatt-hour, down 20 percent from last summer in areas where electric retailers battle to attract customers, like Dallas and Houston.”
Retail prices have continued to fall
since the start of September
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Responding to Recent Drops in Natural
Gas Prices
12.1¢/kWh
9.0¢/kWh
27% decrease
that are Lower than the National Average Price
Sources: powertochoose.org,
lessen their environmental impact.
and opportunities that will enable customers to better
understand the impact of controlling their energy
consumption (e.g., shifting usage to off-peak times).
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Key Stakeholder
Retailers
Real time grid feedback allows for more effective loading of utility assets
Enables increased monitoring and diagnostics to enhance the life of utility assets
Improved line fault detection and diagnostics
Improved system reliability and greater ease/timeliness of power restoration
Automated meter reading
Power quality and reliability improvements
Friendly access to detailed consumption information to make informed choices and enable faster transactions
Enables and promotes energy conservation
Expands retailer’s ability to offer new products
Facilitates time-of-use rates and critical peak pricing
Establishes platform to offer future home appliance monitoring and control
Allows retailers to offer pre-payment programs
Environment
Promotes energy efficiency through immediate energy consumption awareness
Facilitates reduced electric consumption which leads to reduced power plant emissions
Benefits
in Texas
CenterPoint Energy and Oncor have received approvals from the Public Utility Commission of Texas (PUC) to deploy advanced metering systems (AMS) across their respective service territories.
The approved deployment plan for CenterPoint Energy calls for installation of advanced meters over five years beginning in March 2009. Through mid-September, CenterPoint Energy has installed over 76,500 advanced meters and expects to install a total of 145,000 meters by year-end.
Oncor’s approved deployment plan initiated in late 2008 will have installation of advanced meters completed by the end of 2012. To date, Oncor has installed 294,000 meters.
The cost for the meters will be recovered through a monthly surcharge, which may be adjusted over time to reflect both the inclusion of AMS costs in future base rates and variances between the estimated versus the actual cost of implementing the deployment plan. The respective surcharges for both Oncor and CenterPoint Energy take into account the savings advanced meters are expected to bring each company.
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Transmission Investment in Texas
Since 2006, TDUs have invested about $2.5 billion in the ERCOT transmission grid.
ERCOT estimates that the electric grid will require adding or improving 2,888 circuit miles of transmission lines at a cost of about $3 billion from 2009 through 2013.
In addition, the integration of Competitive Renewable Energy Zones (CREZs) into the competitive ERCOT market will require additional investment of about $4.9 billion.
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Competitive Renewable Energy Zones:
Legislative and Regulatory Steps
The Texas Legislature mandated steady increases in renewable power in TX76RSB 7 (1999) and TX791RSB 20 (2005).
Starting Line: 880 MW in 1999
Old Goal 1: 2,880 MW by 2009 (Achieved by 2007)
New Goal 1: 5,880 MW by 2015
New Target 1: 10,000 MW by 2025
New Target 2: 500 MW non-wind renewable generation
TX791SB 20 (2005) also required PUC to:
designate Competitive Renewable Energy Zones (CREZs) in areas in which renewable energy resources and suitable land areas are sufficient to develop generating capacity from renewable technologies;
develop a plan to construct necessary transmission capacity in a manner that is most beneficial and cost effective to customers; and
take into account transmission constraints, the need for generation and the level of financial commitment by generators when defining CREZs.
PUC adopted Substantive Rule 25.174 in December 2006, which creates framework for determining CREZs.
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Emergency Preparedness
Throughout Texas
Texas is prone to a wide array of inclement weather. The state faces hail, tornadoes and ice storms, along with the hurricanes and flooding recently seen along the Gulf Coast.
Transmission and distribution utilities in each part of the state work to ensure that the power grid functions as normally as possible.
Each utility maintains emergency preparedness plans to mitigate the most common inclement weather, while maintaining crisis response teams to quickly respond to these emergencies and, if necessary, emergencies in other parts of the state or country.
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Emergency Operating/Restoration Plans: Utilities Prepare Year-Round
The goal of a utility’s emergency plan is to safely restore service to its customers - quickly and efficiently.
In addition to linemen and local contractors, an emergency plan typically includes virtually every company employee - even those who do not traditionally work in the field.
Through electric utility mutual assistance programs, most utilities have access to thousands of linemen and tree trimmers from around the country.
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CenterPoint Energy recognizes our critical role in serving the public.
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Basic Priority Restoration
Utilities all have Emergency Restoration Plans and are committed to restoring all power as quickly, efficiently and safely as possible. In competitive areas of the state, restoration of power is not affected by customers’ choice of retail electric provider. A typical plan consists of four phases of restoration:
Service to facilities vital to safety, health and welfare, such as hospitals, water treatment plans and public service facilities.
Service to customers whose power is out due to damage to major power lines, which serve thousands of customers.
Service to customers whose power outage was caused by damage to smaller sections of power lines serving hundreds of customers.
Service to customers who have outages caused by damage to equipment that typically serves less than ten customers.
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Specific damage to electric system will be different.
It is not possible to forecast in advance what the exact damage to the electric system will be, so…
It is not possible to give precise outage duration estimates for individual locations in advance.
Remember - No Two Storms
Hurricane Ike – September 2008
Hurricane Ike made landfall as a very strong Category 2 storm on September 13, 2008, on Galveston Island. It was the third worst hurricane on record
Experienced 110 mph winds.
Many AECT members’ service areas were impacted.
2.6 million TX customers lost power.
18 days to complete restoration.
Tropical Storm Edouard – August 2008
Tropical Storm Edouard formed in the Gulf of Mexico on August 3, 2008 and made landfall along the upper Texas coast on Tuesday, August 5. While this storm had a minimal impact in terms of infrastructure damage, it did serve to provide an opportunity to the coastal utilities to activate their Emergency Operations Plans in a realistic scenario.
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Hurricane Dolly – July 2008
Hurricane Dolly was the first hurricane to hit the Rio Grande Valley in many years. However, after making landfall early on the morning of July 23, the storm slowed to a crawl and brought winds up to 100 miles per hour and torrential rain of between 10 and 15 inches in some areas, particularly South Padre Island and Port Isabel and other parts of the Valley.
Some 205,000 electric customers served by AEP Texas were left without power in the Valley area. In all, 212,000 electric customers served by the company lost power as Dolly’s long reach impacted areas as far north as Corpus Christi and as far west as Laredo. More than 1,400 accounts listed as “critical load,” which included hospitals and city services, were among those losing electric service.
Service and line crews from AEP Texas and 23 outside companies replaced over 1,000 distribution poles and 55 transmission structures. In all, some 2,000 line and service technicians, tree trimmers, damage assessors and support personnel helped with restoration efforts.
By the end of the day on July 30, service had been restored to 99 percent of customers who lost power. The remaining 2,000 customers were returned to service over the next few days.
Hurricane Humberto - September 2007
Hurricane Humberto began as a tropical depression off the coast of Freeport, Texas, on Sept. 12, 2007. Within 18 hours, the storm reached hurricane intensity and made landfall near High Island, TX, on Sept. 13. According to the National Hurricane Center, “no tropical cyclone in the historical record has ever reached this intensity at a faster rate near landfall.”
Entergy experienced outages to approximately 120,000 customers in Galveston, Jefferson, and Orange Counties.
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Hurricane Rita - September 2005
Hurricane Rita resulted in over 1,481,000 power outages in Texas. AECT member companies worked to offer all available assistance to get power back online in affected areas:
CenterPoint Energy announced that power for all of its 700,000 affected customers’ was restored about a week after the storm hit.
Within two weeks, Entergy—the hardest hit electric utility—had restored service to more than 90 percent of affected customers.
TXU Electric Delivery (now Oncor Electric Delivery) deployed a workforce of 1,400 employees and contractors to restore service.
All AECT member companies responded to the storm with employees and equipment, while customers in affected areas also received retail service discounts and other benefits.
Hurricane Katrina - August 2005
AECT member companies provided more than 2,900 employees and contractors to assist with restoration to join Entergy’s 10,000 field employees to aid the Gulf Coast’s massive restoration efforts.
AECT companies and employees pledged over $3.3 million to the American Red Cross and the Power of Hope Fund—a charity launched by Entergy, which is based in New Orleans.
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Worst DFW Metroplex Storm in a Century - June 2004
On June 1, 2004, thunderstorms accompanied by hurricane-strength winds struck the Dallas-Fort Worth Metroplex, knocking out power to an estimated 1.4 million customers – the worst storm in terms of service interruptions in Oncor Electric Delivery’s history. Oncor called in 3,700 repair personnel and ultimately repaired 23 substations, replaced 550 power poles, worked 4,000 reports of downed wires, and removed about 40,000 damaged or fallen trees.
Quick Response to Hurricane Claudette - July 2003
In July 2003, Hurricane Claudette hit the Gulf Coast and Houston area, affecting millions of Texans and pounding power lines. When the hurricane hit, the electric grid service areas controlled by AEP Texas Central, CenterPoint Energy and Texas-New Mexico Power Co. were buffeted by winds as strong as 100 miles per hour, flash floods and intense squalls. Response plans included supplying additional manpower, trucks and equipment to aid in restoring electric service quickly and safely.
South Texas Flood - June 2001
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Glossary in Terms of Restoration
Circuits – Main power lines carrying bulk electricity from substations that deliver electricity from one subdivision to the next (usually serve 1,000 or more customers).
Laterals – Smaller power lines branching off main circuit feeders to deliver electricity to individual segments of an area (usually serve fewer than 100 customers). 
Service drops – low voltage lines running from the utility pole to individual homes. Usually made up of two 120-volt lines and a neutral (can be connected to either a main circuit feeder or a branch lateral)
Weatherhead – a weatherproof electrical service point for overhead electrical service (customer owns this equipment)
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