Electricity Deregulation Blog

Will Obama’s massive funding resolve crucial smart grid issue?

A “smart” grid would be a quantum leap of an improvement over the old grid that presently exists. On Tuesday, United States President Barack Obama announced over $3.4 billion in grants to spur the country’s transition toward a smart energy grid. One hundred companies, mostly utilities, will receive anywhere from a few hundred thousand to $200 million under the fund touted as the “largest single energy grid modernization investment in United States history.” Smart grid has long been recognized as a key enabler of renewable energy. With the announcement, Mr. Obama has put himself back in the center of the low-carbon economy debates just months before the world gathers in Copenhagen to discuss the future of the planet’s climate. Though certainly a momentous development, the massive funding does not, however, provide solutions to overcome the main hurdles that have plagued the smart grid. Smart grid The “grid” is simply, and quite deceivingly, the electrical power infrastructure – the whole system that brings generated electricity to everyone who needs it. Much of this system has been around since the beginning of the 20th century. A “smart” grid would be a quantum leap of an improvement over the “old,” existing grid. Despite much attempt at simplification, the complexity and broad coverage of the “smart grid” is hard to overemphasize. Maybe it is even easier to think of what the smart grid seeks to attain, or what its vision is. Reliability, efficiency, affordability, security and environmental impact come to mind. These concepts point to the chief problem of the grid: it has become inefficient. If the grid were just 5 percent more efficient, energy savings from it would mean permanently eliminating fuel and greenhouse gas emissions from 53 million cars. Implementation of smart grid technologies could also reduce electricity use by over 4 percent by 2030 – equal to $20.4 billion in savings, according to the Electric Power Reform Institute. But bringing all of these together will require not just internet-like capabilities applied to the electrical grid and smart meters, but a host of other improvements that include everything from electrical grid sensors to smart appliances to automated power substations. This is why Mr. Obama’s $3.4 billion smart grid financing – which will be matched by the private sector for some $8 billion total investment – covers a wide-ranging array of technologies and goals. Barriers In 2007, the National Energy Technology Laboratory of the Department of Energy identified four main barriers to the deployment of smart grid – regulatory and legislative; cultural; industrial; and technical. Regulatory and cultural barriers reflect an attitude of resistance to change, especially where there is a lack of compelling argument for action. But the focus has shifted recently to technical hurdles. Technical barriers ask how the many kinds of utilities, not to mention other kinds of stakeholder entities, will adopt interoperable technologies that follow the same industry standards. Take just one component of the smart grid – smart metering. Here, standards will have to be adopted with regard to sending data over networks, among many others. But according to SmartGridNews.com, the standard already developed by the non-profit American National Standards Institute (ANSI) faces competition from those set by the International Electrotechnical Commission (I.E.C.), another non-profit standards organization. “Many utilities are unclear whether they should push vendors to support those ANSI standards or whether they should push for similar standards already in place by the I.E.C.” for smart meter communications, SmartGridNews.com wrote. This is only for non-proprietary communications systems. The use of proprietary technology by utilities brings more problems. This is what the Obama administration’s smart grid efforts crucially miss. Standardization concerns are related to another issue – that of the lack of collaboration among utilities. The National Energy Technology Laboratory, quoting industry observers, writes that “as a result of deregulation, the industry’s corporate culture has moved from cooperation and coordination to competition and confrontation.” This merely puts more pressure on the government to bring utilities to work together, and it can only do that by clarifying and bringing smart grid standards out as early as possible. For good measure, the Department of Energy said it would require the 100 recipient companies to undertake projects that support standards that are open to all, but it has not provided definitive information concerning this. Much more is expected of the Obama administration in this regard. It is a tall order, and why not? Because even if the government expects to leverage $8 billion in public-private investment in smart grid, the backwardness of the sector – attributable in part to utilities’ past complacency – continues to hound and hold back progress. This sector has allocated less than 2 percent of its profits to research and development, the lowest among all United States industries. Most troubling of all is that even on the regulatory and cultural fronts, the United States has not exactly been in a hurdle-overcoming mood lately, with a brewing deadlock in the Senate over the climate bill, and with a public whose attention has been diverted from fearing the catastrophic impact of climate change to worrying about a frail economy. -   Eric Dorente

Technorati Tags: energy deregulation

Lack of infrastructure stalls renewable energy

By Jim Pagels

Daily Texan Staff

Wind farms in West Texas make the state a leader in renewable power generation, but a lack of infrastructure leaves much of their potential electricity output blowing across the plains.

With more than 8,500 megawatts of wind capacity, Texas is the nation’s leading producer of wind power. It produces more than double the amount of wind energy than the next state, Iowa.

But the transmission lines across Texas can only handle about 4,500 megawatts of this production so thousands of megawatts of wind energy go to waste each day.

It only takes one year to build a wind farm but five years to build the power lines to transmit the energy, leaving a major surplus in the amount of power the current cable system can handle, according to the Electric Reliability Council of Texas Web site.

The council manages the current power lines and has been planning for the past two years to regulate the construction of a new system of high-voltage transmission lines. These will allow the distribution of wind energy across what is known as the “grid.”

The vast majority of this power is generated in West Texas, where wind production has rapidly grown in the past three years, from 2,800 megawatts in 2006, to more than 4,000 megawatts in 2008, to its current capacity of 8,500 megawatts, said council spokeswoman Dottie Roark.

Roark said a large proportion of this growth is because of the state’s new policy of rewarding environmentally friendly companies. By using wind energy, companies receive Renewable Energy Certificates, which can be sold and traded with other companies, she said.

Much of this growth is also due to the deregulation of the Texas energy sector in 1999, which opened up opportunities for more companies to produce their own power, Roark said.

While largely produced in the western half of the state, most wind energy is used by the cities of Dallas, Houston, Austin and San Antonio. There are not enough high-voltage power cables to transfer this energy across the state, said Paul Sadler, executive director of the Wind Coalition, a nonprofit association organized to promote the development of wind energy.

“If you put too much power on the line, it will overload,” Roark said. “There are many days when ERCOT tells wind generators that they have to back down.”

The passage of Senate Bill 20 in 2005 helped jump-start the current expansion project by mandating long-term planning for the transmission line and wind farm companies. These companies were previously one united corporation before the 1999 deregulation.

The bill introduced the concept of Competitive Renewable Energy Zones, which designates eight areas around the state in which independent transmission companies can build their power lines.

According to Roark, a large amount of the land for these zones will be acquired via eminent domain.

Roark said the current plan to expand the power-line system is an expensive one. Developers estimate the project to cost more than $4.93 billion in the coming years, and they hope the new grid can be fully functional by 2013, she said.

“Private transmission line companies are encouraged to build these lines because they will receive a guaranteed rate of return [from their services],” Sadler said.

While there is no current shortage of energy, the sizeable growth of Texas cities in the past decade has caused concern for analysts about the future because expanding the system is a long-term project, said Terry Hadley, a spokesman for the Public Utility Commission of Texas.

“There is enough energy now, but Texas is a rapidly growing state, so there will be a need for more energy in the future,” Hadley said. “This plan [will be effective] for the next 10, 20 or even 30 years.”

Hadley said between 5 and 10 percent of Texas energy is generated from wind each day.
“This is a significant increase from 10 years ago, when it was only about 1 percent,” he said.

 

Technorati Tags: electricity deregulation, Texas

Q&A for residential customers on electricity deregulation

© 2009 PennLive.com. All rights reserved.

 

 

Technorati Tags: electricity deregulation

Dominion Retail, OnDemand Energy Solutions: Lower residential rates coming.

As PPL rate hikes near, others confirm discounts

By Rory Sweeney rsweeney@timesleader.com
Staff Writer

With PPL Electric Utilities announcing a roughly 30-percent increase when rate caps expire on Jan. 1, two companies have confirmed they’ll be offering lower rates for residential customers.

PPL has spent the past three years buying energy to supply its customers for 2010, when deregulation goes into effect in its territory. At that point, customers will be able to shop for energy suppliers, but won’t see any change in service because it will still be administered by PPL. “The electrons will likely come from the same place,” said Dan Donovan, a spokesman for Dominion of Richmond, Va.

Dominion Retail is offering rates at 10 percent less than whatever PPL’s price per kilowatt-hour ends up being. “We’re pretty sure it’s going to be about 10.5 cents,” said Donovan. “Whatever it is, we’ll be 10 percent less. … If anything, we’d round it down.”

The offer is a one-year contract for the first 5,000 customers who sign up, but Donovan expected the company will secure enough power for all PPL residential customers. “We would anticipate we would offer 10 percent to all 4 million customers, but we don’t anticipate all of them will take it,” he said. “We don’t expect 1 million.”

OnDemand Energy Solutions, which is already offering an aggregation pool for businesses who are members of chambers of commerce in the PPL territory, plans to offer a similar program for employees of those companies.

The company made a presentation at the Chamber of Commerce of Greater Wilkes-Barre earlier this year. “Everyone in our pool to date is going to do phenomenal,” said John Bodine, the vice president for business development. “Virtually everybody should be switching right now.”

The company, which groups smaller customers and markets their combined demand directly to suppliers, expects to beat PPL’s price for businesses by an average of 2 cents per kilowatt-hour, Bodine said.

He hoped that the residential program would see equal savings. “I would say, where the wholesale market is and where the final (PPL) residential rate is, if we can do something similar (to what’s offered to businesses) we should be well above a 10-percent discount,” he said. “I’m really hoping that we can still have something in November.”

The company is currently negotiating with suppliers to structure the process, but expects a “huge” customer demand. “What takes a little longer is there are less suppliers interested,” Bodine said, plus there are more rules about switching customers, “so it’s a little bit more cumbersome. … It’s a matter of time; we will have a residential program.”

Donovan of Dominion said the company started with residential instead of business customers because “we have a different niche than everybody else. … We’re pretty experienced in that we already about a million customers in either gas or electric.”

Dominion can beat PPL’s prices, he said, because PPL is “recovering some historical caps, and we are able to sell at current prices. Current prices have gone down.”

Technorati Tags: electricity deregulation

Deregulation Produces Lower Business Electric Costs

 

Before you can truly understand the deregulation issues in Texas, its important know that the state is ranked 11th in the world when it comes to its consumption. There has always been a debate between state politicians as to what the best approach would be to the rising energy costs. The only thing they could come up with was a deregulation law.

The law allowed most power customers in Texas to choose their own electricity service provider from a number of REPs or Retail Electric Providers in their area. Initially, the new law was extremely popular and customers couldn’t wait to take advantage of better plans that would offer them lower rates. The numbers are actually quite astounding. From 2002, more than 85% of commercial customers in Texas have switched their providers at least once, while about 40% of residential customers in deregulated areas have switched.

The early evidence was auspicious as a number of new firms entered the market. It appeared as if the increased competition from deregulation would lower prices. In the two years after deregulation, more than 60 startup firms entered the Texas electricity market. These new firms served both residential and commercial areas.

Oddly though, prices began to rise once deregulation was embraced by customers. It was so detrimental to the public, the electricity costs increased by over 40% in a three-year span between 2002 and 2004. The end result was residential homeowners and commercial business feeling treated as a result.

However, proponents of deregulation tried to explain the situation as best they could. The answer revolved around electricity prices rising due to natural gas obstacles. During this time the natural gas industry had reached an all time high and reached increases of 60%. So they were trying to tell us that deregulation was actually saving customers money.

Economist also lent credence to the claims of deregulation supporters when they maintained that increased competition would eventually lower prices as soon as energy prices stabilized. Customers remained skeptical. They felt as if they had been sold a false bill of good and that the politicians and legislators had not fulfilled their end of the bargain.

In the end, the economists and supporters were right. As soon as the cost of natural gas stabilized and later declined, electricity bills in Texas fell across the state. In fact, from the summer of 2008 to the winter of 2009, power prices in Texas declined by nearly 30 percent.

Many experts attribute this to the glut of natural gas in the state coupled with decreased energy demand due to the recession. Though Texas residents still have their fingers’ crossed, many in the know expect prices to continue to fall as the recession intensifies and people use less natural gas.

While everything looks sweet on the surface, it’s forcing businesses to cut prices as well. The good news is they believe that the lower electricity costs are helping them keep their businesses afloat until the economy turns around.

About the Author:

About the author: J. Dyess has been specializing in the Electricity market segment for many years and written articles on Business Electric prices.

Technorati Tags: electricity deregulation, Texas

Southern Company to Build Biomass Plant in East Texas

 

ATLANTA, Oct. 9 /PRNewswire-FirstCall/ — Southern Power, a subsidiary of Southern Company that acquires, builds, manages and owns wholesale generation assets, today announced that it is acquiring Nacogdoches Power, LLC from American Renewables, LLC and will move ahead with construction of the planned biomass power plant in Sacul, Texas. Groundbreaking is expected in the fall of 2009 and commercial operation is projected for the summer of 2012. When completed, the project will be one of the largest biomass-fueled electric generating facilities in the U.S., capable of generating approximately 100 megawatts.

The plant’s output is committed through a 20-year power purchase agreement with Austin Energy, the municipal utility owned by and serving Austin, Texas.

“This acquisition fits Southern Power’s business strategy of growing the business in the wholesale market through acquiring generating assets and building new units – for which the output is significantly covered by long-term bi-lateral contracts,” said Southern Power Company President and CEO Ronnie Bates. “We have a reputation of helping our customers meet their energy needs in a cost-effective, reliable and environmentally responsible manner, and we look forward to working with Austin Energy.”

Acquiring the Nacogdoches project diversifies Southern Power’s fuel mix, which aligns with Southern Company’s overall goal of using a variety of fuels to ensure reliable and affordable electricity generation.

“Southern Power continually seeks appropriate opportunities that fit the business strategy and risk profile of the company,” said David Ratcliffe, Southern Company chairman, president and CEO. “We are especially pleased that this project is consistent with our goal to pursue cost-effective renewable energy options that allow us to continue to provide reliable, affordable and cleaner electricity.”

The plant, which will be built on 165 acres, will be fueled with biomass materials, including forest residue from the surrounding areas, wood processing residues and clean municipal wood waste. The project will require approximately 1 million tons of fuel annually, which is planned to be procured within a 75-mile radius of the project site.

American Renewables develops, builds and operates clean energy facilities that utilize biomass materials as fuel. American Renewables brings together the successful track records and project development, operations, energy investment and asset management expertise of its three partners: BayCorp Holdings, Energy Management, Inc. and Tyr Energy.

Southern Power is among the largest wholesale energy providers in the Southeast, meeting the electricity needs of municipalities, electric cooperatives and investor-owned utilities. The company owns and operates more than 7,500 megawatts with facilities in Alabama, Florida, Georgia and North Carolina and has an additional 820 megawatts committed to construction in North Carolina and Texas.

With 4.4 million customers and more than 42,000 megawatts of generating capacity, Atlanta-based Southern Company (NYSE:SO) is the premier energy company serving the Southeast. A leading U.S. producer of electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications. Southern Company brands are known for excellent customer service, high reliability and retail electric prices that are below the national average. Southern Company is consistently listed among the top U.S. electric service providers in customer satisfaction by the American Customer Satisfaction Index (ACSI). Visit our Web site at www.southerncompany.com.

Cautionary Note Regarding Forward-Looking Statements:

Certain information contained in this Release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, plans and estimated costs for new generation resources for the Company, estimated construction and other expenditures for the Company and completion of the Company’s construction projects. The Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of the Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and subsequent securities filings, could cause results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory change, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, implementation of the Energy Policy Act of 2005, environmental laws including regulation of water quality and emissions of sulfur, nitrogen, mercury, carbon, soot, or particulate matter and other substances, and also changes in tax and other laws and regulations to which the Company and its subsidiaries are subject, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries, including Federal Energy Regulatory Commission matters; the effects, extent, and timing of the entry of additional competition in the markets in which the Company operates; variations in demand for electricity, including those relating to weather, the general economy, population and business growth (and declines), and the effects of energy conservation measures; available sources and costs of fuels; effects of inflation; ability to control costs and cost overruns during the development and construction of facilities; internal restructuring or other restructuring options that may be pursued; potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed or beneficial to the Company; the ability of counterparties of the Company to make payments as and when due and to perform as required; the ability to obtain new short- and long-term contracts with wholesale customers; the direct or indirect effect on the Company’s business resulting from terrorist incidents and the threat of terrorist incidents; interest rate fluctuations and financial market conditions and the results of financing efforts, including the Company’s credit ratings; the ability of the Company to obtain additional generating capacity at competitive prices; catastrophic events such as fires, earthquakes, explosions, floods, hurricanes, droughts, pandemic health events such as an avian or other influenza, or other similar occurrences; the direct or indirect effects on the Company’s business resulting from incidents similar to the August 2003 power outage in the Northeast; and the effect of accounting pronouncements issued periodically by standard setting bodies. The Company expressly disclaims any obligation to update any forward-looking information.

Source: PR Newswire

 

Technorati Tags: renewable energy

Leading The Way For Electric Deregulation

 

Ever since 2002, the state of Texas has given citizens the opportunity to choose their own electricity provide (EP). It’s a great way to put a lot of competition on those big named companies who can easily manipulate the system and take advantage of your finances. Maybe you’re looking for better customer support, better renewable resource choices, or various other options your normal company doesn’t provide.

If you remember right only one company would manage distribution in the past. This means they gained all the profits, no matter how satisfied or dissatisfied you were with them. While this was a major disadvantage, today you can deal with companies that actually offer you what you need. However, to make sure the energy distribution doesn’t accumulate a ton of issues, the Public Utility Commission oversees everything.

Unfortunately the entire state of Texas doesn’t have this option. Then again, 75% of the population does which means the majority can definitely make the change. It means you won’t allow one company to control everything, and the prices will drop due to competition. If this is intriguing we recommend speaking with your city utility or a co-op to get a concrete answer.

Even though this law has been in effect for just about eight years, the future still looks brighter. Even though deregulation can help with customer service issues or prices, the main benefit will be having the option to use renewable resources. In fact, if you take a Sunday cruise around the state you would find that there are tons of wind farms being built to fight constant air and water pollutants.

Texans are encouraged to shop for good prices and good service, and it’s easier than it’s ever been. After all, there are plenty of informative websites out there that give you the information you need to decide which energy supplier is right for you. The most advanced sites let you compare power prices in real time without needing to leave the website, and can even place orders. These orders go right to the electric company you decide will be the best choice for your situation.

So if you’re looking to switch providers, you will be happy to know that the process is quite simple. All you have to do is the research, pick a company, have them accept your order, then just wait for all the information. Probably the best part is you don’t have to call up your current REP and let them know you’re leaving. This keeps away from the hassle of exiting questions, discount sales, and tons of overall frustration. When everything is complete, the meter reading will switch hands and you’ll receive a new bill from your new provider. Just keep in mind the old company will keep sending bills until you’ve paid them in full.

That’s all it takes to exercise your power to choose in Texas. The reliability of your power will be the same, outages will occur with the same frequency that they always have (hopefully not often) and your local wires company still maintains your delivery. However, you now have a choice in which company sells you your power, the rate you buy it at, and how it’s produced. The customer is getting more control over their utilities in the state of Texas. That’s a great thing for nearly everyone.

Are you ready to switch? If so, the first thing to do is figure out what options are available. The good news is your service can only get better. Since it’s a more competitive market in the state of Texas, there is better pricing, cleaner energy, and great overall service. It’s definitely a step in the right direction for you and your family.

About the Author:

About the author: Jerry Dyess specializes in Texas Electricity and has published many articles on Texas Electric rates.

 

Technorati Tags: electricity deregulation

Big users pool power needs in hunt for savings

With looming rise in electric costs, municipalities and other major power users joining together in hope of bulk rates.

As Lehigh Valley municipalities, school districts and businesses weigh the costs they’ll face next year, many are putting a new item on their to-do lists: Shop for electricity.

”There’s beginning to be a lot more activity than there had been six months ago,” said Joseph Solomon, president of Provident Energy Consulting, a firm working with several Valley school districts to shop around for better electricity prices.

Choice, competition — and, theoretically, lower prices — have long been touted by advocates of electric deregulation. The process began in 1996 and will culminate in the next two years with the elimination of rate caps for PPL and Met-Ed.

In the immediate future, the change will mean higher bills for customers as the electric companies adjust their prices to market rates. PPL expects an average increase of about 30 percent for residential customers come Jan. 1, and higher for businesses. Met-Ed expects prices to also significantly increase.

As they brace for higher electric costs, municipalities and other big power users are banding together in search of bulk rates.

”What they’re attempting to do is say, ‘If we as a group can get together and guarantee a supplier a larger demand over a period of time, we might be able to get a couple cents off our rate,”’ said Elam Herr, assistant executive director of the Pennsylvania State Association of Township Supervisors.

Officials in Bushkill Township are considering a consultant to help them find the best price for their electricity, ‘’simply because we don’t have the staff or the time to look for the best buy ourselves,” Manager Aaron Hook said.

Supervisors agreed on Thursday to contact the other members of the Nazareth Area Council of Governments to see if those municipalities too are interested in jointly looking for an energy provider to reduce costs.

And municipalities are not alone.

At least five area school districts — Allentown, Northern Lehigh, Southern Lehigh, Quakertown Community and Saucon Valley — have contracted with Provident of Media, Delaware County, to find the cheapest rates.

The Pen Argyl Area School District plans to join the Provident group this month, and the Easton Area School District also is considering a new energy policy that would include ”energy pooling.”

”I think it’s becoming more prevalent now because it’s also following the green trend,” said Henry Guarriello of D’Huy Engineering of Bethlehem, which manages energy plans. ”It’s something people know they can do to conserve, save energy and save money.”

The Manufacturers Resource Center in Bethlehem is working with 15 to 20 small and midsize manufacturing companies that have banded together in hopes of together finding cheaper energy, Executive Director Jack Pfunder said.

Six months ago, Lafarge North America set out to find the cheapest energy provider. Lafarge, which has a cement plant in Whitehall Township and used PPL this year, found the lowest bidder for 2010 in Sempra Energy.

The increase is ‘’slightly below what we had anticipated, but it is still pretty close to about a 52 percent increase,” plant manager Terry Bennett said.

Trexlertown gasmaker Air Products will be ‘’soliciting offers from various potential power providers and [has] been investigating alternative energy options,” said spokeswoman Beth Mentesana, who added the company is bracing for an increase of $10 million in energy costs.

The company recently upgraded its plant control system in Lancaster to help monitor and reduce energy use there.

Other companies are also looking into alternative energy, including Lafarge, which is studying the possibility of wind power at some of its locations, and the Lehigh Valley Health Network, which received a grant to install a solar photovoltaic system.

The Manufacturers Resource Center is also working with companies that want to apply for state and federal grants for alternative energy, Pfunder said.

PPL spokesman Ryan Hill said the company welcomes the competition and will be doing shopping of its own.

Last month, the company hosted an event in Hershey where representatives from 22 energy providers met with 160 of the largest area companies.

”We’ve been encouraging our customers to take a look at what’s out there,” Hill said.

Copyright © 2009, The Morning Call

By Christopher Baxter and OF THE MORNING CALL Arlene Martínez

Technorati Tags: electric rates, electricity deregulation

Retail electricity providers often offer lower rates, survey finds

Retail electric providers in Texas’ deregulated market are offering residential rates that in many instances are lower than those of some municipal power companies, electric cooperatives and investor-owned utilities that are still under rate regulation, a Star-Telegram survey shows.

A decade after the Texas Legislature passed a law authorizing deregulation, retail electric providers compete intensely to win new customers. They have sharply lowered rates in response to a plunge in prices for natural gas, which is burned to generate much of the electricity produced in Texas.

Deregulation critics have frequently noted in the past that residential electric rates in the deregulated market were considerably higher than those charged by municipal power companies, called “munis,” rural and suburban electric cooperatives and investor-owned utilities, or IOUs, in areas such as the Texas Panhandle and East Texas that are outside the deregulated market. But that price gap appears to be narrowing, the Star-Telegram analysis shows.

Many consumers in Dallas-Fort Worth and other deregulated markets have been entering into fixed-rate plans of one year or longer to lock in lower rates before natural gas prices bounce back, as energy analysts have forecast will occur once the economy rebounds and gas supplies tighten.

Other consumers have chosen low-rate variable plans in which the rates are directly tied to the current low natural gas prices. They include former state Sen. David Sibley of Waco, who has represented the Association of Electric Companies of Texas in Austin and was a prime sponsor of the state electric deregulation law passed in 1999.

Sibley declined to name his retail provider but said he’s enjoying a rate of less than 10 cents per kilowatt-hour. He said it appears that “a lot of people are switching” companies to get better deals while gas prices are low.

Lower-priced deregulated plans

Texas’ principal Internet shopping mall for deregulated rates, the www.powertochoose.org Web site operated by the Texas Public Utility Commission, lists many plans with much cheaper rates than were available a year ago.

On Friday, the 110 plans listed offered an average rate of 10.64 cents per kilowatt-hour. The average rate for the 50 cheapest plans was 9.62 cents. Five plans were under 9 cents, with Southwest Power & Light the lowest at 8.6 cents. Twenty-eight ran from 9 to 9.9 cents, and 35 ranged from 10.0 to 10.9 cents..

Many of those deregulated rates are lower than rates offered by some munis, co-ops and IOUs operating outside the deregulated market overseen by the Electric Reliability Council of Texas.

The Star-Telegram survey showed average rates of 9.58 cents for five regulated IOUs; 10.43 cents for six munis; and 10.88 cents for six co-ops. The survey was for September rates.

Three traditionally regulated IOUs offered exceptionally low rates. Beaumont-based Entergy Texas, which serves far Southeast Texas counties, had a rate of 8.07 cents. The East Texas unit of Southwestern Electric Power Co. had a rate of 8.48 cents and Southwestern Public Service Co., a unit of Xcel Energy, charged 8.56 cents to Panhandle customers.

Bryan had the lowest muni rate at 8.82 cents. San Antonio was second at 9 cents, and Denton was third at 9.25.

HILCO Electric Cooperative, based in Itasca in Hill County, had the lowest rate among six co-ops surveyed, 10.62 cents,. Cleburne-based United Cooperative Services was second at 10.7 cents.

The regulated power providers have historically entered into long-term power purchase contracts. Their rates typically have fluctuated less than those of the deregulated retail providers. But some regulated providers expect to see their rates change markedly — either up or down — soon.

Weatherford’s roller coaster

Weatherford had the second-highest electric rate, 12.7 cents, among six munis surveyed (Granbury was highest, at 12.87 cents). But Weatherford Utilities Director Joe Farley said the city’s rate should drop by 2 cents in November, to 10.7 cents, with the expiration of some provisions in its power-purchasing contract.

In July 2008, with natural gas prices skyrocketing above $13 per 1,000 cubic feet, Weatherford residents were stunned to see their electric rates soar to 19.9 cents, virtually double what they had paid less than a year earlier. That rate shock contributed to an election defeat for two City Council members.

Pending rate adjustments swing both ways, however.

While Entergy Texas charged residential customers 8.07 cents per kilowatt-hour in September billings, that rate is likely to jump to about 11 cents by year’s end, said David Caplan, the utility’s spokesman. A fuel refund and another credit that lowered customers’ bill will expire, and the utility will add a $5 monthly charge for recovery costs related to hurricane damage.

While deregulated retail providers are offering many rates comparable to or lower than some regulated rates, a strong case can be made for the benefits provided by munis and co-ops.

“We basically just want to give our members the best possible service we can,” said Marty Haught, vice president of communications for United Cooperative Services, the Cleburne-based co-op serving about 52,000 members in parts of 14 North Texas counties.

“When it comes to co-ops, the model is to provide the best possible service at the lowest possible cost, because we don’t have to meet the revenue requirements for shareholders as a for-profit utility does,” Haught said. “Our members are our shareholders.”

The not-for-profit co-op, which has about $200 million in annual revenue, recently distributed dividends of more than $3.4 million to 191,000 current and former member-owners.

Austin residents enjoy a modest electric rate of 9.94 cents levied by city-owned Austin Energy and take pride in the fact that it has been a leading advocate for clean, renewable wind and solar energy. In addition, the utility transferred $95 million into the city’s general fund this year, spokesman Carlos Cordova said.

Texas’ rates still high

While electric rates in Texas have tumbled along with natural gas prices, the latest U.S. Energy Information Administration data show that the state, as of June, still had a higher average residential rate than 35 other states. Louisiana and Oklahoma had average residential rates that respectively were about 39 percent and 35 percent lower than neighboring Texas.

Tim Morstad, associate state director for AARP Texas, said the state’s deregulated wholesale power market, overseen by ERCOT, is structured in a way that allows “power generators . . . to be paid much more than it costs them to generate electricity.”

While many residential rate plans in the deregulated market are now priced at less than 10 cents per kilowatt-hour, Morstad said many consumers are doubtless paying considerably more. Many who never have switched from their longtime “legacy” electric utility might be paying 14 cents or more, he said.

“Some people have just cut the same check to the same company for so many decades they’ll keep doing that,” Morstad said.

Achieving lower rates for Texas electricity consumers should be “a shared responsibility,” he said. “I think the consumers have the responsibility to see what prices are out there.  . . . I think the legacy providers have the responsibility to not rip people off.”

But Sibley, the former state senator, said deregulation forces retail providers to offer competitive rates and respond rapidly to consumer preferences, rather than being routinely assured of a profitable return as the old legacy utilities were before deregulation.

Today’s retail providers have “got to be nimble, they’ve got to be quick, and several have gone out of business because they weren’t,” he said.

 

JACK Z. SMITH, 817-390-7724 jzsmith@star-telegram.com

 

Technorati Tags: electricity deregualtion