But newer companies have been expanding their operations in New Jersey in recent weeks, attempting to gain a foothold in the relatively untapped residential supply market.

“I guess it’s an opportunity that they see because of the economy,” said Karen Alexander, president of the New Jersey Utilities Association, which represents investor-owned utilities such as Atlantic City Electric and South Jersey Gas.

Some of the companies are promoting savings of between 5 percent to 20 percent over a year’s worth of electricity bills. Gateway Energy Services, based in Montebello, N.Y., has been mailing letters to New Jersey residents this month saying that its current electricity rates “are at least 15 percent below utility pricing.”

Karen Harris, corporate communications editor for Gateway, said the company’s push into New Jersey is favorable because consumers seem to be more open to finding other ways to save money.

Before April, the company was only certified to supply natural gas in the state. After gaining approval to supply electricity from the New Jersey Board of Public Utilities, Gateway added 15,000 residential electric accounts, said Steve Varney, the company’s director of marketing.

So what has been its strategy in converting ratepayers?

“We like to use the model of: Remember when you couldn’t shop around for a phone carrier? But now you can,” Harris said. “Once we use that as a basic model of deregulation, they think, ‘Now I get it.’ Education is a top priority for us.”

Gateway operates in eight states and Washington, D.C. Its largest presence is in New York, where it has the equivalent of 350,000 residential customers, Varney said.

The number of New Jersey residents who use a third-party supplier has grown over the past two years. As of May, 6,594 residential customers in the territory of the four major electric utilities, Atlantic City Electric among them, belonged to an alternate supplier. That’s only 0.2 percent of the 3.35 million ratepayers within those utilities’ coverage area.

But it’s a huge leap from early 2009, when there were just 12 residential customers who belonged to another supplier, according to the BPU.

People who choose another supplier will still get their power delivered to their homes by their local utility, which will continue to be responsible for maintaining the power lines or restoring electricity when there are blackouts. The main difference is how a ratepayer’s bill might look: It would still show his or her local utility’s charge to deliver the electricity as well as the alternate supplier’s charge for supplying the electricity.

While Gateway does not charge a fee to join, it does require its customers to sign contracts, either a nine-, 12- or 24-month fixed-rate plan or a variable-rate plan.

A 12-month fixed-rate plan currently offers a rate of 11.38 cents per kilowatt-hour, which is below the 12.46 cents per kilowatt-hour of Atlantic City Electric’s average annual price. For consumers who use 10,000 kilowatt-hours over a year, Gateway says they could save $108.

Gateway cannot guarantee savings with a fixed-rate contract since Atlantic City Electric’s rate can change because it is based on fluctuating market prices.

“There are other times we unfortunately will be the same or above in the rate,” Harris said. “But we offer more than the utility can because you can lock in your price and it is not going to change.”

Breaking a contract with Gateway would cost $12.50 per month for every month or partial month that is outstanding.

Another licensed residential energy supplier in New Jersey, Viridian Energy, says it offers no contracts for customers. The Connecticut-based company allows people to sign up or cancel at any time. It began service in New Jersey in May, and uses a rate that may vary from month to month. Its current rate is 11 cents per kilowatt-hour.

Viridian is trying to distinguish itself as a “green” energy provider by offering power – 20 percent or more – that it says comes from renewable energy sources. The company also signs up customers through a network of independent associates who belong to Viridian’s direct selling program. The company does not actually charge consumers to sign up for its service.

“We’re not asking for a Social Security number. There’s no credit check,” said Alison Bradford, an independent associate from Estell Manor.

There are at least seven companies that are licensed as residential electricity suppliers in Atlantic City Electric’s service territory. Companies wanting to operate in New Jersey must provide audited financial information, proof that they have experience in the industry and membership with PJM, the operator of the regional power grid. Licenses must be renewed annually, BPU spokesman Doyal Siddell said in an e-mail.

In addition, the BPU verifies any claims about how much renewable energy a company might supply and also reviews the number of customer complaints with each company before a supplier’s license is renewed, Siddell said.

Greg Leap, a Linwood insurance broker, joined Viridian last month after doing some research on the company. He’s still waiting to see how much he can save with his July bill, but is so confident in the company that he became an independent associate as well.

“Everyone would like to go green, but very few people will pay more to do it,” he said. “But this way, it’s the best of both worlds.”

Contact Erik Ortiz:

609-272-7253

EOrtiz@pressofac.com

Technorati Tags: electricity deregulation

Among the four leading candidates is an incumbent who has voted in alignment with environmental groups and a tea-party favorite who blames “environmental extremists” for the crux of the nation’s energy woes.

There’s also a veteran Republican politician who opposes capping and putting a price on greenhouse-gas emissions — a central tenet of President Obama’s energy policy. And a businessman who not only rejects that Earth is inexorably growing warmer but suspects that scientists deliberately cooked the data to push an agenda.

With Congress poised to take a final vote soon on financial regulation, climate and energy legislation remains one of the last major pieces of unfinished business before the November elections.

Sen. Patty Murray, a Democrat seeking her fourth term, shares Obama’s belief that Americans burn too much fossil fuels such as coal, oil and natural gas. She has sought both to reduce demand through conservation and to increase alternative-energy sources.

Murray has voted to require automakers to significantly boost fuel mileage in passenger cars. She supports giving tax credits to promote clean-energy technologies and personally has sought millions of dollars in earmarks for companies working to develop wind, tidal power and biofuels.

Murray’s track record in recent years has put her in full agreement with positions held by such groups as Environment America and the League of Conservation Voters, according to Project Vote Smart, a nonprofit that analyzes voting records.

The House last year passed the first bill ever to curb heat-trapping greenhouse gases. The measure included a “cap-and-trade” system that would set a limit on overall emissions of carbon dioxide and other greenhouse gases; polluters seeking to exceed their limit would have to buy emissions credits from companies that have surplus credits to sell.

Rep. Dave Reichert was one of only eight Republicans to vote for the plan, earning the enmity of many conservatives who regard cap and trade as a new tax.

The Senate is at an impasse over the energy bill, in part because most Republicans and some Democrats oppose cap-and-trade.

In an interview, Murray would not say whether she considers a price on carbon emissions an essential tool to combat climate change. She noted she is undecided about increasing the tax on gasoline as a way to help wean Americans off fossil fuels, saying consumers already pay a high price for energy.

“I will consider anything that has the goal of reducing our dependence on oil,” Murray said.

Dino Rossi, a two-time gubernatorial candidate and Murray’s chief Republican challenger, emphatically opposes cap-and-trade as a “job-killing national energy tax.”

Rossi said he’s not necessarily against setting a hard limit on carbon pollution but said the challenge is to do it without imposing additional costs to families.

“We need to strive for clean air and clean water,” Rossi said. “But I can’t say what that (pollution) limit should be.”

Rossi’s campaign said he believes Earth is warming but isn’t sure how much humans are to blame. That’s the same position he took during his 2008 campaign for governor when he said we should reduce carbon emissions rather than debate the cause of climate change. He said then that he favored incentives over government regulations, and he backed expanding highways to ease traffic congestion, which he argued would cut emissions.

In an interview last week, Rossi said all forms of alternative energy, including nuclear power, should be pursued. He also said the solutions to the nation’s energy challenge lie in the marketplace, not with the government.

When gas prices soared during the summer of 2008, Rossi noted, consumers quickly cut back on driving or switched to smaller vehicles.

Republican Clint Didier, a Pasco farmer endorsed by former vice-presidential candidate Sarah Palin, says the solution to our dependence on foreign oil is simple: Drill for it at home.

Didier believes enough oil and gas lie untapped beneath American soil and waters to meet domestic needs, if only environmentalists and regulators didn’t stand in the way.

“We need more drilling, and build more refineries,” Didier said. “We need to be able to use our resources.”

Americans used more than 7 billion barrels of oil in 2008, 60 percent of it imported, according to the U.S. Energy Information Administration.

The Interior Department’s best guess is that between 67 billion and 115 billion barrels of recoverable oil is buried within 200 miles of shorelines, with an additional 21 billion barrels beneath federal lands. At that rate, the undiscovered oil could fuel the country for two decades at the most.

Asked if he believed the United States truly could drill its way into energy self-sufficiency, Didier said, “Yes, I do. Yes, I do.”

Didier is skeptical of warnings — including most recently from the National Research Council, the nation’s leading scientific body — that global warming is real and caused mainly by burning fossil fuels. Didier referred to the recent “Climategate” controversy involving allegations that British and American scientists manipulated their research.

Five separate investigations have reaffirmed that the fundamental science behind climate change is sound. Nonetheless, Didier said, “I do not trust the basic data.”

Republican Paul Akers, a Bellingham business owner, goes even further.

Climate researchers “are not scientists. They are people with a political agenda,” Akers said, calling global warming “part of the natural cycle” of Earth heating and cooling.

Akers contends private businesses always will out-innovate bureaucrats. He points to Toyota’s Prius hybrid car as an example of free enterprise solving the energy challenge.

Akers said he believes that technological advances soon will make wind, solar and other forms of green energy a reality — and argues against government involvement, even if only to provide tax incentives.

“I think the free market is going to do a fabulous job,” Akers said.

By Kyung M. Song

Seattle Times

Technorati Tags: electricity deregulation

The Obama administration just announced a handout of $2 billion to build solar panels.  The development of this type of energy is politically sexy. Jobs are created to build and maintain the panels, which scream eco-friendly every time they appear on camera.

No one is criticizing the initiative, but it overlooks a power source boasting far greater reliability and intensity than both solar and wind power.  Arguably, it produces NO carbon footprint. You could even say it creates a negative carbon footprint.

The source is recycled energy.  Instead of burning a fuel to create energy, it takes energy that we are otherwise throwing away and converting that into something usable. It captures heat that otherwise disappears into thin air and turns the heat into power.

You see, with the exception of solar panels, all electricity is generated by turning a turbine in a circle.  Windmills and Hydroelectric plants do that with the force of nature.  Coal burning and nuclear power plants do that by boiling water and forcing the steam through the turbine.

At the ArcelorMittal steel plant, in East Chicago, Indiana, a company called Primary Energy mounted giant boilers on top of the big ovens used for the production of steel.  The steam created by those boilers spins the turbine enough to save ArcelorMittal $100 Million per year on its electricity bill.

Thomas Casten, the Chairman of Recycled Energy Development says, “What they’ve done at this plant produces about twice the amount of clean energy as all of the solar collectors in the US since the dawn of the industry.”

Since the power is generated using heat that would be created anyway, you can make the argument for zero carbon footprint.  In fact, since ArcelorMittal uses the power it generates, it borrows less from the grid.  Less coal needs to be burned at the power plant creating an argument for a negative carbon footprint while still voraciously gobbling up megawatts.

No one is against the concept of recycled energy. In fact, using Illinois for an example: the language in the state’s renewable energy portfolio standard seems to prompt it, calling for the exploitation of wind, solar, biodiesel and “other alternative sources of environmentally friendly energy.” But big steel mills with towering smoke stacks don’t say I love nature in a photograph as well as a field of wind turbines.  The politicians and policy makers never jumped on recycled energy.  Mark Pruitt with the Illinois Power Agency says, “There have been a lot of advances in wind and solar. I think the recycled energy approach is something that has been passed over.”

So when you drive past a big steel mill, glass plant or silicon factory, think of how much energy is just being tossed up into the sky.  Across the nation, Casten estimates it at $4-6 hundred billion. “We are the Saudi Arabia of Waste heat.” He says, “You can either use it or lose it.”

Technorati Tags: electricity deregulation, green energy, solar panels

“We customers do not have the choice to go to a cheaper supplier of electricity — we are captives!!” Doris Schenk of Spearfish wrote in a letter.

Despite public outrage over the rate increase, no one is calling seriously for deregulation in South Dakota. But the complaints are a sign that consumers feel frustrated by a lack of choice.

“Aren’t there laws against monopolies?” Jim Roling of Piedmont asked. And Lois Ward of Rapid City wrote: “Where is the protection for the captive consumer? We cannot choose to buy electricity from a different supplier unless we move into a different geographical area.”

Those who have experienced a deregulated electric power market, though, warn that such a choice is not necessarily a good thing for the consumer.

“I would say that, given the experiment with deregulation in Montana, that anybody who suggests that deregulation is a better alternative than any decision the Public Service Commission would make, would be a monumental mistake,” said Greg Jergeson, chairman of the Montana commission.

Jergeson was a Montana state legislator in 1997 when lawmakers voted to deregulate electric utilities at the request of the monopoly Montana Power, which had plans to sell its assets and get into the telecommunication business.

He said Montana at the time had among the lowest power rates in the country, and he voted against deregulation.

“None of it ever made sense to me,” he said. “People came and said, oh, ‘You go to the market and rates will go down.’ The math just simply did not compute.”

A survey eight years after deregulation by Lee Enterprises’ capitol bureau in Helena, Mont., found that residential electric rates for the 300,000 customers now served by NorthWestern Energy in Montana were paying 50 percent more than before deregulation and that the rates were the highest among a dozen utilities and co-ops in six states.

Rates rose when the company’s predecessor, Montana Power Co., sold off its power plants. NorthWestern buys power on the open market, a company official told the bureau at the time. 

Under regulation, it is common for companies such as Black Hills Power to be “vertically integrated,” handling many diverse aspects of generating and distributing power including mining coal, burning it for power, transmitting and selling that power to consumers and handling customer-service calls.

Under deregulation, those services may be provided by different companies. In a common form of competition under deregulation, retail wheeling, a new supplier in the market can sell power to a customer using an established supplier’s transmission system, eliminating the need for multiple sets of power lines. 

But retail wheeling and other forms of competition don’t make power service more efficient, especially in states such as South Dakota, experts say, because even with some shared infrastructure, building a power system is expensive and because the state is so sparsely populated.

“The duplication of facilities in a very capital-intensive business doesn’t necessarily lead to better choices or lower costs,” said Kyle White, vice president of corporate affairs for Black Hills Corp. “Regulation is a proxy for competition.”

Like water, sewer, roads and natural gas, power is a “natural monopoly,” said Jim Burg of Wessington Springs, a former Public Utilities commissioner who served from 1986 to 2004.

Everybody has to have it, and a power system is very expensive to build and takes a lot of overhead to run.

“If electricity isn’t a natural monopoly I don’t know what is,” Burg said.

Under the state’s regulated system, utilities must deliver power to even the smallest and most rural customers in their territories, even though there isn’t any profit there. Those customers could get left out or charged huge rates if faced with a free market.

“A free market is really about choice, consumers having choices,” state Public Utilities Commission chairman Dusty Johnson said. “There might be parts of Rapid City that might be able to get two providers to sell them power, but would that be true for Belle Fourche?”

Services such as cell phones or the Internet work with competition because the infrastructure is cheaper, technology changes quickly and different companies can offer customers a variety of services or packages to choose from.

“The problem with electricity is, you’re still delivering plain old electricity, and you can’t store it,” said Greg Rislov, advisor to the commission. “You can’t tell one electron from another.”

Customers don’t care where that electron came from, and there’s nothing trendy about power. People just want it as cheaply as possible.

Rislov said power is cheapest when companies can pay for the costs of power plants and other infrastructure over many years, by owning their own generation facilities and committing to serving a market for the long term.

If consumers have a choice and competitors enter the market, “You’ve introduced a number of companies who don’t know how many customers they’re going to have month to month and year to year,” he said. They don’t invest for the long term — for example, building cheaper plants that burn natural gas, which is more expensive for consumers. Or, they’ll buy power from other providers, who build more profit into the transaction.

The cost of the Wygen III power plant that is part of Black Hills Power’s rate-increase request would be depreciated over 50 years under the proposed settlement.

“If you’ve got to recover your money in five years instead of 50 years, you’re going to have a different business plan,” Rislov said.

There was some call in the 1990s for South Dakota to follow a national trend of deregulation, Burg said. 

White said: “There’s always an interest in what’s new and trendy. The challenge is making sure it makes sense for the constituents that you serve.”

White lobbied then against the change. He recalled the argument, “Because we’re on the low end, all we can do is have our prices rise to meet the aggregate market.”

The push to deregulate in other states came from large industrial businesses that buy big volumes of power.

“In some states it probably worked OK for industrials, but by and large, the residentials have seen higher prices as a result of this restructuring,” White said.

Consumers were also eager for rate relief, Burg said. In some markets, such as Montana, utilities themselves pushed for the opportunity to restructure their businesses.

Burg said one lawmaker introduced a deregulation bill in South Dakota back when there was discussion about it. “It didn’t really go any place,” he said.

In South Dakota, which became regulated on a statewide basis in 1975, commissioners and lawmakers largely resisted the trend.

“We kept our eye on the ball,” Rislov said. “We didn’t give in to a lot of agendas that had some short-term beauties to them. We wanted our utilities to provide service in the long term at the least cost to the residential ratepayer.”

That strategy seems to be paying off with rates that are relatively low compared to the rest of the country, which is remarkable considering the higher cost per customer for transmitting power long distances, because more line is needed to serve each customer in a rural area than in an urban area.

“Frankly, I’m tickled to death our rates are as low as they are,” Rislov said. Only four states had rates lower than South Dakota’s average of $0.0715 per kilowatt hour as of February, according to the United States Energy Information Administration: Iowa, Missouri, North Dakota and Nebraska. All regulate investor-owned utilities, the private electric companies owned by shareholders.

South Dakota’s current rates would increase if Black Hills Power’s settlement is approved, but what the Rapid City utility proposes would still be less than the current national average.

Under the proposed

settlement, all-electric residential customers would pay $0.0825 per kilowatt hour, up from the current $0.0681. Regular residential customers would pay $0.1020, up from $0.0841.

“There is not a single deregulated state in the United States of America that has cheaper energy than South Dakota,” Johnson said. Today, “You don’t see states moving toward deregulation in electricity. The proof is in the pudding.”

In fact, states that tried it are reversing course.

For example, a 2007 effort in Illinois to secure market-based rates for consumers failed, in part because power sellers were too closely connected to power buyers.

“This is a system that is rigged to lead to higher bills for consumers,” said Jim Chilsen, spokesman for the Citizens Utility Board, a Chicago-based consumer advocacy group that tracks regulation and looks for ways to help power customers save money.

“What happened instead was that electric bills went through the roof. They doubled and tripled in some cases.”

Citizens protested, and state lawmakers put in place a new power pricing system and a new state agency to regulate it.

“Our experience has been, unfortunately, that deregulation or competition experiments in other states have led to higher rates,” Chilsen said.

He said healthy competition should lead to lower rates, but not all deregulated systems have established healthy competition, where customers can make informed choices about power purchases.

“The lesson is that there is a need for reasonable oversight of the electricity market,” Chilsen said.

Barbara Soderlin – Rapid City Journal staff

Technorati Tags: Black Hills Power, electricity deregulation

SAN ANTONIO, TX, June 17, 2010 /24-7PressRelease/ — Across the U.S., a growing number of states are deregulating their energy supply industry, offering more options and services for consumers. In response, state lawmakers are putting in place consumer protection regulations to ensure buyers review and approve contract terms and conditions often using third party verification services when they switch energy companies.
Many states, including California, Connecticut, Florida, Pennsylvania, Maryland, Texas, New York, Illinois, New Jersey, Massachusetts, Ohio, Delaware, Michigan, Virginia, Kentucky, Rhode Island, as well as the District of Columbia have implemented some level of deregulation. Some of these states now recommend or require third party verification as a best practice to mitigate fraud.
“The third party verification process has evolved into a multipurpose service to improve the customer experience and now can be utilized in almost any industry,” said John M. Reistrup, Senior Vice President of Marketing at BSG, which offers VoiceLog , a leader in the call recording services industry. “As a third party, we are able to validate that customers do indeed wish to switch service, and for merchants and regulators alike, they have a record of that agreement. We confirm the transaction is authorized, that the consumer agrees to make the switch, and that they fully understand the terms of the contract. This gives customers better peace of mind and control over the process.”
While some energy supply companies operate their own internal verification processes, to consumers and regulators, this can be perceived as a conflict of interest. That’s why many companies are opting to use third party verification services such as VoiceLog which are impartial to the results of the sale.
Clients using the recently enhanced VoiceLog platform can gain immediate access to recorded calls on the state of the art system, allowing them to process quality assurance for their vendors at any time. The records also drive sales by allowing clients to track progress toward nightly targets and bonus amounts.
“Our clients tell us that with VoiceLog services they get lightning quick response time on all issues, from password changes to script changes,” said Reistrup. “We are also known for providing extremely high accuracy levels across the board.”
With the broadening market, energy suppliers’ expanded sales tactics warrant more controls.
“What we’re finding is that in some states that have been deregulated, energy suppliers have saturated the industrial and commercial markets, and are now moving to small businesses and the residential markets through door-to-door and telemarketing sales, making the third party verification process even more important,” added Reistrup. “As a result of this expanded sales channel, companies want to ensure that consumers really have authorized the switch. With more states moving toward deregulation, we expect to see an even greater demand for verification services.”

Yet for some reason, the end of electricity rate caps in Pennsylvania was predicted to be the apocalypse for businesses. But Jan. 1, 2010, came and went, and doomsday never arrived.

In fact, Pennsylvania has a good story to tell when you look back at the first quarter of electric competition in the PPL Corp. service area and look ahead to the opening of the Allegheny/West Penn market locally in 2011.

No less than 27 power providers are competing to serve residents, businesses, schools, universities, hospitals and units of local government where PPL used to have sole purview — and such competition can mean lower rates for customers. As a result, in only three months, 363,000 residential users opted for a new company to deliver their electric needs.

PPL estimates that 55 percent of large industrial users have taken advantage of the competitive marketplace and switched to other suppliers, as well. As important, this doesn’t include the businesses that have weighed their options and exercised their choice to stay with PPL.

After only one quarter in an open electricity market, it’s already clear the entrepreneurial spirit of Pennsylvania is alive and well. Businesses, universities and local governments are making smart decisions that not only help their bottom line, but that also provide stability across several industry sectors during an uncertain time in our national economy.

That level of performance reveals how Pennsylvania is well on its way to having one of the most successful competitive markets in the nation.

States from Texas to New York have opened their electric markets to retail competition but none had shown such immediate and dramatic results. Pennsylvania’s numbers will continue to grow as more businesses and other customers explore an open and competitive market — and as new marketplaces open on Jan. 1 for customers in areas serviced by Allegheny Power, Metropolitan Edison, PECO and Penelec.

While it’s early to forecast savings for Pennsylvania’s electricity customers, we can look to the experience of states like Illinois that have had competitive electricity markets for more than a decade. Over that period it is estimated that retail customers saved in excess of $1 billion. Pennsylvania has made the right decision for the long term.

Competition also has bred the development of new products and services not typically found in closed, monopoly-regulated markets. Today’s market opens the door to new possibilities for businesses to embrace environmentally friendly and cost-effective alternative energy sources such as wind or solar energy.

For example, the Harrisburg Regional Chamber and Capital Region Economic Development Corp. did something many would have thought impossible a few short years ago; it purchased wind energy certificates to power its Business Expo.

New energy companies in the PPL market also are challenging each other on new technological fronts to provide savings for their customers. Businesses no longer have to wait for monthly electric bills to set energy budgets; they can monitor their energy usage on more frequent intervals. This gives businesses the opportunity to plan ahead as to how they use energy, depending on what it costs at any given time.

Energy companies vying for business in a competitive, open marketplace foster innovation and new technology. In time, as customers become more sophisticated in exploiting the power of competition, they will demand greater innovation and specialized services from electric suppliers, and new products and services will be developed that provide greater control over energy usage and how that energy is generated.

The development of competition helps families and businesses control energy costs and allow units of government to preserve ever-shrinking resources. Such possibilities would never have developed under the old regulatory system.

Pennsylvania policy makers have developed a well-structured environment for competition to flourish — which will bring many benefits to Pennsylvanians for years to come.

Technorati Tags: electricity deregulation Pennsylvnia

started in late 1999, Texas and 22 other states had their own electric utility deregulation. Since then, Texas has learned from a typical utility regulated by the State in an electrical system that 75% is converted deregulated, so the majority of the population, both the electric service provider and a service plan to choose their dresses of life.

While only a handful of states haveproblems encountered in implementing their versions of deregulation, Texas all have is to follow as a model. Why? Texas is the number one consumer of energy in the country. Texas produces and consumes more electricity than any other state. And despite the enormous amount of energy applied to the state every day, the Texas deregulated its electricity market success.

Ten years ago, Texas faced many of the same problems the rest of the country under the current regulatedSystem. The stagnant sector, were made some improvements in the infrastructure of electricity utilities to improve their efficiency in producing, transporting, measuring, and electricity. The construction of new power was often a slow bureaucratic process, as the utility companies had to negotiate with public regulators, both to build new generation plants and as a way to pass the cost on to consumers. Developments in green energy have been underfunded and barely went beyondin the experimental stage. The sector had little incentive to improve service or replace with new technologies because they had a monopoly, you were a profit, happy that their players guaranteed.

Across the country, however, required more and more people are becoming more electricity. Already the second largest population in America, Texas is still one of the fastest growing States in 2040 and is expected to more than 50 million. Houston, Dallas and San Antonio are beingthe 10 areas populated metropolis in the country. The Austin area alone should be five times the current population over the next 30 years ball.

Texas is the second largest economy of the United States (world 15), with an annual production of over one trillion dollars. Unfortunately, Texas also emits 10% of the total U.S. “greenhouse gas”.

The growing concern about climate change and the environment has prompted state and federal mandates for governments to passDevelopment of new green energy alternatives. ERCOT estimates that peak demand for electricity in Texas at an annual rate increased from 2.5% in 1990-2006 and is equally experienced high annual growth from 60,000 to 80,000 megawatts (MW) of new generating capacity by 2030.

State regulators and industry experts quickly realized that the regulated supply, the agility to meet the needs of the 21st Century, was missing.

Why didTexas happened?

There are four reasons why the market is deregulated utilities in Texas has failed. The first is that deregulation stimulated investment in new power generation to meet demand and add reliability. Where companies once had the power of the state for permission to petition the regulatory authorities to build now, if they see potential for profit bodies. In Texas, which led to an investment of over $ 25000000000 39 000 MW of new generation and to ensure that investors do notConsumer took the risk on the sale of all electricity. Most of these investments were to reduce emissions from power stations to gas. Today, more than half the electricity comes from the Texas natural gas. Texas produces 25% of the nation and is the largest producer of natural gas, storage and distribution of natural gas through a pipeline to all regions of the country.

The investment and construction of generation capacity is also needed something that Texas as a state growing rapidly:Reliability. For example, on a hot July day, the electricity demand in ERCOT region threatens to overwhelm both generators and wires. The result would be a blackout of large parts of the state. With the construction of additional generating more electricity can be generated for the establishment of the system is inadequate. In addition, several generators are brought online, it is necessary to load generators, maintenance or upgrades.

The reason is that the next restructuring has led the growth of moreefficient technologies for less environmentally friendly energy. Over the years, regulated utilities and the development of alternative energy innovation languished, rarely passed the stage of demonstration. But rising energy costs and environmental concerns have brought new generation of heat and power, CHP and green electricity. Nationwide, there is a huge demand for green energy, customers are now more aware of greenhouse gases andClimate change. New company to sell green electricity are more than a decade ago. This is not only because it is popular, but companies also see that green energy sources are cheaper to maintain than conventional long term. Two of the greatest innovations in green electricity in Texas will wind and solar.

Currently, Texas leads the nation in wind-generated energy, with over 9,000 MW of installed wind power. More than 2,000Wind turbines operating in the mountains of West Texas alone, and the number continues to increase with decreasing costs and improving wind turbine technology development. In 2007, the first state of Texas for the cornerstone of a giga-watt wind capacity was installed in a single year to achieve. A 736 MW, the Hollow Wind Energy Center of Central Texas Horse is the world’s largest wind turbine. Recently closed status of a plan for an increase of 17,000 MW of wind Take ThatRenewable federally mandated Portfolio Standard (RPS) years ahead of schedule.

Despite the defeat in 2009, a diet plan of $ 500 million to develop solar power alone in Texas, interest in the use of Texas is still lucid. A study by the University of Texas found the same state could generate 123,000 new jobs by moving aggressively into the direction of solar power panel manufacturing and installation. Several groups are already lobbying the governor for a plane target1000 MW of solar energy by 2015 and 5,000 MW by 2025. In March 2010, Texas State Energy Conservation Office awarded the City of San Antonio $, the University of Texas at San Antonio and St. Philip’s College, about 3.7 million of grants for investment in new capacity for distributed solar energy. This is three times the amount of central solar capacity of 600 kilowatts (KW). Finally, design improvements through two Texas companies, and ExeltechEntech Solar, both of Fort Worth, will install solar panels on roofs more easily consumers’.

The third reason managed deregulation, restructuring of the electricity grid is state of Texas. The operation of the Network of Texas has changed, to maximize their efficiency and increase reliability. Neither had settled from the drawing board for years. Indeed, a hold over time is that the grid of Texas largely separately from the rest of the country andface significant challenges, power supply networks in both Texas and the rest of the country. Despite this, Electric Transmission and Distribution Utilities (TDUs) transmission, the cost could be lowered, both in terms of power to reach the market and reducing waste of energy consumers.

In 2008, Public Utilities Commission of Texas (PUCT) energy savings targets of 20% of load growth in Texas Utilities 2009. This means that if the increaseMeasured demand of 10 MW, Texas Utilities to save to 2 MW through efficiency measures. To achieve these objectives, the TDUs manage incentive programs, while retail electric provider of energy services and efficiency of program implementation. The programs are open to all customers and aim to reduce system peak demand, energy consumption or energy costs.

TDUs incentives or rebates paid to the participants of the program for installing high efficiencyDevices that produce a measurable and verifiable demand savings (see http://www.texasefficiency.com). TDUs pay incentives directly to individuals. residential participants rather than efficiency must go through a third sponsor for energy measurements installed in their homes. Residential-participants can not act as sponsors and self-efficiency measures are paid for equipment installed or go directly to her third.

The programs havebeen very successful. Between 1999 and 2006, energy efficiency programs have reduced peak demand by 000 kW and 756 saved 2,005,000 kilowatt hours (kWh) per year. Texas Utilities reported the effectiveness of the program savings of 457 megawatts 808 hours (MWh) in 2007.

Wind energy is affordable only if you put on the market. In February 2009, the PUCT projects allocated for data transmission at five billion dollars) Crezia be built around, Texas ‘Competitive Renewable Energy Zone (. L’Crezia power-line projects is one of the largest projects to improve power transmission in the history of the state. The new lines will be in service within four or five years, finally, the transmission 18 456 MW of electricity generated by wind from the West Texas town to power-hungry state.

The ultimate reason for success is that deregulation and the dismantling of monopolies and introduce competition in the market. After all, is a reliable stream and growing throughoutManagement of supply and demand. So instead of a society, power, power transmission and accounting for power in a one-size-fits-all format integrates the current wholesale and retail competition. Generation is separated from the retail sector. Because traders and their customers can choose where to buy power, enterprises are forced to produce more energy efficient because they compete with other generating plants in other counties – andsome cases in other states. Retailers must now be more efficient and prudent in their purchase and sale of power.

It is no secret that the process of liberalization of electricity in Texas has been rocky. Part of the reason is volatile fuel prices caused by international political and economic turmoil over the years. However, markets do not guarantee work, at the lowest possible price. She likes, also fails to ensure the best possible price to a customer. Of course, ifSearch for the best price, be it food or fuel, consumer information is the best friend. In a liberalized market, consumers will save on electricity bills for Texas to keep competitors informed about their energy, their amount of energy, and their energy supplier. The quickest way to reduce the electricity bill could mean about , shopping for a better offer.

For example, people living in a community of Fort Worth recently had older eyesopen when the columnist Dave Lieber found the Fort Worth Star-Telegram that many were paying as much as 14 or 15 cents per kWh. Why? Perhaps because many had only the old utility monopoly known all my life. Were for the state makes the choice and pricing in use. This was an incident in which some information can only save a lot of money.

Remember, the place to start shopping is Powertochoose.org.

The last ten years have brought more reliabilityTexas’ growing energy needs. The old system could never have kept regulated. Because of deregulation, are creating more developments and innovations to make green energy more efficiently. There are now more reliable in terms of transmission efficiency of cutting both waste and energy costs in Texas. Finally competitive generators and retailers have encouraged them to reduce costs, provide better services at lower prices for consumers.

Technorati Tags: electricity deregulation

“The study by the American Public Power Association shows consumers suffered a double-whammy last year from the recession and deregulation,” said George, D-74 of Clearfield County. “Despite the economic downturn and lower wholesale costs for electricity, ratepayers faced higher prices while deregulated utilities showed consistent and even higher profits.

“The report is an indictment of the regional wholesale distributor of power, PJM Interconnections, and those who consider oversight of the utilities to be “silly.’” said George, whose House Bill 1909 would create a public power agency to purchase cheaper electricity on behalf of Pennsylvania’s citizens and businesses and spur development of new generation in the state.

APPA, the national service organization for more than 2,000 community- and state-owned, not-for-profit electric utilities serving 45 million customers, said the study “at a minimum demonstrates that the question of whether the [Regional Transmission Organizations] RTO-operated markets are providing benefits to consumers in terms of just and reasonable rates has not been answered.”

“A reasonable person would think the state Public Utility Commission would make answering this question a priority and prompt the Legislature to consider fixing the 14-year-old deregulation debacle,” Rep. George said. “Instead, we’re force-fed the ruse that consumers are saving money by shopping and paying more for electricity.”

According to the APPA report: 

 Earnings by companies, including Pennsylvania utilities, “indicate that their revenues from the sale of electricity greatly exceed their costs of producing electricity”;

  The continued profitability of these companies is a direct indicator of insufficient competition and higher costs for consumers;

 Most of the primary owners of unregulated generation in PJM reported returns on equity about even with 2008 and significantly above regulated returns;

 Three of the subsidiaries owning unregulated generation increased their profits between 2009 and 2008;

  Gross margins from the sale of electricity increased in 2009 for three of the four companies reporting this measure;

 Shareholder gains for the companies in the study greatly exceeded returns from investments in the S&P 500 by almost $40 billion over the last 10 years.

The report notes that PPL’s supply segment earnings from continuing operations increased from $303 million to $333 million. Net income from competitive energy services for First Energy – which includes Met-Ed and Penelec — increased from $472 to $517 million between 2008 and 2009.

“An often-made claim is that under deregulation, these profits are justified because it is the companies who bear the risks of excess costs, while consumers are freed from such risks,” the APPA report said. “But the persistence of these high earnings and stockholder prices raises the question of whether companies are in fact bearing such risk.”

In a news release, APPA President and CEO Mark Crisson said the study strongly suggests once again that wholesale electricity markets “are producing undue profits for merchant generators at the expense of electricity consumers.”

“If these RTO-run wholesale electricity markets were truly competitive, during a time when demand and energy prices are falling, generator profits shouldn’t be increasing,” Crisson said. “Yet publicly available data identified in this new analysis shows that most generators continue to enjoy increased profits above what one would expect in a competitive market.”

by Gant Team – GantDaily

The report, “2009 Financial Performance of Owners of Unregulated Generation:

High Profits Earned in Restructured Wholesale Electricity Markets During the Recession,” is available online.

Technorati Tags: American Public Power Association, electricity deregulation, Pennsylvania, Public Utility Commission

1. Towards electricity deregulation.

Analysis of the electricity industry begins with the recognition that there are three rather distinct components of it: generation, transmission and distribution. For many years, each sector was thought of as a natural monopoly for physical reasons (economies of scale for generation plants, losses with long-distance transmission, impossibility to duplicate transmission and distribution networks,…) and common practice was to vertically integrate the three components into state-owned or state-controlled private utilities, each region or country being effectively managing electricity as a public good. One important feature of this paradigm was supply overcapacity to ensure continuous service to end customers.

But technology improvements in the 70s and 80s shattered this model and offered the possibility of competition. Additionally, inefficiencies in the system, particularly significant regional rate disparities in the US, began to rouse the ire of consumers towards regulated monopolies and fueled the desire for change. Within the general deregulating movement in the early 90s and the widely spread faith in markets as the optimal socio-economic organizational pattern, it hence appeared natural to start thinking about commoditizing electricity, just as any other major standardized good. The rationale at that time was that any electricity consumer should be able to choose among a large set of energy providers, and competition between them would naturally increase the affordability and dependability of the service.

The key event took place in 1990 when the UK Government under Margaret Thatcher privatised the UK Electricity Supply Industry in England and Wales. The thus launched process was followed by similar measures and led to a fully deregulated market in 1998, making the UK an absolute pioneer in electricity deregulation.

This example was soon imitated throughout the world and triggered efforts whose main common traits were:
• privatization of state-owned firms
• vertical deintegration of utilities
• allowing new entry in the generation market and fully deregulate its prices.
• presence of an Independent System Operator (ISO) responsible for reliable grid operation

2. The trouble with deregulated electricity markets.

The schemes that have been put in place have worked quite well in some cases, such as the Pennsylvania-New-Jersey-Maryland (PJM) market, widely acknowledged to function properly by reliably providing cheap electricity to consumers, and often cited today by deregulation proponents.

But much less successful stories have also come up.

In the first place, the case of UK which paved the way to worldwide electricity deregulation is far from compelling and has an extensive record of questionable price savings, failure in developing competition, complaints over the practices of electricity companies and higher prices for low-income consumers .
Europe has also seen rising prices and the emergence of electricity giants rather than flourishing competition, and it still struggles with cross-border frictions and price inefficiencies. In 2006, the absence of centralized management of the European network even caused a local congestion in Germany to burst into a major blackout in Western Europe.

But the most striking example of the potential detrimental effects of deregulated electricity markets lies in the successive issues faced by the state of California between 2000 and 2001. California had hastily launched its deregulated electricity market on March 31st, 1998 due to growing anger towards a costly and unsatisfactory electricity market. Problems started arising in June 2000 with an average monthly wholesale price of $143 per megawatt-hour (more than twice as high as in any previous month since the market opened). This resulted in enormous pro?ts for generating companies and ?nancial crises for the regulated utilities that were required to buy power in the wholesale markets and sell at much lower regulated prices in the retail markets. The state’s largest utility, Paci?c Gas & Electric, declared bankruptcy in March 2001. The state of California took over wholesale electricity purchases and spent more than $1 billion per month buying power in the spring of 2001, with average prices more than ten times higher than they had been a year earlier. Some massive blackouts that hit the state were also directly attributed to deregulation as they occurred in winter, usually a time when energy consumption is low because nobody uses power-guzzling air conditioners.

Those experiences and numerous similar cases throughout the world have shed a light on inherent inefficiencies and costs of deregulated electricity markets:

(i) There are first and foremost significant economic contradictions
• The cost of setting up and operating an ISO is substantial (on the scale of an American state, several millions of dollars for setting up and between $100M and $200M every year to operate the ISO).
• Instead of improved competition, most countries that have implemented deregulation have witnessed a quick reintegration, which led to new non state-controlled electricity oligarchies that could easily extract surplus from consumers.
• Because of the non-storability of electricity, supply and demand are very inelastic and prices are very volatile.
• In addition to inelasticity, very low price-responsiveness of the demand-side gives suppliers natural market power. During peak-use hours, a supplier can indeed become pivotal, or essential, in meeting the demand, in which case he can ask for artificially high prices (which will raise the price for all the electricity sold at that point in space and time if the network operates in a single auction system as in the US Standard Market Design). Conversely a market share as low as 6% is sufficient for a seller to push prices higher by physically withholding its supply . This kind of artificial scarcity is known to be the cause of the above mentioned winter disruption in California.
• The physical specificities of electricity requires a complicated market design which invites gaming by traders and retailers, as observed with Enron highly profitable and ethically shaky strategies.
• The end of a state-controlled guaranteed rate of return for utilities combined with higher volatility of fuel prices has increased risk and hence the cost of capital, which causes insufficient generation and transmission investment and eventually congestion and higher prices
As a result, the net benefits of electricity deregulation, if any, are unevenly distributed and clearly shifted towards suppliers to the expense of users.

(ii) Electricity deregulation is also very complicated and policymakers often fail to address properly the technical and institutional challenges of introducing competitive wholesale and retail markets. This complexity also tends to empower technical knowledge and reinforce the authority of the centralized and autonomous power exchanges, independent system operators and regional transmission organizations, further excluding local decision-making and governance from a process which the very rationale of was giving a choice to consumers.

(iii) In case of congestion, the power plants used to meet excess demand are often coal fired and have detrimental effects on the environment. The environmental cost is indeed not factored in electricity market prices which encourages producers to use cheap and dirty energy sources.

3. Discussing the adequacy of electricity with market principles

Even by making the (very daring) assumption that deregulated electricity markets could in some cases lower prices in the long term, the unavoidable reduction of monopolistic overcapacity by the market and the higher risk of disruption associated with it is potentially so harmful that even fierce electricity liberals admit that it’s impossible to give the same breathing space to sellers as in another market.

To that respect, additional measures have been put in place in the years following full deregulation. For instance on July 31, 2002, the US Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking on standard market design (SMD) that would help states to set up efficient markets. Similarly the EU has worked on a third energy package that would tackle the remaining impediments to competition after the full opening of the market in July 2007. The most promising source of competition seems to rest upon the improvement of the transmission network but it requires investments so substantial that they could offset the expected benefits . Projects to render the demand-side more price responsive are also noteworthy but they imply an education of consumers and the purchase of intelligent electricity meters which at the moment are materially and financially difficult to put in place. Finally, incentive mechanisms for electricity providers or carriers to operate in a socially optimal way are often quite complex and can bear potential hidden gaming opportunities.

The fact of the matter is that despite the complex mechanisms surrounding them, the vast majority of deregulated electricity markets do not operate in a satisfactory way as of today. Some US states (in the first place California) have backed away from deregulation and now enjoy reliable service and low prices.
Therefore one might contemplate with awe the formidable amount of thinking produced to stick to deregulation no matter what empirical evidence shows, on finding new tricks to stitch money leaks in the system and the perilous contortions of an increasingly complex regulatory framework desperately trying to keep up with the last trouble caused by those decidedly mischievous markets… A July 2006 research paper of Severin Borenstein (“Customer Risk from Real-Time Retail Electricity Pricing : Bill Volatility and Hedgeability”) is to that regard absolutely enlightening. It advocates the use of “straightforward” financial instruments to hedge away the price risk for consumers, in effect “recreating the effects of cross-subsidy under conventional billing”. Apart from the obvious pleasure of US electricity consumers to have to read an academic research paper to be able to pay a fair price for their electricity bill, one might wonder what benefit a market structure brings in that case. More generally, if electricity markets require policy design to succeed, why wouldn’t it be appropriate to recognize policy as the key factor, rather than markets? What if free markets were simply not an adequate response to the challenge of providing electricity?

If a change in the former monopolistic framework is certainly needed, one should bear in mind that consumer choice of electricity suppliers is only one of the several options that societies have traditionally exercised with regard to electricity. More collective and deliberative decision-making processes could be worth exploring for the future of this key sector.

By Sylvia Beneyto and Julien Vantyghem, Mines Paristech

Technorati Tags: electricity deregulation, US Federal Energy Regulatory Commission