Some time something looking very scaring but they are trying to help to you. Same thing happened with me a huge man trying to jump over my gate with special steps designed for jumping railing. Ultimately the man was not there to kill us or rob to us. He was doing his occupation for a reputed energy provider and installing electric meter. In fact he had been jumping over every railing and installing these meters all around our localities. I’m not pronouncing there was not pre intimation; it is sure who care to read those kinds of intimation. Anyways, now that we have this new machine on our house I thought it would be significant to figure out what the heck it does and why Texas energy providers felt the need to install these meter in everyone’s homes.

At present every industry and family in Texas is required to have an electric meter on their possessions to maintain accurate Texas energy rates, the reason for this is pretty observable, it’s to make sure there is an accurate and consistent way to measure the energy rate going into your home and or business each and every month. This is helpful for both of us the customers as well as Texas energy provider because it allows for a more accurate bill each month and all the meter is designed in a efficient manner. But because we live in a planet where innovative technology

is always being developed, a more interactive and smart energy meter has been created to not only help the consumer but to help the energy provider too.

Something I’d like to point out before I continue is the companies that distribute electricity are called public Utility Broker. Another name for them is PUB. This energy provider is responsible for quite a lot. PUB installs and maintains the meters, poles and transmission lines. They also are the ones who actually provide the power to the retail organization where you get your power from. An example of this type of company is the best Texas Energy Providers United States. Further many informative information please visit: http://publicutilitybrokers.com

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Deregulation of electricity in Texas resulted in much discussion and debate in the government and in media. The sad thing about this is that it is the consumers, the end-users of electricity who do not have much knowledge about the topic. They think meddling with the idea is taking too much of their time, time they would rather spend working or going out with friends. This should not be for the consumers are the one being benefited with deregulation and they will not maximize its advantages if they do not know what it is in the first place.

Before deregulation was introduced, the electric market was monopolized only by a handful of electric companies. If the source of energy is monopolized, the consumers have no control as to the state of their energy source, whether it is being overly priced or not. Monopoly is never a good thing especially if it is a common and very basic need like electricity.

After some time, the government put its hands down over the top energy suppliers saying enough is enough. No longer should electricity be monopolized by capitalists searching to feed off the unknowing consumers. Deregulation was passed resulting to the emergence of private energy companies in the market. The more competition there is, the more competitive the electric rates became.

Nowadays, almost 75% of Texas is implementing the electric deregulation law. People now have the power to choose their Texas electricity suppliers. There are a lot of websites you can go to in order to have a full list of electric companies in your area.

Deregulation of Texas electricity brought with it a lot of advantages for the consumers. For one, it increased consumer protection because monopoly was abolished. It also created jobs for businesses such as retail electric providers. The downside of the law is that Texas electricity rates are reported to have increased rather than decrease over time. This is arguable but there are skeptics who believe and even promote this idea.

There is one known truth about deregulation, though, and that is the promise of growth and innovation for the Texas electricity industry. All stakeholders will continue to go at each other regarding the subject all towards refined advantages in the future. No matter what the state of Texas electricity is now, there is surely a bright future ahead of it.

Come see what were all about and visit us at http://www.chooseenergy.com

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* The Public Utility Commission of Texas and it’s role in protecting your electricity rights, in addition to specific responsibilities and regulations therein.

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

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

* Power generators and their role in producing electricity and placing it on the grid.

* The Electricity Reliability Council of Texas and it’s role in the management of Texas electricity.

Each section will detail the important players, their responsibilities in the Texas electricity market and how each affects the energy bottom line for Texas businesses and consumers.

The Public Utility Commission of Texas (PUCT)

What is the PUCT?

The Public Utility Commission of Texas (PUCT) is a local state agency responsible for the regulation of electric and telecommunications services. Its primary mission is to ensure consumer protections are in place, foster healthy competition and promote high quality and safe energy and telecommunication infrastructures.

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

Here is a list of the consumer services that the PUCT does have authority to regulate:

* Long distance
* Wireless telecommunications service
* Gas
* Water
* Cable TV rates and content
* Rates established by municipal electric utilities
* Rates established by electric cooperatives
* Internet
* ISDN

What Role does the PUCT Play in Texas Electricity Service?

The PUCT is vitally important in the deregulated electricity market in Texas. Though it’s swiftly becoming more common knowledge that Texas is a mostly deregulated state for electricity, the mere fact that Texans do have the power to choose their electric provider is often lost in the fray of misinformation.

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

What the PUCT does not do is endorse particular electricity providers over another, which helps to foster competition and protect consumer rights that would not survive otherwise.

The PUCT and ERCOT

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to 22 million Texas customers, managing a grid that carries more than 85 percent of the state’s electric load. ERCOT monitors and maintains nearly 40,000 miles of transmission line across 75 percent of Texas, amounting to a large portion of the state’s deregulated electricity areas.

The PUCT specifically provides oversight of ERCOT, ensuring that all market rules are thoroughly reviewed at the behest of public interests. ERCOT actually monitors system reliability as well, so when you think of the vast majority of the deregulated market in Texas, think ERCOT and it’s friendly PUCT neighbor.

The PUCT and Texas Electric Choice

The PUCT operates the Texas Electric Choice Web site that is devoted to providing information for consumers looking to switch electricity providers. The site details the benefits of switching, what Texas electric choice means to the consumer, PUCT regulated terms of service and consumer protections, general information about electricity deregulation in Texas and more.

The PUCT and Texas Electric Choice, or powertochoose.org, specifically provides electricity consumers with:

* Details about electric choice including the basics of the retail electric market in Texas, electricity generation, the transmission and delivery of electricity and how that is maintained, and the general safety and reliability of electricity service in Texas markets.
* General information about the PUCT and a link to their site.
* The process of switching electricity providers.
* Introduction to energy conservation, efficiency and general money saving tips.
* Questions to ask potential electricity providers.
* Understanding the choices consumers have when comparing providers.
* Offer information from Texas Retail Electric Providers (REPs)

Sources

“PUCT”: http://www.puc.state.tx.us/ocp/complaints/regulate.cfm

“ERCOT”: http://www.ercot.com/about/

“Power to Choose”: http://powertochoose.org/index.asp

The Role of the REP in Texas

There is a lot of confusion surrounding exactly how the electricity market works in the deregulated areas of Texas. Despite the fact that areas of the Texas electricity market have been deregulated for almost a decade, some people don’t really understand who the different players are in the Texas marketplace and the extent of their roles and responsibilities. However, the most forward facing and well-known players in the Texas electricity market are without a doubt the Retail Electricity Providers (REPs).

What is an REP?

REPs are common and well-recognized companies that provide you with the billing and customer service aspects of your electricity service. Reliant, TXU, Bounce Energy and Gexa are a few example of Texas electricity providers, or REPs. The biggest reason that these are the most known entities in the Texas energy market is the simple fact that the REP sends you a bill every month, in addition to handling turn on and turn off of service. First on their list of priorities and responsibilities is the customer relationship.

A Texas REP competes for your business by offering a a variety of rate plans, incentives and specials for new customers, renewable energy options and more.

What Exactly does an REP provide?

The life cycle of REP to customer goes something like this:

Customers call up an REP like Bounce Energy or Reliant, and place an order for electricity service. The REP on the other end is then responsible for logging that order with the local TDSP (Transmission/Distribution Service Provider) and ensuring that electricity service will be turned on and ready at the specified date on the order. Once the service is turned on, it is the responsibility of the REP to monitor and bill a customer for their electricity usage and collect the outstanding debt. By the same token, when something goes wrong with a customer’s electricity service or there are any outstanding questions, it’s the REP’s role to field those calls and work with the customer to find the most satisfactory resolution possible.

So, to sum up, an REP is responsible for all of the customer-facing responsibilities in the Texas electricity market, from making sure the lights get turned on (and stay on) to billing the customer and providing customer service.

What Makes a Texas REP Unique?

So now that we understand at a basic level what a Retail Electricity Provider does, we should next take a look at what separates one REP from another as far as the customer is concerned. What separates each company is an illustration of one of the reasons the Texas electricity market was deregulated to begin with: Service.

The creation of competition in Texas forces companies to work harder to bring value to their customers in order to retain and attract new business. The most obvious value to a customer is lower prices, and at the end of the day, it’s obviously the most important. Competition in the market place forces companies to try and be as efficient as possible to keep their electric rates as close as possible to the market basement.

At the same time, there are other things that a good REP can offer to their customers. Excellent customer service and having a knowledgeable staff that can answer questions is a highly valued asset to an REP. One of the most common customer complaints among customers is waiting too long on hold or getting the run around from customer service and billing departments. Differentiating or weeding through the good versus the bad when choosing an electricity provider is an advantage that Texans in deregulated areas have.

REP’s in competitive areas usually offer versatile energy plans, such as low variable or fixed rates, or the chance for customers to order Green energy plans in order to entice new customers to sign up for service. Certain providers also offer incentives to their customers, like rebates, bill credits, airline miles and more.

The competition that is created by the deregulation of the Texas electricity market forces the different REPs to work as hard and as efficiently as possible to try and stay competitive with other companies in their marketplace. And since the REPs are responsible for the customer relationship in the Texas marketplace, that competition forces the REPs to offer the best rates, service, and overall value to the customers to make sure they keep their customer base as well as attract new. And at the end of the day, this benefits the customer, because not only do they have a number of options to find the best company for themselves, but the checks and balances created by the presence of competition helps keep the REPs honest.

The Role of the TDSP In Texas

TDSP stands for Transmission/Distribution Service Provider. That probably doesn’t mean all that much to the average Texan, although I’d wager it’s only the term that is unfamiliar, and not actually the companies themselves. But first, let’s take a quick look at what a TDSP is exactly, and what their role is in energy service after Texas became deregulated.

History of the TDSP in Texas Electricity

When the state of Texas deregulated, it forced the incumbent companies (like Reliant, TXU, etc) to break up into different pieces. Before the electric companies provided full scale electricity service, which included maintenance of the electricity infrastructure and getting electricity from the plants to the customers, from start to finish (with a few exceptions). When the state of Texas deregulated, that practice made way for individual Retail Electricity Providers (REPs). At this point, it became a conflict of interest for the already existing former Incumbents to retain ownership of their own Transmission and Distribution systems, as it would create an obvious competitive advantage for the bigger and already established companies.

At the same time, it was also illogical and unreasonable to expect smaller and newly created REP’s to have to build and create their own infrastructure for delivering electricity to their customers. One, it would create excessive redundancy that would be expensive and serve no purpose, and two, the amount of money it would take to construct an infrastructure from scratch would act as immediate barriers of entry for new companies, defeating the entire purpose of deregulation in the first place.

The Difference between a TDSP and the REP

The TDSP, as already mentioned, maintain the infrastructure for electricity transmission or distribution. The names you probably recognize include Centerpoint (split from Reliant), Oncor (Splint from TXU) Texas New Mexico Power Company, AEP North, and AEP Central. These are the TDSPs who own the power lines and come out to repair them when they go down. They’re also responsible for transmitting the electricity over those lines from the power generators and into a customer’s home. The electricity they own they sell to the REPs wholesale, and they also charge the REP’s monthly charges for the upkeep of the infrastructure.

So that is a quick overview of how the TDSPs work in the state of Texas. To use a metaphor that helps make the understanding easier, the TDSPs are like the guys who ship in all the popcorn, hot dogs, sodas and pretzels to the ballparks, which customers then walk up to counters and purchase at the concession stands. They essentially “stock the shelves” for the customers.

Power Generators in Texas Electricity

Being the leading crude-oil producing state in the U.S., Texas plays a vital role in the country’s overall energy capacity. Texas not only provides a quarter of the nation’s refining capacity with nearly 5 million barrels of oil processed per day, but also accounts for a quarter of total natural gas production as the nation’s leading producer.

So it goes without saying that power generation companies are not few and far between in the Lone Star State.

What is a Texas Power Generator?

Power generators or power generation companies use natural gas, coal, wind, nuclear, biomass and hydro to produce the power that Texas businesses, residents and commercial facilities count on. Power generation companies own and operate the power plants responsible for producing energy sold on the wholesale market to Retail Electric Providers in Texas, who of course turn around and package it for the consumer.

Texas power generation companies are responsible for a vast portion of the country’s energy capacity, with Texas specifically the leader in wind energy development throughout the entire U.S.

Major Texas Power Generators

There are of course numerous power generators in Texas and several subsidiaries that are responsible for generating the power placed on the grid and transmitted to homes and businesses across the state.

Here are the major players in Texas power generation:

“Luminant”: http://www.luminant.com/about/default.aspx

Luminant is a subsidiary of Energy Future Holdings (EFH), formerly TXU Corp., and generates more than 16,100 megawatts (MW) of energy in Texas, including 2,300 MW of nuclear and 5,800 MW of capacity generated from coal. Luminant also happens to be the largest purchaser of clean electricity generated from wind in Texas and fifth largest in the United States.

“NRG Energy, Inc.”: http://www.nrgenergy.com/index.htm

Founded in 1989, NRG currently has a capacity of more than 24,000 MW across the globe, including nearly 11,000 MW in Texas. NRG also has full or part ownership in 44 power generation plants.

“Suez Energy”: http://www.suezenergyna.com/ourcompanies/energygen.shtml

Suez Energy Generation is located in the heart of energy land in Houston, Texas. Suez owns and operates 72 power, cogeneration, steam, and chilled-water facilities, with a total power capacity of more than 7,750 MW. Suez power generation facilities use various fuels to produce electricity, including renewable resources.

“Shell”: http://www.shell.com

Providing the world’s first commercial gas liquification plant in 1964, Shell is one of the largest energy producers in the world, active in everything from gas-to-liquids, wind and solar energy to coal gasification technology. In addition to providing gasoline for automobiles across the country, Shell is also heavily involved in building and operating natural gas pipelines, and developing wind and solar technology.

Power generation companies are essentially the first line of a long conveyor belt that serves the Texas electricity market from generation to home and business. As the means to improve infrastructure and add additional power plants becomes available, Texas is generally at the front of the pack when it comes to producing energy in new, more ecological, efficient and abundant ways.

The Role of ERCOT in Texas

ERCOT is otherwise known as The Electricity Reliability Council of Texas. ERCOT may not affect you directly, but through its actions helps insure you safe reliable electricity for your home.

What is ERCOT?

The Electricity Council of Texas (ERCOT) is a nonprofit corporation entity under NERC/FERC, which manages the flow of electricity and power to over 22 million Texas electricity consumers. ERCOT schedules power to an electric grid that covers over 38,000 miles of Texas Electricity Transmission, equivalent to 85% of the state’s electric load. ERCOT manages 75% of the deregulated electricity market in the state. ERCOT also oversees financial settlements for the wholesale bulk-power market in Texas as well as customer switching for more than 6.5 million Texans in deregulated areas.

What Role does ERCOT play in Texas Electricity Market?

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

One of ERCOT’s major roles in the Texas Electricity Market is to ensure that consumers have reliable electric service. ERCOT performs this role by constantly monitoring and analyzing all power grid components every 2-4 seconds for status updates. ERCOT also directs the flow of electricity in conjunction with your local Transmission and Distribution Service Provider (TDSP) so you can have safe and reliable energy.

ERCOT also plays a huge role in the deregulated Texas Electricity Market. Now that people in Texas have the power to choose their own Retail Electric Provider (REP), ERCOT’s role is to help facilitate retail registration of energy and also help the switching process fpr Texas electricity companies and their customers.

Market Process and Participants

Although ERCOT is managed and regulated by the PUCT, it is not the key reason why ERCOT is able to fulfill its roles in the Texas Electricity Market. There are four major entities that help ERCOT perform its three processes in Texas: Qualified Scheduling Entities (QSE), Resource Entities (REs), Load Serving Entities (LSE), and the Transmission and Distribution Service Providers (TDSPs).

Market Operations:

Qualified Scheduling Entities (QSE) is the key part of the market operations of ERCOTs process. QSE submits daily schedules for their bilateral transactions with total generations and demand. QSEs also place bids for ancillary service and settle financial payments with ERCOT.

Power Operations:

Resource Entities are facilities that are represented by a QSE that has been approved and capable of providing energy. Resource Entities either own or manage a generation resource or has the option to act as a Load Acting as a Resource (LaaR) that correlates with ERCOT instructions to lower electricity usage or provide ancillary service.

The Transmission and Distribution Service Providers (TDSPs) transmit and delivers the electricity to a customer’s home or business along the poles and wires. This company is responsible for maintenance and repair of these poles wires.

Commercial Operations:

Load Serving Entities (LSE) provides electrical service to retail and wholesale customers. LSE includes competitive retailers that sell electricity in Texas in a competitive market.

The Texas Electricity Market in 2009

Deregulation provides not only unique benefits to the Texas electricity consumer, but also unique structural and logistical needs in order to ensure that electricity service across the state remains safe and reliable. Moving forward into 2009, the continued growth of deregulation in the Texas electricity market only serves to increase competition and foster more opportunity for affordable and reliable electric service.

Each of the players in the Texas electricity market detailed above are essential cogs in the wheel that ensure energy is generated in an efficient and cost-effective manner, that the wholesale and retail markets are maintained with consumer protection and good business practice in mind, and that ultimately the electricity reaches its final destination in a safe and ongoing, reliable manner.

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The primary reason for Texas’ higher rates “is deregulation,” insists Tom “Smitty” Smith, Texas director of Public Citizen, an environmental and consumer watchdog organization. “The ultimate problem is that the market is designed to maximize profits for the power companies, and it’s costing consumers more money,” he said.

John Johnson III of Arlington, a small-business owner who has analyzed Texas’ deregulated system, contends the Lone Star State’s rates are higher because of rules governing the wholesale power market overseen by the Electric Reliability Council of Texas, the operator of the power grid for a huge area that encompasses most of Texas’ population and electricity demand.

Johnson hews to a view he expressed in a 2008 op-ed article published in the Star-Telegram. He complained that the ERCOT wholesale market “pays all electricity generators the marginal — or highest — price for electricity regardless of how much it costs to generate. Three-cent [per kilowatt hour] electricity from coal and nuclear power plants gets sold for natural gas prices — 9 cents.”

As a result, “electricity generators are big winners,” but “consumers are the big losers,” he wrote.

Deregulation supporters, however, say the wholesale market is competitive and note that retail electric providers now offer an array of attractively priced variable-rate and fixed-rate plans.

On Friday, there were 14 plans offered at 8 to 8.9 cents per kilowatt-hour, 30 plans at 9 to 9.9 cents and 37 at 10 to 10.9 cents on www.powertochoose.org, overseen by the Texas Public Utility Commission. There were 51 more plans priced at 11 to 14.2 cents.

Rates have plunged sharply since mid-2008 as a result of a steep decline in prices for natural gas, which is burned to generate much of the electricity produced in Texas and heavily influences power prices during peak consumption periods.

Texas rates higher

Nevertheless, U.S. Energy Information Administration figures for August, the most recent month for which nationwide data are available, show that Texas’ average residential electric rate was 12.43 cents per kilowatt-hour, far higher than the averages for neighboring states.

Texas’ 12.43-cent rate ranked 34th among the states (ranked lowest to highest, with West Virginia the lowest, at 7.92 cents, and Hawaii the highest, at 25.13 cents). Texas’ average was higher than the national residential average of 12.05 cents in August. The state had lower-than-average rates before initiating deregulation in 2002.

Texas’ overall average electric rate in August — a figure that includes residential, commercial and industrial rates — was 10.19 cents per kwh, placing it an unimpressive 33rd, but slightly below the U.S. average overall rate of 10.40 cents. Texas’ overall rate was far higher than its neighbors as well.

Deregulation providing choice

John Fainter, CEO of the Association of Electric Companies of Texas, said deregulation is giving consumers the right to choose their retail electric provider and tailored rate plans that meet their particular wants and needs. An industry survey shows that, as of June 30, more than 2.5 million electricity customers, or 46 percent of the more than 5.5 million customers with access to Texas’ deregulated market, had switched away from their historical “legacy” electricity provider.

About 35 percent more, or nearly 2 million, had chosen a specific rate plan with their legacy provider. That means more than 80 percent have exercised a choice as a result of deregulation, Fainter said.

Star-Telegram conversations with numerous electricity consumers this year indicate, however, that many persons in deregulated markets are still paying considerably higher rates than necessary. Some routinely pay electric bills without even knowing their rates. Some consumers, especially senior citizens, lack basic computer skills necessary to examine rate offers on powertochoose.com. Others switched to fixed-rate plans with terms of two to three years in summer or early fall 2008, when rates were higher, and are now reluctant to switch to a lower-cost plan because they could face cancellation fees of $200 to $350.

Some consumers acknowledge not making any effort to shop for better rates, either because they find it too much trouble or simply abhor dealing with change.

“There are still some people using black rotary dial telephones,” Fainter said.

Heavy power investments

Deregulation supporters also note that fast-growing Texas has pumped huge sums of money into added generation and transmission capacity, far more than its smaller, slower-growing neighbors.

Texas’ population mushroomed by 16.7 percent, to 24.3 million, from Apri1 1, 2000, to July 1, 2008 — more than double the national growth rate. New Mexico gained 9.1 percent; Arkansas, 6.8 percent; and Oklahoma, 5.6 percent. Hurricane-battered Louisiana lost 1.3 percent.

Since 1999, more than 41,000 megawatts of generation capacity, costing $36.5 billion, and more than 6,000 miles of transmission lines, costing $5.8 billion, have been added in Texas, the electric companies group said. In addition, about $8 billion more is forecast to be spent on transmission lines during the next four years, with $5 billion devoted to building big, high-voltage lines carrying wind power from West Texas to Dallas-Fort Worth and other population centers.

Texas’ heavy investment in new power facilities is “definitely” a factor in raising its electricity rates, said Tyler Hodge, an economist who analyzes power markets for the Energy Information Administration.

Natural gas a factor

Texas has higher rates in part because of its heavy reliance on natural gas as a power-generation fuel, especially during peak consumption periods such as hot summer days when wholesale electricity rates tend to rise.

Gas-fired generation generally poses significantly higher fuel costs than coal or nuclear power. Federal data for January through October of this year show that Texas generated 44.3 percent of its power using natural gas, almost double the national average of 23.2 percent and considerably higher than neighboring Louisiana (34.6 percent), Arkansas (23.0) and New Mexico (22.6), but less than Oklahoma (48.8).

New Mexico had the highest percentage of electricity generated from coal (72.7). Other coal percentages were Oklahoma (44.4), Arkansas (42.3), Texas (37.4) and Louisiana (33.2).

Louisiana and Arkansas had by far the biggest nuclear generation percentages (27.9 and 27.0, respectively), while Texas was at 11.9 percent.

Grid isolation issue

Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University in Dallas, said Texas’ extensive use of gas-fired power plants contributes to the state having higher electric rates. But “the other main factor is that we’re not hooked into the national [electric power] grid,” other than some “minor interconnects,” he said.

“Because of that we have to maintain a lot more excess capacity to meet peak demand” in the summer, Weinstein said. “Most of the time we have a lot of capacity sitting idle.”

If Texas were linked with the national grid, “theoretically, we could be selling power to other parts of the country” during low demand periods, he said, while “in the summer we could be buying power and we wouldn’t need as much excess capacity. In the winter, our utilities could be making money by selling power to the grid.”

Andrew Tevington, deputy director of the Public Utility Division of the Oklahoma Corporation Commission, expressed similar sentiments.

“The big problem you’ve got [in Texas] is that it’s so isolated from the rest of the country,” he said. If ERCOT were fully linked to the national grid, Texas “could shop elsewhere for lower electric rates.”

Tevington also cited Texas’ deregulated market as a contributor to higher rates. “If you look around the country, to where states have gone to unregulated electricity markets, they are paying higher prices.  . . . I think that’s because the so-called free market has not become efficient in controlling prices for that commodity,” he said.

Deregulated markets require consumers to become more sophisticated about assessing retail electric rates, but many “don’t keep up with it,” Tevington said.

Fainter said however, that the electric companies group would be “very opposed” to hooking Texas up to the national grid, not only because of the considerable expense of building interconnections with other states, but also because it would put ERCOT under the jurisdiction of the Federal Energy Regulatory Commission.

“We feel the benefits of not having to deal with FERC are tremendous,” he said, including a relatively streamlined state regulatory process for launching capital projects such as building new power plants or transmission lines.

Neighbors’ rates low

Texas’ electric rates compare especially unfavorably with its neighbors, in part because they generally have lower rates than most of the nation.

Louisiana has the fifth-lowest overall rate and second-lowest residential rate among the 50 states, while Oklahoma has the 13th-lowest overall rate and sixth-lowest residential rate. Arkansas is 15th in overall rate and 16th in residential, while New Mexico is 22nd overall and 26th in residential.

Texas’ deregulation critics often zero in on the spot wholesale market overseen by ERCOT. Because electricity cannot be economically stored, ERCOT — as well as grid operators elsewhere in the country — must continually balance supply and demand through the so-called “balancing energy market.” Power generators submit bids at 15-minute intervals, saying how much electricity they are willing to sell and at what price.

ERCOT begins by taking the lowest bids and goes to higher bids until there is enough power purchased to meet demand. All the generators whose bids are accepted are paid the so-called market clearing price, the price of the last, highest bid accepted to meet demand.

Tim Morstad, associate state director of the Texas AARP, said the system allows power generators “to sell their power on the wholesale market for much more than it costs them to generate it.”

Wholesale prices fall

In 2008, when natural gas prices skyrocketed and Texas’ transmission system experienced major congestion problems that caused price spikes for wholesale electricity, the average ERCOT wholesale price was $65.64 per megawatt-hour. That was well above the average of $53.21 in the Southwest Power Pool, a regional transmission organization that serves seven states plus portions of Texas outside ERCOT, or $48.04 for the Midwest Independent Transmission System Operator, which oversees high-voltage transmission lines in the Midwest, according to Dan Jones of Potomac Economics. Jones is the Texas Public Utility Commission’s designated independent market monitor of ERCOT.

While ERCOT wholesale rates were high in much of 2008, they began declining along with natural gas prices in the fall of that year and have continued at lower levels. In October, the average ERCOT wholesale price was $28.74 per megawatt hour, compared with $29.91 in the Southwest Power Pool and $27.81 in the Midwest system, Jones said.

Jones said Potomac Economics has concluded that Texas has a competitive wholesale power market. He defended the market clearing price function of the ERCOT system, saying that it results in a more-efficient dispatch of electric power. Further improvements in ERCOT operation of the power grid next year should make the system more efficient, he said.

‘The cheapest way’

Smith, of Public Citizen, said Texas should “re-regulate the electric utility industry.” But he added that “the cheapest way to provide for our growing needs for electricity is through energy efficiency.

“On average, you could save 20 to 30 percent of the energy consumed in the home or office at a fraction of the cost of buying electricity in the market,” he said.

Johnson, the Arlington man who has persistently criticized Texas’ deregulated market, forecasts that electricity consumers can expect another painful jolt to their wallets in the future because of how the balancing energy market awards the highest “market clearing price” to all the successful bidders.

“When the price of natural gas goes up again, and we all know it will,” the market clearing price mechanism “will once again become a massive weapon which the large generating companies will use in another billion-dollar heist,” Johnson warned.

JACK Z. SMITH, 817-390-7724

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Because of this, electric companies have been reined in such that deregulation laws in Texas have been put in place as of 2002. Now, most citizens in Texas can choose the providers they want for their electricity. That gives more competition, which puts customers in control once again. Deregulation means better customer service, a chance to use renewable energy sources instead of the “same old, same old” nonrenewable, bad for the environment sources, and better pricing as well.

It wasn’t always that way; before deregulation took hold in Texas, a single utility would provide service to an entire area, including sales, transmission, and distribution. That meant consumers had no other options but to take what they got. Deregulation has changed that, such that now, one company can handle the transmission and distribution of electricity within a given area, but other companies take over billing and sales. For consumers, this gives choice, such that they can choose the providers they want to work with. The Public Utility Commission oversees the entire process, to forestall any problems that may arise.

Approximately three fourths of today’s Texas citizens can choose their own utility providers, which means that they also control what they pay, to some extent. They can choose where they get their power from and what level of service they want as well. Businesses and private consumers alike benefit from this, because when businesses receive this kind of value, their customers also benefit.

That’s because when businesses can choose their own electric service providers, they get better service and lower utility costs, which lowers their own costs. In turn, they usually pass this cost savings onto their own customers.

At present, some 25% of Texas’ electric consumers still do not have the ability to receive the benefits of competition. That includes those in large cities like Austin and San Antonio, and those that use electric cooperatives.

Nonetheless, positive changes continue to be made in Texas when it comes to electric utility providers. Renewable resources continue to be explored and implemented, with wind farms, as one example, springing up all over the state as a means to provide clean, completely renewable energy that can be converted into electricity.

If you are a citizen of Texas and you live somewhere where deregulation is enforced, make sure you use it and utilize its benefits. Choose your provider by shopping around for the company that’s best going to suit you and your family’s needs. Many websites, like ChooseEnergy.com, also provide tools whereby you can choose a company by comparing between companies with real-time pricing data. This allows you to shop around just by going online and comparing different companies with ease.

Once you’ve done your homework and have chosen an electric provider that meets your needs the best, and at the best possible prices, you simply place your order with the company; you should expect to receive information from them on your rights as a customer, and the terms of service agreement from your new provider as well. You don’t have to contact your old provider to discontinue service, either. Your new provider will handle that, and you’ll simply get a notice of service change in the mail. Actual change of service will happen at your next meter reading.

It should be noted that your new company will not be assuming responsibility for sending you your final bills from the old company, so make sure you address those and get them taken care of. Other than that, though, the change is completely seamless and automatic. You simply choose your new provider, and the wheels are set in motion so that you can enjoy the benefits of going with an electric provider you’ve chosen.

Technorati Tags: electricity deregulation, Texas

Roy Anderson thinks he has a way to make deregulation so sweet for consumers that everybody in the country will want an electricity market just like the one in Texas.

Anderson, who grew up in Zambia and spent much of his professional career in Canada, runs a company called Tremcor Energy Inc. that’s known as an aggregator. He brings together pools of electricity customers and negotiates cheaper rates for them with retail electric providers.

This week, Tremcor is offering a two-year fixed rate of 11.9 cents, equal to some two-year offers from electric companies and lower than many.

“My original goal was to aggregate so successfully here that it would deregulate the rest of the United States,” Anderson said.

In the energy industry, nothing is ever that easy.

Aggregators struggle to explain their business strategy to customers and to win their trust.

Once an aggregator has collected enough customers, he must persuade retail electric providers to negotiate with him.

If Anderson’s past is any indication, he may be up for the task.

Anderson was born to a family of white landowners in Zambia who fled to South Africa when he was a boy. He traveled the world as a young man, eventually making his way to Canada.

There, he made his fortune aggregating natural gas customers. Anderson started Dominion Energy Resources and signed up 300,000 homeowners.

He later moved to Florida and married. He and his wife lived in a $3 million home with eight kids and operated a pet food business called Happy Paws.

Gone to Texas

When Anderson heard that Texas was deregulating its electricity industry, he itched to try aggregation all over. So, he sold his $3 million home, moved his family into a $1 million home and took his seed money to Texas.

“I started in South Texas because I wanted to be off the radar to get going,” he said.

In 2003, Anderson hired a manager and some salespeople, and eventually collected about 10,000 customers.

Already, he’s had more success than just about anybody else who has tried to aggregate retail electric customers in Texas.

The Public Utility Commission’s list of official aggregators has hundreds of names. Most of them are electricity brokers who negotiate deals for corporations. Hardly any of them even use their aggregator license.

“More often than not, we sign the customers, business clients up without aggregating them,” said Jim O’Reilly, owners of Credo Energy, which advertises itself on the Web as an aggregator.

He said businesses could get a better price by aggregating into a large pool, but commercial clients prefer individual, customized agreements.

O’Reilly doesn’t work with residential customers.

Some nonprofit groups have tried to aggregate residential customers without success.

Cities Aggregation Power Project, started by lawyers with the Lloyd Gosselink firm, negotiates lower prices for cities.

“We’ve been able to save cities millions of dollars over what they otherwise would have paid,” said Thomas Brocato, a lawyer with the firm.

But when Brocato tried to apply the model to residential customers, he gave up. The group paid for an ad campaign and signed up 1,000 residents in five cities in the Texas Hill Country. But it couldn’t negotiate a good deal.

“When we shopped bids from retail electric providers, we just didn’t get meaningful responses,” Brocato said.

“Some made comments that this wasn’t enough to make it worth their while, no different than signing up a very large apartment complex. We also had reason to think that perhaps they weren’t as thrilled about seeing us succeed.”

CAPP and other groups have urged the Legislature to automatically put residents in the power pool with their cities. This would allow regular people to enjoy the low rates that city governments negotiate.

This type of aggregation is called opt-out. People would automatically be part of the program unless they choose to leave it.

An opt-out aggregation program in Ohio has cut rates as much as 12 percent.

The program is “a way to give opportunities for residential customers and small commercial customers who didn’t otherwise have any leverage in the market,” said Leigh Herington, executive director of the Northeast Ohio Public Energy Council, the largest public aggregator in the country.

He said utilities didn’t exactly welcome the program when the Ohio Legislature included aggregation in the laws that deregulated the industry.

“Ohio is so successful that I think there are probably utilities in other states that see that as a difficult program for them,” he said.

In Texas, similar aggregation bills have failed.

Electricity providers lobby against it. They argue that deregulation is supposed to give people a choice, not make a choice for them.

Not on the list

PUC members, staunch defenders of deregulation, encourage people to compare prices and choose a provider at the commission’s Web site, www.powertochoose.org. But the PUC won’t list Tremcor’s aggregated offerings on the site.

PUC spokesman Terry Hadley said aggregators aren’t technically offering the products themselves. The commission cannot be sure that aggregators can guarantee the price.

So Anderson is attacking the North Texas market the hard way. He is hiring 300 salespeople to go door to door wearing Tremcor uniforms. They will explain the company’s business model and try to persuade people to sign up for something they’ve probably never heard of.

Once the Dallas sales staff is in place, Anderson will move on to Houston.

Anderson said there are benefits for customers beyond better pricing. Sometimes he can negotiate a longer-term deal than people can find on their own. When the contract is up, Anderson negotiates a new one, so customers never have to worry about switching.

If the electric provider doesn’t treat customers well, Anderson intervenes.

Sometimes he persuades providers to waive deposits for customers who would normally have to pay them.

Last year, some of Tremcor’s customers were with one of the electric providers that went bust. He moved the Tremcor customers to a new provider right away, while most customers found themselves dumped on other electric companies with high rates.

Anderson has solved one problem that the nonprofits faced. The nonprofits tried to gather customers before negotiating a deal. That meant customers had to sign up without knowing how much the power would cost.

Tremcor negotiates with electric companies before gathering customers. Company officials are constantly negotiating deals, then scrambling to find customers to fill the pools.

Anderson said he has no trouble finding electricity providers to offer him deals, but he just can’t persuade the older companies to negotiate with him.

“The newer companies are hungry,” he said.

Right now, Anderson’s problem is persuading residents to break their contracts to go with Tremcor. Even though in many cases he can save customers enough money to more than offset the termination fee, people are reluctant to do it, he said.

Anderson makes a commission on every kilowatt-hour his customers use.

He expects that once he gets 50,000 more customers, he will finally make a profit.

AGGREGATOR Q&A

WHAT IS AN AGGREGATOR?

An aggregator is a company or nonprofit group that negotiates electricity deals with retail electric providers on behalf of customers.

HOW DOES AGGREGATION WORK?

The aggregator collects a group of customers.

The aggregator then goes to retail electric providers, such as TXU Energy, Reliant, Gexa or StarTex, and asks to negotiate a reduced rate for the group of customers.

The customers normally agree to stick with the group for a certain period.

If something goes wrong with the electricity provider, the aggregator can intercede on customers’ behalf or move the group to a new provider.

HOW DO AGGREGATORS MAKE MONEY?

Tremcor, a for-profit aggregator, gets a commission for every kilowatt-hour of electricity its customers use.

By ELIZABETH SOUDER / The Dallas Morning News
esouder@dallasnews.com

Technorati Tags: electricity deregulation, Texas

Daily Texan Staff

Paul Wentzell/The Daily Texan

Texas leads the country in its use of wind energy; future growth of the state’s population will require further development of wind energy.

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

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