This document provides an update on preparations for summer in the Texas electric industry. It discusses how higher temperatures increase electricity consumption and bills. Retail electric providers have launched solutions to address common customer inquiries during the summer, such as providing energy efficiency tips and bill payment assistance options. Generators are prepared for increased demand during heat waves. Hurricane season also begins in June.
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Texas Electric Industry Update: Preparing for Summer
1. Update
on
the
Texas
Electric
Industry:
Preparing
for
Summer
Legisla)ve
Staff
Briefing
May
15,
2014
Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc.
1005 Congress, Suite 600 • Austin, TX 78701 • phone 512-474-6725 • fax 512-474-9670 • www.aect.net
2. 2
AECT
Principles
•
AECT
is
an
advocacy
group
composed
of
member
companies
commiHed
to:
-‐
Ensuring
a
modern,
reliable
infrastructure
for
the
supply
&
delivery
of
electricity.
-‐
Suppor)ng
efficient
compe))ve
markets
that
are
fair
to
customers
and
market
par)cipants.
-‐
Suppor)ng
consistent
and
predictable
oversight
and
regula)on
that
will
promote
investment
and
ensure
the
stability
of
Texas’
electric
industry.
-‐
Promo)ng
an
economically
strong
and
environmentally
healthy
future
for
Texas,
including
conserva)on
and
efficient
use
of
available
resources.
•
AECT
member
companies
remain
dedicated
to
providing
Texas
customers
with
reliable
service
and
are
commiHed
to
the
highest
standards
of
integrity.
The
Associa+on
of
Electric
Companies
of
Texas,
Inc.
(AECT)
is
a
trade
organiza+on
of
investor-‐owned
electric
companies
in
Texas.
Organized
in
1978,
AECT
provides
a
forum
for
member
company
representa+ves
to
exchange
informa+on
about
public
policy,
and
to
communicate
with
government
officials
and
the
public.
For
more
informa+on,
visit
www.aect.net.
3. 3
AECT
Companies
Within
ERCOT
Transmission
and
Distribu)on
U)li)es
Retail
Electric
Providers
Genera)on
Companies
Total ERCOT
Capacity:
>74,000 MW
4. 4
AECT
Companies
Outside
of
ERCOT
Western
Electricity
Coordina)ng
Council
(WECC)
Southwest
Power
Pool
(SPP)
Midcon)nent
Independent
System
Operator
(MISO)
5. 5
Preparing
for
Summer
Opportuni)es
for
Retail
Customers
Generators
Prepared
for
Heat
Hurricane
Season
Begins
in
June
6. 6
Texas
Summers
Are
Long
And
Hot
• When
temperatures
rise,
electricity
consump)on
and
customer
bill
amounts
tend
to
increase
• Even
if
thermostats
are
set
at
a
constant
temperature,
as
it
gets
hoHer
outside
the
A/C
must
work
harder
to
keep
up
and
therefore
uses
more
electricity
• Strong
PUC
customer
protec)on
rules
are
in
place
to
help
customers
during
the
hot
Texas
summer
• Con)nued
customer
educa)on,
empowerment,
and
choice
are
key
5/19
5/26
6/2
6/9
6/16
6/23
6/30
7/7
7/14
7/21
7/28
8/4
8/11
8/18
8/25
May
June
July
August
86
96-‐9
9
87
96-‐1
04
89
98-‐1
03
91
100-‐
105
92
102-‐
105
93
102-‐
112
95
104-‐
108
95
105-‐
110
96
104-‐
110
97
104-‐
111
97
107-‐
111
97
107-‐
110
97
105-‐
108
96
104-‐
108
95
104-‐
108
North
Texas
Historical
Weather
Data
Average
high
Record
high
7. 7
May 2014
Lower
Prices
Available
Today
than
Before
Compe))on
Began
Sources: PUC Historical Data, Bureau of Labor Statistics - Consumer Price Index (34% inflation since December 2001),
www.powertochoose.org offers as of May 1, 2014
December 2001
While
ERCOT
compeOOve
offers
have
dropped
significantly,
the
latest
average
U.S.
residenOal
electricity
prices
are
up
43%
since
2001.
Service Area
Average Fixed-
Price Offer
(12-month term)
Lowest Fixed-Price
Offer
(12-month term)
Lowest Price
Offer
Available
Dec. 2001 prices,
not adjusted for
inflation
Dec. 2001 prices,
adjusted for inflation
AEP Texas Central 11.8¢/kWh 9.6¢/kWh 8.4¢/kWh 9.6¢/kWh 12.8¢/kWh
AEP Texas North 11.6¢/kWh 9.4¢/kWh 7.9¢/kWh 10.0¢/kWh 13.3¢/kWh
CenterPoint
Energy
11.6¢/kWh 9.8¢/kWh 8.3¢/kWh 10.4¢/kWh 13.9¢/kWh
Oncor 10.7¢/kWh 9.1¢/kWh 7.3¢/kWh 9.7¢/kWh 12.9¢/kWh
TNMP 11.3¢/kWh 9.5¢/kWh 7.7¢/kWh 10.6¢/kWh 14.1¢/kWh
8. 8
Retail
Electric
Providers
(REPs)
Launched
Solu)ons
Designed
To
Address
Common
Customer
Inquiries
During
The
Summer
Retail
electric
providers
deliver
summer
soluOons
to
customers
that
are
tailored
to
their
needs,
building
on
the
PUC’s
strong
customer
protecOon
rules
Customer
Inquiry
Category
Sample
SoluOons
Offered
by
REPs
Electricity
Usage
• Energy
Efficiency
Tips
• Energy
Management
Alerts
(e.g.,
Budget/Usage
Reports)
• Online/Mobile
Account
Access
• Time
of
Use
Plans
Bill
Amount
and
Components
• Average
Price
per
kWh
Informa)on
• Transmission
Distribu)on
U)lity
Charges
Informa)on
Bill
Payment
Assistance
• System
Benefit
Fund
for
Low
Income
Customers
• Average
Monthly
Billing
• Deferrals
• Installment
Plans
• Texas
211
• Agency
Assistance
9. 9
Energy
Efficiency
Tips
• Raise
temperature
sebng
on
thermostat
• Use
ceiling
fans
in
the
“down”
mode
to
help
keep
cool
• Check
HVAC
air
filter
• Check
insula)on
• Change
light
bulbs
to
compact
fluorescents
• Caulk
and
weather-‐strip
all
doors
and
windows
• Make
sure
fireplace
damper
is
closed
when
not
in
use
• Keep
shades
and
curtains
closed
during
the
day
10. 10
Preparing
for
Summer
Opportuni)es
for
Retail
Customers
Generators
Prepared
for
Heat
Hurricane
Season
Begins
in
June
11. 11"
ERCOT
Reports
Sufficient
Power
Expected
For
Summer
2014
• ERCOT
released
its
Seasonal
Assessment
of
Resource
Adequacy
(SARA)
on
May
1.
• ERCOT
found
that
ERCOT
does
not
expect
periods
of
limited
capacity.
– However,
ERCOT
notes
in
the
SARA
that
“If
an
extreme
system
peak
occurs…
[condi)ons]
could
result
in
an
Energy
Emergency
Alert
(EEA),
with
corresponding
public
appeals
for
conserva)on.
Depending
on
the
severity
of
the
situa)on
and
the
amount
of
genera)on
available
during
periods
of
highest
demand,
ERCOT
could
take
other
progressive
steps
necessary
to
protect
overall
system.”
• According
to
ERCOT’s
meteorologist,
most
of
the
state
should
not
expect
temperatures
hoHer
than
last
summer.
– While
not
as
hot
as
last
summer,
temperatures
are
likely
to
be
above
the
long-‐
term
historical
average
in
Texas.
– July
is
expected
to
be
hoHest,
especially
affec)ng
Aus)n,
San
Antonio
and
the
Valley.
12. 12"
Longer-‐Term
Outlook
for
ERCOT
Shows
Genera)on
Investment
S)ll
Needed
Source:
ERCOT,
2015
Report
on
the
Capacity,
Demand
and
Reserves
in
the
ERCOT
Region,
May
2014
65000$
70000$
75000$
80000$
85000$
2015% 2016% 2017% 2018% 2019% 2020% 2021% 2022% 2023% 2024%
MW%
ERCOT%Summer%Resources%and%Firm%Load%Forecast:%2015C2024%
Resources%
Load%Forecast%
Reserve%
Margin%14.3%%
14.1%%
13.8%%
12.3%%
9.8%%
8.4%%
3.5%%
6.1%%
7.4%%
4.8%%
13. 13"
Opera)ng
Reserve
Demand
Curve
To
Enhance
Efficiency
in
Scarcity
Pricing
A
Cri)cal
Step
to
Any
Future
Market
Design
• The
objec)ve
of
an
ORDC
(opera)ng
reserve
demand
curve)
is
to
improve
the
efficiency
and
accuracy
of
energy
and
reserves
pricing
as
opera)ng
reserves
(that
are
immediately
available
to
ERCOT
to
manage
the
grid
in
real-‐)me)
are
depleted
and
the
risk
of
involuntary
load
curtailment
increases.
• ORDC
accomplishes
its
objec)ve
by
administra)vely
adjus)ng
prices
for
energy
and
reserves
to
approximate
the
real
cost
of
customers
losing
power.
14. 14"
Drought
Update
and
Available
Water
Resources
For
Power
Plants
• Most
electric
generators
require
the
use
of
water
for
system
cooling.
• The
vast
majority
of
this
water
is
returned
to
its
source
–
typically
a
reservoir
built
by
the
power
plant
owner.
• Drought
condi)ons
remain
in
much
of
Texas,
but
the
electricity
system
has
remained
reliable.
Source: United States Drought Monitor – April 29, 2014
15. 15"
Water
Usage
In
the
Average
Household
• To
put
water
use
for
electricity
into
perspec)ve,
only
about
3
percent
of
water
use
in
the
average
household
is
for
electric
produc)on.
Source: “Viability and Impacts of Implementing Various Power Plant Cooling Technologies in Texas,”
Electric Power Research Institute, 2012
16. 16"
Electric
Generators
Prepared
for
Summer
Heat
• Electric
generators
prepare
facili)es
for
opera)ons
during
the
summer
through
rou)ne
maintenance,
which
typically
occurs
during
March
and
April.
– Maintenance
includes
assessment
of
physical
components
of
the
power
plant
to
ensure
con)nued
opera)on
whenever
possible.
– Given
Texas’
hot
climate,
power
plants
are
designed
specifically
for
opera)on
during
the
summer.
• Summer
readiness
programs
are
focused
on
safety,
evalua)on
of
problem
areas,
tes)ng,
training
and
communica)ons.
– The
immediate
goal
is
reliable
opera)on
of
power
plants,
including
“peaker”
plants
used
during
)mes
of
peak
demand,
such
as
the
anernoon
of
a
hot
summer
day.
– Procedures
are
also
in
place
to
ensure
the
grid
operator
–
such
as
ERCOT
–
is
no)fied
of
offline
power
plants,
to
allow
for
procurement
of
needed
genera)on.
17. 17
Preparing
for
Summer
Opportuni)es
for
Retail
Customers
Generators
Prepared
for
Heat
Hurricane
Season
Begins
in
June
18. 18"
“Quiet”
Hurricane
Season
Predicted
• Hurricane
season
runs
June
1
through
the
end
of
November.
• Researchers
at
Colorado
State
University
predict
a
“quiet”
2014
hurricane
season,
although
the
official
forecast
for
the
season
from
the
Na)onal
Oceanic
and
Atmospheric
Administra)on
(NOAA)
will
not
be
available
un)l
closer
to
June.
• El
Niño
condi)ons
over
the
Pacific
Ocean
and
cooler
water
temperatures
in
the
Atlan)c
Ocean
are
two
factors
that
are
expected
to
result
in
fewer
storms
than
normal.
2013
Tropical
Storm
AcOvity
• Electric
service
providers
monitor
weather
threats
around
the
clock
and
remain
in
a
state
of
readiness.
19. 19"
U)li)es
Prepared
for
Storm
Response
• Each
u)lity
maintains
emergency
preparedness
plans
to
mi)gate
impacts
from
the
most
common
inclement
weather,
while
maintaining
crisis
response
teams
to
quickly
respond
to
these
emergencies
and,
if
necessary,
emergencies
in
other
parts
of
the
state
or
country.
• U)li)es
perform
reviews
aner
actual
ac)va)ons
of
their
emergency
plans
and
make
revisions
based
on
lessons
learned
in
order
to
beHer
prepare
for
future
emergency
events.
• In
addi)on
to
linemen
and
local
contractors,
an
emergency
plan
typically
includes
virtually
every
company
employee
-‐
even
those
who
do
not
tradi)onally
work
in
the
field.
• Through
electric
u)lity
mutual
assistance
programs,
most
u)li)es
have
access
to
thousands
of
linemen
and
tree
trimmers
from
around
the
country.
• The
)meline
for
restora)on
is
heavily
dependent
on
the
severity
of
the
weather
event
and
the
extent
of
the
areas
affected.
An
extremely
severe
storm
can
result
in
outages
las)ng
a
number
of
weeks.
• U)li)es
are
preparing
for
outages
before
they
happen
by
inves)ng
in
technology
to
more
quickly
and
accurately
pinpoint
problems.
21. 21"
Con)nued
Transmission
and
Distribu)on
Investment
Needed
Throughout
Texas
• According
to
the
Texas
State
Data
Center,
10
million
new
residents
are
expected
in
Texas
by
2040.
• From
October
2012
to
September
2013,
u)li)es
completed
$4.0
billion
in
transmission
projects,
including
$3.04
billion
related
to
the
CREZ
project.
• The
total
includes
the
addi)on
or
upgrade
of
4,156
miles
of
transmission
circuits,
among
other
projects.
• Though
not
shown
here,
areas
of
Texas
located
outside
the
ERCOT
grid
are
also
growing,
both
in
terms
of
popula)on
and
economic
development.
Source:
ERCOT,
“Report
on
Exis+ng
and
Poten+al
Electric
System
Constraints
and
Needs,”
January
2012
(map)
and
December
2013
(text)
22. 22"
Distribu)on
Investment
Also
Needed
• The
need
to
replace
an
aging
distribu)on
infrastructure
to
meet
popula)on
and
demand
growth
will
require
con)nued
investment.
• It
is
becoming
more
evident
that
rising
construc)on
material
costs
are
an
increasingly
important
driver
contribu)ng
to
the
higher
actual
and
planned
u)lity
industry
infrastructure
investments.
• Na)onwide,
distribu)on
investment
is
expected
to
be
almost
triple
the
size
of
projected
transmission
spending,
according
to
the
Edison
Electric
Ins)tute.
Distribu)on
investment
is
likely
to
exceed
genera)on
and
environmental
capital
spending,
as
well.
24. 24"
Remember
–
no
two
storms
are
alike
• Specific
damage
to
electric
system
will
be
different.
• It
is
not
possible
to
forecast
in
advance
what
the
exact
damage
to
the
electric
system
will
be,
so…
• It
is
not
possible
to
give
precise
outage
duraOon
esOmates
for
individual
locaOons
in
advance.
25. 25"
• Goal
–
restore
power
to
the
largest
number
of
people
in
the
shortest
amount
of
)me
quickly
and
efficiently
• Approach:
• All
electric
distribu)on
facili)es
that
did
not
sustain
damage
are
energized
• Simultaneously
assess
damage
• Damaged
electric
lines
are
repaired
beginning
at
the
substa)on
and
then
proceeding
outward
toward
the
ends
of
the
lines
• Individual
services
lines
that
are
damaged
receive
a
lower
priority
for
restora)on
un)l
the
major
parts
of
the
distribu)on
system
are
repaired
Systema)c
Power
Restora)on
26. 26"
Mutual
Assistance
• Mutual
Assistance
is
a
na)on-‐wide
program
of
electric
u)li)es
willing
to
safely
support
other
electric
u)li)es
during
major
events
on
a
not
for
profit
basis.
• Groups
of
U)li)es
have
organized
by
Regions
and
have
formed
Regional
Mutual
Assistance
Groups.
• They
voluntarily
help
each
other
restore
electric
service
aner
major
events,
such
as
ice
storms,
hurricanes,
tornadoes,
or
floods.
• They
provide
a
rapid,
scalable
and
effec)ve
response
of
labor
and
equipment.
28. 28"
• 8,500
out
of
more
than
1
million
wood
distribu)on
poles
• 300,000
n.
of
wire
&
cable
out
of
approximately
140
million
n.
• 4,000
transformers
out
of
400,000
• 860,000
meals
Hurricane
Ike
Logis)cs
Resources
• More
than
1
million
gallons
of
fuel
for
7,000
vehicles
• 2
million
lbs.
of
ice
• 94,000
hotel
room
nights
• 5,000
+
cots
system-‐wide
• More
than
11,000
mutual
assistance
crews
from
35
states
and
Canada
29. 29"
Pre-‐storm:
Electric
service
)ps
• Unplug
sensi)ve
electrical
appliances,
such
as
computers
and
TVs.
• If
you
expect
flooding,
turn
off
electricity
at
the
circuit
breaker.
• If
someone
depends
on
electricity
for
life-‐sustaining
equipment,
you
need
to
make
alternaOve
arrangements
for
them
in
advance.
MAIN
30. 30"
Post-‐storm:
Electric
safety
)ps
• DO
call
your
uOlity
to
report
a
downed
power
line
or
other
electric
emergencies
• Always
stay
away
from
power
lines!
• Stay
away
from
standing
water;
energized
power
lines
could
be
submerged.
• Treat
all
downed
lines
as
if
they
are
energized.
31. 31"
Electric
Weatherhead
• Check
your
home’s
weatherhead.
• Any
weatherhead
problems
will
need
to
be
repaired
by
an
electrician
prior
to
service
being
restored.
32. 32"
In
Summary
• U)li)es
plan
year
round
for
hurricanes.
• Hurricanes
present
logis)cal
challenges
for
the
u)lity.
• U)lity
workers
and
mutual
assistance
crews
work
well
together
to
restore
service
safely
and
efficiently.
• U)lity
customers
should
prepare
for
outages
las)ng
2
to
4
weeks,
or
more,
depending
on
the
severity
of
the
storm.