Topics include: effects of summer weather, use of water by generation facilities, offers available in the competitive retail electric market and the CSAPR rule

1. Update on the Electric Industry in Texas:
Summer Recap
Legislative Staff Briefing!
September 28, 2011 !
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. AECT Principles!
• AECT is an advocacy group composed of member companies committed to:
- Ensuring a modern, reliable infrastructure for the supply & delivery of
electricity.
- Supporting efficient competitive markets that are fair to customers and
market participants.
- Supporting consistent and predictable oversight and regulation that will
promote investment and ensure the stability of Texas’ electric industry.
- Promoting an economically strong and environmentally healthy future for
Texas, including conservation and efficient use of available resources.
• AECT member companies remain dedicated to providing Texas customers with
reliable service and are committed to the highest standards of integrity.
The Association of Electric Companies of Texas, Inc. (AECT) is a trade organization of investor-
owned electric companies in Texas. Organized in 1978, AECT provides a forum for member
company representatives to exchange information about public policy, and to communicate with
government officials and the public. For more information, visit www.aect.net.
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3. U.S. Divided into Eight!
Reliability Regions!
• The eight reliability regions in the FERC
continental U.S. are subject to the
oversight and enforcement authority of NERC
the North American Electric Reliability
Corporation (NERC), which is subject to
the Federal Energy Regulatory
Commission’s (FERC) oversight. NERC
is responsible for developing standards
to ensure and improve reliability for
delivery of electricity on the bulk power
system.
• Electric systems in Texas are located
within four separate reliability regions:
- Texas Reliability Entity (TRE),
which oversees participants in the
Electric Reliability Council of
Texas (ERCOT);
- SERC Reliability Corporation;
- Southwest Power Pool (SPP); and
- Western Electricity Coordinating
Council (WECC).
(ERCOT)
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4. AECT Member Companies!
Within ERCOT!
Retail Electric Providers
Transmission and Distribution Utilities
Generation Companies
4

5. AECT Companies!
Outside of ERCOT!
SERC Reliability Corporation
Southwest Power Pool (SPP)
Western Electricity Coordinating
Council (WECC)
5

6. Unrelenting Summer Heat Affected!
the Entire State!
6

7. Texas Faced Extreme Heat
This Summer!
Summer 2011 has been one of the hottest and driest on record in Texas.
In Austin, for example, high temperatures were above average nearly every
day from June through August
7

8. August Heat Wave!
Particularly Harsh!
• A statewide heat wave during the week of August 1 presented particular
challenges to grid operators because of high demand
• Temperatures well in excess of 105 combined with high humidity led to
afternoon heat indices of more than 110 in several cities
• During that week, ERCOT demand peaked on August 3 at 68,294 MW
(4,396 MW more than predicted), triggering emergency reliability
actions
• Other AECT member companies across the state also experienced
demand records during the heat wave, including:
– El Paso Electric: 1,711 MW on August 8
– Xcel Energy: 5,936 MW on August 2. Xcel Energy exceeded 2010
peak demand 33 times this summer
– AEP SWEPCO: 2,687 MW on August 3. AEP SWEPCO exceeded
the 2010 peak demand 16 times
8

9. ERCOT Demand
Records in August!
• New Peak Demand Records This Year
– August 3, 2011: 68,379 MW
– August 2, 2011: 67,929 MW
– August 1, 2011: 66,867 MW
• Prior to this year, the all-time peak demand record was 65,776 MW (set
on August 23, 2010)
ERCOT Demand Monthly Records
2011 2010
May: 57,356 MW May: 56,344 MW
June: 63,102 MW June: 62,278 MW
July: 65,195 MW July: 63,400 MW
August: 68,379 MW August: 65,776 MW
Source: ERCOT
9

10. Texas Particularly Challenged
Throughout the Past Year!
Change in 52-Week Year-On-Year Electric Output For Electric Utilities By EEI Region
August 2009-2010 Compared With August 2010-August 2011
+1.0%
-0.9%
+2.5%
+0.5%
+0.7%
-0.3%
+0.5%
-1.0%
+4.7%
Comparing the past year to the previous year, nationwide electric output has risen by 0.6%.
Output in the South Central region, including Texas, has risen by 4.7%.
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Source: EEI

11. Long-Term Drought Could
Impact Electric Generation !
• AECT member companies represent the largest private
owners, builders, and operators of reservoirs in Texas.
• Water supply is essential to the reliable generation of
electricity.
– Water supply is generally obtained in the form of water contracts/
rights, prior to the construction of an electric generation station.
– Water contracts/rights are secured at a level to ensure a reliable
water source during future drought periods.
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12. How Texasʼ Power Plants
Use Water!
Fuel
• Most power plants heat water until it becomes steam, then pressurize that steam to
turn a generating turbine.
• The steam is then routed to a condenser, where the water is condensed and
reused in the steam cycle.
• Water from one or more reservoirs or cooling towers is used to cool the condenser,
making it possible to recycle the water to make steam.
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13. How Texasʼ Power Plants
Use Water!
• The heat added to the water as it flows through the condenser must be allowed to
dissipate from the system in some way.
• One way the cooling can occur is when cooling water is pumped from a reservoir
through a condenser and is returned to the reservoir.
• If the heat is dissipated in a cooling tower, the heat dissipation occurs almost
entirely by conduction and convection, or by evaporation, depending on the type of
cooling tower.
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14. High Consumption Means Potentially
Higher Electric Bills Though Prices
Remain Low !
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15. Potentially High Summer!
Electric Bills!
• Typically, the bulk of customers’ electric bills is calculated based
on the price of electricity and the amount consumed.
• So even though electric prices have declined substantially in
recent years, residents may still see increased electric bills due to
higher weather-driven consumption.
• Some residents may also see increased electric bills due to
multiple months of consumption included on a single bill. This is
an impact of disconnection moratoria that were in place to help
protect customers during the hot summer months.
15!

16. Benefits for Qualified!
Customers: REP Programs!
• Several retail electric providers across the state also provide additional, voluntary
programs to assist low-income customers.
– The Care to Share Fund provides bill payment assistance to eligible First Choice Power residential
customers in need of emergency funding. Customers can donate to the Care to Share Fund and assist
residential customers who need a little extra help.
– In 2011, nearly $800,000 in bill payment assistance was committed to Reliant's CARE program. Non-
profit social service agencies review customer cases and qualify customers CARE funds based upon
the agency's designated hardship criteria. In addition, more than a dozen Beat the Heat Centers were
offered by Reliant in Corpus Christi, Dallas and Houston to provide heat relief in high-need areas.
– Below is information on several programs offered by TXU Energy.
– TXU Energy operates TXU Energy Aid, the largest bill-payment assistance program among
electricity companies in the nation. The company committed $25 million over 5 years (through
2012) to this program which has helped over 390,000 Texas families since 1983.
– TXU Energy also works collaboratively with ~1,000 agencies across the state to assist customers
in need.
– In addition, TXU Energy uniquely provides a self-funded, year-round low-income customer
discount of ~10 percent. The company committed $125 million over 5 years (through 2012) for
this program which assisted over 150,000 customers this summer. Since 2008, the company
has also helped 18,000 low income households reduce their energy consumption through grants
invested in energy efficiency improvements.
– Since September 2006, several REPs have participated in the low-income credit program resulting from
CenterPoint Energy’s 2006 rate case settlement. This program is currently providing a credit of $7.68
per month to eligible customers.
• Texans can check their electric provider’s Web site or call their provider to see
what other programs are available.
16!

17. Lower Bills Through!
Choice and Energy Efficiency!
• Customers in the competitive retail electric market can contact
their retail electric provider or visit www.powertochoose.org to
learn more about available options.
• All customers can contact their electric company to find out what
programs are available, or to find a contractor or vendor who
participates in the state energy efficiency programs.
• Customers can also call 2-1-1, the Texas Health and Human
Service Commission's information and referral network to learn
about programs available in the area.
• Additional resources
– Texas Department of Housing and Community Affairs:
www.tdhca.state.tx.us/assist_repair.htm
– Texas Is Hot: www.texasishot.org
– U.S. Department of Energy: www.energy.gov/energyefficiency
– Get Energy Active: www.getenergyactive.org 17!

18. Competitive Market Bringing
Sustained Lower Prices
Prices in the
competitive
market remain
at low levels
Source: www.powertochoose.org; prices are a simple average among service territories. 18

19. Lower prices available today than before
competition began
Sources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of September 26, 2011 19

20. Every Competitive Area in ERCOT Has
Variable and 1-Year Lock Offers Available
that are Lower than the National Average Price
Sources: PowerToChoose.org offers as of May 17, 2011,
U.S. Energy Information Administration, latest available data
20!

21. Texasʼ National Price Ranking Has Improved
With Competition Despite Input Fuel Cost
Increases AND Customers Can Choose
Plans To Meet Their Needs
18
2001 State Ranking (Pre-Competition)
16
¢/kWh
14
12
10
8
6
4
2
0
KY
WA
WV
WY
MT
MO
OK
MS
GA
VA
WI
MI
AZ
IA
TX
PA
AK
MA
VT
ME
ID
OR
TN
NE
UT
IN
AL
SD
CO
MN
KS
MD
SC
AR
LA
OH
FL
DE
IL
NM
NV
NJ
CT
CA
RI
NY
HI
ND
DC
NC
NH
May 2011 State Ranking (Latest Available)
Average lowest
available offer in
competitive
market in
May 2011:
6.1/kWh
¢/kWh
Source: EIA average annual residential rates for 2001 and May 2011 monthly data (latest available information). Average lowest available price from
powertochoose.org Web site as of 5/17/11 for a residential customer using an average of 1,000 kWh per month.
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22. Federal Environmental Regulation!
Raises Concerns Over Resource
Adequacy!
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23. Texas Unexpectedly Included in
Cross State Air Pollution Rule (CSAPR) !
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24. Texas Unexpectedly Included in
Cross State Air Pollution Rule (CSAPR) !
• Power plants in Texas as a whole, based on 2010 emissions, will
have to make about a 50% reduction in SO2 emissions and an
11% reduction in NOx by the end of 2012.
• Coal units collectively, will have to make a 51% and 21%
reduction respectively.
• Gas units collectively, will be allocated a surplus of 65% and
45% respectively, over their 2010 emissions.
• Compliance options available within this short timeframe include
fuel switching, environmental dispatching, reducing load,
seasonal operation, temporary mothballing and retirement. All of
which could impact reliability in Texas.
• As subsequent slides show, Texas generators perform well in
comparison with those in other states.
24!

25. Texasʼ Electric Generating Plants Among
Cleanest NOx Emitters in the Nation!
0.800
0.700
0.600
Texas has the 12th
cleanest average
NOx emissions rate.
NOx (lb/MMBtu)
0.500
0.400
0.300
0.200
U.S.
Average-0.156 lb/
0.100 mmBtu
0.000
IL
AL
FL
WV
NV
UT
VT
SD
ND
NE
DC
KS
OK
CO
MI
IN
MN
DE
OH
MS
MO
MD
TN
WI
NC
NH
SC
RI
ID
NJ
MT
ME
CT
WY
IA
KY
GA
NY
NM
MA
AR
OR
CA
PA
WA
AZ
LA
TX
VA
25!
EPA Acid Rain Database, 2010

26. Texasʼ Electric Generating Plants Among
Cleanest SO2 Emitters in the Nation!
1.000
0.900
0.800
Texas has the 27th
0.700 cleanest average
SO2 emissions rate.
SO2 (lb/MMBtu)
0.600
0.500
U.S. Average-
0.387 lb/mmBtu
0.400
0.300
0.200
0.100
0.000
AL
IL
FL
MT
UT
CT
VT
WV
NV
OH
NH
ND
SD
IN
DC
DE
MO
TN
NE
WI
SC
NC
OK
MS
KS
MD
CO
ME
ID
MI
MN
NM
RI
AR
OR
WA
TX
LA
AZ
VA
NJ
WY
IA
KY
GA
NY
MA
CA
PA
26!
EPA Acid Rain Database, 2010

27. 1995-2010 Emission Rate Trends!
Sulfur Dioxide (SO2) Nitrogen Oxides (NOx)
lb./mmBtu lb./mmBtu
Year Nation Texas Nation Texas
1995 1.088 0.526 0.537 0.319
1996 1.103 0.535 0.53 0.325
1997 1.093 0.524 0.509 0.311
1998 1.055 0.482 0.481 0.307
1999 0.999 0.481 0.441 0.284
2000 0.875 0.381 0.399 0.261
2001 0.843 0.385 0.373 0.221
2002 0.793 0.384 0.348 0.173
2003 0.815 0.389 0.321 0.143
2004 0.779 0.353 0.286 0.124
2005 0.753 0.349 0.268 0.116
2006 0.702 0.338 0.255 0.111
2007 0.644 0.32 0.237 0.103
2008 0.564 0.315 0.222 0.103
2009 0.458 0.309 0.159 0.098
2010 0.387 0.304 0.156 0.095
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EPA Clean Air Markets Division – 1995- 2010 Acid Rain Program Data

28. Web: AECT.net
Blog: AECTnet.wordpress.com
Twitter: twitter.com/AECTnet
Facebook: Association of Electric Companies of
Texas, Inc.
Email: info@aect.net
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