The 4-1-1 on Emergency Interruptible Load

The Emergency Interruptible Load Service (“EILS”) program pays participants including political subdivisions to be available to reduce demand in emergency load situations — that is, when energy is running perilously short on the grid. This is not a peak-load reduction program but rather serves as an emergency response to prevent rolling blackouts. Emergency situations have historically occurred infrequently in Texas, but may potentially occur at anytime, and in fact, may be more likely in “shoulder” months in which high demand is not anticipated and so generation is off-line for scheduled maintenance.

The EILS program is part of ERCOT’s multi-step strategy for handling these potentially serious shortage situations. Under ERCOT’s Level 1 emergency response, the organization dispatches all available generation, issues a media appeal, and attempts to acquire maximum available power across the direct current (DC) ties that connect ERCOT with adjacent grids. Under its Level 2A emergency response, ERCOT deploys Load Acting as a Resource (“LaaRs”), which is another form of interruptible service. EILS, ERCOT’s Level 2B emergency response, is triggered when the grid frequency drops to 60 Hz. (Dropping to frequencies much less than 60 Hz can pose a threat to grid stability.) When grid frequency goes below 59.8 Hz, ERCOT deploys its Level 3 emergency response, which is to shed firm load via rolling blackouts.

In order to be eligible to bid into the EILS program, a load resource must have at least 1 MW of load that can be curtailed with ten-minute notice at any time during the committed hours. ERCOT has divided the day into four periods for the purposes of the EILS program, which allows resources to bid for a specific time frame. The load resource must have 15-minute interval metering or other statistically valid samples of its load that are acceptable to ERCOT. The load resource must be represented by a Qualified Scheduling Entity (“QSE”), (the QSE must have operations capable of receiving verbal commands 24/7.) In the event of the program being deployed, ERCOT will notify the QSE starting the ten-minute period, and the QSE must notify the load resource. The resource must keep its committed load offline until it is released by ERCOT. After ERCOT has released a resource, it is required to return to service within ten hours.

There is no minimum clearing price in the EILS program. Load resources bid for a specific MW (must be at least 1 MW) for a specific time period (one of the four daily periods) for each contract period (three per year). If accepted, the resource receives payment for being available to curtail its load regardless of whether it is called upon to do so. The resource does not receive additional payment if it is called upon to curtail.

-- Pat Jackson

Texans Continue Paying Too Much for Electricity

Although some electric retailers have cut prices in recent weeks, Texas consumers continue paying too much for power, according to an analysis of federal data.

The Energy Information Administration, a federal agency that collects information about the electric industries in the 50 states and the District of Columbia, reports that average prices in Texas have remained consistently higher than average prices in adjacent Louisiana and Oklahoma. The agency also reports that prices have gone up in Texas over a recent 12-month period, while they have gone down in Louisiana and Oklahoma.

Like Texas, both Oklahoma and Louisiana rely on natural gas to fuel many of their generating plants. As the commodity price of natural gas has declined to a seven-year low in recent months, the average price of electricity also has declined. But the recent EIA numbers show that Texans continue paying too much:

*Average prices in Texas have gone UP during the last 12-month period for which the federal agency has collected data. For the 12-month period that ended in April 2009, Texas prices increased by more than 5 percent, according to the federal agency.

*By contrast, average prices have gone down in Louisiana and Oklahoma over that same 12-month period. In Louisiana average residential prices decreased by 11.63 percent. In Oklahoma they decreased by 2.1 percent.

*Texans, on average, pay nearly 50 percent more for electricity than residents in those two states, according to the most recent federal data. The agency lists the average residential price of electricity in Texas at 13.02 per kw/h, while it lists the average prices in Oklahoma and Louisiana at 8.82 and 8.73 respectively.

*The average price of electricity in Texas is also higher than the average nationwide price of 11.59 cents, according to the federal agency. For many years more before passage of the state’s electric deregulation law, Texans paid rates below the national average.

While the recent price cuts announced by some Texas retailers are not reflected in the most recent federal data, it's logical to assume that the declines are no greater than those in regulated states with a similar dependence on natural gas. That's because separate reviews of federal data have consistently shown that Texans typically pay more for electricity than customers in regulated states with a similar dependence on natural gas. Moreover, electric companies operating in a regulated environment are not permitted to earn any profit off the commodity price of natural gas.

-- R.A. Dyer

Chicken Problems for the Texas Wind Industry?

In case you missed it, the Associated Press has an interesting story this week about a small bird that’s leading to big headaches for the wind industry. Known as the “lesser prairie chicken,” the bird is apparently very close to being listed as threatened or endangered by the federal government.

The result? According to Heather Whitlaw, Texas Parks and Wildlife Department biologist: “Anybody who puts anything on our landscape would be evaluated in one form or another.”

The AP reports that federal recommendations from 2004 discouraging the construction of turbines within five miles of prairie chicken breeding grounds have gone largely unheeded by the industry. Instead a wind energy trade group has asked for the scientific basis of the five-mile limit, according to the AP.

The Texas Public Utility Commission last year authorized the construction of billions of dollars of new transmission lines to serve wind generators throughout Texas. Some of these lines will connect to the Panhandle, which the AP identifies as lesser prairie chicken territory. No word on how a federal designation for the tiny bird will impact the state’s expensive transmission line initiative.

The Oncor Rate Case: Shifting a $90 million tax burden onto Texas residents

Oncor customers could see their rates go up by about $130 million annually, according to an analysis of several preliminary decisions rendered by the Texas Public Utility Commission in the utility’s pending rate case.

The analysis also shows that as a consequence of just one PUC decision, the burden of paying about $90 million in corporate taxes would get shifted onto Oncor’s captive ratepayers. That single decision represents nearly two-thirds of the annual rate increase, according to the analysis.

“By shifting this tax burden onto Oncor’s customers, the PUC will be increasing the cost of electricity for millions of Texas residents,” said Geoffrey Gay, general counsel of the Steering Committee of Cities Served by Oncor that developed the analysis. He said evidence developed in the case shows that Oncor customers should be getting a rate cut, not a rate hike.

The Steering Committee of Cities Served by Oncor is a coalition of about 100 municipalities and political subdivisions that represents consumer interests before the PUC. The Steering Committee analyzed the potential effects of rate case decisions rendered by the PUC during a meeting on July 30th.

The regulated monopoly wants permission to hike rates by about $253.4 million annually. By contrast most other parties in the case — including the PUC’s own staff — have concluded that the company already collects too much and should instead lower rates. The Steering Committee estimates Oncor’s overearnings at about $175.4 million annually.

Oncor has about 7 million customers in Texas. It is the state’s largest transmission and distribution utility. Because it provides transmission services, all of its customers — regardless of their retail electric provider — would have to pay the higher rates.

The PUC’s three commissioners could render an official decision in the rate case later this month.

-- R.A. Dyer