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

Keep The Lights On -- New Energy and Consumer Blog

Check out this promising new consumer and energy blog, Keep The Lights On, which you can find here. Although this blog is just getting under way, it already includes plenty of useful tips for comparing electric prices, filing complaints, and reviewing the fine-print detail in electric bills. The blogger behind the keyboard is Cory Henrickson, a legislative staffer working in the office of state Rep. Sylvester Turner.

In one of his first posts, Henrickson analyzes PUC rules governing level-payment plans. “The rule mandates that a retail electric provider must offer a customer an average or level billing plan if a customer so desires — the ONLY qualification one must meet is that they are current on their bills,” he writes.

In another, Henrickson reviews retail electric provider contracts -- including one that permits a nearly $10 surcharge on customers who conserve energy. "The devil is in the details," writes Henrickson.

Henrickson’s boss, state Rep. Turner, is a member of the House State Affairs Committee, which has legislative responsibility for electric utility issues. Turner also has been advocating recently for new customer protection rules at the PUC.

-- R.A. Dyer

Seeking Emergency Protections: Round 2

Shrugging off an earlier rejection by the agency, state Rep. Sylvester Turner and the AARP have filed a revised petition before the Public Utility Commission calling for the creation of new protections for elderly and infirm electric customers during the hottest days of summer.

The petition calls for the temporary suspension of cancellation fees for customers who seek to save money by switching electric providers. The new petition also calls upon electric retailers to notify customers about the availability of rate discounts. The petition was filed July 17 and signed by Turner, AARP and several other consumer groups.

The PUC on July 2 rejected an earlier proposal by the same coalition that would have banned electric disconnections when the heat index was forecast to reach 105 degrees Fahrenheit or higher. In issuing that earlier rejection, the commissioners said those who face summertime disconnections because they pay too much for electricity should switch providers. The commissioners also noted that low-income customers can get rate discounts through the LITE UP Texas program.

But in a July 17 letter accompanying the new petition, Turner said customers who want to switch providers face substantial obstacles. “Termination fees of several hundred dollars effectively prevent customers from switching,” he wrote. Turner also said that several hundred thousand Texans who are eligible for the LITE UP program likely do not receive assistance from it.

“Since the July 2, 2009 Open Meeting, ERCOT has experienced record high electricity usage,” wrote Turner. “Of course that is due to the extreme and persistent heat we are experiencing. The prior record usage day was in 2006, the last time the Commission took action to prevent dangerous electricity disconnections. More reports of heat related illnesses and death continue to come in. The Public Utility Commission has significant latitude in crafting solutions to dangerous electricity disconnections during the summertime. I urge you to do so.”

The next PUC open meeting is July 30th.

-- R.A. Dyer

Windfall profits under Cap and Trade

Texas consumers may end up paying another billion dollars each year as a consequence of federal cap-and-trade legislation according to a new report.

Sponsored by a coalition of utility commissioners and consumer groups, the report also warns of higher "unproductive" costs from the legislation because a single price sets all spot prices in deregulated wholesale markets. That means there could be an uptick in price for power from all sorts of generators -- even those that emit little or no greenhouse gases -- according to the report.

"In deregulated markets, it is likely that any allowance allocation will result in consumer-funded windfall profits for certain generating plant owners, at least in the early years," noted the study, drafted on behalf of the National Association of Regulatory Utility Commissioners, the American Public Power Association and other groups.

The report added that granting free cap-and-trade credits would increase windfall profits in both regulated and deregulated markets. A provision for granting free allowances to transmission companies was ushered into the House version of the bill at the urging of utility lobbyists, according to media accounts.

The incremental cost to consumers in the ERCOT region could run anywhere from $848 million to $3.3 billion per year, depending on the final language of the legislation. The report's authors stressed, however, that it is not their position that greenhouse gas legislation is prohibitively expensive, nor that its costs would likely exceed its benefits.

An earlier analysis conducted by ERCOT noted that a typical monthly electric bill could increase by $27 as a consequence of proposed climate change legislation.

-- R.A. Dyer