Posts Tagged ‘deregulation’

Texas Coalition for Affordable Power’s (TCAP) report on electric deregulation in Texas says the industry has failed to deliver, while industry and agency critics find fault with the reports price and reliability comparisons.

Texans have paid higher prices for power that is less reliable – as evidenced by two rolling blackouts – during a decade of electric deregulation, the report, Deregulated Electricity in Texas: A History of Retail Competition – The First 10 Years,  asserts.

Commissioned by the Texas Coalition for Affordable Power, a non-profit including 163 municipalities and other political subdivisions, the report takes sharp aim at higher retail prices, increased consumer complaints and greater reliability problems.

Key findings of the report include:

  1. During 10 years of deregulation, typical electric customers paid $3,000 more than other Texans not subject to deregulation.
  2. Nationally, Texans paid average prices 6.4 percent below national averages before deregulation but 8.72 percent higher in the 10 years since deregulation.
  3. Customer complaints have risen because an increase in providers has also produced an increase in the complexity of contracts.
  4. Texaselectric reserve margins – which are key for electric reliability – have shifted from among the highest nationally before deregulation to among the lowest now.
  5. Under deregulation,Texashas seen two rolling blackouts in four years and nine reliability emergencies last year alone. Before deregulation,Texasendured only one rolling blackout in more than 30 years.
  6. Electric generators are seeking market changes “that abandon competitive principles” and rely upon “artificial price supports.” At the same time, generators are making no promises that they’ll add new electric supplies if they get their wish for market adjustments.
  7. The power grid, the Electric Reliability Council of Texas (ERCOT), has “suffered persistent management problems.”

The report acknowledges that electric prices have recently dropped but also notes that customers have endured $7 billion in “stranded costs” under deregulation that were shifted from electric generators to electric customers.

TCAP Board President Jay Dogey said recent drops in both prices and complaints are not “sufficient to offset the billions of dollars in excess costs to consumers. All this points to a market that is deregulated but still not fully competitive.”

John Fainter, president and chief executive officer of the Association of Electric Companies of Texas, said TCAP’s report fails to consider several key factors that undermine its comparisons, but that still cannot counter the fact that Texas has some of the highest electric bills in the country.

Texas Public Utility Commission Chairman Donna Nelson responded to the report’s price comparisons by re-issuing a letter she sent to Senate Business and Commerce Committee Chairman John Carona (R-Dallas) more than a year ago.

A copy of Nelson’s letter is here.

TCAP’s report is here.

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The PUC wants to have a meeting at the end of August to try to figure out how to fix Texas’s experiment of a deregulated generation market, as we look like we are going to run out of energy during what could be ever increasing hot summers.
It seems the current market based behavior doesn’t send proper signals to companies to build new generation.
In addition our grid was designed to be almost completely isolated from the rest of the country so we cannot get help if its needed and available.
Generators use old, outdated generation to reduce costs and even turn off environmental controls to further lower costs at the expense of citizens health and to maximize profits.
The “new” market is based on scarcity pricing but if generation is truly scarce we have rolling blackouts, which are devastating to the economy and kill people.
Before deregulation the Utility commission would request new generation be built in a certain time frame and capacity and pay a preset profit margin to the companies that participated. They did the same thing with transmission lines and retail costs.
These are critical infrastructure needs and were protected from the swings of the financial and other markets. The process was covered under the term Total Resource Planning.
Now with the current heat wave and over a decade of deregulated markets we face the possibility that there will not be enough generation to meet the needs of Texas. We have many old and highly polluting plants that resemble the old steam locomotives of the 1800’s carting around a bin of coal to burn rocks and boil water. A larger amount of our critical infrastructure also consists of ancient natural gas “steamer” plants that are only run around 400 hours a year and are also highly polluting and have proven not to be very reliable but highly profitable.
Compare that to the newer generation of combined cycle gas turbines that resemble a jet engine and have several additional generators attached to it to recover the excess heat to generate even more energy with low stack emissions.
We have harvested significant amounts of non-polluting wind energy (coastal wind is over-performing expectations during the current crises) but the majority is located in just one region (West Texas) leading to problems of transmission congestion and generation variability. Some progress has been made on building wind projects in the areas along the Texas coast that provide energy much closer to the time that its needed, but more needs to be done.
Texas has made very little progress on adding an solar generation (that would provide energy when its needed most) because of a lack of policy leadership at the legislature and the PUC.

Now the PUC wants to tinker with the market to see if it can artificially raise the price of energy by using a “proxy” price as in “we will pay you more because our market system isn’t working, so pretty please build some new generators”.

This is a hell of a way to provide the resources that Texans need. Its time to get rid of the old smoking wreaks of generation plants that are carrying the load, sucking up our ever shrinking water supplies and fouling our air, and go to a controlled “regulated” modernized generation plan that uses all our resources with the least impact to our health, environment and wallets.
We used to pay a fair price for services delivered, now we just pay and hope the lights stay on.


By promoting cleaner energy, cleaner government, and cleaner air for all Texans, we hope to provide for a healthy place to live and prosper. We are Public Citizen Texas

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Loren Steffy, the Houston Chronicle‘s business columnist writes this week about why the lights went out.

Loren Steffy, Houston Chronicle

We are left with an electricity market that has failed at both ends. Leaving our power supply dependent on the whims of that market means that last week probably won’t be the last time it leaves us in the dark.

Click here to read Loren’s blog.

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At a time when in much of the US we are facing the most significant heat waves in decades, global temperature averages have shown 2010 to be the hottest year ever in recorded history, the National Oceanic and Atmospheric Administration / Climactic Data Center just released its most comprehensive report on climate change which may as well have been called “It’s Real and It’s Here: NOW!”, and droughts, heatwaves, and wildfires are causing Armageddon-like conditions around Moscow, causing even the global warming denying Russian government to capitulate to the scientific consensus…..  Even with all of that, it would seem like an odd time for the state of Texas to send a shot across the EPA’s bow, insulting them and goading them into a fight over Texas carbon emissions and the Clean Air Act.

But yet they have.

Monday August 2nd the state of Texas sent a letter to the EPA (original can be downloaded here) informing them that we would no longer be complying with the Clean Air Act, specifically provisions relating to the regulation of greenhouse gases.  This letter signed by Attorney General Greg Abbott and TCEQ Commissioner Bryan Shaw is full of bluster and short on reasoned legal arguments with any real merit.

Famous painting of Ukrainian Cossacks writing a triumphant and bawdy letter to the Turkish Sultan after the Cossacks defeated his army

What it really remind me of is one of my favorite paintings, Запорожцы пишут письмо турецкому султану or, Zaprozhe Cossacks Writing a Letter to the Turkish Sultan by Ilya Repin.  (For comparison’s sake, I would highly recommend following that link to read the text of the Cossack’s letter– it has language saltier than anything else I’ve heard this side of South Park)  I just can’t help think of the unabashed joy that must’ve coursed through the veins of the Atty General and TCEQ Commissioner as they drafted this, using phrases like (more…)

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