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Your thermostat may be plotting against you

Welcome to 2021.

Amid [recent] sweltering temperatures in Houston, the agency that operates the state’s power grid asked residents to cut back on how much electricity they used to help it meet demand. That’s how some people apparently learned the hard way that their “smart thermostats” were programmed to rise in their homes when grid conditions got tight.

A user posting on the Reddit page for discussions about Houston wrote of knowing eight people with thermostats that bumped up automatically and made their homes less cool — sparking a conversation about how and why this happens. The concerns were first reported by KHOU.

Turns out, utility customers can opt in to programs that automatically adjust their thermostats when demand is high and grid capacity is strained. Those people can also opt out. Some, it seemed, were caught unawares.

One user wrote of being automatically enrolled in a program and then waiting months while trying to get out of it. Another reported sending an email to get removed from the service.

A third chastised them all: “This is what happens when you don’t read the contract.”

A software provider called EnergyHub works with thermostat manufacturers to run such programs. No one is enrolled without their consent, said Erika Diamond, the company’s vice president for customer solutions.

The idea is to reduce energy load when the grid is stressed, such as during an extreme weather event, Diamond said. Temperatures at George Bush Intercontinental Airport hit at least 95 degrees every day from June 11 through June 16.

I’m sure this was somewhere in your user agreement, which I know we all read thoroughly. One could easily argue that this is a net benefit for all, as the modest reduction in A/C that everyone affected by this would experience would save energy and maybe avoid some blackouts. It’s almost certainly more effective than asking people to voluntarily dial it back, as some won’t do it and others won’t be aware you’re asking. But it would be better if people were generally aware of this, even if it meant more of them opted out or manually overrode the auto-adjustment as they can do, if only to prevent the inevitable conspiracy theories and overall mistrust that a lack of awareness will spawn. At least it’s mostly been not-so-hot since then, so this has been less of an issue, but obviously we can’t just count on that. Reform Austin and Mother Jones have more.

Abbott tells the PUC to, like, “do something” about electricity and stuff

He’s a Very Serious man making Very Serious proposals.

Gov. Greg Abbott on Tuesday gave state electricity regulators marching orders to “improve electric reliability.”

In a letter to the Public Utility Commission, Abbott directed the three-person board of directors, who he appoints, to take action that would require renewable energy companies to pay for power when wind and solar aren’t able to provide it to the state’s main power grid, echoing a move state lawmakers rejected in May.

Abbott also told the PUC to incentivize companies to build and maintain nuclear, natural gas and coal power generation for the grid — which failed spectacularly during a February winter storm, leaving millions of Texans without power or heat for days in below freezing temperatures.

Texas energy experts were skeptical that Abbott’s orders would actually improve the reliability of the state grid, which operates mostly independently of the nation’s two other major grids.

“What is here is not a serious or prudent plan for improving the grid,” Daniel Cohan, an associate professor of civil and environmental engineering at Rice University, said in an interview Tuesday. “It’s more of a political job favoring some [energy] sources over others. For Texans to have a more reliable power supply, we need clearer thinking that makes the best of all the sources we have.”

Abbott’s letter also called on the PUC to direct the state’s main grid operator, the Electric Reliability Council of Texas, to better schedule when power plants are offline, an issue that caused tension between state regulators and power generators after some power plants unexpectedly went offline in June and led ERCOT to ask Texans to turn their thermostats up to 78 degrees for a week during a heat wave to conserve energy.

Abbott responded to the plant outages by declaring the power grid “is better today than it’s ever been.”

Does anyone believe that? I don’t know what the odds are of another major power failure between now and, say, next November, but does anyone think such platitudes will be accepted by the public if one does happen? Even Dan Patrick thinks that power grid reform items – most of which never went anywhere during the session – should be on the special session agenda. Maybe we all get lucky and nothing bad happens any time soon, but if that’s the case it won’t be because Abbott was busy urging us all to clap louder.

We’ll be paying for the freeze for a long time

What’s more, we have done nothing to prevent the same thing from happening again.

Publicly funded state agencies needing to keep the lights and heat on during the freeze racked up huge bills. In February 2020, the Texas Department of Criminal Justice, which operates the state’s prisons, paid about $1.2 million for natural gas. This February the cost soared to nearly $8.5 million.

The University of Texas-Austin paid $940,000 for gas in February 2020. In 2021: $3.65 million.

Last month, state legislators passed laws to help companies borrow billions of dollars to pay for storm-inflated power costs and bill ratepayers over time to pay it back. Yet well before that, many Texas cities that own public utility companies already had been forced to scrounge up additional millions to cover gas and electric bills hugely inflated by the storm-caused shortages.

Outside of Dallas, Denton borrowed $140 million. Georgetown, just north of Austin, borrowed $48 million to cover the cost of providing electricity to its residents during the storm. Ratepayers will have to cover that, as well as a projected $5 million in interest and costs over the term of the loan.

Other cities dipped into their savings accounts to pay the storm-inflated power costs, depleting reserve funds. Garland siphoned millions from its rainy-day account. Weatherford, a small city outside of Fort Worth, drew down $13.7 million.

Wherever the money came from, eventually it will be repaid by local citizens, said Steve Moffitt, vice president of Schneider Engineering, a Boerne-based company working with municipal utility companies across the state to find the extra money. “At the end of the day, it has to come from customers somewhere,” he said.

The small city of Hearne borrowed $1.9 million to cover costs incurred by its publicly owned electric utility company. Ratepayers will pay off the debt over the next 10 years, said City Manager John Naron.

“Usually if we get a $2 million loan, we’re fixing streets, the sewage system, street lights,” he said. “Now we’re borrowing $2 million and getting nothing for it.”

When the dust cleared on the biennial legislative session that ended June 1, one thing was clear. Although it was ordinary Texans who suffered when the freeze hit four months ago — millions were left shivering in the dark for days; hundreds died — it is also ordinary Texans who would foot much of the bill, said Tim Morstad, associate director of AARP Texas.

“Consumers are being forced to prop up the system that failed us,” he said.

[…]

The magnitude of the financial fallout is difficult to digest. Experts estimate that based on the sky-high prices, nearly $50 billion-worth of electricity was consumed in Texas during the one-week storm — 250 times the normal cost, said Beth Garza, an energy analyst for R Street who from 2014 to 2019 was ERCOT’s independent market monitor, which watchdogs the electricity market.

Companies that had gas and electricity to sell cashed in on a Uri  windfall. Some Wall Street investors made millions, too.

For those forced to buy gas and electricity during the height of the freeze it was expensive at best, catastrophic at worst. Brazos Electric Power Cooperative, the state’s largest and oldest member-owned electric company, declared bankruptcy after racking up about $2 billion in charges when its generators failed.

To spare ratepayers the financial pain of getting hit with giant utility bills all at once, last month state lawmakers passed several laws to help the biggest losers borrow money and pay it back over time. The laws are complex, and analysts and companies said they are still deciphering how they will be used.

Pending high-stakes legal battles over the storm’s giant bills add more uncertainty to the final tab. “There are a zillion contractual disputes underway right now,” said Garza, pointing out that those, too, will end up costing companies – and their customers — giant legal fees.

Still, analysts projected the taxpayer tab would come to roughly between $7 and $9 billion. Yet that doesn’t include numerous other hidden costs.

The primary advantage to our market for power and electricity has always been low prices. Lots of firms offer a variety of plans, both fixed and flexible rates, and for the most part it has worked pretty well, as long as you do a bunch of research and remember to switch plans again before your low-rate plan ends and you get dumped into a default higher-rate plan. (Some people do lots of research.) All of this is predicated on the Texas energy market being geared towards low prices, and the way it does that is by not mandating capacity. There’s no backup power, no plants generating extra power that isn’t used, and that means we’re not paying for anything we’re not using. It’s efficient, and that efficiency keeps prices down.

The down side is what we saw in February. Because there was no extra capacity, when a number of plants went down, there wasn’t any power to spare. The only way to get more juice was to pay for it, and when prices are allowed to be unconstrained, you can be sure someone is going to make a buck off of it. We also learned that another key ingredient to our everyday low prices for electricity was that the power plants could be and were run as super low-cost operations, which in this context meant no money spent on weatherization. I think we all know how that turned out.

The argument in favor of our system is that we have paid a lot less for our electricity over a long period of time, so that even with the price shocks of February and the borrowing that various municipalities and utilities and co-ops have had to do, we’re still coming out ahead. But that isn’t of much help right now, and as we did nothing to change the fundamentals of our power market, we could face the same situation again at any time. People will be paying more now for what happened his past winter, and they have no insurance against a repeat. Even more, I don’t think a lot of people understand that. I don’t think we’re any more prepared mentally and emotionally for the next time this happens than we were this February. Maybe if we go another ten years before it happens again it won’t much matter. Do you want to make that bet? Like it or not, you already have.

Sure is a good thing the Lege fixed all those power grid problems

Otherwise, who knows what could happen?

Texas’ main power grid struggled to keep up with the demand for electricity Monday, prompting the operator to ask Texans to conserve power until Friday.

The Electric Reliability Council of Texas said in a statement Monday that a significant number of unexpected power plant outages combined with expected record use of electricity due to hot weather has resulted in tight grid conditions. Approximately 12,000 megawatts of generation were offline Monday, or enough to power 2.4 million homes on a hot summer day.

ERCOT officials said the power plant outages were unexpected — and could not provide details as to what could be causing them.

“I don’t have any potential reasons [for the plant outages] that I can share at this time,” said Warren Lasher, ERCOT senior director of systems planning, during a Monday call with media. “It is not consistent with fleet performance that we have seen over the last few summers.”

The number of plants that were forced offline today is “very concerning” Lasher said.

“We operate the grid with the resources that we have available,” he said. “It’s the responsibility of the generators to make sure their plants are available when demand is high.”

How reassuring. I don’t have anything but snark and profanity to add, so let me point to the Chron story for more details.

CenterPoint, which manages electricity for power providers in Houston, said in a statement if it must cut power to maintain reliability of the grid it will be “done with the intent to rotate outages.”

It is not the first time since February’s freeze and statewide power outages that ERCOT has issued a conservation order. The grid manager did so on April 14, when temperatures were hotter than usual and power generators went offline to do routine maintenance ahead of skyrocketing demand that happens annually during Texas’ hot summers. However, that conservation alert only lasted for one day.

Ed Hirs, an energy fellow at the University of Houston, said he wasn’t surprised another alert was issued on Monday.

“This is not going to get better,” he said. “There will be more alerts this summer primarily because the weather pattern looks like it will be hotter than last summer, and ERCOT, with the new bills passed out of the Legislature, is duty bound to issue alerts.”

[…]

Earlier this month, Gov. Greg Abbott signed Senate Bill 3 into law, which mandates the weatherization of power plants; creates a statewide emergency alert system; improves communication among those in the industry; and designates some natural gas facilities as “critical” so their power can’t be turned off during crises.

However, Hirs said those actions fall short of what is needed to prevent these issues from happening.

“This was destined to fail because no one would invest in new capacity or at least not invest fast enough to keep pace with demand,” Hirs said. “There’s really no incentive to reinvest or maintain the grid for weatherization.”

But hey, you got permitless carry and a six-week abortion ban, and if those things don’t make you feel all cool inside, I don’t know what would. And because I don’t have any more words to add here, have some Internet humor.

Try to stay cool, y’all.

Another upward revision of the freeze death count

Buzzfeed News takes a deep dive.

The true number of people killed by the disastrous winter storm and power outages that devastated Texas in February is likely four or five times what the state has acknowledged so far. A BuzzFeed News data analysis reveals the hidden scale of a catastrophe that trapped millions of people in freezing darkness, cut off access to running water, and overwhelmed emergency services for days.

The state’s tally currently stands at 151 deaths. But by looking at how many more people died during and immediately after the storm than would have been expected — an established method that has been used to count the full toll of other disasters — we estimate that 700 people were killed by the storm during the week with the worst power outages. This astonishing toll exposes the full consequence of officials’ neglect in preventing the power grid’s collapse despite repeated warnings of its vulnerability to cold weather, as well as the state’s failure to reckon with the magnitude of the crisis that followed.

Many of the uncounted victims of the storm and power outages were already medically vulnerable — with chronic conditions including cardiovascular disease, diabetes, and kidney problems. But without the intense cold and stress they experienced during the crisis, many of these people could still be alive today.

[…]

The BuzzFeed News analysis of deaths during the storm is based on mortality data from the CDC. It relies on a method called “excess deaths” analysis, recently used to estimate the full toll of the COVID-19 pandemic.

Our analysis, reviewed by three independent experts, suggests that between 426 and 978 more people than expected died in Texas in the week ending February 20 alone. Our best estimate is that 702 people were killed by the storm that week. Even the lowest end of the range is almost three times the number officials have acknowledged. Neighboring states that were hit hard by the winter storm but did not experience the widespread power outages seen in Texas did not show a spike in deaths.

BuzzFeed News reached out to relatives of people who died during the power outages, identified from dozens of wrongful death lawsuits as well as death reports obtained from public records requests to medical examiners in eight of the biggest counties in Texas. Interviews revealed stories of anguish and confusion, as families struggled to find out exactly how their relatives died.

This confusion also poses real economic challenges for survivors. For Mary Gonzales, the delay in obtaining a cause of death for her husband meant she was unable to claim an income from his pension for almost three months. And without an official acknowledgment tying their loved ones’ deaths to the storm, families will be unable to claim federal assistance for funeral costs.

The high death toll adds pressure on state legislators, energy regulators, and Texas Gov. Greg Abbott to harden the state’s infrastructure to avert another deadly disaster.

Abbott’s press secretary, Renae Eze, did not respond to questions about the significantly higher death toll or whether the state would investigate further, but said Abbott was “working collaboratively with the House and Senate to find meaningful and lasting solutions to ensure these tragic events are never repeated.”

“The Governor joins all Texans in mourning every single life lost during the winter storm, and we pray for the families who are suffering from the loss of a loved one,” she said.

But with the state’s legislative session ending on May 31, lawmakers only have a week left to finalize a proposal to address some of the vulnerabilities that made the February storm so horrific.

“As it stands, nothing has happened,” said Michael Webber, a professor of mechanical engineering focused on energy infrastructure at the University of Texas at Austin.

As of the end of March, the official death count was at 111, and a Houston Chronicle analysis in early April estimated it at 194. As this story among others notes, there are only so many medical examiners in the state, and only so many deaths result in an autopsy. As was the case with COVID, some deaths are attributed to chronic conditions like heart disease despite the obvious external cause. Similar statistical methods that estimate “excess deaths” have been used for COVID as well, and you can read how they arrived at these figures in the story. We’ll never know an exact number, but we do know that the official number will always be too low. Daily Kos has more.

Are we headed for a June special session or not?

Too soon to tell. Right now this is just the usual end-of-session venting and frustration.

With the future of the power grid and voting laws in Texas hanging in the balance, tensions among the top political leaders in the Legislature are fueling a round of political gamesmanship that has even the future of the Texas Holocaust & Genocide Commission caught in the crossfire, one of many pawns in a larger battle over GOP priorities.

There are just four days left in the legislative session, which must end by midnight Monday. Yet with so much still unresolved, top Republican leaders in the Texas House and Senate are publicly accusing one another of torpedoing important legislation.

[…]

Gov. Greg Abbott addressed the Republican infighting during a news conference in Fort Worth on Thursday.

“If the leaders in the Legislature will stop fighting with each other and start working together, we can get all of this across the finish line,” Abbott said.

End-of-session drama is almost a given in Texas, where top leaders often clash in the closing days. But this year it is different as the Senate appears ready to take important political hostages in an attempt to force Abbott to call a special session in June, whether he wants to or not.

Just past midnight Thursday morning, the Senate appeared to try to force Abbott’s hand by refusing to take up House Bill 1600, which, if passed, would have assured the continued operation of 18 state agencies — including the Holocaust & Genocide Commission, the Texas Commission on Law Enforcement and the Racing Commission. There are other bills to keep those agencies operating, but HB 1600 is considered a backup to make sure those agencies are not placed in jeopardy unintentionally.

In Fort Worth, Abbott sent a public message back to Austin that he will not be pushed around.

“Not only am I the only one with the authority to call a special session, I get to decide when, and I get to decide what will be on that special session,” Abbott said. “And here’s what I would do if, if anybody tries to force this: It’s not going to be like it has been in the past, where we’ll have 40 items on a special session.”

Abbott said that if there is a special session, “the only thing that we’ll be putting on there are things that I want to see passed.”

Patrick, a Republican from Montgomery County, went on Spectrum News 1 on Thursday afternoon to deny he’s threatening state agencies to pressure Abbott or the House.

“I’m not holding anything hostage,” Patrick told host Karina Kling.

Instead, Patrick says the special session is necessary after the House refused to advance a bill to ban transgender girls from playing on girls scholastic sports teams.

Patrick has a long history of fighting for measures to restrict or regulate transgender Texans. In 2017, a similar bill to stop transgender children from using the bathrooms they are most comfortable with also triggered calls for a special session after the House refused to take it up. Abbott did call a special session, and the so-called bathroom bill still didn’t pass.

Patrick on social media listed other failed bills — a ban on taxpayer-funded lobbyists by city governments and legislation to stop social media companies from “censorship” — as important measures the House has blocked.

See here for the background. As the Trib notes, Abbott supports the things that Patrick is whining about, so this may be just a little show of dominance, or it may be Abbott’s usual fecklessness, or it may be that he had indigestion after ordering the burrito supreme platter for lunch on Thursday. As I said, he’s gonna do what he’s gonna do, and he may telegraph it or he may not. He’s the guy with the power, and he wants to make sure we know that.

One more thing:

All of this is happening as lawmakers still have not reached a final deal on a plan to require electricity grid suppliers and operators to winterize their facilities to prevent a repeat of the mass power outages that left millions of Texas freezing in the dark in February.

The House and Senate passed different bills, but despite that legislation being listed as a priority of nearly every elected official, lawmakers still have not announced a compromise on it.

Eh, who cares about the grid.

The Republican leaders and majorities in both chambers, though, did exactly what I feared they would do. None of the bills heading for Gov. Greg Abbott’s signature address core problems, such as the wholesale market design or the $9,000 price cap. Nothing they did will prevent another blackout of equal scale.

They did agree on more than $9 billion in bailouts for the electric utility industry that Texans will pay off over the next 20 or 30 years through mandatory charges on their utility bills. The goal is to spread the cost of the disaster to all Texans and make the monthly fee so low we do not complain.

This will bail out electricity providers who guarantee customers a set monthly rate, even though electricity is sold on a wholesale market where the price changes every 15 minutes between free and $9,000 a megawatt-hour.

When the February freeze hit and prices maxed out, many retail providers went bankrupt and left behind $2.5 billion in unpaid bills. House Bill 4492 allows the state to issue bonds to pay off those bills and charge customers a monthly fee to repay them.

Electricity co-ops also ran up huge bills for electricity used to power critical facilities. Senate Bill 1580 allows them to issue bonds estimated to total $2 billion. Again, the co-op’s customers will repay those bonds through their monthly bills.

Winter Storm Uri also triggered a 700 percent spike in natural gas prices, creating all kinds of financial pain for another sector that typically guarantees a set price. To help natural gas utilities, the Legislature authorized them to issue $4.5 billion in bonds. We will repay these on our gas bills.

“Considering the extraordinary costs incurred in the recent winter storm, customers could see a dramatic increase in their monthly bills,” Rep. Chris Paddie, R-Marshall, wrote as his intent for the bond authorizations. “This financing mechanism will provide rate relief to customers by extending the time frame over which the extraordinary costs are recovered.”

Magic of the free market, baby. Socialize that debt, and focus on the important things. It’s what they do. Reform Austin and the Trib have more.

How many times will we fail to fix our power grid?

By “we”, I mean our Legislature, and the PUC, and the Governor, and the Railroad Commission, and pretty much everyone else in charge of this state.

Ten years ago, Texas power plants froze during a fast-moving winter storm, causing rolling electricity blackouts across the state. Outraged Texas regulators and lawmakers, vowing to crack down, debated requiring energy companies to protect their equipment against extreme weather to ensure reliability.

But they didn’t.

Nine years ago, two state agencies that regulate utilities and the oil and gas industry warned that natural gas facilities that lost power during outages couldn’t feed electricity generation plants, creating a spiral of power loss. The agencies jointly recommended that lawmakers compel gas suppliers and power plants to fix the problem.

But they didn’t.

Eight years ago, economists warned that the state’s free-market grid left companies with little incentive to build enough plants to provide backup power during emergencies. With the support of then-Gov. Rick Perry, legislators and regulators considered increasing power rates to encourage the construction of more power plants, so that Texas, like other states, would have sufficient reserves.

But they didn’t.

In the wake of each power failure, or near-failure, over the past decade, Texas lawmakers have repeatedly stood at a fork in the road. In one direction lay government-mandated solutions that experts said would strengthen the state’s power system by making it less fragile under stress. The other direction continued Texas’ hands-off regulatory approach, leaving it to the for-profit energy companies to decide how to protect the power grid.

In each instance, lawmakers left the state’s lightly regulated energy markets alone, choosing cheap electricity over a more stable system. As a result, experts say, the power grid that Texans depend on to heat and cool their homes and run their businesses has become less and less reliable — and more susceptible to weather-related emergencies.

“Everyone has been in denial,” said Alison Silverstein, a consultant who works with the U.S. Department of Energy and formerly served as a senior adviser at the Federal Energy Regulatory Commission. “They treat each individual extreme event as a one-off, a high-impact, low-frequency event, which means, ‘I hope it doesn’t happen again.’”

With each passing year, the grid has steadily become less reliable. In 1989, Texas suffered a cold snap considered worse if not equal to the winter storm earlier this year yet managed to keep the grid functioning, with only a few hours of rotating outages.

By comparison, February’s Winter Storm Uri brought the Texas power grid to within five minutes of complete collapse, officials acknowledged. Millions of residents were left without power for days in subfreezing temperatures; nearly 200 died.

“Our system now is more vulnerable than it was 30 years ago,” said Woody Rickerson, vice president of grid planning and operations at the Electric Reliability Council of Texas. “With the generation mix we have now, the weather has the ability to affect wind and solar and (the gas supply). Those are things we can’t anticipate.”

It’s the first of a three-part series, and it’s a long read that will make you mad. The simple fact is that the system we have now works very well for some wealthy interests, and they are very good at defending their turf. Throw in an unwavering belief in the invisible hand of the free market and the general incentive towards doing nothing, and voila. Even the incremental steps forward have turned out to be meaningless:

As a result, the only legislation to come out of the 2011 storm was a minor bill from then-state Sen. Glenn Hegar, a Katy Republican, which required power companies to file weatherization plans with the PUC each year.

Two months after that bill was signed into law, the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation put out a report of more than 350 pages, urging Texas to enact stricter weatherization standards for power plants and natural gas operators.

And they did to a degree, with ERCOT putting out best practices, conducting annual workshops and inspecting plants every three to four years.

But there were two problems. First, despite FERC’s recommendation, the state Legislature never gave the PUC authority to penalize power plants that did not comply, making weatherization voluntary. While progress was made, some companies opted not to bring their plants up to code, said Rickerson, the ERCOT vice president.

“Ultimately those were financial decisions that had to be made,” he said. “How much is someone willing to invest in a power plant that’s 50 years old and going to retire in a few years?”

More significantly, the best practices ERCOT was sharing were designed for a cold snap like that seen in 2011. While cold, with temperatures in Dallas dropping as low as 14 degrees, it was nothing compared to the 1989 winter storm, when temperatures dropped to 7 degrees in Houston and minus-7 in Abilene, let alone 1899, when the state’s all-time low temperature of minus-23 degrees was set in the Panhandle town of Tulia.

So when temperatures dipped into the single digits for days on end this February, most Texas power plants were simply not prepared. Exterior control equipment and fuel lines froze, not to mention coal piles and wind turbine blades.

“One power plant under freezing for 200-plus hours. That’s not a thing, right?” said Chris Moser, executive vice president of operations for NRG Energy, of expectations going into the winter. “If you look at the math ERCOT did prior to the seasonal assessment, it looked like (there was plenty of power). But then you have 80 to 85 plants not showing up. It was a failure of imagination.”

As for Hegar’s legislation, it has proved even more toothless than it appeared at the time.

According to a recent report from ERCOT, the agency was never given authority to judge the weatherization plans but only to check that they were being implemented. And a requirement in Hegar’s bill that the PUC produce a one-time Weather Emergency Preparedness Report, which was quietly published in 2012 and found that many power companies were still doing a poor job implementing reforms, drew little attention from state officials.

“When you’re on the commission, you’re dealing with what’s immediately in front of you,” said Ken Anderson, a former public utility commissioner. “I’m not sure how much follow-up occurred.”

Seems like this is a pretty good campaign issue for next year, especially given what is being prioritized over making the grid more robust. I’m just saying.

So we bail out the electricity providers

I guess I don’t know enough about our weird electricity market to suggest a viable alternative to this, but it sure doesn’t speak well of our system.

An approximately $2.5 billion plan to bail out Texas’ distressed electricity market from the financial crisis caused by Winter Storm Uri in February was approved by the Texas House Thursday.

The legislation would impose a fee — likely for the next decade or longer — on electricity companies, which would then get passed on to residential and business customers in their power bills. Lawmakers on Wednesday said they could not yet estimate how much it would impact Texans’ electricity bills.

House lawmakers sent House Bill 4492 to the Senate on Thursday after a 129-15 vote. A similar bill is advancing in the Senate.

Some of the state’s electricity providers and generators are financially underwater in the aftermath of the February power outages, which left millions without power and killed more than 100 people. Electricity companies had to buy whatever power was available at the maximum rate allowed by Texas regulations — $9,000 per megawatt hour — during the week of the storm (the average price for power in 2020 was $22 per megawatt hour). Natural gas fuel prices also spiked more than 700% during the storm.

Several companies are nearing default on their bills to the Electric Reliability Council of Texas, which manages the grid that covers most of the state and facilitates financial transactions in it.

Rural electric cooperatives were especially hard hit; Brazos Electric Power Cooperative, which supplies electricity to 1.5 million customers, filed for bankruptcy citing a $1.8 billion debt to ERCOT.

State Rep. Chris Paddie, R-Marshall, the bill’s author, said a second bailout bill will be necessary during the current legislative session for severely distressed electric cooperatives.

“This is a financial crisis, and it’s a big one,” James Schaefer, a senior managing director at Guggenheim Partners, an investment bank, told lawmakers at a House State Affairs Committee hearing in early April. He warned that more bankruptcies would cause higher costs to customers and hurt the state’s image in the eyes of investors.

“You’ve got to free the system,” Schaefer said. “It’s horrible that a bunch of folks have to pay, but it’s a system-wide failure. If you let a bunch of folks crash, it’s not a good look for your state.”

If approved by the Senate and Gov. Greg Abbott, a newly-created Texas Electric Securitization Corp. would use the money raised from the fees for bonds to help pay the companies’ debts, including costs for ancillary services, a financial product that helps ensure power is continuously generated. The aid would only be allowed for the debt that would otherwise be defaulted.

Hard to say how much this will increase the average monthly electric bill, but I’m sure someone will study that. Having a bunch of bankruptcies would be bad for a variety of reasons, so this is what we’re doing, but let’s take a moment to review the bidding on our deregulated electricity market. Massive statewide blackouts (and water failures) during the freeze because there was no requirement to weatherize the systems (even though we had experienced similar, though smaller scale, blackouts before, in recent memory), which led to a huge financial crisis in the industry that is now requiring a state bailout as well as a large state investment in weatherization, because otherwise that was never going to happen. All this, and we have higher consumer prices than other states. Is this a great system or what?

Meanwhile, in other ERCOT news:

During February’s deadly winter storm, Gov. Greg Abbott and many state lawmakers quickly criticized the Electric Reliability Council of Texas because several members of its large governing board reside outside Texas.

Many of the out-of-state board members are experts in the electricity field, but resigned following criticism of the agency’s oversight of the state’s main power grid during the storm that left millions of Texans without electricity for days in freezing temperatures.

State lawmakers are now trying to change the way ERCOT is governed by requiring members to live in Texas and giving more board seats to political appointees — changes that experts say may do little to improve the power grid.

One former board member who resigned after the storm, Peter Cramton, criticized legislation for politicizing the grid operator’s board.

“These people would be political types without electricity expertise,” he told The Texas Tribune.

The Texas House has already approved House Bill 10, which would remove independent outside voices on the ERCOT board and replace them with five political appointees. The governor would appoint three of those people, while the lieutenant governor and speaker of the House would each appoint one. None of the appointees would be required to be electricity experts. The only requirement is that appointees live in Texas.

Senate Bill 2, which has cleared the upper chamber, would give the governor five ERCOT board member appointments.

[…]

The political appointees replace what are now called “unaffiliated members,” who mostly served as outside expert voices. The other board members currently represent regions across the state that make up the ERCOT grid, as well as non-voting members such as the chair of the Public Utility Commission, which oversees ERCOT.

Some power grid experts have said in legislative testimony, at industry events and in interviews that they don’t see how giving more power to the political class — and making minor tweaks like requiring all board members reside in Texas — could improve the grid operator.

“From the consumer standpoint, we really depend on those unaffiliated directors to make decisions that are in customers’ interest and in the interest of the overall health of the ERCOT market,” Katie Coleman, who represents Texas Industrial Energy Consumers, said at a recent industry conference.

Seriously, WTF are we even doing here?

ERCOT roundup

Just a few stories of interest that I didn’t feel like putting in their own posts…

ERCOT will argue it is immune from lawsuits.

The Electric Reliability Council of Texas will argue that it has governmental immunity that protects it from the at least 35 lawsuits that have been filed against the operator after February’s disastrous winter storm which killed dozens of people and created millions of dollars of damages.

“ERCOT has and will continue to assert that it is entitled to sovereign immunity due to its organization and function as an arm of State government,” the organization wrote in a Wednesday court filing requesting to consolidate several of the lawsuits it’s battling.

Sovereign immunity grants protections for state agencies against lawsuits, with some exceptions. And this isn’t the first time ERCOT has made the argument — with some success — that it should be shielded from lawsuits due to its role acting upon the directives of state agencies and lawmakers.

In 2018, an appeals court in Dallas ruled that ERCOT, despite the fact that it is a private nonprofit, has sovereign immunity after Dallas-based utility Panda Power sued the operator over allegations of flawed energy projections.

That immunity was challenged at the Texas Supreme Court last month. However, the high court refused to rule on the issue, claiming it lacked jurisdiction because the original case that posed the question was dismissed — a hotly contested opinion with four of the nine justices dissenting.

See here for the previous update. I don’t know what practical effect this might have if ERCOT succeeds, but as a general principle I think this kind of legal immunity needs to be carefully limited. Maybe it’s appropriate here, but there needs to be a strong argument for it.

ERCOT: Blackout primarily caused by power plants freezing up:

The massive loss in power generation during the Texas blackout in February was caused primarily by power plants freezing up under historically cold conditions, according to a new report by the Electric Reliability Council of Texas Tuesday.

The state’s grid operator reported that on the morning of Feb. 16, the most severe moment of the blackout, 54 percent of the loss of power supply stemmed from weather-related issues at power plants, while 12 percent was due to a lack of fuel such as natural gas. Some 51,000 megawatts of generation — more than half of the system’s capacity — were offline at the height of the blackouts at 8 a.m. of Feb. 16, ERCOT reported.

The findings come as state officials are debating how to fix the state’s energy system to prevent a repeat of the power outages that left millions of Texans without power for days on end.

The report Tuesday offered a fairly limited perspective on what went wrong, failing to explain why specific types of generation were unable to operate during the winter storm or what happened. But it will add questions to how well prepared ERCOT and the state’s power plants were for cold weather, despite warnings from the Federal Energy Regulatory Commission to winterize following a less severe cold snap in 2011.

[…]

After weather-related problems, the second biggest loss of generation on Feb. 16 was caused by planned or unexpected outages prior to the cold snap that began sweeping Texas earlier in the week, accounting for 15 percent of lost power supply.

Another 14 percent of lost generation came from equipment failures unrelated to the weather. Only four percent of outages were due to transmission problems or a short drop in the frequency of the power grid that occurred early Monday morning.

I don’t know enough to say what this means in terms of figuring out the best path forward, but I sure hope that the Legislature has some people who know how to read a report like this available to explain it to them. We screwed this kind of response up last time. We have no excuse for screwing it up again.

Faulting ERCOT, insurer says it shouldn’t have to cover storm damages:

ERCOT’s insurance company is seeking a court ruling excusing it from defending Texas’ electric grid manager from lawsuits or covering damages stemming from the catastrophic power failure in February.

The Cincinnati Insurance Co. on Tuesday sought relief from the U.S. district court in Austin, arguing it does not have to defend the Electric Reliability Council of Texas because it does not view the power outages as an accident, defined by the insurer as a “fortuitous, unexpected, and unintended event.” As a result, the company said it has no obligation under its insurance policy to cover ERCOT, which faces a flood of lawsuits after the winter storm.

“The allegations in the Underlying Lawsuits allege ERCOT either knew, should have known, expected, and/or intended, that Winter Storm Uri would cause the same power outages which occurred as a result of previous storms in Texas, including storms in 1989 and 2011,” the insurer said in court documents. “The Underlying Lawsuits allege the power outages caused by Winter Storm Uri were a result of the exact same failures including failures of the same generators which failed in the previous winter storms, and therefore, the power outages were foreseeable, expected, and/or intended.”

[…]

ERCOT’s insurance policy with Cincinnati Insurance, effective until June 2022, states that the insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages.’

The policy, however, says Cincinnati Insurance has no duty to defend ERCOT in cases in which the insurance policy does not apply, and retains the discretion to investigate any “occurance” and settle any claim or lawsuit that results from it. The insurer defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

In case you were wondering why ERCOT really doesn’t want to be sued. Also, when was the last time that an insurance company paid a claim without fighting it?

An open Texas power grid would boost reliability and renewables, experts say.

Since the February power outages, Texas legislators have been busy weighing a host of improvements for the state’s grid, from weatherizing equipment to shaking up oversight to partnering with the billionaire investor Warren Buffett on new emergency-use power plants.

But hardly any of them have focused on what some believe could be a more widespread fix: plugging into other U.S. power supplies.

While Texas has long opposed opening its grid to avoid federal oversight, and ostensibly to keep prices low, energy experts say the calculus is not what it once was and that the benefits of connecting to the outside world are at least worth examining, especially as renewable energy is poised for a major expansion under the Biden administration.

Not only is the state missing out on a potential lifeline in future blackouts, they warn, it also risks passing up billions of dollars in new investments for clean, marketable electricity.

“We export every form of energy you could imagine except electrons,” Michael Webber, a professor at the University of Texas at Austin, told reporters recently. “This is ridiculous,” he said. “Let’s at least study the option.”

There are some good arguments for this, and some reasonable ones for maintaining the independence of the Texas grid. Just because our setup is dumb and expensive and unreliable doesn’t mean it has to be that way, after all. But this is all an academic point, because there’s a zero percent chance this happens. Go ahead and write a report, but don’t ever expect Greg Abbott or Dan Patrick to read it.

Winter storm death count now at 111

A revision of the numbers. Expect this to happen at least once more.

At least 111 Texans died as a result of last month’s winter storm, according to updated numbers released Thursday by the state Department of State Health Services.

The newly revised number is nearly twice what the department had estimated last week, and will likely continue to grow. Some of Texas’ larger counties, such as Tarrant County, have yet to report any storm-related deaths.

The majority of people died from hypothermia, but health officials also attributed deaths to “motor vehicle accidents, carbon monoxide poisoning, medical equipment failure, exacerbation of chronic illness, lack of home oxygen, falls and fire.”

[…]

Harris County reported 31 storm-related deaths, the largest share in the state. Travis County followed with nine deaths.

Health officials will continue to update their preliminary findings weekly.

According to DSHS, the data is compiled from forms that certify deaths are related to a disaster, notification from death certifiers and analyses of death certificates from state epidemiologists.

See here for the background. As a reminder, there were 103 deaths attributed to Hurricane Harvey, so the February freeze event (I’m sorry, I’ve not adopted the new paradigm of naming winter storms, so I have not and probably will not again refer to this as “Winter Storm Uri”) has now surpassed that total. And will likely put some more distance between them when the next month’s data is available.

There has been a bit of legislative action on this front.

A bill that would overhaul Texas’ energy industry — including mandating weatherization for natural gas and power generators — was approved by a Texas Senate committee on Thursday.

The sweeping Senate Bill 3, sponsored by Republican state Sen. Charles Schwertner of Georgetown, includes a number of reforms that have been floating around the state Capitol since last month’s deadly winter storm left millions without electricity during freezing temperatures. While the Texas House earlier this month approved a package of similar, standalone bills, Thursday’s vote represents the first substantive action on the issue by the upper chamber.

“This is an important issue to get right for the people of Texas, for the future of Texas, for the economy of Texas,” Schwertner said.

Chief among the bill’s provisions is a requirement that all power generators, transmission lines, natural gas facilities and pipelines make upgrades for extreme weather conditions — a process known as weatherization. Many power generators and gas companies were ill-suited for the freezing temperatures in February, which led gas pipelines to freeze and power transmission to falter.

The measure would delegate rulemaking authority to the Texas Railroad Commission, which regulates the oil and gas industries, and the Texas Public Utility Commission, which regulates the electric and telecommunication industries. If a gas or energy company fails to comply with the weatherization rules, it would face a fine up to $1 million for each offense. The bill does not address funding to pay for the required upgrades.

A Texas House committee earlier this month passed a similar weatherization bill. But the requirements only apply to electric companies, not natural gas companies. In public testimony before the Legislature, Railroad Commission Chair Christi Craddick largely dodged talks of winterizing the natural gas supply chain.

There’s more, so read the rest. I don’t know enough to offer a general critique of these bills, but I would certainly argue that natural gas companies should have the same weatherization requirements. All of these bills are sure to change as they move from one chamber to the other, so we’ll need to see where they wind up.

The power to pay more for electricity

Deregulation really does create jobs.

When Texas deregulated electricity markets 16 years ago, the Public Utility Commission created the website Power to Choose to help consumers through the power buying experience. But what was promoted as an easy, free way for Texans to pick electricity providers has turned into a such a complex and confounding experience that it is spawning a cottage industry to help consumers navigate the scores of companies and hundreds of plans available.

At least five companies in Texas are providing both free and paid services aimed at helping consumers in Houston and other deregulated markets decipher confusing electricity offers such as free nights and weekends, multi-tiered pricing plans, and credits for high electricity use.

The companies have built computer algorithms that try to ferret out the best deals based on factors such as past electricity consumption, home size, and the number of people living there. In some cases, it’s just a matter of plugging in your monthly electricity into a website calculator. Others provide more comprehensive services, charging a monthly fee to advise customers which plan will save them the most money and then monitor the market so if prices fall, consumers can switch.

This kind of hand-holding is akin to car buying services, which save customers the time, energy and aggravation researching models, doing comparison shopping and negotiating prices. But unlike cars, there’s no difference in the electricity provided by different retailers, making the emergence of these power buying services a sure sign of the complexity of the system.

“The third party guys demonstrate the consumer is getting ripped off by the Power to Choose artificial configuration that the Public Utility Commission has rammed down the throat of Texas consumers,” said Ed Hirs, energy economist at the University of Houston.

The Public Utility Commission recently recognized the shortcomings of Power to Choose, with chairman DeAnn Walker criticizing retail electric providers for misleading pricing plans. Those plans offer rock-bottom rates at 1,000 kilowatt hours, but if consumers use just one kilowatt hour more, the price per kilowatt hour can jump as much as 10 times.

[…]

Jesson Bradshaw, a power industry veteran, saw an opportunity when his friends and family asked him which company they should sign up with for electricity. He sent them to Power to Choose, but he quickly heard complaints.

“I saw how confusing it was,” said Bradshaw, who worked as a power trader and owned the retail power company Amigo Energy until he sold it to Just Energy in 2011.

Four years ago, he and a partner launched the buying service Energy Ogre. The company charges customers $10 each month to find the lowest price plan and monitor rates to see if it makes sense to switch mid-contract. It doesn’t take commissions from power providers.

Bradshaw said his business is not exactly popular among the retail providers, many of which bet that customers won’t shop for better rates when contracts expire.

“They don’t like us informing the customer,” he said. “ If there is a better rate, we move them. We don’t care which provider.”

Mark Axford of Sugar Land signed up with Energy Ogre about three years ago. Axford said the company switches electricity providers at least once a year and makes sure Axford and his wife do not get hit with penalties. The monthly fee is well worth it, he said.

If you want to save, you have to shop, said Axford. “But who has the time to keep shopping for electricity?”

The trade association for retail electricity providers in Texas said it recognizes that the buying services may help customers sort through offers. But it’s important to note, said Julia Rathgeber, president of the Association of Electric Companies of Texas, that these companies are not subject to oversight by the Public Utility Commission. It’s still up to consumers to decide whether plans are right for them, she said.

Got that? If you’re paying too much for electricity, it’s your own damn fault. Never mind how confusing or time consuming the shopping process is. There’s no reason I can think of why the state couldn’t provide, for free, the kind of easy, at-your-fingertips information that these entrepreneurs have done. Why wouldn’t we want to do that, if the goal of deregulation was to lower prices for consumers? The answer to that is left as an exercise for the reader. In the meantime, here’s the sidebar that tells you how to find the best deal for yourself:

MORE INFORMATION
Companies that help consumers find the best power deals:

Texas Power Guide

Website: TexasPowerGuide.com

Awesome Power Texas

Website: AwesomePowerTexas.com

Geek Your Rate

Website: GeekYourRate.com

Energy Ogre

Website: EnergyOgre.com

Real Simple Energy

Website: RealSimpleEnergy.com

You might also want to go back and look at some guest posts my friend Dan Wallach wrote about picking power plans. Good luck.

Pity the poor utilities

Sorry, but low electricity prices, especially when they are aided by record amounts of wind power generation, are good news.

ERCOT

Texas’ national lead in cheap wind power, combined with near historically low natural gas prices, mild weather, an abundant power supply and slower growth in electricity demand, can work to the detriment of power companies.

The combination weighed down wholesale power prices last year to their lowest averages since 2002. And the effects are only becoming more dramatic in 2016, even creating bizarre instances when, in the abstract at least, providers are paying to put electricity on the market.

“It’s pretty dire,” said Michael Ferguson, associate director at Standard & Poor’s covering utilities and infrastructure. “It’s a bad situation for gas generators, but for coal generation, it’s even worse.”

Texas’ wholesale power prices averaged $26.77 per megawatt-hour last year, down nearly 35 percent from $40.64 per megawatt-hour in 2014. The cost was more than $70 as recently as 2008.

While now is a good time for consumers to lock in cheaper electricity prices, well more than 25 percent of the state’s power plants are operating at a cash loss, especially the older coal-fired plants, power executives and analysts estimated. That’s before more stringent federal emissions regulations go into effect in coming years

Until coal plants start shutting down or the state tweaks regulations to artificially inflate prices, power companies will struggle, executives said. A new Moody’s Investors Service report concluded that Texas “power prices are unlikely to climb out of their doldrums.”

Already, less than a quarter of Texas’ coal fleet is operating early this spring, as more generators simply take their coal plants offline until the summer heat brings more demand, analysts from Tudor, Pickering, Holt & Co. noted.

In March, wind added to the grid more than coal power for the first time ever for a full month. Wind contributed 21.4 percent of the grid’s overall power, compared with 12.9 percent from coal, which used to be the dominant source of the state’s electricity generation, according to the Electric Reliability Council of Texas, which manages about 90 percent of the state’s electricity load.

“Ultimately, something is going to have to give here,” said Thad Hill, president and CEO of Calpine Corp., the largest power generator in the Houston region and owner of the nation’s largest fleet of natural gas-fired power plants.

[…]

Texas is home to nearly 20 coal-fired power plants and the near future of at least six of them are considered at risk.

They will require expensive upgrades to meet federal standards, according to a recent ERCOT analysis, and the costs could outweigh the benefits of keeping them open. That’s not even counting the effects of the federal Clean Power Plan, which is pending in court.

“Ultimately, we think the market could be a lot tighter than people think, particularly if people start mothballing or retiring units,” said Hill, whose Calpine would stand to benefit because it doesn’t own any coal plants.

At-risk plants include Luminant’s Big Brown, Monticello and Martin Lake coal plants in East Texas, half of Luminant’s Sandow plant east of Austin, NRG Energy’s Limestone plant east of Waco, and Engie’s Coleto Creek plant near Victoria that’s being bought by Dynegy.

It’s fine by me if those coal plants go the way of the dodo. It’s long overdue, and their demise will make meeting the Clean Power Plan benchmarks even easier. More investment in solar energy will help mitigate the low-wind periods and ensure demand can be met in the summertime. What’s not to like?

Dan Wallach: 2016 Electric Power Usage Update

Note: From time to time, I solicit guest posts from various individuals on different topics. While I like to think I know a little something about a lot of things, I’m fortunate to be acquainted with a number of people who know a whole lot about certain topics, and who are willing to share some of that knowledge here. In this particular case, I’m welcoming back someone who has written on this particular topic before.

We’ve now had a solar system on our house, and an electric car charging from the house, for just over a year. Also of note, in my post last May, I suggested that what we need is a retail electric plan that sells to you at a competitive rate (versus the inflated prices at Green Mountain) and buys from you at the wholesale price (which can climb impressively high on hot summer afternoons, when your solar system is cranking out the juice). Well, plans like this are starting to appear on the market. MP2 Energy has such a plan and others are looking into it.

Today, I want to discuss a few related questions:

  • How much electricity did our solar system generate, and our electric car consume, in the past year?
  • Based on our year of data, would we do any better to stick with Green Mountain or go to one of the newer plans?

Of course, I’m only writing about our own usage, with our house and our car. Your house and your car and your, umm, mileage will vary, but you might be able to extrapolate from our numbers to reach your own conclusions about whether you want to go solar.

How much electricity did our solar system generate?

Below is a graph of the energy-per-day produced by our solar array. You can see the system generating more energy in the summer months, with the correspondingly longer days. You can also see the occasional days with bad weather. No sun = no power.

Dan Wallach 2016 chart

In total, over this twelve month period, our solar array (36 panels, 250W peak production per panel) produced 10.3 MWh of electricity. At the $0.12/kWh buyback rate we’re getting with Green Mountain Energy, that means that our solar array saved us roughly $1240 this year. (Our panels are facing east and west, as a result of the way our roof is built. If your house has a large southern-facing roof, you could get this much power from fewer panels.)

How much juice did our Tesla consume?

According to the Tesla’s dashboard measurements, after a year of owning it, we’ve driven a total of 7033 miles, and used 2476 kWh to do it. That’s 352 Wh/mile. Assuming you were paying $0.10/kWh for your electricity, then we’re talking about 3.5 cents/mile. Contrast that with a comparably large sedan with comparable performance (e.g., an Audi A7), doing the same sort of city driving and thus getting something crappy like 15 miles/gallon, then with current $2/gallon prices, you’re looking at 13.3 cents/mile. You’d have to have some kind of amazing 57mpg  hybrid to achieve the same cost per mile. (A Prius is almost there. Big luxury cars, not so much.)

Another way to think about it: the “long tailpipe” problem. Some critics of electric cars note that they still burn fossil fuels, just somewhere far away from home. Our solar array produced enough energy to run our Tesla for nearly 30,000 miles. So if you want to have a “solar powered electric car”, you can do it with even a modest-sized solar system.

What if you drive a longer commute? The prior owner of our Tesla lived up in the Woodlands and commuted back and forth to Houston. He was averaging an even more amazing 300 Wh/mile, driving twice as many miles per year in the same exact car. He upgraded to a Tesla P85D (the four-wheel-drive version that goes insanely faster) and his mileage stayed roughly the same. Supercar performance, tiny hybrid efficiency.

All that said, I don’t have a really good handle on the overhead of the Tesla. Sure, it consumed 2476 kWh in the past year, but that’s going from the car’s battery to the tires. There’s some fractional overhead beyond that, going from the wall outlet to the car’s battery. Charging a battery creates heat, which represents wasted electricity, and also requires additional energy to remove. The Tesla will thus use extra power to run the A/C compressor while it’s charging. For now, let’s just say that measuring the charging overhead is future work. (Hey OffTheKuff readers: if you’ve got measurement infrastructure that I could borrow for this, let me know!)

Lastly, I’ll note that we did several road trips in the Tesla, using their Supercharger infrastructure. I’d estimate that somewhere around 500 kWh of that energy was “free” from the Supercharger network (i.e., included in the cost of buying the car).

Should we stick with Green Mountain or switch elsewhere?

Green Mountain has the best net metering plan on the market, but there are only two competitors. In a nutshell, Green Mountain buys and sells power from you at the exact same price: $0.12/kWh, inclusive of all fees and taxes. But there are plenty of standard retail plans that will sell you electricity at $0.08 or $0.09/kWh. Can we do better than Green Mountain’s net metering plan? The real issue, once you strip away all the dumb politics, is that the underlying pricing model isn’t at all a flat rate for electricity.

Roughly speaking, there’s a wholesale price for the electricity coming from a commercial generator and then there’s a distribution price to get it to you. Wholesale prices vary all day long, with overnight lows below a penny and mid-afternoon highs as much as 3 cents/kWh, with occasional peaks that are much, much higher. CenterPoint charges 3.8 cents/kWh for delivery of that power, no matter what, alongside a flat monthly charge of $5.47 per residential customer. All those charges are often rolled into the pricing plans you see from other retail electricity providers, who are essentially gambling that they can buy power at variable wholesale rates and sell it to you at a flat retail price while still somehow making a profit.

When a retail electricity provider wants to get into the solar buyback game, their actual costs to get power downstream to your house (so far as I can tell) are the wholesale price plus the distribution price. Your excess solar power production is worth the same to them as the spot wholesale price when it flows back upstream. CenterPoint doesn’t give any sort of rebate for upstream electricity flows. CenterPoint’s argument: Somebody else is receiving the power you’re sending upstream, and they’re paying to get it delivered. CenterPoint charges for that delivery.

Can a retail electricity provider offer a competitive pricing plan that’s closer to the wholesale market structure while still buffering consumers from the sometimes insane spikes of the raw wholesale market? One such provider, who prefers not to be named yet in public, approached me privately and offered me the chance to test drive a new plan they’re working on. Their proposal is to pass through all the CenterPoint charges, as is, and then have a flat 3 cents/kWh for buying and selling power, downstream or upstream. I ran these numbers through my spreadsheet for the same 12 months of data I’ve already captured. Here’s what came out: Green Mountain’s $0.12/kWh net metering plan cost us $692.84 for the year. If we had this new plan instead, it would come out to $712.07 for the same usage in the same year.

Evaluating MP2’s spot-price “solar buyback” plan is a bit more complicated, because the upstream price they pay you varies all day long. Conveniently, MP2 did this analysis for me. I emailed them all our data and their conclusion was that our annual bill would be $904.32, so not especially competitive with Green Mountain’s net metering. MP2 also offers a net metering plan, similar to Green Mountain’s plan, but it’s presently offered as part of getting your solar system installed through SolarCity. Thus, not an option for us.

Call me modestly bullish on this. Even though MP2’s solar buyback plan isn’t a good deal for our house, other firms are looking to offer variants on the same business model that are competitive. As an added bonus, I’d now be incentivized to put a big battery on our house to capture the excess daily production and reuse it at night. With standard net-metering, there was no incentive, but now I’d save those distribution charges. I’ll still wait for the cost of battery packs to drop, but it’s fun to think about.

Some Thoughts About the Future

There are always going to be a few days in the summer where the demand on the grid peaks out. In those cases, all the market-rate adjustments in the world won’t cause a new industrial generator to be constructed and placed online. That means high prices and brownouts. (If anything, there’s a reasonable fear that generators might deliberately go off-line to force price spikes. That’s beyond the scope of today’s post.)

Solar has a big role to play in stabilizing our grid, because those hottest hours of the day are exactly when solar panels will be generating the most power. Solar also happens to do the job without pollution, and without incurring large infrastructure costs for long-distance power distribution. On top of that, solar’s one-time purchase and installation costs are rapidly shrinking.

Consequently, it’s sensible and desirable for the Federal government to continue its solar subsidy, and it would make a lot of sense for the Texas state government to get in on the game as well. The solar on our roof helps our neighbors, not just us. I’m not suggesting that we’ll stop burning fossil fuels, but rather that a diversified set of sources is a desirable way to meet the needs for a stable and scalable power grid.

The biggest objection to solar, so far as I can tell, comes from shills who misrepresent the financial structure of the electricity markets and claim that residential solar production leads to “mooching” off the grid. What I like about MP2 and some of the other buyback plans coming online is that they address this concern head-on. By passing through the monthly CenterPoint connection charge and pricing power consumption somewhere only marginally higher than wholesale rates, these new plans make it clear that solar systems aren’t mooching at all. They’re paying their fair share, and they’re improving the reliability of the grid while they’re at it.

Dan Wallach: 2015 Electric Power Usage Update

Note: From time to time, I solicit guest posts from various individuals on different topics. While I like to think I know a little something about a lot of things, I’m fortunate to be acquainted with a number of people who know a whole lot about certain topics, and who are willing to share some of that knowledge here. In this particular case, I’m welcoming back someone who has written on this particular topic before.

I’ve been blogging about our electricity situation for the past few years here at OffTheKuff. In 2014, I mentioned that we were pondering going with a solar system. Well, we did it — a 9 kW (peak) solar system via Texas Solar Outfitters — and we also picked up a Tesla Model S. This is less about being green hippie freaks and more about disconnecting from what I’ve viewed as a deeply dysfunctional electricity market. (And also having a car that kicks ass, but that’s for another day and a different blog.)

We’ve only had the solar system since November, so it’s too soon to have full-year statistics. Once the system reaches its first full year anniversary, I’ll run the “profitability” numbers and do another guest post here. Stay tuned for more exciting charts and financial math (present value, IRR, and more)! Instead, I wanted to give some perspective on the economics of solar power.

Notably, Tesla just announced a new “PowerWall” contraption that puts a 10kWh battery pack on your garage wall for $3500 (plus hiring an electrician, plus permitting, plus ancillary equipment like inverters, so let’s call it $6000 minimum). Elon Musk envisions that we can truly replace our entirely fossil fuel-based economy with solar power: homes, cars, everything. (For more technical details on the PowerWall products, Teslarati has a good writeup.) Let’s do the numbers, shall we?

To begin, here’s our March electrical bill from Green Mountain — the best of the three available plans if you have solar.

WallachElectricBill

This is what “net metering” looks like. We drew 862kWh from the grid and fed back 573kWh. Meanwhile, over the same time period, our solar system reports that it produced 853kWh. Of this, the house consumed 280kWh and we sold back the remaining 573kWh. So, our actual power consumption for March was 1142kWh (solar generation plus grid consumption, minus excesses solar generation sold back).

I rolled back to last year’s stats, when we had neither solar nor a Tesla, and the monthly usage for the same time period was 864kWh, which says that the Tesla used around 280kWh for the month, or maybe it’s just hotter this year. Last year’s awful summer peaks were well north of 1500kWh, so presumably this summer, with the Tesla, we’re looking at 1800-2000kWh / month of peak usage.

(With our Tesla, we’re on target to hit about 7500 miles/year, so these numbers may represent a “low” usage point relative to others, but you can easily scale our numbers up if you want to predict your own hypothetical costs. Your mileage and the weather may vary, etc.)

Here’s where solar gets fun. The graph below shows the energy generated by our solar system on a beautiful, sunny April day. Positive numbers represent power we’re drawing from the grid. Negative numbers represent excess power we’re selling back to the grid. You can see our Tesla charging itself up after we got home from eating dinner out. You can also nicely see when the sun came up and when it went down again. On this particular day, midnight to midnight, we drew 20kWh from the grid while the sun was down. The solar system generated 52kWh, and we had an excess of 44kWh that we sold back to the grid (i.e., we consumed a total of 28kWh on this particular day and were a net seller of electricity). Sounds great right?

WallachSunnyDayApril

The new Tesla PowerWall contraption leads you to ask the question of whether you could store all that extra energy in a battery during the day and release it at night. If you could do that, you could then cut yourself free from the grid. Today’s question: what would it take to go completely “off grid”?

To pull this off, you need to generate everything you might ever need, even in the worst case. So how bad is bad? Here’s a chart of our power usage over a two day period in early April when it was rainy and awful.

WallachRainyApril

Over these two days, our total power drawn from the grid was 46kWh. The solar system generated 25.2kWh, of which 9kWh was sold back to the grid (i.e., we consumed an average of 31kWh/day on these two days). To make this work “off grid”, we’d need to double the size of our solar system. To make this work on a bad weather winter day, with correspondingly less daylight, the solar system would need to grow yet again. Also, this included a typical day of driving with our Tesla. What if we did a long drive and got home with a near-empty battery? You’d have a whole new form of range anxiety to deal with. Conversely, on days when you generate more than you use you’re just throwing it away.

Our current solar system cost us roughly $30k to purchase and install (before the 30% tax credit, which might go down in future years). No matter how you slice it, the profitability of the system is dubious, given how much cheaper electricity became after the Saudis decided to crank up their production. Doubling the solar system, installing expensive batteries, going off-grid, and discarding excess production? Sorry, that’s not financially rational.

Incidentally, if you want to know how to size up a Tesla PowerWall system for an off-grid solar application, you pretty much just add up your grid consumption during the night; you need to ensure you have enough solar capacity and battery capacity during the day to cover it. For our house, two PowerWall batteries ($3500/ea, for 20kWh total storage capacity) wouldn’t quite do the job. We’d need three of them to have a decent margin. If you had a bigger house or you drove many more miles on your electric car, then you’d have to ratchet everything up appropriately.

Conclusion 1: building a solar system to deal with worst-case power generation, operating your house “off grid”, will require your solar system to be much larger than you’d specify for a net-metering application, where you can rely on the grid for bad-weather days. As solar panels get more powerful and cheaper, the economics of this will change. Today, no. Ten years, maybe.

Next question for today: is there any point in buying a PowerWall if not to go off-grid? If what you want is “emergency” service in a power-outage situation, you can buy all sorts of natural gas generators. They’re loud when running and they require regular service, but after Hurricane Ike knocked our power out for ten days, we could feel the soulful allure. Unfortunately, a smaller PowerWall system wouldn’t help here, since for a ten day blackout, you’re really in a situation equivalent to the fully off-grid scenario.

Sadly, with only flat-rate grid electricity pricing available here, I conclude that a PowerWall has no real use at our home.

Caveat 1: so long as TXU is willing to give you “free nights”, then a PowerWall means free electricity for your home! You can expect TXU to kill that program off quickly once Tesla’s battery packs start shipping. Sorry about that.

Caveat 2: electric utilities are cranking up the scare machine that it’s “unfair” for solar consumers to pay less for the grid. First off, this is totally bogus, as we pay the same fixed fee as everybody else pays for CenterPoint to maintain the grid. (Many retail electric plans hide this fee, so long as you use more than 1000kWh, but they’re still paying it on your behalf. ) And if you’re a net provider rather than net consumer of power at peak times, you’re helping the grid. But let’s say the utilities win the argument and kill off or weaken solar net metering. At that point, we’re forced to buy a battery storage system to recapture our excess daytime usage. The grid then loses the benefit of our excess generation, and every new solar system just got more expensive for no good reason.

All of this would change if consumers were more exposed to the variable pricing of the commercial power market. Rice University, for example, buys its electricity a full year ahead of time, hour by hour, offset by in-house solar production. If it turns out that Rice pre-bought more than they need, they sell it back on the spot market. If they need more than they pre-bought, they have to go buy power on that same spot market. And, of course, when do they really need it? The same time as everybody else does, on the hottest days, so spot prices can be brutal. With this in mind, typical commercial flat rooftop solar installations point their panels southwest, maximizing their power generation in the afternoon when electricity is most expensive.

The real genius of power storage systems is that you can buy and store the power when it’s cheap and uses it when it’s expensive. Energy arbitrage! That means that the mammoth version of Tesla’s PowerWall might be very attractive for industrial and commercial users. Even utilities might deploy them into neighborhoods. And if home users were more exposed to the “real” pricing in the commercial market, they too would be incentivized to get personal battery storage systems, with or without solar, for the same reasons. So far as I can tell, none of the available-in-Houston 325 plans from the 52 different retail electric providers offer hour-by-hour variable pricing like this, but in Austin or San Antonio, your traditional electric utility might be able to do it. Here’s a nice NPR article with useful details.

Conclusion 2: so long as consumers have net metering available and are not exposed to variable time-of-day electricity pricing, they won’t be incentivized to buy a battery storage system, with or without a solar system on the roof. There’s really no benefit for Houston consumers today to buy a storage system.

Teslarati runs a similar analysis in a state with variable pricing. In Southern California, the PowerWall becomes profitable in 3-5 years, and is unattractive for off-grid. Also, Vermont’s Green Mountain Power, not to be confused with our NRG-owned Green Mountain Energy, is ramping up some kind of joint program with Tesla. Who knows, maybe we’ll see something like it here some day.

One parting thought: in the insane, fragmented universe of the deregulated Texas electricity market, where generation, distribution, and retail sales are performed by unrelated players, we’ll probably be stuck with pricing policies that incentivize consumers to waste energy for make benefit most glorious State of Texas. Of course, exposing consumers to the raw industrial electricity market would likely be disastrous. Consumers can’t easily manage their load or trade contracts against future use. The best we seem to get are “smart” thermostats that can throttle back at peak times. Yawn. What seems missing, then, is better regulations for how consumer pricing is structured to incentivize lower peak usage. My proposed solution? Net metering and predictable time-variable pricing should be a standard part of any retail electricity offering. Let me sell high and buy low! Similarly, every plan should be structured to eliminate perverse rate structures where marginal rates go down as usage goes up. That’s common sense. Deregulation!

Dan Wallach is a professor of computer science at Rice and a friend of mine who has written four of these analyses before.

Get out of solar’s way

Keep an eye on this.

“Hawaii is a postcard from the future,” said Adam Browning, executive director of Vote Solar, a policy and advocacy group based in California.

Other states and countries, including California, Arizona, Japan and Germany, are struggling to adapt to the growing popularity of making electricity at home, which puts new pressures on old infrastructure like circuits and power lines and cuts into electric company revenue.

As a result, many utilities are trying desperately to stem the rise of solar, either by reducing incentives, adding steep fees or effectively pushing home solar companies out of the market. In response, those solar companies are fighting back through regulators, lawmakers and the courts.

The shift in the electric business is no less profound than those that upended the telecommunications and cable industries in recent decades. It is already remaking the relationship between power companies and the public while raising questions about how to pay for maintaining and operating the nation’s grid.

The issue is not merely academic, electrical engineers say.

In solar-rich areas of California and Arizona, as well as in Hawaii, all that solar-generated electricity flowing out of houses and into a power grid designed to carry it in the other direction has caused unanticipated voltage fluctuations that can overload circuits, burn lines and lead to brownouts or blackouts.

“Hawaii’s case is not isolated,” said Massoud Amin, a professor of electrical and computer engineering at the University of Minnesota and chairman of the smart grid program at the Institute of Electrical and Electronics Engineers, a technical association. “When we push year-on-year 30 to 40 percent growth in this market, with the number of installations doubling, quickly — every two years or so — there’s going to be problems.”

The economic threat also has electric companies on edge. Over all, demand for electricity is softening while home solar is rapidly spreading across the country. There are now about 600,000 installed systems, and the number is expected to reach 3.3 million by 2020, according to the Solar Energy Industries Association.

The Edison Electric Institute, the main utility trade group, has been warning its members of the economic perils of high levels of rooftop solar since at least 2012, and the companies are responding. In February, the Salt River Project, a large utility in Arizona, approved charges that could add about $50 to a typical monthly bill for new solar customers, while last year in Wisconsin, where rooftop solar is still relatively rare, regulators approved fees that would add $182 a year for the average solar customer.

This story doesn’t have a direct connection to Texas, but our state has a tremendous potential for solar, high electric bills in many cities, and a Legislature that isn’t all that friendly to renewable energy, but very much is friendly to the entrenched status quo. That’s a combination that makes this all worth keeping an eye on.

Use less, pay more

Ain’t utility deregulation grand?

More than 70 percent of electric plans offered in the Houston area contain terms that may penalize customers who don’t use a certain amount of power, according to a Houston Chronicle analysis of more than 300 plans available in early January.

NRG and other companies with plans that include the fees say they offer a variety of products designed to meet the needs of different kinds of customers. They also point out that fixed fees covering some of their overhead allow them to reduce the rates they charge per kilowatt hour of consumption.

Some plans charge minimum-use fees to customers whose monthly power consumption falls below a particular threshold – usually 1,000 kilowatt hours. Other plans offer credits to customers who exceed a specified threshold of power use.

“The market probably still has a way to go toward rewarding people for using less,” said Troy Donovan, market development manager at CenterPoint Energy Services, which runs a website called TrueCost that factors the fees into its analysis of electric plans. It is a division of CenterPoint Energy, the transmission company that distributes electricity in the Houston area regardless of what retailer sells customers their power.

Consumer advocates say minimum-use penalties discourage energy conservation at a time when environmental groups, all levels of government and even electric companies themselves are encouraging customers to scale back on energy consumption.

“These fees often go unnoticed until you really cut back and you realize you still have a larger bill than you expected,” said Jake Dyer, a policy analyst at the nonprofit Texas Coalition for Affordable Power. “It’s bad news for a lot of folks doing their best to save power and save on their electric bill.”

Even customers penalized for using less energy pay for energy efficiency initiatives: A $3.05 fee on monthly bills in the Houston area covers installation of technically advanced smart meters partly touted as energy-saving measures; the city of Houston last year raised residential energy-efficiency requirements.

[…]

About a third of the Houston-area retail providers the Chronicle examined listed no plans containing penalties or credits based on power use.

TriEagle Energy, based in The Woodlands, charges customers flat monthly fees – in addition to their electricity rate per kilowatt hour – but the fees aren’t tied to power consumption. Consumers are more likely to stay with the company if they don’t get surprises like minimum-use fees on their bills, said Kasey Cline, TriEagle’s director of sales and marketing.

Other retailers, how­ever, say the fees make sense.

Champion Energy Services uses them to cover fixed costs that it otherwise would roll into energy rates, said Brenda Crockett, vice president for market development and regulatory affairs. The company has to pay costs of billing and other services for all customers, she added, regardless of their electricity use.

Other companies echoed that response.

“There’s a cost to cover, whether they’re using 1 kilowatt hour or 1 million kilowatt hours,” said Robbie Wright, a founder of Bounce Energy, which also charges minimum use fees.

That argument rings hollow with Dyer, of the Texas Coalition for Affordable Power. “You don’t pay a minimum-use fee when you step into a grocery store,” Dyer said. “You don’t pay a minimum-use fee when you shop for any other product. Most businesses price their product in such a way that the people who actually buy it will pay for their fixed-cost infrastructure.”

Dan Wallach noted this feature back in 2013, in his annual report of choosing an electric plan for his house that year. There’s no logical reason for this – the companies do it because they can, because most people don’t read the fine print closely enough. Jake Dyer is exactly right, but in the absence of some kind of market regulation, or better educated consumers, they’ll get away with it. It’s easy to say that other companies could undercut the ones that do this on price and steal their business, but that isn’t what has happened. Maybe this Chron story will help, but I doubt any one story could. It will take a lot more outreach than that to penetrate the public consciousness.

Dan Wallach: Home power analysis, 2014 edition

Note: From time to time, I solicit guest posts from various individuals on different topics. While I like to think I know a little something about a lot of things, I’m fortunate to be acquainted with a number of people who know a whole lot about certain topics, and who are willing to share some of that knowledge here. In this particular case, I’m welcoming back someone who has written on this particular topic before.

It’s July and that can only mean one thing: time to worry about my electrical contract for the next year. As we saw in last year’s installment, I ended up going with TriEagle Energy’s 100% renewable product. They want to jack my rates by 10% over last year, so clearly it’s time to run the numbers again.

This year, I decided to try to sort out what each plan would cost based on my power usage data for the past year (thanks again to SmartMeterTexas.com). For five months, my usage went over 1000 kWh/month and for seven it was well below. I then downloaded the full spreadsheet of available offers from PowerToChoose.org, built an equation to estimate my monthly charges, and then all I have to is sort to find the cheapest, right? Sadly, it’s not that easy. The spreadsheet data they give you is a disaster. Rather than just listing the fees, there’s now a textual column titled “Fees/Credits” and there’s no standard way in which they’re reported. Some companies report what you’d pay per kWh, inclusive of monthly fees, while others report what you pay exclusive of those fees. This meant I had to go through every row in the table and try to interpret their mumbo jumbo. Deregulation!

If you just try to just naively scale the 500 or 1000 kWh numbers, you end up with a wrong answer by 2% or more, but the EFLs often fail to give you enough data to do any better. So, with that caveat, here’s a histogram of how much money I’d spend in a year with each of the nearly 200 fixed rate electricity contracts on offer. Higher points in this histogram mean there are more plans that would end up costing me that price.

WallachPowerAnalysisChart2014

While I don’t want to name names for companies with unhelpful Electric Facts Labels and PowerToChoose-published data, I do want to give kudos specifically to Our Energy for doing it better. They say explicitly what CenterPoint expenses they are passing through, and they themselves have a flat rate on the power they’re selling. This allows me to calculate my real expenses, not a cheesy approximation of them. That would adjust them from $1316/year (as everything else in the histogram above is computed) to $1277/year, moving them into the top competitive position on my chart. Would others be cheaper as well? Probably, but PowerToChoose doesn’t give me enough information to choose. Should I reward Our Energy with my business for having the best and most transparent EFL? It’s tempting, but first, a rant…

Can’t we please go back to having a centrally regulated traditional utility company?

San Antonio still has this. I had a friend there send me a copy of her utility bill. She’s paying approximately $0.11 / kWh. Her bill breaks out the fixed and variable charges, much like I appreciate from Our Energy. On my histogram above, she’d be somewhere in the far left — getting an exceptionally good rate and not having to do this stupid analysis every year. All of our lovely free market competition in Houston is really just a series of opportunities for fools and their money to be quickly separated from one another.

Hey, what about solar power and saving the earth and stuff?

When I first started writing this year’s analysis, I said to myself, “Surely solar power must be a real option by now!” After way too much investigation, the short answer is, “maybe, if you can afford the big payment up front.” After spending the last month getting quotes and doing the research, I’m this close to pulling the trigger on a solar installation. Here are the high points:

Solar works hand-in-hand with the grid. When you install a solar system, it’s generating power during the day that you probably don’t need, and you need power at night that your solar system isn’t providing. This means your meter gets to run backwards during the day and forwards at night. If you have a month where you generated more than you used, you get a negative electric bill, which is then “banked” for future months. (Curious side-effect: you don’t want to over-size your solar system, because you’ll never get all your money back from the “bank”.) Also notable: if grid power goes down, so does your solar system. You can install a backup battery system or a gas-powered generator, but that’s a whole separate animal.

The financial incentives are okay, not great. In rough terms, the system I’m contemplating, which might generate 9-10 kW from the mid-day sun, will cost $20k after federal tax incentives. After that, you have small or even negative electric bills, and you start making money back on your initial investment. You stir in a bunch of assumptions about the depreciating value of the asset you’ve bolted to the roof, and you come out with a bottom line that you can look at with standard financial investment terms (internal rate of return, etc.). The proposal I’m considering from Texas Solar Outfitters would have an IRR of 7.4%, under their standard set of assumptions. Under different assumptions, you’re better off just getting power from the grid. (The same numbers in a place like California are in the “no brainer” category, both from additional up-front incentives and from the tiered electrical pricing they have. Solar helps keep you out of the higher tiers.)

What about leasing vs. buying, warranties, etc. In short, a lease is a lot like a loan. You’re paying less up front and you’re making monthly payments. The leasing company is trying to make money. The net effect is that the IRR goes down to the point that the deals are less likely to be worthwhile. (Again, this varies on a state by state basis. Nobody’s subsidizing those leases here.) Solar lease deals also act like an extended warranty on your gear. If your panels aren’t up to spec, they repair them for you. Most solar parts have very long warranties of their own, so this is less of a big deal than you’d think.

The environmental impact of solar is less abstract than the premium you pay for a “green” grid electricity plan. No matter what grid plan you purchase, green or not, the same mix of mostly coal and gas-fired generators are still producing the power your house is consuming. The only difference is that you’re paying your utility middleman to also buy you “renewable energy credits”, which are sold by wind farms and other such things and which may or may not be feeding their electrons to your house. It’s at best unclear whether you’re incentivizing somebody to install more “green” generation capacity versus building another traditional plant. On the flip side, when you’re turning sunlight into power, you’re directly removing your demand from the grid. This sort of logic is especially attractive if you’ve got an electric car and you’re worried about the “long tailpipe” emissions problem.

Aren’t you just a leach on the electric grid, then? Umm, no. By installing solar, you’re doing the grid a favor by supplementing its power during the peak draws in the hot summer sun. If more houses could run their meters backwards, that would effectively supplement the big generators and help avoid brownouts. Also, you’re paying the same monthly fee that everybody else pays for connecting to the grid.

So, what’s your new electricity plan then?

I need to pick a new electricity provider now, even though it might be a while before I can get a solar panel system installed on my house. The set of plans that support solar sellback is very small. So far as I can tell, I’ve got precisely three choices: Green Mountain, Reliant Energy, and TXU. The winner among these seems to be Green Mountain, who will buy your first excess 500 kWh/month from you at full retail price and half price thereafter. TXU buys from you at 7.5 cents/kWh no matter what. I can’t seem to find the Reliant number.

Green Mountain says you can sign up for any of their plans and switch without penalty to the plan that supports buying your power back from you, so that’s probably the way for me to go.

Dan Wallach is a professor of computer science at Rice and a friend of mine who has provided this annual analysis three times before.

Dan Wallach: Energy Pricing 2013

Note: The following is a guest post by my friend Dan Wallach

For the past two years, I’ve written a guest blog post here about electrical rates. Let’s do it again, shall we?

Last year, I switched from a variable rate to a fixed rate electrical plan, to avoid the occasional shocking price hikes that came with variable plans. This year, with my one-year lock-in ending, I decided it was time to look again, so once again, it was back to PowerToChoose.com. To help you sort through the offers, it helps to understand how much electricity you use every month. For those of you with a smart meter on the side of your house, you can get yourself an account at SmartMeterTexas.com. You type in some stuff from your power bill and you’re good to go. Here’s what it said for my monthly power usage over the past year:

WallachGraph1

What you see shouldn’t be too surprising: when it’s hot in the summer, our electric bills go way up to run the A/C. In the rest of the year, we’re using less. (You’ll see the July 2012 bar got cut into two half-bars. This is probably a side effect of when I switched my electrical service from one company to another last year.)

You’ll notice that, for most of the year, we’re running comfortably under 1000 kWh/month. Well, most of the electricity plans available to us have a $10/month surcharge if you go below 1000 kWh. (You have to read those electric fact labels carefully.) What’s the right way to go shopping then? Turns out, there’s a link at PowerToChoose that will let you download all the terms of every electric plan in one giant CSV file that you can load into Excel. I took that data, stripped out everything except the plans offered in Houston through CenterPoint Energy, and then sorted by the 500 kWh/month predicted cost. Estimated prices range from $48/month to $89.70/month.

Cutting to the chase, who’s got the best deal? If you want a fixed rate 12 month term, the winner turns out to be TXU’s “Energy Saver’s Edge 12”. Summer Energy is slightly cheaper with a 6 month term, but then you have to do it all again in 6 month. If you want a “100% green” power source, the winner is TriEagle Energy’s “Green Eagle 12”. At least, that’s who would have the best deal for me, given my electric usage. Just for fun, here’s a frequency distribution chart of these prices, focused on what you’d pay for 500 kWh/month, which is the more relevant number for me.

WallachGraph2

The y-axis tells you how many plans would cost you each given price (within a bucket size of $1.50). I’ve plotted frequency charts for only the fixed-price plans, and I’ve separated out the renewable ones (typically “100% renewable”) from the others. I’m not entirely sure what to make of this except to say that there are a whole lot of uncompetitively priced plans out there, and the gap between “100% renewable” and other plans has largely disappeared from the market, unless you’re looking for strictly the lowest priced plans out there.

At least in my case, the TXU cheapo plan looks like the way to go. Even then, if you read their fine print, I’d get assessed a fee if I ever went below 500 kWh/month, but since that hasn’t happened at all in the past year, I’m not going to worry about. I always find it perverse when I have a disincentive to make my house more power efficient. Say I replaced a bunch of our power-hungry halogen bulbs with LED bulbs. I might drop below 500 kWh/month in the winter and end up spending more money. That’s fantastic.

But wait! I downloaded all of this data on May 30 and that’s when I told TXU to switch me. Somehow, their computer switched me from the “TXU Energy Saver’s Edge 12” plan to the “TXU Energy e-Saver 12”. Sounds similar, right? In fact, the 500 kWh/month estimated cost for the new plan is $74/month versus the $54/month that I was expecting. Talk about bait and switch! My guess is that TXU rolled out new plans on June 1 and silently moved me from the original, competitively priced plan to the new, embarrassingly uncompetitive plan. It’s a good thing I had all the original data saved when I called, and then had to talk to a supervisor, and so forth. After 41 minutes of “we’re terribly sorry for the inconvenience” and peppy hold music, all I know is that they’re “investigating” and will get back to me in a few days.

Incidentally, Summer Energy, my current electrical provider, is June 3rd’s winner, with an estimated $50/month for 500 kWh/month of usage with a one year lock-in, so long as you use the proper promo code. TriEagle’s “Green Eagle 12” continues to be the cheapest “100% renewable” plan at $56/month. Part of me wants to just dump TXU ($54/month, if everything goes my way) and instead go with one of these others. The other part of me is just curious to see what TXU will do next. Behold the power of electricity deregulation!

(Note to readers: I’ll post an update here in a comment when I finally resolve this mess.)

Electric cars and the power grid

Fascinating.

Pecan Street Project

It doesn’t take too long for visitors of Mueller, a 700-acre master-planned community in Austin, to realize that the neighborhood is peculiar.

The planned community, built on the site of the former Mueller airport, boasts almost too-perfect rows of homes with cheery pastel exteriors and quaint front porches. And then there are the neighborhood’s green flourishes—solar panels that adorn every other rooftop and the eco-friendly hybrid cars that roll almost silently through the development’s tidy streets.

Mueller isn’t just a subdivision—it’s a life-size green energy research test site. The New Urbanist, a mixed-use development, is home to a five-year “smart-grid demonstration project” led by Pecan Street, Inc., a nonprofit research and development organization focusing on green energy, and Austin Energy.

In late July, General Motors announced that it is partnering with Pecan Street, making 100 Chevy Volts available to Mueller residents to buy or lease. Since February, Pecan Street has been providing financial incentives for residents to join, matching the $7,500 federal tax credit extended to owners of electric vehicles with their own $7,500 rebate. Those who opt to lease will receive a $3,000 rebate.

Mueller’s 600 residents are currently using about sixty electric vehicles, according to Colin Rowan, Pecan Street’s director of communications, and 52 of those vehicles are Volts.

Now, the recent influx of electric cars in Mueller has allowed Pecan Street to test the impact that high concentrations of electric cars might have on the area’s smart energy grid.

“We’re interested in how the grid performs when you have a lot of electric vehicles pulling power in one area, and how people use them and charge them,” Rowan said. “That sounds kind of basic, but it actually puts some interesting stress on the grid. We’re very interested in finding out how that can be optimized so that it is actually a benefit to the grid and not a liability.”

The Statesman adds on.

For 16 years, OnStar has been communicating with GM customers in their cars, usually in times of emergencies. But now the company is re-imagining itself to also be an energy manager for a fleet of electric vehicles.

The electric vehicle market is minuscule today, but some day, they could potentially serve as a fleet of mobile batteries that could store power until it is needed by a homeowner or grid operators during peak power demands.

Until now, OnStar’s experiments have been limited to small demonstration projects or work in the lab. Now they want to begin test-driving their theories with Austinites.

“This partnership provides us with a unique opportunity to observe charging details with many real customers in a concentrated setting,” said Nick Pudar, OnStar vice president for strategy and business development. “We are moving our lab demonstrations into the real world.”

Among the possibilities are taking advantage of different rates for different times of day for cheaper charging, and using the stored energy in car batteries to help power one’s house or give back to the grid in times of high usage. This real-world experiment is set to run through the end of 2014. Very, very cool.

Dan Wallach: Energy pricing 2012

This is a guest post that follows up on an earlier guest post.

Dan Wallach

Last year, I wrote a guest article for Off The Kuff where I discussed the complexity of trying to get a good price on your electric bill. In Houston, we have seemingly hundreds of companies who will gladly take our money in return for electricity. Which should you choose? The place to begin remains PowerToChoose.com, but the market has changed a bunch from when I last took a look.

If you really dig around PowerToChoose, you’ll see all these companies you’ve never heard of, each of which has a piece of clip-art on its web page of a beautiful meadow with a shining sun, or maybe a happy family with perfect teeth. (Exercise for the reader running the Chrome browser: you can right-click on those pictures, and select “Search Google with this image”, and see how widespread those stock images are used. In one case, the smiling family I saw also appeared in web sites for a car dealership, a dentist, a youth ministry, a nutrition supplements company, and an alarm system company.)

Last year, it was common for these companies to offer low teaser rates for the first month that bubbled them up to the top of the list. You’d then pay the regular higher rate thereafter. This made it very difficult to do comparison shopping, since you had to dig deeper into the “electricity facts label” sheets to find out what the real prices were. It also created a huge incentive for you to switch companies every month.

At the time, I decided to switch to Pennywise Power, who was advertising a relatively low variable rate. I was entirely happy with them until this July, when their prices exploded. My bill for June was $197.99 for 1873 kWh ($0.105 per kWh, after taxes, fees, and such). My bill for July was $289.78 for 1662 kWh ($0.174 per kWh). It’s come back down again, but at least for two months, they were charging far above other companies’ advertised rates. (Note: the wholesale market for electricity went bonkers at the end of June, and some of that was clearly passed on to me.)

My conclusion last year was that Pennywise’s rates were low enough to be attractive, but I apparently failed to notice my own warning:

“Variable rates” aren’t connected to much of anything beyond the whims of the executives who set these rates. If you read the legal verbiage closely, they can change your rate, at any time, to any price they want.

After seeing the shocking July bill, I figured it was time to jump into a fixed rate product, so back I went to PowerToChoose.com and slogged through the various options. These days, the low teaser rates from last year are all gone. Now, the advertised price seems to be the price you actually pay, but things are still a bit wonky. One of the tricks I observed with Pennywise is that their pricing, which included a $9.95 “base charge” if you use less than 1000 kWh, creates some perverse incentives if your electrical usage is just below that number per month. Wasting energy to get over the top might save you real money! This year, I resolved to find the best fixed price with zero “base” charge. That led me to Summer Energy, where I inked a one year lock-in at $0.093 per kWh. (If you sign up today, with the proper promotion code, it’s $0.085 per kWh.) My first bill showed up for the back half of July, and it included a $4.89 base charge! I had to threaten to abandon them if they didn’t fix it, and they eventually came around.

So, what have we learned here? First, when you’re doing business with faceless companies who advertise low rates, you might expect to have unexpected charges and unusual behaviors. (Summer Energy still hasn’t sorted out my request to set up automatic credit card payment.)

Second, this “deregulated” market could stand to have more regulation. If you read the electricity fact sheets that our vendors are required to publish, there’s a remarkable amount of diversity among them, and lots of fine print they leave out. If I were king for a day, all of these fixed “base rate” fees would be standardized, simplifying vendor competition to price per kilowatt-hour within equivalence classes of different percentages of “renewable” energy.

Finally, a word about the future. A buddy of mine in California got himself a fancy solar panel system on his house. He sells excess capacity back to the grid, but it’s much better than that. His electric utility company (for which he has no choice) has tiered rates. The more electricity he burns, the more he pays. But by selling power back, he stays out of the higher rate tiers. He also gets tax credits and other incentives that aren’t available in Houston; some other Texas utilities offer rebates, but Centerpoint has nothing in our area. In theory, with our shiny new smart meters, we could have some all kinds of sophisticated billing policies like variable day/night rates or solar systems that let you sell power back to the grid, but these aren’t happening yet. I suspect this is an unfortunate side effect of our multi-vendor deregulated market. (Reliant does have a plan that lets you sell power back, but the base electrical rate is uncompetitive.)

If you dig deeper into your electrical bill, you’re paying a big chunk of your bill to Centerpoint for “delivering” your electricity, no matter who you’re paying for your juice. That’s the place where we might eventually see some innovation. Centerpoint could charge variable time-of-day or tiered rates, they could buy back your electricity if you have solar, and so forth. One of these days, I might buy myself an electric car, and I’d be keen to have more sophisticated electrical pricing in place before then.

Dan Wallach is a professor of computer science at Rice University.

ERCOT hopes this summer is better than the last

That would be nice.

Managers of the state’s primary electricity grid expect to avoid rolling blackouts this summer but not without calling on Texans to turn up their thermostats and conserve power during peak usage on the season’s hottest afternoons.

The Electric Reliability Council of Texas is also bringing back mothballed power plants — some 35 to 40 years old — to give itself a larger margin of error than last summer’s near-miss on rolling blackouts.

ERCOT has tweaked its program that pays large industrial and commercial users to interrupt their power during emergencies and is adding to the list smaller customers who generate their own power on-site.

“We have taken an ‘all of the above’ approach to meeting Texans’ electricity needs this summer,” said Donna Nelson, who chairs the Public Utility Commission of Texas.

Despite its efforts, ERCOT, which serves 23 million people, expects “a significant chance” it will have to issue several emergency alerts asking Texans to conserve electricity, especially at the usual daily peak usage times of 4 to 7 p.m.

More information here. We’re projected to be low on reserve power by 2014, so enjoy this while you can, and do what you can to bug your elected officials about making energy conservation a priority.

Rolling blackouts may be on the summer horizon

Better hope the mild weather we’re getting in winter translates to mild weather for the summer, because the alternative isn’t pretty.

Inadequate electric power reserves likely will force Texans to cut back this summer to avoid rolling outages if the weather matches last year’s record heat, utility experts warned legislators [last] Thursday.

“We have to have conservation, and everyone made a tremendous difference during the peak of hot, summer days (last) August. We have to have that, plus some, to survive this summer without rotating outages,” H.B. “Trip” Doggett, president and CEO of the Electric Reliability Council of Texas, told the House State Affairs Committee.

Legislators are looking at the state’s electricity market to find ways to keep lights on in Texas during peak demand periods. A range of issues contributes to the problem, including surging population growth, regulatory influences on the power industry, low natural gas prices that discourage new power plants, and difficulties in borrowing money to build them. Texas faces “a serious problem,” State Affairs Chairman Byron Cook, R-Corsicana, said after 13 experts spoke to his committee.

“It looks like we’re going to really have to embrace conservation because we don’t have the extra generation,” he said.

I’d say we need to embrace conservation anyway for a whole host of reasons, but in this particular case the need is obvious. One solution suggested in the story to help achieve that is a public relations campaign to explain the situation to residents. I remember Con Edison in New York doing exactly this sort of thing in the 70s. They were a sponsor of Yankee games on WPIX, and their exhortations to conserve electricity, usually given by the Yankees’ broadcasters, were on all the time. If I can remember that 35 years later, it seems safe to suggest this kind of campaign can have an effect. We’ll need a lot more than that going forward, but one hopes this can suffice for now.

“How to Choose a Texas Electric Provider the Wrong Way”

Recently, my friend Dan Wallach wrote a guest post here about how to find the best deal on electricity in Texas. Robert Nagle, another friend of mine, took issue with some of the things Dan wrote and penned a response on his blog, called How to Choose a Texas Electric Provider the Wrong Way. A brief excerpt:

I am amazed at how easy it is to make a bad decision about electric providers.  A college friend with a PhD in Economics chose an expensive coal-laden TXU plan because he had just moved back to Texas and wasn’t aware that you had the ability to choose your provider – he just went with whatever someone told him about. (In two minutes, I was able to find him a plan which was 10% cheaper and 100% green).  Various acquaintances have chosen plans for the most illogical of reasons. One chose “Reliant” because it sounded “reliable” (Reliant-reliable – get it? I guess getting your name on the downtown stadium was good for something).  Another signed up for the coal-dirty Reliant because it had balanced-billing – never mind that it was significantly more expensive than the other plans. A friend chose a plan simply because a friend of hers had recommended it – that was also more expensive. Another friend opted not to choose the “renewable” plan because she didn’t want to have to renew it each time the fixed rate expired.  There are other not-so-obvious problems. When I had Dynawatt (a company I don’t recommend) I could not make head or tail of the bill (no matter how long I studied it). Everything on the printed bill contradicted what the terms of my contract were, and when I called telephone support several times, each agent quoted me a different rate on my current plan – something which didn’t exactly inspire confidence.

4 Things You Need to Know about Choosing an Electric Provider in Texas

This blogpost is going to ramble a bit, so I’ll summarize for people who are in a hurry and need some fast tips.

  1. Texas consumes more fossil fuels than any other state in the US. If Texas were a nation, it would be the 7th largest emitter of greenhouse gases. Electric plants in Texas (population 25 million) emit as much CO2 as electric plants in the COMBINED states of New York, California, Florida, Massachusetts and Oregon (population: 86 million)
  2. 1 year Fixed-rate plans for 100% green (renewable) energy plans are on average 5-10% higher than comparable coal/natural gas plans.
  3. Don’t choose an electric provider which has received too many complaints. (Check thecomplaint scorecards on the PUC site and also Yelp if you want).

You’ll need to click over and read the whole thing for the fourth point. My thanks to Robert for sharing his expertise.

Car charging stations coming this week

Cool.

Houston became the first major U.S. city to announce an electric vehicle charging network in November with the launch of NRG Energy subsidiary eVgo.

Now it’s finally getting the chargers to match the announcement.

A number of electric car owners signed up with the company for in-home charging stations in the past year, but this week will see the opening of the first of the network’s public charging stations.

The so-called “Freedom Station” will be located at the H-E-B Buffalo Market at the intersection of Buffalo Speedway and Bissonnet Street.

[…]

Each station allows for two cars to charge simultaneously. They will have a 480-volt DC fast charger able to charge an EV at a rate of 160 miles of range per hour (or about 30 miles in as little as 10 minutes) and a 240-volt Level 2 charger that can add up to 25 miles of range in an hour.

Here’s a subsequent article with a bit more.

[Mayor Annise] Parker pitched what she calls Houston Drives Electric as a continuation of the innovative, entrepreneurial spirit that has characterized Houston from its origins. Parker said the city figures to save at least $7,000 per car in fuel and maintenance costs in the first three years of the 25-car electric-only fleet it will purchase by the end of the year.

The city also has retrofitted 15 of its existing hybrid vehicles to charge off the stations. In addition, the city is installing 56 charging stations of its own – half in the City Hall parking garage to service the municipal fleet and half for public use at libraries, Hermann Park, the Arboretum and other parks. The city stations are funded by state and federal grants.

Three more of the NRG stations will open within the next week, including one downtown, and a total of 50 are slated to open by the end of 2012. Expect to see more of these around the country in the next few years as well.

Oh, and if you feel like banging your head against your desk, go wade through the comments in that Fuelfix post. If ignorance were a fuel source, we wouldn’t need to drill for oil.

Charge your cellphone wirelessly

Cool.

San Antonio-based Pree Corp. is developing multiple technologies, including one that would pluck wireless transmissions from the air and convert the energy to power mobile devices such as smartphones, tablets and MP3 players.

Rudy De La Garza, the company’s CEO, said they are trying to raise about $437,000 from accredited investors. When Pree goes public later this year, he said he expects to raise about $2 million.

Pree, which stands for Providing Reliable Energy Everywhere, started as an idea for a business and engineering design class at UTSA. That’s when business students Matthew Jackson, 23, and Amanda De Kay, 30, met with Matthew Ellison, 23, the engineering student who had the idea for the wireless technology. The team entered the idea in an annual competition at the UTSA Center for Innovation Technology and Entrepreneurship and won second place.

With help from the university, the group has utilized lab space to work on their devices and had help with a patent application, which was filed last September. The company was launched after they partnered with De La Garza, who runs the Idea Finishing School, an organization that helps early-stage companies find investors and take their ideas to market.

Neat. Just imagine what we could achieve if we lived in a state that valued academic research.

Illegal electrons

Hilarious.

As Texas struggles to keep the lights on, who should come to the rescue? Mexico. That’s right, Mexico’s state electricity company on Wednesday started supplying electricity to Texas, where cold weather and power shortages forced rolling blackouts across the state. Mexico’s Federal Electricity Commission issued a statement saying it “was determined to support Texas with electrical energy” as its neighbor to the north scrambled to deal with its power woes.

If we can figure out some way to harness the energy from all of the heads that will explode as a result of this, we ought to be able to avoid any summer brownouts, too. You can also thank wind power for keeping the lights on. No word on whether or not it was a Mexican wind, however.

On a more serious note, you might be wondering why we experienced rolling blackouts in the winter, for a weather event that we knew was coming for days, and without any advanced notice of said blackouts. The Public Utility Commission is also wondering. Hopefully they’ll get some answers. Perhaps if Governor Perry spent more time in Texas and less time gallivanting around the country, he’d know what was going on, too. PDiddie, McBlogger, and Texas Vox have more.

UPDATE: From California to Kentucky. Our Governor does get around.

Baby, you can charge my car

Plug it in, plug it in.

The city of Houston will make it easier for locals to buy and own electric cars, including speeding up permitting of home charging stations and opening up HOV lanes to the vehicles.

Mayor Annise Parker announced some of the measures Thursday at an event introducing power plant operator NRG Energy’s plans for a citywide electric vehicle charging system.

“I recognize that Houston is a car city,” she said. “But let’s make sure if you have a particular type of car you want to drive, and it’s an electric vehicle, let’s make sure it’s supported.”

The NRG network, branded eVgo, will begin with 150 charging stations throughout the city at retailers and offices.

Walgreens will have chargers at 18 of its local stores, HEB at 10 of its H-E-B or Central Market stores, Best Buy at up to 10 locations and Spec’s at eight.

Fifty of the public stations will be rapid chargers that can charge a vehicle fully in about 30 minutes. The other 100 chargers can do a full charge in about four hours.

OK, I think I’ve run out of cheesy musical allusions. It’s a small step towards a greener planet – it would be nice if we were doing more on the back end, to make sure that the electricity powering these cars comes from green sources and not just more coal-fired plants, for instance – but every little step is needed and helpful. Swamplot has a map of where you can go to get your recharge on, and Hair Balls has more.

New frontiers in sports branding

Would you like your electrons in burnt orange or maroon?

In a deal put together by sponsorship broker IMG College and Branded Retail Energy, a Dallas-based company that markets electricity through affinity partnerships, the schools will create university-branded power companies. Texas Longhorns Energy and Texas A&M Aggies Energy will begin selling electricity and natural gas to consumers in deregulated markets in the state next month.

“We’re very conscientious about our brand. We want to be careful with that logo and that symbol,” University of Texas Senior Associate Athletic Director Chris Plonsky said. “When BRE and IMG brought it to us, we went ‘Huh?’ But it made sense because the issue of sustainability, especially on large college campuses that use a lot of energy, is important to us.”

That was the hook — pardon the pun, Hook ‘Em Horns’ fans — to the whole deal. Texas Longhorns Energy will be powered by one of the nation’s top retail electricity providers, Champion Energy Services, and will provide renewable green energy to alumni and fans in deregulated regions of Texas. Each new customer account will generate funds for sustainability initiatives for the respective schools.

“I haven’t come across a university president yet who didn’t have a committee on sustainability,” says Larry Weil, chief marketing officer for Branded Retail Energy.

And to think I once considered university-branded credit cards to be a tad on the excessive side. I presume that “sustainability” here means “new and innovative revenue streams for the athletics department, so we can keep up with the Joneses”. I’d ask what could possibly be next, but I’m afraid to find out. Via Consumerist.

Brown’s energy plan

Completing our trifecta of Mayoral policy examinations, we come now to Peter Brown’s energy plan. As with other policy matters, Brown goes into more detail than the others – David Ortez recently wrote that Brown is “winning the policy campaign”, and I think that’s a fair assessment. I’m just going to comment on a couple of points in Brown’s plan, which you should read in full for yourself.

MAKE THEM DELIVER

When Houston residents pay for something, it better be delivered. As Mayor, Peter Brown will stand up to local utility companies, demanding that they adhere to existing contractual obligations under the terms of their current franchise. Utility companies should be responsible for demonstrating compliance with the maintenance, grid-hardening, and energy-efficient investments they’re supposed to be making. No more double billing, no more corporate bailouts. Peter Brown will make sure we get what we pay for, and don’t have to pay for it twice.

One thing I find myself asking over and over again as I look over various policy statements from candidates is “How much of this is something they can do themselves, and how much would require coordination with or the cooperation of some other governmental entity?” I’m really not sure how to answer this question here, though my impression is that this is more of a state issue than a municipal one. And as always with these policy papers, it’s about the what they want to do and not the how they plan to do it, so there’s no help there. I feel confident that this is something that can be made an issue and a prioirity by Houston’s Mayor, and there probably are some things that could be accomplished by fiat or city ordinance, but more than that I couldn’t say.

Still, even if everything Brown proposes here requires the Lege or a state regulatory agency to accomplish, a Mayor Brown can still bring attention to these issues, and can pledge to work with or put pressure on whoever can get them done. Which suggests to me that how effective a Mayor may be in getting other elected officials or agencies to do things he or she wants to do is something that perhaps ought to be given more priority in how we decide who to elect. Perhaps the endorsements that a Mayoral candidate gets from other elected officials is a possible indicator of this, and should be given some weight as a means to guide one’s voting decision. Just a thought.

A BETTER DEAL FOR HOUSTON

As it is, we pay too much. Electricity in Austin and San Antonio is nearly half the price of ours. The City should use its leverage and drive a harder bargain, protecting Houston consumers and getting them a better deal. And we should explore creative ways to lower monthly electric bills, like an opt-in program that would allow residents – especially seniors and those on low or fixed incomes – to buy their electricity from the City and enjoy the discounted bulk rates the City already receives.

The question of why Houston’s electric rates are higher than those of Austin and San Antonio deserves more exploration. For that, I refer you to this 2006 Observer story about electrical deregulation in Texas:

What makes the Texas experiment with deregulation especially interesting is that a “control group” has survived—the municipal utilities and rural electric cooperatives. Nobody disputes that higher electric rates are partly due to the near-tripling in cost of natural gas, the fuel for 46 percent of Texas power generation. But the rates of still-regulated city-owned utilities and electric cooperatives, which also use natural gas power plants, are substantially cheaper almost across the board. A ratepayer in Austin—who must buy power from the city-owned Austin Energy—spends a little less than $95 each month for 1,000 kwh of electricity. In San Antonio, it’s about $72. Austin and San Antonio have the advantage of owning their own power plants, but the statewide average bill for customers served by municipally owned utilities is a little over $100 and is $97 for cooperatives, according to the PUC.

The cheapest service plan—one negotiated by the City of Houston—in the entire deregulated market is about 35 percent more expensive. What accounts for this difference? “[T]he energy being sold in the deregulated service areas didn’t cost any more to produce than in the regulated areas,” says Biedrzycki of Texas ROSE. “The difference is in the way the pricing is established.” In the deregulated market, economists and industry experts say, expensive natural gas-fueled plants generally act on the “margin” to set the wholesale price that retail power companies must pay for all power generation. Even though it’s currently much less expensive to create electricity from coal and nuclear generators, costly natural gas plants control the market price.

“[O]wners of nuclear and coal plants have no incentive to charge anything less than the gas-based market price [to retailers],” as the Association of Electric Companies of Texas explained in a presentation to lawmakers recently.

Again, one wonders what the Mayor can do on his or her own about this, and what would require legislative intervention. Regardless, one presumes that Brown or any of the other candidates would prefer not to rely on coal-fired plants to get a better deal for Houston consumers. Brown does talk about making a bigger investment in renewable energy in his plan. I hope we’ll see something like this as part of it.

EMPOWER HOUSTON TO HELP

Peter Brown will use the latest technologies to allow residents to instantly alert the City of poorly maintained infrastructure – including downed lines and poor maintenance – to keep our grid working and electricity flowing. Streamlined notification processes using smartphone applications enable quick and easy reporting to city departments, allowing residents to quickly collect and share photographic evidence of disrepair or neglect. We can also connect with residents via their existing social networks like Facebook and Twitter to enhance communication between residents and City departments.

I highlight this to show Brown’s commitment to better service through smartphones. Of which I definitely approve.

Overall, I like Brown’s ideas, and think that more attention should be paid to stuff like this. For all the talk we always get about “finding efficiencies” in government, this is exactly the sort of place that we should be looking for them. Of course, some of these things require an up-front investment, which may not pay off within the six years of a Mayor’s term in office. That doesn’t mean they’re not wise or necessary, but it does tend to warp the political dynamic of implementing them.

That wraps up this week’s look at Mayoral policy positions. I’m sure we’ll get more of these as we pass the tradiational Labor Day start of the campaign season. I’ll do my best to do more of these analyses as we do get them. Let me know what you think.

Deregulation fail

How’s that electricity deregulation working for you, Texas?

In the decade since Texas deregulated its retail electricity market, rates have skyrocketed higher than any other state with such open competition, according to a report released today.

Commissioned by the Cities Aggregation Power Project, a nonprofit coalition of Texas municipalities, the report found that residential electricity rates rose 64 percent between 1999 and 2007. Before that, Texans paid rates that were well below the national average, according to the U.S. Energy Information Administration.

Boy, the one time we’re below the national average for something in a good way, we go and screw it up. If only we could bring such results to the number of uninsured children or something like that. In any event, since I’m a numbers kind of guy, if electric rate increases had been capped at five percent a year, which is what Governor Perry and some members of the Lege would like to do to property appraisals, the maximum total increase over an eight-year period would be a little less than 48%. For some odd reason, this issue just isn’t as salient to them. Go figure.

The report does give the law credit for encouraging the use of renewables, enhancing efficiency standards and helping to reduce emissions.

The Cities Aggregation Power Project, which pools the energy needs of its member cities in order to negotiate better prices, does not recommend going back to the pre-deregulation system. But the group says it wants the Legislature to curb market abuses by limiting how much power any one utility can generate.

The coalition also advocates reforms that would allow citizens living in its municipalities to join together and negotiate better rates the way governments do now.

Here’s CAPP’s press release, and their full report (both PDF). The main takeaway from all this is that what we have is not a “free” market. There’s too many abuses, and the consumer has little power to do anything about them. It also contains this blast-from-the-past gem:

Enron played a key role in the deregulation of the Texas electric market. Some of the current problems with the market structure can be attributed, at least indirectly, to the considerable political influence of Enron during the late 1990s.

They’re just the gift that keeps on giving, aren’t they? Remember, kids, what is good for business – in particular, what is good for one business – is not necessarily good for you. EoW has more.