Texas Grid Operator Forecasts Multiple Emergency Conditions this Summer, Meaning Prices Sure to Spike

By Tracy Hodge on March 7, 2012

The Electric Reliability Council of Texas, which runs most of the state’s electric grid, said last week that it expects to enter Energy Emergency Alert conditions — meaning electric demand is nearing or surpassing available supplies — on “multiple occasions” this summer. During these emergency conditions, the wholesale price of power spikes to $3,000 per megawatt-hour, and Texas electric customers may be exposed to these high prices unless they shop for a low electric rate now with SaveOnEnergy.com.

Although ERCOT provided some good news — it does not forecast the need for rolling outages this summer unless there is extreme, record heat and a higher than anticipated number of power plants that unexpectedly trip offline — ERCOT’s preliminary summer assessment confirms that Texas electric rates will repeatedly spike this summer, to levels at the price cap of $3,000 per megawatt-hour, due to a shortage of generating capacity in the state.

“Based on expected resource availability and demand levels driven by anticipated above-normal temperatures, there is a significant chance that ERCOT will need to declare an Energy Emergency Alert (EEA) on multiple occasions during the summer of 2012 and issue corresponding public appeals for energy conservation ; these EEA declarations are not likely to result in the need for rotating outages,” ERCOT said.

The Energy Emergency Alerts include several steps, from first appealing to the public to conserve energy , to ordering certain large customers to take their load off the grid (e.g. interruptible customers), to finally rotating power outages .

Regardless of what level of Energy Emergency Alert is reached, it indicates that electric demand cannot be met with available supplies. At these times, all power plants are ordered to turn on, including the most expensive plants which usually do not run. The “dispatch” of these high-cost, peaking power plants pushes the wholesale price of power to $3,000 per megawatt-hour when shortage conditions hit.

When this happens, it is not uncommon to see retail electric providers pass through these costs to their customers, sometimes through rates that are as high as 25 cents to 30 cents per kilowatt-hour.

Because those rates are more than three times higher than what Texas electric customers can currently find in the market, customers need to shop for a low electric rate now, while they are still available.

SaveOnEnergy.com can take the hassle out of finding the lowest electric rate by making electric providers compete for your business. With SaveOnEnergy.com, you can find a low electric rate in just a few minutes, any time day or night, to protect against the inevitable price spikes coming this summer when Energy Emergency Alerts are declared.

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Low Natural Gas Prices Keeping Texas Electric Rates Down; But Analysts Anticipate Rise

By Tracy Hodge on March 1, 2012

Texas electric customers continue to enjoy the lowest electric rates in a decade due to the revolution in shale natural gas, which has depressed both natural gas and power prices , but investment analysts continue to anticipate an inevitable increase in power prices, meaning customers need to shop for a low rate with SaveOnEnergy.com now while they are still available.

Texas electric rates continue to be below rates seen before the start of competition in December 2001, but that has made generators hesitant to invest in new capacity, which Texas needs to keep pace with its population and economic growth, and, more urgently, to meet expected power plant retirements due to federal environmental rules.

As SaveOnEnergy.com has noted over the past few months, the Public Utility Commission of Texas (PUC) is trying to forestall any power shortage by ensuring that Texas’ electric market works correctly.  The PUC is resisting calls to pay generators solely for their capacity (regardless of whether they turn on and produce energy), as occurs in some Northeast states, but the PUC is tweaking its current, ” energy only” market rules to make sure that they reflect true market conditions, and not administrative interference.

Most of these efforts are designed to ensure that when electricity demand approaches, meets, or exceeds the available supply, these shortage conditions are reflected in the wholesale energy price through “scarcity pricing.”  In other words, when electric demand peaks and there are no more power plants available to meet additional demand, the wholesale price should reflect customers’ value in avoiding rolling blackouts.

What this essentially means is that wholesale prices, going forward, will be more likely to hit the price cap, which is currently $3,000 per megawatt-hour.  The price cap equals $3 per kilowatt-hour, or nearly 3800% higher than the current retail price of power (about 8 cents per kilowatt-hour for residential customers).  Furthermore, the PUC appears ready to increase the wholesale price cap, further raising prices.

These higher wholesale prices will eventually be reflected in retail electric rates paid by customers, either because retail electric providers will pay these wholesale prices directly, or will hedge against them but will still incur a premium above current costs to hedge this risk.

In either case, market analysts are expecting retail electric rates to rise in Texas, to account for the market changes at the wholesale level.  During several recent earnings calls with some of the larger Texas electric providers , investment analysts have asked the companies how they will adjust their retail pricing to account for the increased risk in the Texas electric market.  Although the companies have declined to reveal their pricing strategies, it is clear that investment analysts covering the Texas retail market expect Texas retail electric providers to increase their electric rates in the near future, particularly for the summer, to protect the retail providers against exposure to any wholesale price spikes that hit $3,000 per megawatt-hour.

Faced with the prospect of higher prices in the future, Texas customers need to shop now while electric rates are still at historic lows.  By shopping for a low electric rate now with SaveOnEnergy.com , customers can ensure that they benefit from today’s low prices for the maximum period of time, and avoid the price hike expected in the Texas market.

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SaveOnEnergy.com Enters 10th Year of Saving Customers Money on Energy with New Website, Expanded Markets

By Tracy Hodge on February 22, 2012

SaveOnEnergy.com , the leader in helping customers find a lower energy rate by getting competing energy suppliers to compete head to head, is entering its 10th year of saving customers money with a newly redesigned website, and other features to enhance the customer experience.

The redesigned website is more user friendly, and features enhanced search and sorting features for residential customers, making it faster and simpler to find a low rate for electricity and natural gas . 

Residential customers can easily filter products to see the products that best meet their needs and criteria, such as green products, or products for customers with poor credit.  Customers can also sort products by SaveOnEnergy.com’s recommendation, lowest rate , term length, and by energy provider .

SaveOnEnergy.com has made its form for commercial customers much easier as well, streamlining the process.  Using this form, commercial customers can leverage the competition available through SaveOnEnergy.com and get customized rate quotes from multiple competing electric or natural gas providers , ensuring that customers get the lowest rate.

SaveOnEnergy.com has also launched an enhanced 24/7 call center to help customers in finding the lowest  electric rate  or natural gas rate .

Now in its 10th year of operation, SaveOnEnergy.com can save customers money on their  energy bills  in all deregulated markets in the United States.  In 2012, it will be enhancing its presence in several natural gas markets, with a big push in Georgia, New York, New Jersey, and Ohio.

Additionally, SaveOnEnergy.com will be making a push into the Canadian markets this year, starting with the Alberta market.

SaveOnEnergy.com features the most reliable and reputable energy providers in the market, with 8 of the top 25 mass market retailers, as ranked by industry consultant KEMA, competing for customers through the SaveOnEnergy.com platform.

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Texas Risks Rolling Outages This Summer; Electric Rates Set to Rise

By Tracy Hodge on February 16, 2012

Last week, officials from the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT), which runs that state’s main power grid, updated legislators on Texas’ generation adequacy and ability to meet peak electricity usage this summer.

As SaveOnEnergy.com has previously noted, the state has only a razor-thin margin of “excess” power (called a reserve margin) to call upon on days when it is extremely hot, and additional power is needed above even the typical summer peak.

Officials told lawmakers that the picture remains bleak, and that if last summer’s weather is repeated, the state would need conservation — on top of the level of conservation seen in 2011 — to avoid rolling outages and keep the lights on.

H.B. “Trip” Doggett, CEO of ERCOT, told lawmakers that from 2013 onward, the state will not have enough reserve capacity unless companies start building more power plants .  “Making matters worse were last summer’s extreme heat, which set records for demand, and the ongoing drought, which reduces the needed water flow to power plants,” according to the Star-Telegram .

“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 power outages ,” Doggett told the House State Affairs Committee .

Aside from the risk of rolling outages, the shortage of generation will lead to higher electric rates — both in the wholesale market, and eventually the retail market.  Last summer, wholesale electric rates routinely hit the equivalent of $3 per kilowatt-hour (which is the cap on wholesale prices), while the lowest retail electric rates in Texas are currently 8 or 9 cents per kilowatt-hour.

With an even greater supply/demand imbalance this summer, wholesale electric prices will reach the wholesale price cap more frequently, forcing retail electric providers to raise their electric rates , as they must buy incremental power supplies needed for customers’ “super-peak” usage on record-setting summer days at these high wholesale prices.

Customers can shield themselves from any looming hike in Texas electric rates by shopping for a low electric rate now with SaveOnEnergy.com .  Texas electric rates are still at the lowest levels seen in the past decade, making now the perfect time to make sure you’re getting the lowest rate possible.  By making electric suppliers compete for your business on SaveOnEnergy.com , you’re guaranteed the lowest rate, and can ensure that you find a low electric rate before the summer price spikes hit.

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Frustrated El Paso Residents, Businesses Look to Electric Choice

By Tracy Hodge on February 8, 2012

El Paso businesses and residents, fed up with some of the highest electric rates in Texas , continue to mull the introduction of competition to the area’s electric market as they see customers in parts of Texas with electric choice — like Dallas and Houston — paying much lower electric rates .

Back in November, SaveOnEnergy.com noted customers’ frustration with the high rates at the area’s monopoly electric utility , El Paso Electric.  Like some other parts of Texas not connected to the main Texas grid such as Southwestern Public Service and Entergy, El Paso Electric was not forced to open its system to electricity competition , like Oncor, CenterPoint, and AEP.

The result is yet another clear example that competition drives down electric rates , as customers at El Paso Electric are paying some of the highest electric rates in Texas, and customers and city leaders have had enough.  For example, a residential customer using 1,000 kWh at El Paso Electric in December paid a rate of 11.2 cents per kWh, while customers in Dallas, who can shop for their electric supply, could get a fixed rate as low as 8 cents per kWh, with variable rates even lower.

According to El Paso Inc. , City Rep. Cortney Niland and other council members, “contend that high electric rates and the lack of competition have contributed to El Paso’s economic problems.”

“The tone they’re setting by saying, ‘We have the highest rates and we’re taking them higher,’ shows they have no interest in the community” Niland said.

Niland noted that due to El Paso Electric’s high electric rates , the city, “cannot compete for businesses,” with places such as Houston and Laredo — both areas where customers can choose their electric provider .

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“Captive” Customers Upset with Lack of Choice at Austin Energy

By Tracy Hodge on February 1, 2012

Last month, SaveOnEnergy.com told you about looming electric rate hikes at Austin Energy, where customers cannot choose their electric provider , and are instead subject to the city monopoly for electricity .

Now, more customers are speaking out against the rate hike, as they see lower electric rates in parts of Texas where customers have a choice in their electric supplier .

” Austin Energy’s rates are soaring, while rates elsewhere are declining.  State officials will want to know why Austin Energy’s residential rates have escalated sharply because statewide average rates have dropped by 14 percent and are still falling,” one customer wrote to the Austin American Statesman .

The customer notes that Austin Energy, under its new energy rate proposal, would impose an “inclining block” rate structure on customers, where higher levels of usage pay a higher per kilowatt-hour rate.  In parts of Texas open to competition, like Dallas and Houston, customers can choose the rate design that best fits their usage (flat rate, Time of Use, declining or inclining block, etc.), but at Austin, everyone would be subject to the same “one size fits all” product.

“The proposal features high rates and other anticompetitive elements that assume the utility will remain a monopoly forever,” the customer continues.  “Without monopoly protection, Austin Energy cannot survive in the competitive marketplace … By making itself an outlier, the utility will become an inviting deregulation target.”

Meanwhile, as previously observed by SaveOnEnergy.com , the Austin American Statesman noted that even as monopoly Austin Energy is seeking a huge electricity rate increase, Austin Energy’s contribution to the City of Austin’s general fund grew from $77 million in 2006 to $105 million this year, while Austin Energy’s net earnings went from $53 million to a projected negative $76 million.

This transfer of dollars from captive ratepayers to the city’s general fund is being protested by Austin Energy customers who live outside of the City of Austin, but within Austin Energy’s franchised service area, who must pay for these wealth transfers through their electric rates , but have no say in how the money is used since they cannot vote for Austin city council.

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Customers in Dallas/Ft. Worth Could Have New Opportunity to Earn Money for Reducing Load

By Tracy Hodge on January 25, 2012

Medium and large commercial electric customers in the Dallas and Forth Worth areas may soon have a new opportunity to save money on their electric bill by curtailing load at the request of Oncor during peak times.

Oncor currently runs a ” Commercial Load Management ” program which pays participants for each kilowatt (kW) of reduced load during curtailment events — which are times during which Oncor instructs participants to reduce, or curtail, load.  Participation is currently capped at 50 megawatts (MW).

Under the 2011 Commercial Load Management program, Oncor paid $20 per kW for unscheduled curtailments called by Oncor (which are called with one hour’s notice), as well as $10 per kW for scheduled curtailments during testing.

Due to the generation capacity shortage expected in Texas energy  this summer (which SaveOnEnergy.com has previously noted here ) Oncor has proposed to the Public Utility Commission (PUC) increasing the Commercial Load Management program by an additional 50 MW for the summer of 2012.  This would provide the Oncor service area with an extra “cushion” if demand is projected to exceeded supply, and could help avoid rolling blackouts .

Oncor’s request must be approved by the Public Utility Commission .

Although not explicit, it appears that the terms for the incremental 50 MW of Commercial Load Management curtailable load would be the same as for the existing Commercial Load Management program, including payments for load reductions.

Under the program, eligible “Curtailable Load” must produce savings through an interruption of electrical consumption during the summer peak demand period, and project sponsors must commit to making the “Curtailable Load” available for one peak season.

Eligible “Curtailable Load” is considered to be load listed on the project application that will be available for curtailment.  This could be building(s) or individual end-use equipment that creates demand reduction during the summer electricity peak demand period.

Other requirements include:

• Loads must be located in Oncor’s service area and serviced by an Oncor electric meter

• Loads must have at least 700 kW of electric demand

• A single project may involve more than one customer facility

• Loads must be able to reduce electric load within an hours notice during the on-peak demand period, defined as the hours between 1:00 p.m. to 7:00p.m., Central Standard Time, Monday through Friday, June through September, excluding weekends and federal holidays.

• Each project must achieve a total estimated demand savings of at least 100 kW during the on-peak demand period. 

• Load reductions must be verified by Oncor.

• Each participating site must have an interval data recorder (IDR) meter

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Shoulder Months Less Price Friendly as Grid Changes, Shop for Low Electric Rate Now

By Tracy Hodge on January 18, 2012

Electricity demand within the Electric Reliability Council of Texas (ERCOT), which covers about 80% of the state, increased 5 percent in 2011, ERCOT recently reported .

A forecast for a similar high level of load in 2012 means that electric rates will likely rise with increased demand, and that customers should shop for a low electric rate now on SaveOnEnergy.com .

Net energy for load for 2011 was 335,000 gigawatt-hours (GWh), compared to 319,097 GWh in 2010 and 308,278 GWh in 2009. 

April had the highest energy increase compared to the previous year with 14.4 percent, followed by July which increased 12.2 percent compared to last year, ERCOT said.

The April statistic is telling, and should prompt customers to check their electric rate now and lock-in a lower price, before energy prices increase.

Typically, the spring and fall are good times to shop for electricity in Texas , because the months are known as “shoulder” months, which have moderate temperatures and do not cause high spikes in electric usage due to excessive air conditioning usage in the summer or electric space heating in the winter.  Because there is less demand for electricity in these shoulder months, power prices are typically lower.

However, as shown by the spike in last April’s electric usage, that paradigm is shifting, and the so-called “shoulder” months are no longer as solidly reliable for having favorable electric rates as they once were. 

One of the reasons is the higher amount of wind power on the grid.  Wind generation’s output is variable, and although complex models forecast the production from wind generation, changes in weather can drastically alter wind generation’s output in a short period of time.  This can leave grid operators scrambling to replace these “lost” megawatts due to a reduction in wind power .  When this happens, and other power plants have to “turn on” on short notice, wholesale electric prices can spike, leading to higher retail rates.

While wind’s generation output varies throughout the year, there is less margin for sudden changes during the “shoulder” months, ironically, because demand for power is lower in these months.  That’s because most generators perform needed maintenance on their power plants during the shoulder months — in the fall and spring — because the grid can afford to have several thousand megawatts “off-line” for maintenance since peak usage is not expected.  When plants are undergoing maintenance, they typically cannot start-up on short notice to respond to rapidly changing conditions, such as reduced wind output.

Having so many megawatts off-line during the shoulder months means there are fewer power plants able to respond to a sudden drop in wind generation on short notice, which can cause shortage conditions and lead to higher energy prices .  In contrast, in the summer, nearly all generation is ready to come on-line to meet peak demand, with plants taken out of service only for emergencies, so shifts in wind power can be more easily filled during the summer.

Indeed, prior to last year’s rolling blackouts during the February cold snap, the most recent rolling blackouts in Texas had been in April of 2006 — a shoulder month — because unseasonable heat and air conditioning use sent power demand past forecasts and the amount of generation available to respond.  Rolling blackouts are always accompanied by record electric prices , because they indicate a shortage of electricity .

This is all to say that if Texans are holding off on shopping for an electric rate until the spring, there’s a risk that prices may spike in the shoulder months.  With today’s electric rates still at historic lows, there is no upside to waiting three or four months to shop for power, and customers should instead use SaveOnEnergy.com to get a low rate while still available.

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Texas Drought Could Mean High, Volatile Electric Rates This Summer

By Tracy Hodge on January 11, 2012

Last week, SaveOnEnergy.com noted that even with a stay of federal environmental regulations, which will keep more Texas power plants online this summer, Texas electric rates are still likely to rise because the supply of generation only marginally exceeds forecast demand.

One of the reasons for this is the prolonged drought Texas has experienced, and its impact on power generation and electricity production, which was examined by the state senators earlier this week.  Even recent heavy rains in some parts of the state, including Houston, have not eased the statewide drought conditions.

Many types of power plants rely on large amounts of water for cooling, and without adequate water, these plants cannot generate electricity .

“If Texas’ drought persists, it could pose a risk to electricity generation if there isn’t sufficient water to produce the power the state needs,” the Abilene Reporter-News reported.

“The drought is already having a ‘slight impact’ on electricity generation, according to testimony from Trip Doggett, the chief executive of the Electric Reliability Council of Texas (ERCOT), which operates the state’s electric grid.  He anticipated that problems would remain slight through the summer, but if the drought continues into next year, ‘the consequences are likely to become more severe,’” the Texas Tribune reported.

If power plants are unable to obtain cooling water due to the drought, that means they could be forced to reduce operations or shut down completely.  With such a small margin in excess power capacity currently in the state, even small reductions in generation due to the drought could have huge implications in both reliability and market energy pricing . 

This summer, Texas saw wholesale prices routinely hit the price cap of $3,000 per megawatt-hour (the equivalent of $3 per kilowatt-hour) even before the drought affected most plants.  If Texas has a repeat of last year’s extreme heat, coupled with the continued drought, electric prices may spike even more repeatedly, which will drive up retail electric rates .

That’s why it’s important to shop for a low electric rate with SaveOnEnergy.com now, while low rates are still available.  Electric rates are still at historic lows, and shopping for a new energy provider now means customers can avoid any future price increases. 

Electric providers competing for customers on SaveOnEnergy.com are still offering rates as low as 8 cents per kilowatt-hour — less than what electricity cost 10 years ago — in both the Dallas and Houston regions, making now the perfect time to shop.

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Texas Electric Rates Still Set to Rise Despite Stay of Costly Environmental Regulations

By Tracy Hodge on January 4, 2012

Although a federal court recently stayed implementation of new federal environmental regulations which threatened Texas with the loss of power generation and rolling blackouts, keeping those megawatts on the grid will not fundamentally change the expectation that Texas electric rates are due to rise this year, particularly for the summer, due to a remaining imbalance in power demand and supply.

The stay of the EPA’s Cross-State Air Pollution Rule will mean more electric generation capacity will remain on the Texas grid during the next six to nine months as the regulations are litigated in court.  Already, Luminant has announced plans to maintain the operation of 1,200 MW of generation it had previously said it would close due to the new federal rules.

While keeping this generation online will help Texas make it through the winter and summer without rolling outages, it doesn’t mean Texans will have relief from the expected rise in electric prices coming to Texas, for several reasons that SaveOnEnergy.com discussed a few months ago .

That’s because, while the added generation will help Texas keep the lights on, conditions will still be scarce, and supply will still only outpace demand by a small margin.  Essentially, conditions in 2012 will be similar to those in summer of 2011, when Texas risked rolling blackouts on a daily basis due to a lack of available generating capacity.  Under these conditions, wholesale electric rates routinely hit the equivalent of $3 per kilowatt-hour last summer, while the lowest retail electric rates in Texas are currently 8 or 9 cents per kilowatt-hour.  Similarly high wholesale pricing can be forecast to be repeated this summer, which may lead retail electric providers to increase their retail electric rates to account for the higher expected wholesale prices.

Also, most of the generation that was due to retire, but that will remain on the grid under the EPA’s stay, was coal-fired generation.  Typically, these units do not set on-peak electric prices in Texas , which are set by gas-fired generation.  The return of these coal units, while displacing some higher-cost generation, won’t lead to a fundamental change in the drivers of on-peak Texas electric rates .

The good news is that while electric rates are still under upward pressure, they haven’t increased materially yet.  Customers can still shop with SaveOnEnergy.com to find a low electric rate in the 8-cent range, and to choose a plan that lets them avoid the expected rate hikes in the future.

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