Posts Tagged ‘Texas’

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Negative Power Prices in ERCOT West: 2009 and 2010 through September

November 11, 2010

Michael Giberson

Below are charts showing data on ERCOT West zone power prices for the 2009 and for 2010 January-September with a focus on negative prices.  The charts were derived from data provided through the ERCOT website, on their “Balancing Energy Services Market Clearing Prices for Energy Annual Report” page.

These charts were prepared in the same way, including use of the same axis scale, as earlier charts showing 2008 data in order to make comparison easier.  General discussion of negative prices in ERCOT West is at “Frequent negative power prices in the West region of ERCOT result from wasteful renewable power subsidies.”  Additional discussion in “2009 power prices in ERCOT’s West zone: a mix of wind power, natural gas prices, transmission constraints, and (inefficient) congestion management practices.”

As the histogram charts show, negative prices in 2009 are not quite so negative as in 2008, and negative prices in 2010 are not so negative as in 2010.  Likely causes for the somewhat less extreme negative prices are changes in zonal congestion managements prices in mid-2008 (more frequent use of “out-of-market” adjustments that don’t directly affect the zonal balancing energy market price) and transmission additions and improvements over the period.

2010 January-September

ERCOT_W_Freq_Neg_Prices_2010-jan-sep

Frequency of negative prices in ERCOT West, January-September 2010

ERCOT_W_Hist_Neg_Prices_2010-jan-sep

Frequency of negative prices by price bin, ERCOT West, January-September 2010

ERCOT_W_Avg_Prices_2010-jan-sep

Daily average prices in ERCOT West, January-September 2010

2009 January-December

ERCOT_W_Hist_Neg_Prices_2009

Frequency of negative prices in ERCOT West, 2009

ERCOT_W_Freq_Neg_Prices_2009

Frequency of negative prices by price bin, ERCOT West, 2009

ERCOT_W_Avg_Prices_2009

Daily average prices in ERCOT West, 2009

Posted in Electricity, Energy markets | Tagged , | Comments Off

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Sunny Texas and solar power

November 8, 2010

Michael Giberson

The Houston Chronicle reports the growing interest in Texas in still-expensive solar power:

Surely some wiseacre is on record observing that there are two things Texas has plenty of: hot air and hot sun.

But Texas may eventually have the last laugh. The state, which already leads the nation in turning wind into electricity, has quietly begun to harvest sunlight on a large scale.

Its first solar farm, an array of 215,000 photovoltaic panels that capture sun rays and turn them into power, went on line Thursday in San Antonio. Statewide, at least six more projects are in earlier stages of development.

Who ends up laughing may depend on who ends up paying for the projects. In this case the captive customers of San Antonio municipal electric company CPS Energy are on the hook for a 30 power purchase agreement. Currently solar power projects remain much more expensive than many other technologies for producing electricity.

Posted in Electricity, Environmental policy | Tagged , , | Comments Off

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Review of Kiesling and Kleit (eds.) Electricity Restructuring: The Texas Story

October 7, 2010

Michael Giberson

In the current issue of Regulation, Tim Brennan reviews Electricity Restructuring: The Texas Story, edited by Andrew Kleit and our own Lynne Kiesling. After a lengthy introduction discussing how deregulation came to the electric power business (mostly it hasn’t, but parts of the industry have been reorganized), Brennan gets down to the book at hand.  He tells us, “The subject of their important book is why Texas appears to have succeeded where the rest of the country has failed.”

Electric Restructuring: The Texas StoryBrennan finds the book useful as a guide to what Texas has been doing with its electric power market and how they got to where they are today. He finds the book a bit full of “inside baseball,” stocked as it is with contributions from many of the state commissioners, regulatory staff and other folks who were front-line participants in the developments discussed. Brennan would have liked to see more external evaluations of market performance to complement the insider views.  He also found that the book missed opportunities to convey some of the lessons learned in the Texas experience, as with Texas’s initial choice of a zonal market design and subsequent switch to a nodal market design. Finally, with the book’s heavy focus on the Texas experience, it neglects discussion of developing issues of interest.

Overall, despite the mild criticism, Brennan finds the book a valuable contribution on a subject of importance. I’ll endorse that view. Anyone who wishes to be up-to-speed on electric power restructuring policies in the United States should read this book.

 

 

Posted in Books, Electricity | Tagged , | Comments Off

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Is Texas CREZ a model for getting transmission lines built elsewhere in the country?

September 28, 2010

Michael Giberson

Current and anticipated changes in the patterns of electric power production and consumption drive the demand for new transmission lines to help get lower-cost power from generators to consumers. The biggest changes in power production have come from growth in renewable power supplies, so the expansion of transmission is seen as critical to the growth of renewable power. But siting transmission lines is tough in the best of cases; most of the time it seems nearly impossible to get new major transmission projects built.

The Texas CREZ process – a long-term effort to identify opportunities to develop additional renewable energy resources in the state by supporting expansion of the ERCOT grid to enable delivery of power into the state’s largest population centers – has frequently been seen as a model of sorts.  At least compared to similar ideas elsewhere, the CREZ lines are moving forward through regulatory and legal processes and beginning to be built.

Well, there has been some opposition, as detailed in a three-part series by Kate Galbraith in the Texas Tribune.

Posted in Electricity | Tagged , , | 7 Comments »

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Nodal pricing coming to Texas wholesale power market

September 9, 2010

Michael Giberson

A story by Purva Patel in the Houston Chronicle does a reasonably good job explaining the upcoming shift from a zonal to a nodal market design for the ERCOT market in Texas. It is a complicated matter and hard to convey to non-specialist readers.

(In fact, even some specialists appear confused about parts of the bigger picture as evidenced by the comments reported of an attorney “who represents cities in utility issues and who sits on ERCOT’s Technical Advisory Committee.”  The attorney claims that while a “nodal system may make it easier to spot congestion and where new power plants are needed, it ignores the reality of how plants are built.”

How does it “ignore the reality of how plants are built”? The gist of the point seems to be that prices will rise at points in places like Houston but it is unlikely a new power plant could be built in Houston because of space limitations, public opposition, and air quality problems.

The misunderstanding may arise because of loose talk about how a more transparent and efficient pricing system will signal where new power plants are needed. This is not quite right. The more transparent and efficient pricing system will just do a better job of revealing the value of power at various locations on the grid.  What consumers and producers do with that information – build new power plants, add transmission, reduce consumption, or just pay the higher prices – is up to them.)

UPDATE: The Austin American-Statesman ran a story on Texas nodal the same day. It reveals something about the differences between Houston and Austin that the Houston story focused more on the practical aspects of the change while the Austin story highlights the behind-the-scenes politics.

Posted in Electricity, Energy markets | Tagged , , , | 3 Comments »

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Texas wind power: It isn’t about the RPS

May 18, 2010

Michael Giberson

Texas did it again, it achieved it’s target for new renewable power generation capacity years ahead of schedule. And so, of course, as it becomes increasingly obvious that the Texas Renewable Portfolio Standard (RPS) is essentially irrelevant to growth in wind power, the Texas RPS is increasingly held up as a success and model for other states and the federal government.

From Brighterenergy.org:

The State of Texas exceeded its 2025 renewable energy target 15 years early last year.

The Electric Reliability Council of Texas (ERCOT) said on Friday that there was a record increase in voluntary participation in the state’s renewable energy certificate program in 2009.

Nearly 15 million renewable energy credits [RECs] were retired last year, with just 6.79 million needed by retail electricity providers to satisfy the state’s renewable portfolio standard for the year.

A further 8.14 million RECs were voluntarily retired, surpassing 2008’s record of 6.77 million.

The figures came as ERCOT submitted its annual report on the scheme to the Texas Public Utility Commission.

With more than 10,000 megawatts of renewable energy capacity on the Texas grid – mostly wind power – the state has reached its 2025 target 15 years early, and has doubled the target set for 2015.

The original mandate for 2009 was just 2,000MW, which was achieved three years early.

“Successful”

ERCOT interim CEO Trip Doggett said: “The Texas program was the first of its kind in the nation when it began in 2001, and it is now recognized as one of the most effective and successful in the nation.

“It’s also one of the biggest influences on the rapid growth of wind energy in Texas,” added Mr Doggett.

Other than the popular but faulty post hoc ergo propter hoc logic, what is the evidence?

Sort of like the 45 mph minimum speed limits on some Texas highways, the constraints are so far from binding that it is hard to see how they are relevant.

I think a better explanation of the growth of wind power in Texas (and about 95% of the Texas REC-qualifying renewable power capacity is wind power) is the combination of federal Production Tax Credit subsidies + reasonably good quality wind resources near transmission lines.  The CREZ transmission expansion plan is likely the next most important factor.  REC monies along with other state and local tax exemptions are far smaller considerations, perhaps tipping the balance in favor of development for a few projects.

What is my evidence? Oh, actually, what I have is more of an inference and interpretation drawn from a number of mostly anecdotal sources.  Nothing really reliable to show.  But given the lobbying for a national RPS, it makes a difference whether or not the Texas law is the model it is held out to be.

I’m sure someone has put together the story somewhere.  Anyone know of anything?

Posted in Energy markets, Environmental policy | Tagged , | 5 Comments »

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More on Smart Meter Texas

March 26, 2010

Michael Giberson

From the Houston Chronicle, “Smart meter power usage data isn’t so current“:

A Web site touted this week as providing near real-time power use information to electricity customers with new smart meters actually delays the information by up to two days, CenterPoint Energy has acknowledged.

… The company said Monday the site would give consumers with smart meters information about their power usage in 15-minute intervals so they could make better choices about how much power they use.

Not mentioned in the news releases from the company and state regulators was that the 15-minute incremental information can take as long as 48 hours to hit the Web site.

Apparently the timeliness issue was discussed in the regulatory process that preceded roll-out of the system.  Retail electric providers favored real-time data, but “transmission companies like CenterPoint argued that consumers wouldn’t really need the data any sooner than the following day.”

I’m of about three opinions about this issue.  The article quotes the CEO of an energy management company as saying “2- to 3-day-old data … is all but useless.”  I agree, more or less.  The data isn’t useless – an interested homeowner or business manager could still learn quite a bit from examining 15-minute interval data from a few days earlier – but the delay does sap the immediacy from the system and makes it harder to put the information to use.

On the other hand, being able to access 2-day old data on power consumption at the 15-minute interval level is light-years ahead of the situation that most consumers find themselves in.  Currently I get an electric bill that reports a “previous [meter] read” and a “current [meter] read.”  No explicit dates are attached to the two bits of information, but I’m guessing the first number is from about 5 weeks before the billing date and the second one from about 1 week prior to the billing date.  This kind of meter data is “all but useless;” interval data from a few days ago would be super fantastic.

Almost no smart grid benefits will emerge directly from Smart Meter Texas, but that is okay.  It is only a taste of the possibilities, not the full smart grid smorgasbord.  This system is not “the end,” it is one beginning.

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Pat Wood joins the ranks of energy bloggers

March 5, 2010

Michael Giberson

The Houston Chronicle has added another voice to its roster of energy bloggers: Pat Wood III.  Wood is former chairman of the Federal Energy Regulatory Commission and before that chairman of the Public Utility Commission of Texas (though around here they usually list those two items the other way.  In order of importance, you know).

The blog, Wood on the Wires, is subtitled “Energy infrastructure with Pat Wood.”  As the Chronicle’s NewsWatch: Energy blog says in its introduction, “His inaugural post shows a bit of the humor that anyone who knows Pat is sure to recognize.”

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The REVISED history of electric competition in Lubbock

February 1, 2010

Michael Giberson

At the time of the initial announcement that Lubbock Power & Light would acquire the distribution assets of competing electric utility Xcel within the city, leaving LP&L as a monopolist, I took note of several inconvenient statements about the benefits of competition included in official LP&L history.  (See “The (soon to be revised) history of electric competition in Lubbock,” November 5, 2009.)

At the time I wrote, “I’m guessing the official story is about to change.” Guess what? Now available on the LP&L website, a somewhat revised version of the document, “The History of Lubbock Power & Light.”

Here is a comparison of selected old and new paragraphs from “The History of Lubbock Power & Light.”  Old first paragraph (emphasis added in this quote and in quotes below):

In the electric utility industry, retail competition for electric customers is a relatively new concept. Not so in Lubbock, Texas. The good people of Lubbock have benefited from retail competition for electricity since 1916.

In the new history the first two sentences are:

Lubbock was a relatively new town at the time having been created in 1891 when two smaller settlements both moved their towns from several miles away to our present location. The first county court house was built at this time with the county itself having been created in 1876 by the Texas State Legislature.

Obviously a shift in emphasis (and a somewhat awkward first sentence) produced by the revision.

The old version of the history noted that the emergence of competition in the city immediately produced lower rates. This paragraph remains the same in both versions:

The effort by those early Lubbock leaders was realized a success on September 28, 1917 as the municipal power plant began producing electricity priced at only ten cents a kilowatt-hour. The other utility cut its rates accordingly soon after. Imagine that!

In the older version of the history, that early success was followed by a report of steadily falling prices in subsequent decades and then the following claims about the continued value of competition: low rates and high quality customer service:

Today, the vast majority of Lubbock remains dual-certified and customers still have a choice of electric utility providers. Customers whose account balances are current are allowed to switch from one company to the other at their discretion. The competition for the electric dollar in Lubbock has resulted in some of the lowest electricity costs in the state of Texas and in the nation. Another major benefit of competition is that customers enjoy increased levels of customer service than would be found in cities this size with only one electric provider.

Lubbock Power & Light’s mission is to provide low cost, reliable electric service. We feel we’ve been successful in that mission. All electric customers in Lubbock have benefited from the decision of those early pioneers to begin retail competition.

In the new view of Lubbock’s electric power history, the report of steadily falling prices jumps directly to a claim about LP&L’s mission:

Lubbock Power & Light’s mission is to provide low cost, reliable electric service. LP&L has competed with many private companies, but in the end the majority of the customers have chosen LP&L, leaving the private companies looking for other options.

Compare the final sentence above, in bold, with the final sentence in the old paragraph.  The old paragraph emphasizes the benefits to consumers, while the new official story shifts the viewpoint to that of the utilities.  The shift seems to me a possible harbinger of the future of utility service for LP&L customers: a shift in viewpoint from customer benefits to a utility perspective.

UPDATE: Link to a copy of the history of LP&L showing the post-November 2009 changes.

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How valuable will a monopoly be to Lubbock Power & Light?

January 31, 2010

Michael Giberson

After over 90 years of operating in competition with a rival electric utility in town, late last year Lubbock Power & Light and Xcel announced a deal in which municipal electric utility LP&L would buy out Xcel’s distribution assets and customer accounts in the city for $87 million, leaving LP&L as a monopoly electric utility in the city.

Regulatory filings with the state reveal much more of the details of the deal.  A newspaper story in the Lubbock Avalanche-Journal notes, for example, that the $87 million will buy assets that Xcel values at $64.2 million.  Lubbock’s electric power consumers may wonder what the city is getting for that extra $22.8 million payment.

It is a complex deal that, in addition to paying Xcel to get out of town, accommodates changes in numerous existing contracts between the two companies.  For example, a few years ago when LP&L was on the brink of bankruptcy, LP&L and Xcel entered into a deal under which Xcel controls operations at LP&L’s generating plants and LP&L began buying all of its power supply needs from Xcel.  That deal expires in 2019, but under the acquisition plan Xcel would continue to make available some wholesale power to LP&L.  Xcel purchases waste water from the city for cooling a power plant, and that agreement would be revised as well.  All the complexities make it hard to evaluate what, exactly, the deal is worth to citizens of Lubbock – putative owners of the municipal utility – and the value to be created by the deal (if any).

One question to be asked, as a starter, is why LP&L needs to pay anything above scrap value for the Xcel distribution system in the city.  After all, the city claims its existing system is sufficient to serve the entire city and that maintaining two utility systems is town is wasteful.  So LP&L doesn’t need Xcel’s distribution assets to take on current Xcel’s customers, and adding the distribution assets will simply result in a costly, wasteful, and over-built local distribution system.

Scrap value would be too low, since some of the Xcel distribution system may be incorporated into LP&L’s system (in cases in which the Xcel system is superior to the LP&L segment that it duplicates), but book value on the assets seems a reasonable upper limit.  In any case it is hard to believe LP&L should pay a premium over book value for Xcel’s assets.

Is having a monopoly going to be so valuable to LP&L that they are willing to pay Xcel a $20+ million bonus to get out of town? What does that imply for future electricity rates in the city?

BACKGROUND – Earlier posts on electric utility competition in Lubbock:

Note that, technically speaking, one or two small neighborhoods will still have a choice between LP&L and South Plains Electric Coop, but otherwise LP&L becomes the monopoly provider in the city of Lubbock.

ADDED: The related regulatory filings at the PUC of Texas can be found via the PUCT’s Interchange document system.  Start on this page, enter 37901 as the “Control Number,” and press the “Search Now” button.

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