Key is to give businesses and consumers tools to reduce energy demand – and save money – says Sierra Club
The Senate Business and Commerce Committee met earlier this week to discuss, among other interim charges, the competition in electric retail markets including the impact of the “nodal” transition on electric customers. On December 1, 2010, the Texas ERCOT electricity market will officially transform from a “zonal” system – based on five geographic zones – to a “nodal” system, based on hundreds of local areas. Thus, electricity pricing should be more varied, with local factors of generation, transmission and congestion impacting the wholesale and ultimately retail price.
While several invited panelists expressed some concern about the potential for problems at least as the system is rolled out, Trip Doggett, President and CEO of the Electric Reliability Council of Texas, the operators of the electric grid that covers roughly 80% of the Texas market, expressed confidence that testing had worked out must of the bugs in the system. Public Utility Commissioner Donna Nelson emphasized that the nodal system was already being paid for through a surcharge and that prices would not increase as a result of the software and infrastructure needed to change to nodal. In addition, she noted that PUC had passed rules to establish some ceiling prices during the transition to prevent any runups.
Much of the morning’s testimony centered on whether the deregulation of the wholesale, generation and retail markets of much of Texas had actually led to lower prices for consumers. While all admitted that today’s current low prices were heavily influenced by the historically low natural gas prices, Nelson, Phillip Oldham with the Texas Association of Manufacturers, John Fainter with the Association of Energy Companies of Texas, Marcie Zlotnik with StarTex Power, an electric retail provider, and Brad Jones, with Luminant Energy, for the most part felt that competition had led to more efficient generation and lower prices and felt that companies that had done their homework would be able to thrive in the “nodal” market. Taking a different tact, Jake Dyer, representing the Cities Aggregation Power Project, argued strenuously that “public” power provided by municipal utilities and electric cooperatives had represented a better deal for most residents, and presented information based upon prices reported by the Energy Information Administration to prove up his case. However, when asked by Chairman Corona (R-Dallas) whether his group would favor re-regulation of the electric market, he said it wanted reform, not re-regulation. Similarly, Bee Morehead with the interreligious non-profit organization Texas Impact said the market was not working for most people – particularly Texans with lower and moderate incomes — and suggested a major overhaul of the “Power to Choose” website which people rely upon to choose their electric provider among other fixes. Similarly, Tim Morestead with AARP said a workshop of some 140 older Texans given the chance to compare and choose contracts from different providers resulted in mass confusion among many.
Testifying that Sierra Club did not actually know what the impact of the nodal market would have on retail electric prices – except it would lead to more local variability – Lone Star Chapter Conservation Director Cyrus Reed instead called for a series of legislative changes to promote energy efficiency, demand side management and onsite renewable energy. As Reed pointed out, while we can’t know how the nodal market will impact retail rates, we can reduce bills through promotion of such efforts.
Among Sierra Club’s suggested fixes were:
- Creation of a Texas Energy Efficiency Coordinating Council which would oversee and coordinate the different energy efficiency program offered or overseen by the Texas Department of Housing and Community Affairs, the State Energy Conservation Office and the Public Utility Commission, among others;
- Raising the energy efficiency goals that investor-owned utilities must meet, but allowing such utilities to more directly interact with customers;
- Allowing retail electric providers, investor-owned utilities, municipal utilities and electric cooperatives to provide on-bill financing for energy efficiency and solar projects;
- Allowing aggregators and others to “bid-in” demand-side management – where individuals and companies voluntarily turn down their power use for payment – into the ERCOT nodal market;
- Establishing a statewide fair market price on the sale of surplus electricity from solar rooftops;
- Clarifying the rules for when Homeowner Associations can prevent – if at all — a homeowner from putting up solar panels.
To see Cyrus Reed’s testimony on video, click here. Then Click on the Video Feed for October 25th. Testimony starts at 3 hours and 1 minute.
A side-note that was not officially on the agenda were a number of individuals who came to speak against Austin Energy’s Generation Plan and Climate Protection Plan – which calls for Austin Energy to increase its renewable resources up to some 35 percent of total generation — as having the potential to add huge costs to consumer’s bills and lead to great uncertainty on reliability and costs. Data Foundry’s Andrew McFarlane, called for municipal utilities to be opened up to competition from other utilities so that businesses could choose another provider, a proposal that led Chairman Corona to suggest such advice would be sent to a subcommittee chaired by Austin Senator Kirk Watson, a former mayor and board member of Austin Energy. Some other suggestions by McFarlane and others, however, drew more favorable responses, such as the idea for greater transparency of municipal cost data. The Lone Star Chapter of the Sierra Club has officially endorsed the Austin Energy 2020 Generation Plan, with the understanding that each decision on additional purchases of generation would have to go through a public process to assess all the costs and benefits of such additions.