How DeregulationDrives Innovation

How the Deregulated Energy Market and Customer Choice

Push Technology Further

More and more people are demanding more and more electrical power.

State regulated markets lack agility to tackle rapid growth.

• Building new power improvements is a slow, bureaucratic process.

• Power utilities & state regulators must negotiate to build new generators and transmission routes.

• They must wrestle with the means of how to pass the expense on to consumers --(aka: state taxpayers)

• Because regulators spend public money cautiously, innovations are often technologically out of date when deployed.

In deregulated states, competition has been the answer to the problem of growth and expanding power demand.

• Competition removes the public's financial risk for investing in electrical generating plants and transfers it to private investors.

• When customers can choose between rival competitors in an industry, the most successful gives their customers what they want for the lowest price.

• Investors can effectively order their generating companies to cut costs by investing in new technologies, adopting best practices, and improving energy efficiency.

Market competition has been key in meeting the rising Texas electricity demand since deregulation began in 1999.

• Texas has the second largest population in America, growing to 50 million people by 2040.

• The Electricity Reliability Commission of Texas (ERCOT) estimates peak demand for Texas electricity increased at an annual rate of 2.5% from 1990 to 2006.

• Anticipated growth will require between 60,000 and 80,000 megawatts (MW) of new electricity generation capacity by 2030.

Houston at night from space showing a 60 mile wide area.Photo courtesy of NASA

To supply demand, ERCOT has performed many improvements:

• ERCOT consolidated 10 different control centers into one central location.

• Increased staff and resources, created new transmission pricing and interconnection policies.

• Developed statewide planning expertise, and produced detailed annual reports identifying transmission constraints and needs throughout Texas.

ERCOT reorganization streamlined policies, cut transmission/distribution bottlenecks.

• All transmission rates are "postage-stamp" rates — generating companies pay the same rate throughout the region.

• ERCOT is the central clearinghouse for price and policy — transmission companies rely on one organization with one price.

Investing in the Grid

• Since 1999, $5.8 billion has been invested in upgrading 69,000 volt lines (69 KV) to 138,000 volt lines (138 KV).

• Since 2008, ERCOT Transmission Service Providers (TSPs) completed 1,137 circuit miles of transmission improvement projects.

Investing in the Grid

• In 2013 alone, an estimated 2800 circuit miles of additional 345 kv lines are planned.

• Between years 2010 through 2015, an estimated $8.8 billion of improvements are planned.

Investment in Power Generation:

• Between 1990 and 1997, the state regulated system only added 6 gigawatts (GW; 1 GW= 1,000 megawatts) of electrical generating capacity.

• From 1998 through 2008, 36 GW of electrical generating capacity was added.

• 6.4 GW (most of it green renewable energy) added in 2008 alone.

Most investment in new generation capacity was in energy efficient generating technologies:• Low-polluting combined-cycle natural gas systems.

• Clean coal generation technologies now cut carbon emissions through Carbon Capture and Storage (CCS).

• Solar and wind power.

Texas leads the US with more operational wind turbines than Iowa and California combined.

• February 28, 2010: Texas wind turbines delivered a record 6,242 megawatts of power to Dallas, Austin and other population centers.

• 22% of all the electricity consumed in the Texas grid that day came from wind.

• ERCOT has now set the goal deploying 10,000 MW of renewable energy by 2025.

Smart Meters are the latest consumer innovation being deployed by TSPs and ERCOT.• Provide both retail and transmission companies with consumer power usage for

billing.

• Consumers can get an hourly breakdown of their usage history.

• Software companies are developing home systems for the consumer to monitor their electricity.

• Smart appliances will show consumers real-time usage and cost.

• Consumers can adjust their power usage to increase efficiency and save money.

Market competition has pushed companies to tailor electricity to customers’ needs.

• Generation is separate from retail.

• Retailers and their customers can choose where they buy power.

• Power generating companies must produce power more efficiently than their competitors.

Retail Energy Providers build their success by getting the best deal on the Texas Electricity.

• They shape plans to meet consumers' needs.

• They offer consumer incentives that reward both consumer loyalty and paying their bill on time.

• They pass on their savings to their customers.

In a regulated market, consumer loyalty oron-time bill payment rewards don't happen. Why?

The regulated power company is the only choice.

...or buying a case of candles.

In a deregulated market, the consumer gets real choices.

• Consumers can choose the cheapest Texas electricity available or they can choose power made using 100% green, renewable technologies.

• They can choose a provider plan that follows monthly market prices or locked-in, fixed rates for up to five years.

• They can choose a provider that rewards customer loyalty and on-time bill paying.

By competing to win, energy wholesalers and retailers will meet growing consumer demand for:

Better Plans Innovative Technologies Lower Cost

The quickest way consumers cansave money is by shopping around

for a better deal.

Check out www.PowerToChoose.org