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EnergyWize Agent Certification Program
Texas Electricity Basics
Introduction
OBJECTIVE
• After completing this training, you should feel comfortable with how the Texas competitive electricity market works in support of your efforts to sell electricity services with EnergyWize Texas Electricity Deregulation Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Geographic Areas Open to Competition Geographic Areas Open to Competition Switching Process Switching Process Switching Process
TOPICS COVERED
Texas Electricity Deregulation o Background o Benefits Competitive Market Structure o Power Generation Companies o Transmission & Distribution Service Providers (TDSPs) o Retail Electric Providers (REPs) o Public Utility Commission of Texas (PUCT) Geographic Areas Open to Competition Switching Process
LENGTH
• Approximately 18 minutes (12 slides)Texas Electricity Deregulation
Background
Texas Electricity Deregulation Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Geographic Areas Open to Competition Geographic Areas Open to Competition Switching Process Switching Process Switching Process Why energy deregulation? • The business model of a single provider for energy services in most areas of the U.S. is outdated • Energy deregulation in some form has occurred in over 50% of the states across the U.S. Before Texas Deregulation • All customers purchased their electricity from their local electric utility • One company in each service area was both the provider and distributor of electricity Texas energy deregulation went into effect on January 1, 2002 • Electricity deregulation only After Texas Deregulation • A company can no longer be both a provider and distributor of electricity • Customers have a choice of electricity providersTexas Electricity Deregulation
Benefits
Lower Prices • When customers can choose between rival competitors in an industry, the most successful gives their customers what they want for the lowest price Efficiently Meet Ever‐Increasing Demand for Energy • Competition removes the public's financial risk for investing in electrical generating plants and transfers it to private investors Increased Investment in Clean Energy • Most investment in new Texas generation capacity has been in energy efficient generating technologies including wind and solar Better Cost Management & Innovation • Private companies are better at managing costs by investing in new technologies, adopting best practices, and improving energy efficiency Texas Electricity Deregulation Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Geographic Areas Open to Competition Geographic Areas Open to Competition Switching Process Switching Process Switching ProcessCompetitive Market Structure
Overview
Power Plant Generates Energy Transmission Lines Carry Electricity Long Distances Distribution Lines Carry Electricity To Customers Homes and Businesses Use Electricity Transmission & Distribution Service Provider (TDSP) TDSPs are responsible for maintaining the poles, wires, and meters that deliver and measure the electricity consumed by a home or business. The PUC continues to regulate TDSPs by setting the rates for transmission and distribution service, setting reliability and safety standards, and ensuring that all customers and REPs are treated the same when it comes to the delivery of electricity to homes or businesses. Not Competitive Retail Electric Provider (REP or Energy Provider) REPs compete to sell electricity directly to homes and businesses by offering a variety of different pricing options, renewable energy options, added customer service benefits, or other incentives. REPs are also responsible for customer service and billing. Competitive Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Switching Process Texas Electricity Deregulation Power Generator (“Wholesalers”) Power generation companies own and operate power plants. Power generation companies operate in a competitive market and sell their power to REPs. Competitive (Scheduling & Control)Competitive Market Structure
Power Generation Companies
Role of Power Generation Companies • Own and operate power plants, including plants fueled by coal, nuclear power, natural gas, wind, water, solar power, or other renewable sources • Sell power at wholesale to REPs, who package the power with transmission and delivery service for sale to homes and businesses • REPs are not permitted under Texas law to own power plants; however, they can be affiliated with a power generation companyTexas Electricity Generation by Fuel
Impact of Deregulation • Traditional electric utilities now provide only a quarter of the state’s electricity capacity • With deregulation, independent power producers have flourished and now account for three‐ quarters of Texas electricity capacity Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Switching Process Texas Electricity DeregulationCompetitive Market Structure
Transmission & Distribution Service Providers (TDSPs
)
Role of Transmission & Distribution Service Providers • Delivers electricity • Maintains the poles and wires • Maintains the reliability of the system • Maintains and reads all meters • Provides 24‐hour a day emergency serviceTDSPs in Competitive Markets
Impact of Deregulation • The PUC continues to regulate TDSPs by setting the rates for transmission and distribution service, setting reliability and safety standards, and ensuring that all customers and REPs are treated the same when it comes to the delivery of electricity to homes or businesses • Regardless of which REP provides the electricity to a home or business, the TDSP delivers the electricity Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Switching Process Texas Electricity DeregulationCompetitive Market Structure
Retail Electric Providers (REPs)
Role of Retail Electric Companies • Purchase electricity from power generation companies and bundle with transmission and distribution services of TDSPs • Market electricity to homes and businesses • Offer value‐added energy services and programs • Bill customers for electricity usage • Provide customer service ** Above list of REPs is not intended to be a complete list ** Impact of Deregulation • Lower prices, more service options, improved customer service • Since 2002, approximately 85% of commercial and industrial consumers have switched power providers at least once Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Switching Process Texas Electricity DeregulationTexas Electricity Deregulation
Public Utility Commission of Texas (PUCT)
Purpose • The Public Utility Commission of Texas (PUCT) is the state governing agency that manages electricity and phone service in Texas Mission • Protect customers • Foster competition • Promote high‐quality infrastructure Key Responsibilities • Enforce consumer protection laws • Approve who can sell electricity in the state as Retail Electric Provider • Regulate transmission and distribution of power • Oversee the Electric Reliability Council of Texas (ERCOT) that manages the flow of electric power to Texas customers Competitive Market Structure Competitive Market Structure Competitive Market Structure Geographic Areas Open to Competition Switching Process Texas Electricity DeregulationGeographic Areas Open to
Competition
Markets Open For Competition • Customers of investor‐owned utilities in most service areas have the right to choose their Retail Electric Provider Over 6 million customers in Texas have electric choice representing 2/3 of the populationCompetitive Markets
Markets NOT Open For Competition • City‐owned utilities and electric cooperatives may decide whether customers will have a choice o 77 city‐owned utilities currently serve Texas cities including Austin, Lubbock, and San Antonio o 73 electric cooperatives provide electricity in communities throughout Texas Geographic Areas Open to Competition Geographic Areas Open to Competition Geographic Areas Open to Competition Switching Process Competitive Market Structure Texas Electricity DeregulationSwitching Process
Texas Electricity Deregulation Switching Process Switching Process Switching Process
Switching providers will not interrupt electricity service and the reliability of service is not affected by the choice of provider. All that changes is the company that sells and bills for power ‐‐‐ not the company that maintains the poles and wires that deliver electricity to the home or business. REP provides required regulatory documents to customer for review Customer has three days to review documents and cancel if desired REP sends request to ERCOT to switch customer from old REP to new REP ERCOT sends a postcard to customer to confirm decision and customer can cancel if not authorized ERCOT informs local poles and wires company (TDSP) of the change TDSP starts sending meter (usage) data to new REP so they can start billing the customer Customer selects new REP and executes electricity agreement Competitive Market Structure Geographic Areas Open to Competitionwww.myenergywize.com
