Oncor Wins Funding for Smart Grid

We’ve covered a lot of articles about Smarts Grids, Smart Meters, and how they potentially return money to consumers. Well, here’s yet another article on the subject from the Dallas Morning News. In the article, it talks about how Oncor got some federal funding for their smart grid initiative, which has to be great news after they were rejected for some stimulus funding a couple weeks ago.

The article then goes into the advantages of a smart grid, which we’ve already covered on this blog before. Basically, the electric service will be positively impacted by Oncor’s ability to monitor how much energy is currently on a line, as well as the demand for electricity on the grid. This in turn can affect things as far afield as regulating green electricity needs, as well as whether or not to fire up new electric plants when demand is high. Basically, the message is consistent with everyone we’ve said about smart grids and Texas electricity this entire time: Smart Grid technology and Smart meters continue to get a bigger and bigger push and aren’t a passing fad. Between increased and continued funding, plus the internal commitment from the TDSP’s like Oncor and Centerpoint, the Smart Grid technology and the Smart Meters that will take the utmost advantage of them are the wave of the future, and will revolutionize both our bills as well as our energy reserves. And Texas is first in line ahead of the rest of the country in building out and utilizing this technology to the fullest.

In fact, for those people who already have Smart Meters in the Oncor area, there’s an online application by Google called their Power Meter that allows people to monitor and measure their current electric intake in real time. I might do a write-up on that technology in a later post, so let me know if you’re interested in leanring more about it from Texas Electricity Ratings.

New Time-Of-Use Plan for Some Texas Customers

This is just a quick post to talk about an article in the Dallas Morning News I saw which discussed a new plan that’s available to a small number or customers in Texas, although it should expand to much larger areas of Texas in the next couple years. The plan is called a Time of Use Plan, and basically it has different rates for electricity depending on what time of the day the electricity is being used.

The aim here is for consumers in the Texas electricity to use a plan that gives them incentive to use their electricity in off hours, which is often times the late afternoon. So this plan could appeal to people who are away from home during the day and don’t use much electricity in that time span. The benefit to the TDSP (Oncor, Centerpoint, etc.) is that there is less electricity demand during the peak hours when power plants are running at maximum capacity.

So what’s the catch? Right now the only people who can get on a plan with these electricity rates are ones who have Smart Meters installed in their households, which is about 300,000 people. But many many more smart meters will be installed by the end of 2012, so this plan could be much wider in availability in the next couple years. If your household does have a smart meter, it makes sense to explore right now and see if this plan makes sense for you.

Right now the only two REPs who offer this plan are Reliant and TXU, although other companies will probably adopt it over the next couple years as the availability of smart meters increases.

Pre-Paid Electricity and PUC Rule Changes

Here’s an article that hit the Dallas Morning News recently, talking about the problems that exist currently with Pre-Paid Electricity providers and their customers. Currently the PUC is criticizing the potential issues that can occur with Pre-Paid customers in the Texas Electricity and PUC laws that currently don’t take into account the differences between regular utilities and pre-paid utilities.

Basically, the article points out that it’s really impossible to have a truly effective and efficient pre-paid electricity market without the customers having Smart Meter technology that can measure in real-time the amount of electricity a customer is using. Currently, Smart Meter technology is only available for a small percentage of customers and it will be years until it’s truly and completely installed all throughout the areas of deregulated electricity. Furthermore, the article specifically points out how the issues can basically create “Second Class” citizens/customers in the electricity market. Essentially the current holes in which some of the pre-paid companies operate means that customers don’t always have the same rights as customers of traditional utilities, in part because the customers have to pay estimated usage in advance and there’s no real way to track their usage effectively, as well as the fact that pre-paid rates are often much higher than rates from traditional companies.

So be careful if you are with a pre-paid company, or are considering them as a provider. The PUC is working quickly to modify their rules to apply closer to the way Pre-Paid electricity companies operate.

Indexed Plans: What You Need To Know

I’m sure I’m not the only person who’s seen the new TXU commercials that are appearing everywhere on TV lately. The commercials don’t really promote any TXU products, instead they talk more about Variable Rate plans and things that potentially make them risky or dangerous. They’ve got their advertising webpage set up here for people to poke through and compare against other Texas electricity providers. The commercials don’t really, in my opinion, do a good job of promoting Indexed Plans and explaining what they’re all about, so I want to take the time on this blog to shed the light on the facts about Indexed Plans.

Now, the biggest part of Texas Electricity Ratings and the part I’m most proud of is the consumer advocacy aspect of the website. And with TXU’s release of their new Indexed plan, Texas Electricity Ratings has a rare opportunity to take a look at a new plan as it hits the market and is hitting public awareness. A large percentage of the people who share their experiences with me often have bad stories or negative reviews, and most of the time these are centered around shifting prices or unmet expectations with the plans they sign up for. So now I want to take a look at what exactly are the key pieces of TXU’s Index Plan so people can have an understanding of exactly what makes it different from the Variable Rate plans and what they should expect, in advance, if they sign up for an Index plan. So lets get into what I found.

What is an Indexed Plan?

Ok, so lets start with details about exactly what an Indexed Plan is, so people understand that. As we’ve covered many times before, the costs of electricity in Texas deregulated markets are based largely in part on the cost of Natural Gas prices. When those gas prices go up in the marketplace, the cost of ALL electricity prices are affected, be it Variable Rate plans, Fixed Rate plans, or Indexed plans. Variable Rate plans go up and down monthly based on the price of natural gas in the marketplace. Fixed Rate plans are still tied to the marketplace, but they’re a longer term hedge (or gamble) by both electricity providers and customers on the price of natural gas in the marketplace. Fixed Rate Plans are typically higher than Variable Rate plans because of the risk on the side of the electricity companies. So what is an Indexed plan? Well, like every other plan in Texas, a TXU Indexed Plan is tied to the price of natural gas market prices. But in this instance, the connection is direct. It’s based on this formula below:

a. Price per kWh = (Monthly Natural Gas Price multiplied by Applicable Seasonal Natural GasFactor) + Energy Charge + ((Monthly Charge + Monthly TDSP Advanced MeterSurcharge)/Monthly billed kWh Usage)

This formula basically creates a concrete tie between the cost in the natural gas market and the prices you see every month on your bill. If the natural gas market prices rise, so will your monthly bill. If they fall, so will your monthly bill. However the market changes, your electricity bill will change accordingly. The difference between this an a Variable Rate plan is that the price adjustment will always be based on this formula, and with a Variable Rate plan the particular REP can rise and lower the price of their rates once a month according to their discretion (of which there are many factors, including natural gas market, credit score of their customer base, etc). It’s also fair to point out that with a variable rate plan, prices are typically kept low by market competition between companies, like any other free market. The same principle for why things typically cost the same at Best Buy and (formerly) Circuit City. So it’s a formula vs. a provider discretion.

Questions to Ask TXU if you are interested in an Indexed Plan

So now we’ve looked at the nuts and bolts of an Indexed plan and how it’s different, now lets take a look at some of the questions and ambiguities I had when I looked at the TXU website. This isn’t a criticism at all, but I have some questions to which I don’t know the answers to, and I think a responsible customer should maybe ask a TXU rep about this if they’re considering this plan.

TXU’s website claims that they’ll give two weeks notice for any price changes to their Index plan, however, the electricity facts label states they’re only obligated to notify customers if they change the formula of the Indexed plan. That’s a pretty huge disparity. The market prices change monthly, if not more, so will people get a notice every month for rate changes? TXU might plan on notifying their customers for every price change on top of the formula obligations, however, so I would just advise people shopping for an Indexed plan to specifically ask this question to a customer rep and finding the answer.

In for Formula above, there’s a multiplier that is listed as “Applicable Seasonal Natural Gas Factor.” What is that, exactly? They don’t give a direct number, but it’s a big part what goes into making the monthly bill, so it would be good to have a ballpark what those #s are for each season.

My Final Thoughts

So what does all this mean, exactly? Ok, well let me sum up what I think someone should expect from an Indexed plan. The TXU advertising presents it as a much safer alternative to Variable Rates, and the reason for that in their marketing plan is that with an Indexed plan, your bills can’t be changed at the discretion of the electricity company. This is true, the bill is based on a formula. But I would stress to all customers that with an Index plan, a customers bill will STILL change up and down with the natural gas market. This is not a Fixed Rate plan, so people’s bills will move up and down, and I feel that it’s important for customers to understand that going into getting into an Indexed Plan, and I’m not certain that fact is presented clearly in their commercials. I’d also suggest that all consumers looking into this ask the questions I presented above, which is more specifics on the formula that determines their price, and how often they can/will notify customers of any actual pricing changes.

Since the number one form of complaint that comes across Texas Electricity Ratings has to due with pricing changes and people feeling misled by their electricity companies in one way or another, I would encourage everyone to ask critical questions now about the Indexed Plan AS it’s hitting the marketplace. People should ask the right questions just so they fully understand the plan and what determines the changes/prices that determine their bills. In their advertising campaign, TXU is encouraging everyone to be smart consumers: so be just that, ask questions, and understand the details about your plans.

Green Energy and Tax Credit

Here’s a post from a Green Energy blog that I read this week. Basically the gist of it is that the people at Bounce Energy posted some information about the benefits of making your home more environmentally friendly, and how you can use this to collect on a tax break from the government for energy conversation, as well as a general estimate on how much money you can save just by greening up your home. There’s a lot of details in the post, and this blog/article at Green.TMC.Net does a great job of breaking down the details.

The short of it is that it makes a lot of sense for everyone to take the time to make some green upgrades/renovations to your home, which can be as simple as re-caulking windows and vents. It doesn’t have to be something as drastic as installing a windmill or solar panels. The Texas Electricity market offers lots of opportunities to save money just because of the options for electric choice. This is a little bit of a different opportunity on how to save money, but it’s a good opportunity nonetheless. I’d encourage everyone to read the breakdown.

Entergy TX accused of Fraud

Here is an interesting article that will inevitably raise a few eyebrows in regards to potential fraud by Entergy, a regulated electricity provider that operates in parts of East Texas. Anyway, this is an interesting article to me because Entergy operates in regulated areas, meaning there isn’t electric choice for their customers. So when a city accuses them of fraud, they’re both the creator and the seller of electricity, which is not how the market works for deregulated areas, where we have a TDSP and an REP working together to deliver electricity.

Anyway, I find this interesting, because they’re being accused of massive fraud. Now, if this were to happen in a deregulated electricity market like Dallas with say Oncor (TDSP) and an REP (TXU, Reliant, Stream Energy or Ambit, etc.) then it very well would be not just a city vs. the electric company. It might be the City vs. the REP, or more likely, the city and the REP vs. the TDSP. It could take many different forms. While it might seem that the situation is more complex this way in the deregulated market, it also increases the amount of checks and balances of this kind of thing happening, potentially, at least. Or that’s just how I’m interpreting it. The city might be being over-charged, but the REP would have a vested interest in siding with their customer and rooting out this kind of thing earlier, or at the least helping to corroborate their customer’s claim. Or if the REP is corrupt, then the TDSP and the city could work together to root out the REP’s wrongdoing.

Again, this is just how I’m seeing things. The system might not actually work that way in regards to government entities/services and their commercial electricity providers, but if it does, this might be another benefit to a a deregulated energy market like the one that serves Texas electricity.

Retail Electricity Providers Have Lower Rates

I’m a bit behind on the release of this article, as I’ve seen it linked on a couple of other blog sites for specific retail electricity providers (for obvious reasons), but it’s important enough to warrant blogging about here as well. The article basically summarizes a survey that supports the idea that the cost of Retail Electricity Providers (providers in competitive markets like Houston, Dallas, and Corpus Christi) are offering lower electric rates than Co-Ops or providers in areas that exist without competition.

The gist of the article is simple, saying that survey results are showing that the rates customers can get now from their REPs are less expensive than many of the rates that people can get from Co-Ops are areas that are still regulated. Personally, I think this is great news, and I’ll address why I believe that now. First, is the obvious reason, which is that the rates of deregulated markets are just getting lower and coming down to be equal to areas where there isn’t choice in your electric companies. I don’t think we need to address the obvious reason here, which is that lower prices for Texas electricity. Now, the deregulated market model has taken loads and loads of criticism from both customers in Texans as well as other states across the country, but if all of the prices are even close to equal, then deregulation wins as the superior model. Why, you ask? Well, because is the prices are all similar, then Texas customers in these markets can choose providers based on other things, like contract terms, or more importantly, customer service. If they have a bad experience they can go elsewhere to choose their electricity provider. That’s an option of choice that other people simply don’t have, and it forces the companies in deregulated markets to strive to be better and do right by their customers, as opposed to act indifferently because consumers have no other choice but to come to them for electricity. Of course, the caveat here is that the prices will remain someone consistently similar to the rates of regulated areas.

Now, another reason I like this article is it is yet another example of the increasing awareness of the deregulated marketplace in Texas, how it works, and that people are becoming aware of how the model and system works. We’ve discussed this before in previous blog posts here, and I will continue to trumpet that it is a great thing that people are becoming more and more aware of the system, how it works, and most importantly, how to make it work for them. The more articles we see like this continue to reflect the increase with which this is hitting the consciousness of Texans looking to shop for electricity.

What do you guys think?

Smart Meters Hackable?

Here’s an article that doesn’t really fit the bill of the kind of thing I report on here at Texas Electricity Ratings, but it’s been a slow last few days and I kind of liked this article just because it’s got that touch of intrigue you just don’t see often in the electricity world. The kind of thing you could see slipping into the plot of a movie at some point, right?

Anyway, we’ve discussed the new smart meters a few times on this blog (here, here and here) but never really quite in this context. Usually it’s more along the lines how smart meters can change your bill, how much their instillation is costing you, and generally things that have something to do with the Texas electric market.. This article is interesting because talks about the fact that the new smart meters might be hackable. Yes, Hackable. They’re digital and they contain a processor and software, so some enterprising computer guru might be able to access them and control them to their own purposes. Now, there’s LOTS of possibilities here. Blacking out your home? Check. Blacking out a NEIGHBORHOOD? Check. See what I mean about being in a movie plot sometime in the near future. Now, for my money, I think that the more likely thing you’ll see is someone making a box or piece of simple software that people can use to tap into their smart meter and modify the numbers shown there and lower their bill extensively. We’ve seen similar concepts like this in the form of satellite dishes, where cards can unlock channels and subscriptions for free. That’d be my guess on how this appears widespread. Although there’s more conventional methods to save money on your electricity bill.

Despite the listed potential options, I doubt there’s really much to fear here. Has to be pretty unlikely that terrorists hack into everywhere with a Smart Meter to cause some kind of issue. Although, now that I think about it, I could see Jack Bauer combating something like this on 24. What do you guys think?

Weather and Your Electricity

Ran across this article/post by the folks at Bounce Energy. It’s a pretty good read, although kind of lengthy. I think everyone should give it a read. It discusses, at length, exactly how the weather affects your electricity bill. But what makes it interesting isn’t so much that it covers the obvious (you use more electricity when it’s hot outside) but the way in which it explains all of the details of WHY things work together. Basically, the article peals back the onion an extra layer as it discusses energy in Texas.

I think this article is a good primer on understanding an aspect of the electric market that functions, but that a lot of people probably don’t put a lot of thought into WHY things work the particular way they work. Also, this is a good article for people to read who have recently moved to Texas and are perhaps shocked exactly why their electricity bills aren’t what they’re used to seeing from some of the northern states or locations on either seaboard. It’s a good overview of what people can expect from their electricity company (and why) when it comes in the mail each month.

Texas Electricity Quick Hits

Slow day today in the Texas Electricity world, so I figured I’d drop a few bullet points of some things, but which probably don’t warrant their own individual post/dissection.

Green Mountain Energy powers a college with Solar Energy

A look at Centerpoint’s efforts a year after Hurricane Ike

Here’s an interesting overview of electricity deregulation from a national perspective, not a local one. Some interesting tidbits involved.