My Experience With a Smart Meter

I lived in an apartment for years that had a smart meter, and despite the fact that I write about them regularly on this website, I never really paid much attention to them myself. However, I recently moved into a home with a lot more electricity usage. On top of that, I saw this quote in an article in the Fort Worth Star-Telegram last week, which I found really fascinating:

While the utility can use the meters to determine outages and track usage without meter readers, most Texas consumers have yet to take advantage of the new technology. Just 14,000 homeowners in Oncor’s territory have signed up for free access to smart meter data, Schein said. Statewide, 30,000 of about 4.5 million customers in deregulated areas have logged onto their accounts via http://www.SmartMeterTexas.com.

For all the coverage Smart Meters get in the media, only about 30,000 customers in the deregulated areas of Texas are actually using them? I found that number to be mind-blowingly small. So after seeing that quote, I decided to log in and check out my smart meter usage. Sure, I also wanted to see what the electricity usage was like in this house with the previous owners, so I could get a grasp on what kind of bills to expect. But now I had a reason to log in and take advantage of what the Smart Meter had to share with me.

So, the process is pretty simple. You visit this website: https://www.smartmetertexas.com and register a new account. It is a pretty easy process, no different than any other registration account online.

The most important piece of info you’ll need to register is your EISD number for your home or apartment and your smart meter number. The EISD # is the unique number that ERCOT and your TDSP use to track your electricity usage and tie it into your bill, and I got mine by logging into my account with my electricity provider and getting it from there. It should also be listed on a customer’s monthly bills. You’ll also need your Smart Meter ID number, which is actually listed right on the electricity meter outside your residence.

Plug all that information in, and you’ll be good to go. After you get your username, you can log in and select the Usage link to view your home’s usage. The information is typically about 2 days behind the actual day, so if you log in on a Monday, you can see your usage information from Saturday. You can select 3 graph types, one for a 15 minute segment breakdowns, one for daily totals that show a side by side summary of usage by day for the past month, and a monthly usage graph that shows the monthly household electricity consumption going back an entire year. I’ve attached screenshots of the respective graphs below:

What I Learned

So, everyone will have their own uses for this information, but here is what I was looking for and learned while I was using this free web portal.First, I wanted to have an idea of daily electricity usage that was “normal” for this home. Since the Smart Meter tracks the household, I got to see the normal usage for the previous owners, including the previous summer when everyone’s usage and bills were high because of the heat and drought. So not only could I plug this usage in with the rates on my own electricity bills and estimate what my bills would look like, I also had a benchmark to know whether or not I was using much more or much less in the same home as some other residents. I thought this was pretty good info in terms of planning and budgeting.

Additionally, after living here for a couple weeks, I could even see how my DAILY usage compared to another set of residents. And because of the 15 minute increments and breakdowns, I can see if I am using more electricity in the morning or evening, etc. Maybe this makes more sense for me to use this info to figure out if I should do my laundry in the evenings, or weekends, things such as that. Am I using more electricity than the previous occupants? Maybe I need to make a concerted effort that all lights and fans aren’t off when I’m in the room, or invest in some energy efficient drapes. Things like that.

While I don’t have an Smart Meter specific applications or tools, like a thermostat or applications on my smart phone, those things do exist and might be something I look into in the future. But for me, the most important thing this web portal and the information did for me was make me aware. It’s easy to just generally try to keep your electricity bills low with conservation, but you really DO look at things differently when you have data in front of you and can see how you compare to other people in the same home. It really does make it more cognizant of your usage.

But don’t take my word for it. Try it yourself. It’s a 5 minute registration and then you can start poking around for yourself. It’s a painless process, and I personally found it pretty interesting to view my electricity usage in a different light.

ERCOT Price Market Cap Changes Appear Politically Motivated

I’ve written before about the potential crisis in Texas due to the lack of new generation plants. Basically, not many new energy generation plants are being built, or even planned, at a time when Texas’s population continues to explode and our electricity needs along with it. The problem is that because of the deregulated electricity system, all new plants must be built by private investors instead of by taxing customers or raising electric rates. And right now the low cost of natural gas and the lack of guaranteed profits have investors leery of risking the construction of new plants in Texas.

A commonly referenced solution is to raise the market cap, which is the maximum cost a generator can charge for electricity per unit, from the existing three thousand dollars. And it looks as if Commissioner Donna Nelson of the Texas Public Utilities Commission is pushing to raise the market cap to four thousand five hundred dollars on July 1st of this year, followed by further increases over several years until the cap reaches seven thousand five hundred dollars.

In the past I haven’t been vocal against raising the market cap because, well, Texas needs the generation and there are only so many options to encourage investors to build new plants. Texas is adding the equivalent of the population of Corpus Christi every year so something needs to be done from a generation perspective.

But I haven’t been overly in favor of raising the cap either because it absolutely guarantees electricity rates will increase. Other options beyond raising the market cap would be to explore a capacity market or to improve the existing process of how the daily bid stack is ramped up, i.e. have some willing generation price points between the low 100’s and the absolute market cap. There should be a real debate about these options in the public eye, and to this point there hasn’t been. And now it looks like there won’t be one at all.

Results of Raising the Market Cap

Arguing about raising the market cap at this point is almost a religious argument in the sense that people believe in it or they don’t, oftentimes irrespective of actual facts. It is important to understand that this move is not a problem solving plan. Raising the market cap is an attempt to make the Texas market more attractive to investors that might build new power generation plants. But doing so in no way, shape, or form guarantees any new generation will take place. Texas needs new generation being built and coming online and raising the market cap is just a calculated roll of the dice the PUC hopes will land new investment in generation.

Raising the cap certainly does NOT benefit residential and commercial customers because higher price points will be passed onto the end consumer. Weeks to months before the market cap increases on July 1st, prices will go up for anyone who is signing a new electricity contract in the state of Texas.

Raising the cap also doesn’t benefit the retail electricity providers (REPs), who will immediately have to adjust to new purchasing models and pay substantially increased prices for electricity. REPs will also pay much higher amounts than they do currently if they’re forced to buy electricity on the spot market during power shortages like we experienced last summer when there were threats of rolling blackouts. Almost a half-dozen major REPs such as Reliant, TXU, Gexa, Dynowatt, and StarTex Power reported massive losses from the 2011 quarter that included August. Losses they have attributed directly to the Texas summer and the price spikes in the spot market when they were forced to purchase additional electricity to cover their customer’s needs. And none of those are small companies, they’re all part of major energy conglomerates.

Nor is it the energy generation companies and plants that benefit from the raising of the market cap, despite what some people, apparently including the commissioners, might think. No generation plant will enter the market under the assumption of maximum price potential in their forecast models. And while yes, the price they can charge will increase, so will the risk they assume. This is because power plants have to play the spot market as well. Power plants go offline unexpectedly regularly when something breaks or goes wrong, or if weather conditions force shutdowns. And when they do go down, generation assets have to participate in the spot market as well and purchase electricity just like an REP does to cover their own commitments to REPs. What this means is that when a plant goes down, they will be at the mercy of the increased market cap pricing of the spot market just like an REP, except they won’t have had the chance to hedge against this possibility like an REP. They’ll just be cutting massive checks. It is foreseeable in this situation that a power plant suffering an unexpected closure of just a couple days could cost them their profits for an entire quarter. It’s definitely risk versus reward. But does a tactic to raise the market cap when it comes with that kind of elevated risk really seem like a slam dunk to draw new investors in energy generation plants? There is no underlying data to support the theory being pushed by the PUC.

Who Does This Move Benefit?

My biggest issue with the PUC raising the market cap on July 1st is that it appears to be a 100% POLITICAL move for this summer. The only apparent benefactors from this decision are the commissioners themselves. Lets take a closer look.

First, why July 1st? Why raise these rates when the Texas summer is peaking and the market is the most active with customers switching providers and shopping prices? When the grid and energy generating plants are at their most taxed with meeting consumer demand? When the threat of rolling blackouts and inflated spot market prices are the most prevalent to both REPs and downed plants alike? What possible benefit is there in choosing this time to drop a massive change into the marketplace, a change that will immediately inflate the prices and risk for all parties involved? Wouldn’t it make more sense to pick the fall or winter, when generation needs are low, as a go launch date when everyone can easier adapt to the price changes and demands and plot forecasting models for the summer of 2013?

Perhaps because by picking July 1st any price spikes in the spot market under the new market cap might make the idea of investing more attractive to potential investors. If there is the threat of a rolling blackout and the spot market erupts to the new market cap, investors could look at that activity and see the potential for profit. They’ll also be able to view the price increases Texans will be forced to immediately pay, during the most expensive time of the year, and see the profit potential there as well.

The whole thing is a gambit, and consumers, generators and REPs are all on the hook. And the sad truth is that this effort will in no way ensure new investment in energy generation construction in Texas. It is implausible that the PUC commissioners don’t know this is the case. And down the line, if there is an energy shortage, they’ll be able to point to the July 1st initiative to raise the market cap to legislators and say they did SOMETHING try and avert the energy shortage. The problem is that everyone knows fully well that raising prices this summer does nothing to avert any potential energy shortage later. No new multi-billion dollar generation plants will be built in the next 4 months, that notion is absurd. That is why this feels like a politically motivated move by the PUC.

If no new generation comes online as the population continues to expand the commissioners can hold up their hands and say the shortage wasn’t their fault, they tried to do something. It isn’t their fault no investors took the bait. They’ll be covered politically. Meanwhile, by that time, the customers and REPs will have been paying out the nose for the PUC’s gamble for several years and Texas still won’t have enough electricity to meet the basic needs of the state.

It is a fact that the population of the state of Texas is rapidly expanding and needs energy desperately. The solution to the problem isn’t likely to come from politicians who don’t adequately understand how the market works in the first place. An encouraging sign that the commission somewhat understands this is that they have hired an outside consulting agency, the Brattle Group, to review the state of the ERCOT market. However, that doesn’t mean those politicians can’t tinker with the market to make sure they have their own political cover. Even if that tinkering forces the REPs and generators to adjust and guarantees Texas consumers will be paying substantially increased rates for electricity. And all of that for a strategy that still doesn’t guarantee any new investment in the electricity generation plants Texas needs.

The only thing a move on July 1st guarantees is that the days of low prices in the Texas deregulated electricity market will be behind us.

Examining a Few Texas Electricity Ratings Customer Reviews

I get tons of customer reviews through Texas Electricity Ratings, and one of the most consistent issues I see are negative reviews based on misconceptions, or in some cases, a lack of understanding of how the deregulated electricity market works. Since a big part of what I do is to try and help educate people on how the market works I’m going to paste some reviews that I didn’t let through the website for various reasons, which I will explain at length below.

These first two reviews go together:

1.) StarTex Power:

I switched my electric service to StarTex Power about June 3, 2011. I selected their Residential Promotional Variable Price Product. My electric bill began to rise significantly after October, 2011 and upon review I saw that the electric rate they were charging me had almost tripled. My initial rate for the selected plan was 4.75 cents per KWH. That plan allows them to change the rate at their sole discretion. The following month my rate almost tripled to 13.68 cents per KWH. My rate has remained above 12 cents per KWH for the rest of the year 2011. I see from the EFL on their website that their Residential Promotional Variable Price Product is now charging 6.84 cents per KWH. However, they are billing me almost twice that amount. They shouldn’t switch me to another much higher plan without notifying me first. But that is their business plan: Trick customers into signing up for a great rate for one month and then triple their rate and hope they won’t notice.

and

As many have noted, this company will sneakily jack up your rates if you’re not paying attention. They’ll lure you in with a low introductory rate, induce you to autopay your bills, then double your rate immediately at the end of your term and hope it takes you a while to notice. Exceptionally sketchy business model. I’ve used several providers and this company is by far the worst.

Ok, my issue with these reviews is that these people are complaining specifically about their variable rates increasing and attributing it to StarTex. But the fact of the matter is, this is just how variable plans work, regardless of providers. Introductory rates are just that, and they expire. Additionally, in the first review, part of the reason the guy’s plan tripled by October was due to the August record breaking heat wave and prices combined with his variable plan. So it isn’t a StarTex thing, it’s a variable plan thing. It’s the main reason I always suggest a fixed rate plan. I’m highlighting these reviews to help people understand how variable plans work and the pitfalls of signing up for them without understanding that customers have to watch their rates diligently.

2.) First Choice Power:

I was new to the DFW area a few years back and didn’t have a good idea on where to move. I choose a semi crappy apartment complex. Several individuals who gave their notice to move out during my stay there warned me that their electric bill had skyrocketed the last couple of months. When I gave my notice, my next bill went to just under $400 (from avg $100 a month). I called First Choice Power and expressed my concerns about the apartment complex. I spoke to several folks there and asked them if someone could come investigate. There was no care from customer service and I was told that I needed to be more responsible/reduce my usage. The day I moved out, I turned everything off in the apartment, including fridge, micro, etc. I went out to the box and sure enough the ticker was still moving. I called FCP and told them that they really needed to investigate. Their new excuse was… I’m sorry but you don’t live there anymore so there’s nothing we can do about it. Thanks for nothing

While the woman has a legitimate gripe about First Choice’s customer service, the issue I have with this review is that the woman’s angst with First Choice Power in regards to her meter and usage is misplaced. First Choice isn’t responsible for any meter issues. And asking First Choice to investigate was also fruitless…again, the woman should have contacted Oncor. And while First Choice should have HELPED her to understand that she needed to contact Oncor (again, questionable customer service), I’m highlighting this because some people still struggle with the difference between the electricity company that bills them (First Choice Power, etc.) and the pole and power company (Oncor, Centerpoint, etc.) that are responsible for meter issues and the like. People confusing the responsibilities of their REP (Retail Electricity Provider) and TDSP (Transmission and Distribution Service Provider) is still one of the biggest misunderstandings in deregulated electricity in Texas, even 10 years later.

3.) Tara Energy:

Watch out! This is a bate and switch kind of a company. They hook you showing a low price per KW and bill you excessively for some fee called T & D charge. I asked them what this was and was told it is what Oncor charges us. I called Oncor and asked if my KW usage has stayed the same can this so called charge go up? They said no! I will be calling the PUC next!

This guy is going to be sorely disappointed when he calls the PUC because he won’t find their response very satisfying. T&D charge stands for Transmission & Distribution charge. It, along with a number of other potential charges, are passed directly to the customer and have nothing to do with whichever electricity company someone might use. It is listed in the Electricity Facts Label (EFL) for every plan of every electricity company on the market. Also in every EFL is a disclosure that those rates can change at any time based on decisions that have nothing to do with an REP. Other TDSP charges that can be passed down to customers are charges for things like Smart Meters, or Hurricane Recovery fees, etc. Again, this person’s anger at Tara as misplaced, as they have as little control in those fees as the person who lodged this complaint. I’m not certain what the person he spoke with at Oncor was talking about at all. In fact, Tara Energy themselves explained the charges pretty clearly on their website:

Transmission & Distribution Utility Charges (“T&D Charges”)
The amount you owe your local utility for transmitting your electricity, and maintaining wires, poles and meters. The amount billed by
Tara Energy, on behalf of the transmission and distribution utility (TDU) shall not exceed the amount of the TDU tariff charge(s).

4.)Stream Energy:

A bit of a note before I delve into the next review, as it’s not so much education as something that I generally roll my eyes at when they come through my website. They would more accurately be classified in a blog post titled “Fun with Customer Reviews.”

After being a satisfied Stream customer for 3 years and so pleased with both their pricing and service, that I joined Ignite, Stream’s marketing group, as an Associate to help share my wonderful experience with others and share the knowledge to friends and family about how easy it was to switch and how much money they could save. I can’t say enough good things about Stream, but their prices are lower and their customer service is better. They were actually Rated #2 in TX by JD Power & Associates!

Ambit and Stream reviews can be difficult because they often come from their Marketing Associates and are thus, by definition, biased. They’re aren’t many instances of people who willingly sign up to be salesman for a product to make money and turn around and bad-mouth said product. So when I see reviews like the one above, I have a hard time taking them at face value because they come from people who have a financial interest in making Stream (or Ambit) look good. Case in point: Stream didn’t rank #2 in TX by JD Power & Associates…they were ranked 7th:.

In 2010 Stream Ranked 8th. In 2009 they were 6th.

Anyway, I hope this article was helpful to some people in regards to learning some new things about how the deregulated Texas electricity market works.

Who is The Texas Coalition for Affordable Power (TCAP)?

Anyone who visits my blog regularly has probably seen that I’ve been talking a lot about the Texas Coalition for Affordable Power (TCAP) lately. TCAP recently published their “history” of deregulated electricity in the state of Texas, and there are several things about their self-proclaimed history I find questionable, which I’ve documented at great length in the four posts below:

Part 1
Part 2
Part 3
Part 4

While I’m finished critiquing the “Major Findings, “Facts,” and “Recommendations” sections of the document (which only comprise the first few pages), I wanted to take some time to revisit exactly who TCAP is, what they do, and why they might have an interest in shaping the Texas electricity market.

Who Is TCAP And What Do They Do?

This section is pretty straightforward. Per their website:

Texas Coalition for Affordable Power (“TCAP”) is a non-profit political subdivision corporation established by the 2010 merger of Cities Aggregation Power Project, Inc. (“CAPP”) and South Texas Aggregation Project, Inc. (“STAP”), both created in 2001 to aggregate members’ power needs in order to negotiate electric better prices for their members. TCAP is one of the largest political subdivision aggregation groups in Texas with over 150 political subdivision members that purchase approximately 1.4 billion kWh annually

Let me sum that up succinctly: TCAP is an organization that works to use the combined electricity demands of its member institutions to bargain for cheaper electricity prices. In short, they’re leveraging their combined size to attempt to buy electricity at a discount, something that anyone with a Costco card can understand and appreciate. Currently, because of Texas regulations, TCAP can only target government institutions and usage for their aggregation. In other words, they can’t negotiate an electricity rate and contract for the entire city of Corpus Christi and its residents. But they can negotiate an electricity rate and contract for all of the government buildings and usage for the city of Corpus Christi, like courthouses, schools, etc. It is no coincidence that TCAP’s board of directors is made up of city politicians and functionaries.

Make sense so far? Ok. So what does TCAP charge for their service? I’ve posted this before, but it is applicable in this blog post as well:

There is a one-time New Membership Fee equal to the greater of (i) $0.05 per capita of the resident population of the Member  or  (ii) one-half (1/2) of one percent (1%) of the prior calendar year’s total electric bills, not to exceed $14,000.  Also, TCAP members pay a per kWh aggregation fee that is set annually by the Board of Directors.  Over the last three years the aggregation fee set by the CAPP and STAP Boards has been $0.0013 and $0.0010, respectively.  The 2011 fee ranges from $0.0010 to $0.0012 depending upon the member’s location.  Funds raised through the aggregation fee are used to: pay attorneys, energy and public relations specialists; develop and provide interactive web portals for members use; maintain web sites; and promote market reforms that would benefit political subdivisions and their residents.

So TCAP collects a fee for new members, as well as per kWh aggregation fee. These funds go to pay for the day-to-day expenses as well as maintaining websites and funding TCAP promotions. There’s one other thing this money is used for that isn’t mentioned. While TCAP operates as a non-profit, that doesn’t mean its board of directors and employees don’t earn very real salaries, which are paid via the funds collected from its members.

Why Does TCAP Care About Deregulated Electricity?

Obviously TCAP cares about deregulation because it allows them to exist in general. If there isn’t electric choice, there isn’t any need for aggregation. TCAP goes to great lengths to paint themselves as a Consumer Advocacy Group by talking about supporting pro-deregulation bills and acting as voice for the consumer but if you examine their website, along with the webpage of their public relations face Recharge Texas, you won’t actually find any specifics about what they would like to change or HOW they suggest things change.

Don’t misunderstand me; some of the things TCAP supports are logical no-brainers that everyone in the industry supports, like cracking down on loopholes that cost customers money. Other things they promote, such as apples-to-apples comparison of rate plans, don’t have any substance at all or an example of execution. In fact, a closer look at the Recharge Texas website will see two things:

1.) A lengthy list of “official reports” and articles written by TCAP themselves sensationalizing all of the things wrong with deregulated electricity in Texas. These articles if taken at surface level face-value will likely make you angry.

2.) Once you’re good and angry, the only recourse or call to action is for visitors to sign an online petition. It doesn’t matter what specific item you’re outraged over, there’s only one petition for all the issues.

What does this petition say? I’m glad you asked:

I stand with RechargeTexas in demanding that the Texas Legislature make deregulation work, and bring back cheap Texas electricity.

Not call your congressmen. Not write a letter. Just sign our petition. But what good does a vague petition do to effect change, much less any specific change to the deregulated market, such as Apples-To-Apples comparison? TCAP’s own webpage offers us an answer to that question:

CAPP (now TCAP) was the only effective voice on behalf of electric customers in the 2003, 2005,2007, and 2009 legislative sessions.

Remember, TCAP is a political organization. And their dubious claims of being an effective voice for electric customers aside, the thing they want more than anything is have a huge list of people who have signed their online petition that they can parade around a congressional session, effectively giving TCAP their vote by proxy. The larger the number of people who sign the petition, the more clout and perceived power they will have to be taken seriously by the legislature and effect change.

After visiting the Recharge Texas website, which remember is the PR face of TCAP, we’re reminded that they don’t give a lot of details about what changes they want to effect. They’re just collecting these signatures. In fact, this non-profit agency who’s charter is to aggregate power for local government electric contracts is spending lots of time and money to maintain two websites, writing suspect histories and long documents negatively skewing deregulated electricity, and being vague about their general purpose and initiatives as a “Consumer Advocate,” for the sole purpose of getting people to sign their online petition.

That seems like a lot of time, money, and effort for a non-profit agency solely to capture digital signatures on a petition. It is even more surprising when TCAP doesn’t seem to have any real concrete plans or details on the reforms they would like to make in the deregulated marketplace.

TCAP’s Real Agenda?

After reviewing the articles on the TCAP website, I certainly know one thing that they would like to change in the Texas deregulated electricity market. They tip their hand in their 2008 year in review page from their statistically challenged “history” of deregulation in Texas. What is it? Opt-Out Aggregation.

What is Opt-Out Aggregation? Basically, it would allow entire cities and municipalities to negotiate electricity contracts and rates on behalf of their citizens. Remember earlier where I explained how right now TCAP can only negotiate contracts for local government entities? Opt-Out Aggregation would allow them to negotiate the rates and contracts for every individual resident living in a city that is a member of TCAP. So instead of bidding on just all the local government electricity usage in the city of Corpus Christi, TCAP would have the right to negotiate on behalf of everyone in Corpus Christi. Individuals that didn’t want TCAP to negotiate for them could simply Opt-Out, hence the name. No big deal, right? Lets remember two very important things:

1.) TCAP, as an aggregater, would suddenly find the potential market for their services increase by 24,000% to potentially 335 billion kWh. TCAP currently handles approximately 1.4 billion kWh annually (numbers from 2011).
2.) TCAP’s entire board is made up of local city politicians. In many instances they would be negotiating with themselves. This is an obvious conflict of interest, and with that money on the table the potential for collusion is enormous.

And yet, here on the 2008 recap page, we see TCAP complaining about how difficult the rules are currently for Opt-In regulation, and how much easier it would be for Opt-Out regulation. They share this story below:

A group of six West Texas cities tried and failed to use opt-in aggregation in 2007 and 2008. About 1,600 households in the cities of Cisco, Comanche, Dublin, Eastland, Hamilton and Snyder (in largely rural West Texas) agreed to participate after being contacted by their cities’ representatives through a long, extensive and costly outreach program. Most of the residents had never before negotiated electric contracts and many expressed enthusiasm about the sense of empowerment they received from the program. Their city representatives then attempted to negotiate a bulk rate deal. But competitive electric providers — some noting the relatively small number of residential participants — either declined to submit bids to serve them or would not beat the lowest prices already advertised on a website operated by the Texas Public Utility Commission.

“Most of the residents had never before negotiated electric contracts and many expressed enthusiasm about the sense of empowerment they received from the program.” I found this statement odd because, well, by the very nature of the program itself residents wouldn’t actually be negotiating any electric contracts themselves. And the following statement also seemed quite subjective: “after being contacted by their cities’ representatives through a long, extensive and costly outreach program.” Long, expensive, and costly compared to what exactly? And how would TCAP know this for sure?

Because, shock upon shock, the 5 cities mentioned in the report (Cisco, Comanche, Dublin, Eastland, Hamilton and Snyder) are all members of TCAP. So basically TCAP and the local politicians tried to expand their business scope to residential service in 2008 and implemented a program in 5 of their cities to try and get customers to Opt-In. THEY found the program to be expensive and time consuming, and it failed miserably when their efforts didn’t generate enough interest to get any bids or any rates other than the standard rate customers could get for themselves. And then they wrote about it as part of TCAP’s “history” in the 3rd person, pretending it wasn’t actually them the entire time, complaining, and pining for Opt-Out Aggregation so they could expand their potential business scope by 24,000% percent.

I consider that to be just a little bit shady. I would also say that it seems like we have found a major part of TCAP’s agenda. Step 1: complain bitterly and vocally about how terrible deregulated electricity in Texas is for consumers, using questionable data and statistics that don’t paint an accurate picture. Step 2: offer no real solutions, but solicit people to sign an online petition. Step 3: when enough users sign petition, use said petition to try and push for Opt-Out aggregation. Step 4: claim public success and say opt-out aggregation is the tool that forces electric companies to offer the best possible rates, all the while fattening TCAP’s own pockets and political power.

That’s just my speculation. But it certainly fits. And I’m not even against Opt-Out aggregation as a concept, although I’m highly skeptical of a situation where local politicians who sit on the board of TCAP are negotiating with themselves “on behalf” of consumers. That seems like a situation ripe for corruption. What I’m definitely against is the notion of TCAP parading themselves around as some kind of consumer advocacy organization when their own agenda is strictly financially motivated. I have an enormous problem with that and so should everyone else.

TCAP is very critical of political lobbyists for big energy companies that leverage politicians and the deregulated electricity system for their own interests. But from my point of view, they’re also a group of politicians trying to do the exact same thing. They do that by painting themselves as consumer advocates, all while seeking to remove electric choice from Texans and put it in the hands of the local politicians. We should ask people in El Paso and Austin how having their city government in charge of electric policy has worked out for them. In the mean time, Texans should understand exactly who TCAP is and their personal agenda.

Austin Contributor Backwards on Electric Deregulation

I was perusing this article from Carol Penny, a local contributor for the Austin American Statesman, and I couldn’t help but think one thing: at least the article was published under the “Opinion” category. Sheesh. Opinions don’t need factual support, so she has that going for her, I suppose.

Penny’s article talks about why bringing the deregulated electricity market to Austin would be a terrible idea. This is a topic that has come up with Austin’s impending rate hikes and the public outcry surrounding them. And Penny wants to be sure everyone knows WHY deregulation is such a horrible idea for Austin. Quotes with my commentary below.

Electric deregulation has a long history of high rates and widespread customer dissatisfaction. It has brought huge price increases and volatility over the past 10 years to our fellow Texans in Dallas, Fort Worth and Houston.

Hmm. I’m curious where she gets the idea of rampant customer satisfaction. She must be reading Recharge Texas’s take on things. Personally, I’ll stick with my own understanding of how the internet has changed consumer behavior as well as the JD Power & Associates’ claims that customer satisfaction in Texas is as high as it has ever been for deregulated electricity.

Oh, and as for the rates, lets not forget that for people who actually SHOP the deregulated marketplace, Texans have the 3rd lowest electric rates available to them in the nation. Huge prices indeed.

In contrast, large city-owned utilities like Austin Energy that remain outside deregulation have experienced greater rate stability and allow for democratic rate-setting.

Yes, Austin has been stable. They haven’t raised rates in 17 years. As a result, they’ve also put up almost a quarter billion dollars in debt. Their rates are stable because they’ve simply been running up debt and offering rates they can’t afford to offer. As for the notion of “democratic rate setting,” I’m sure the people protesting the massive increase in rates coming down the pipe have really felt part of a democratic rate-setting process.

Case in point is the proposed rate hike by Austin Energy. Even under the new proposal, AARP is concerned that dramatic increases in the customer charge will disproportionately impact older Austinites, who generally use less electricity. But at least these arguments are being aired in a public process with all sides having ample opportunity to make their case.

In a deregulated market this conversation wouldn’t be happening. And when the public is not well-represented, bad things happen to consumers.

I’m sorry, how is the AARP thing relevant? If deregulation came to Austin and cheaper rates came with it, and senior citizens used less electricity, wouldn’t they have cheaper bills? I imagine the proposed $22 a month mandatory fee for all Austin citizens isn’t going over too well with the AARP. This wouldn’t be in an issue in a deregulated market.

Also, when the public isn’t well represented bad things happen to consumers? I’d argue that when politicians insert themselves into anything, bad things happen because public interests gets muddled with political interests and elections. Additionally, I don’t remember bad things happening to me because my local politicians didn’t represent my interests in buying a new car, ordering my cable service, or deciding to purchase an iPhone.

A recent report by the Texas Coalition for Affordable Power found that Texans in deregulated areas consistently pay higher average annual electricity rates than other Texans, including Austinites. It estimated that the added expense has cost a typical customer more than $3,000 since 2002. Deregulation can also lead to huge price spikes, as it did in early 2008, when the average rate was more than 60 percent higher than Austin Energy’s rate. Electric customer complaints have been significantly greater under deregulation.

What a shocker, I was right, she was getting her information from TCAP/RechargeTexas. Well, lets see, I’ve already tackled their baseless insistence that complaints are a sign of dissatisfaction with the whole market. The added expense notion is pretty funny considering that Austin Energy has racked up a 236 million dollar debt during this time span, so lets not pretend the two have had a level playing field.

I’ll use a separate paragraph to once again attack the idea that deregulated areas have higher annual electric rates than regulated areas. The information RechargeTexas uses to make this statement is flawed. It only looks at deregulated areas as a whole, which includes people who pay unnecessary premiums because they don’t shop the market for the best deals. It’s a flawed illustration. The competitive rates in the deregulated areas of Texas are as low, or lower, than the regulated areas, including Austin. And especially Austin after their rate increase makes them the highest rates in Texas, which is about to happen.

Moreover, deregulation brings us confusing electric contracts, rife with “gotcha” clauses in fine print. Don’t use a certain amount of electricity in a given month? Your deregulated electric company may charge you a $10 fee. Want to switch companies before your contract expires? Your deregulated electric company may charge you $300. Your deregulated electric company goes belly up? You could end up paying double the going market rate.

Oh, yes, another person complaining about how complicated contracts are…sheesh. Just let the utility do the thinking for us, right?!?! Yes, there are minimum usage charges. They’re different for each REP, and so is the electricity usage levels where they kick into effect. Read your Electricity Facts Label. Austin is about to have a $22 Any Usage Or No Usage Charge, is that preferable?

Yes, if you sign a year long contract for a certain rate, you are going to have to pay a cancellation charge for breaking your contract. The same things exist for satellite television and cell phones and the world still turns every day without public outcry over cell phone contracts. Why is this any different?

Since Carol obviously doesn’t know much about the deregulated electricity market, let me help clarify her last two sentences: “Your deregulated electric company goes belly up? You could end up paying double the going market rate.” When your REP goes out of business, a customer is released from their contract and allowed to select a new provider on their own without penalty. If they fail to do so, they are then moved to the “Provider of Last Resort,” on a month to month contract, which they can leave at any time penalty free. Yes, those rates are typically higher. Of course, if your electricity company goes out of business, you can just read the multiple pieces of mail you will receive informing you of this, and then switch to a provider of your choice. Oh, the horror!

There’s also the key issue of accountability. Because Austin Energy is a publicly owned utility, we have the ability to make it reflect the priorities of our community. Do we value affordable rates for older residents who use less energy? Do we value being an environmental leader? Do we value attractive commercial rates to draw more businesses to Austin? Whether the answer is yes or no, what’s important is that we have the power to make it happen because Austin Energy is our utility.

Can’t argue with this point. Well, except the older residents getting better rates for using less energy, I mean, I’ve already addressed that nonsense. And the attractive commercial rates she speaks of are part of the huge uproar in Austin because residential customers are flipping much of the bill for the upcoming rate hike. That and the rates aren’t any more attractive than anywhere else in Texas. But yes, they certainly have the power to force environmental priorities on the entire community. I guess customers in deregulated areas will have to be satisfied with their choice of choosing a 100% green energy plan for their home or offices.

Colyandro and Aldred state, “Providers in competitive parts of the state continually respond to market pressure.” But the fact is that this doesn’t compare to the amount of accountability a publicly owned utility like Austin Energy has to its customers, whose voices are heard before changes are made and who wield a hammer to hire and fire the city’s decision makers.

In my opinion, the “accountability” is part of the problem with Austin Energy. Who was accountable for Austin Energy running up a 236 million dollar debt because they didn’t raise rates for 17 years? I’m guessing it was the politicians that refused to approve raising rates because they were concerned their constituents might vote them out of office. Why do you think the politicians are so vocally against the rate hikes now? They’re concerned for their jobs. That is a conflict of interest and extra layer of complication that doesn’t exist in deregulated markets.

Rate cases are a rough-and-tumble activity. We should closely examine the overall estimated revenue needed to operate Austin Energy. We should vigorously debate which electricity customers should pay what part of the revenue. Again, the process can take many months, with several opportunities for community input. Conflicts will arise and compromise is a certainty, but what emerges from this ultimately reflects the priorities of the Austin community.

A process that can take many months. Or 17 years. You know, give or take.

So speak up, Austin! Let’s hold the ground on unfair electric rate hikes. Let’s make Austin Energy — our electricity utility — work as well as it can for us. We need a utility that is truly accountable and reflects our values as a community, not higher prices and less oversight. We have the power.

Yes, all hikes are unfair even though Austin Energy is 236 million in debt! And I’m sure she meant “lower prices and less political complications,” you know, if she wanted to be factually accurate. But who’s quibbling, right? Also, deregulated areas have plenty of oversight in the form of the PUC.

Penny is an Austin resident and member of the all-volunteer AARP Texas Executive Council.

Oh, she’s an AARP member…that explains the earlier mentions in the article. Well, you know, as long as she’s an expert in the electricity field.

Texas Electricity News and Links

Here are a few interesting articles I’ve stumbled across today, none of which are worth an individual post. However, I figured I’d post them all here as a link dump for anyone interested in the topics. Enjoy:

AEP

AEP has been busy. While I don’t have any new updates from their case in Texas regarding retail electricity, it looks like they’re working to separate some of their generation assets in Ohio. This could be paving the way for them to move into retail electricity in Ohio, which is on the horizon.

AEP To Split Up Ohio Assets

Interestingly enough, AEP is also seeking a license from the US Department of Energy to sell electricity to Mexico. Yes, you read that correctly. This is interesting because Texas is currently under their optimal energy reserve percentage, and we had a horrific energy shortage last summer with another one on the horizon this summer, and yet AEP wants to sell energy to Mexico.

AEP Looks to Sell Electricity To Mexico

And Paul Ring at Energy Choice Matters has written an article based on AEP’s comments claiming that AEP is not, in fact, looking to start a national brand for retail electricity.

AEP Not Seeking National Electricity Brand

Texas Energy Generation Capacity Will Hit Fever Pitch

No one who has read this blog or visited my Facebook Page is any stranger to the ongoing discussion about Texas’s shortages in generation resources. Well, with summer starting to bear down on Texas, expect this conversation and topic to come even more frequently. This is because Texas still hasn’t recovered from the drought damage and record heat wave from last summer, and the same drought is still in effect and looks to have a repeat performance ready for us in Summer 2012.

Texans warned to expect outages if 2011 Summer Repeats for 2012

House Panel Seeks Ways to Boost Electricity Generation

That’s it everyone, enjoy your Monday.

Texas Electricity, TCAP, and a Biased “History” – Part Four

Yes, I’m still writing blog posts about TCAP’s recent release of their “history” of deregulated electricity in Texas which they have been still pushing out heavily through PR channels the past couple weeks. I know I initially said I didn’t want to do a 10 part series on this topic, but I never said it wouldn’t take me four or five sections just for me to get through the broad strokes. Which brings us to Part Four. As things stand, I’ve gone through the “Facts” the document claims to examine as well as their “Major Findings” section. In this post I’m going to evaluate their “Recommendations” section. And after that I may or may not write a couple posts looking at some of their more hilarious pieces of “data,” as well as a closer look at TCAP the organization.

Anyway, now that we’ve gone through the laundry list of complaints TCAP seems to have with the deregulated electricity system, lets take a look at how TCAP thinks the system can be improved.

ENHANCE PROTECTIONS AGAINST ANTI-COMPETITIVE ACTIVITIES IN THE WHOLESALE MARKET
Anti-competitive behavior should be prohibited in the wholesale energy market, and legal loopholes that exempt some generators from prosecution should be closed. The submission of “hockey stick bids” and anti-competitive practices prohibited in other states by the Federal Energy Regulatory Commission should be outlawed in Texas. Penalties for anti-competitive activities should be increased. When market power abuses occur, market participants harmed by such anti-competitive activities should be given the right to participate in investigations and enforcement actions undertaken by regulators.

No complaint here. Find the loopholes and eliminate them and fine the people who break the laws.

AVOID CHANGES IN THE MARKET STRUCTURE THAT WILL INCREASE WHOLESALE COSTS
Policymakers should look for ways to stimulate growth in generation resources other than through price supports and subsidies that are inconsistent with the principles of competition and a free market. Policymakers should reject all proposals for “capacity markets,” in which generators get paid even when they do not operate. This will only add to consumer bills.

This is pretty vague. But yes, any other way to stimulate new generation assets that doesn’t include subsidies or price increases is prefereable. But I haven’t heard of any real examples of these possible solutions, and this report doesn’t offer any either. In their document, TCAP has complained about dwindling power reserves, they have complained about deregulated pricing (and incorrectly painted it as some of the highest in the nation when it is in fact some of the cheapest), and they’ve criticized any solution that requires taxpayer subsidies or stimulation to create more generation. Well, that’s pretty much everything. If they dislike all of the options, then what are their proposed solutions?

It is worth noting that Australia, a country with a completely deregulated electricity market, has price caps exceeding $10,0000 per unit. The caps in Texas are currently set at $3,000.

REDUCE CONFUSION IN THE RETAIL ELECTRICITY MARKET
Texas electricity consumers should have access to uniform, standard-offer products. These will help reduce confusion in the retail electricity market and allow for apples-to-apples comparisons in pricing deals. All retail electric providers should be required to promote the powertochoose through a printed notice on home electricity bills.

Again, you won’t see me complaining about this either. I consider myself a consumer advocate and my primary goal as such is to educate people how to navigate the Texas deregulated electricity market. Education is great. But TCAP loves to tout standard offer products, which I’m not against, but what is the standard part? Again, they offer no details or specifics to how this will work. And if you think that is because of space constraints, think again, because their website offers no details or explanations either:

http://rechargetexas.com/apples-to-apples/

The video on that pages says nothing. The text on the page offers no details. It is worthless and just another tool to get people to sign their petition, which in turn gives them cache when lobbying congress. They might have just made a page that says “We Want Everything To Be Awesome!” Gee, really?

When speaking of making standard or uniform offers they obviously don’t mean rates. So what do they mean, the additional charges? That would require the state to interfere with how individual companies conduct business in regards to minimum usage charges and other things. Of course, TCAP doesn’t actually explain or give an example of what this standard offer product would look like. At the end of their day, the big outcry here is that right now customers have read the fine print to understand their charges. Boo. Hoo. I’m all for reform and making things easier, but get back to me when you have a real suggestion for reform instead of just “This is hard because it requires people to read their contracts.”

Also, pay attention to this last sentence in their recommendations:

All retail electric providers should be required to promote the powertochoose through a printed notice on home electricity bills

Laughably, REPs have been required to promote Power To Choose on home electricity bills for years now. Specifically since April 1, 2010.

Way to keep up with the times, TCAP.

INCREASE OVERSIGHT OF ERCOT
The PUC should increase its oversight of ERCOT’s finances, both by approving all annual budgets for the organization and by pre-approving all uses of debt by ERCOT.

Finally, a second point I can one hundred percent agree with in regards to this report without any pause. Too bad it only took wading through about 50,000 words.

RE-REGULATION IS NOT THE ANSWER
Policymakers should strive to make the state’s deregulated electricity system as efficient and fair to Texas consumers as possible. Re-regulation is not the answer. Instead, the Public Utility Commission should pursue a balanced approach with regards to the state’s electricity market. Consumer protection should have equal footing with the promotion of competition.

First, I just want to enjoy the irony. Re-regulation isn’t the answer, but apparently almost everything that could be wrong with deregulation is wrong, and TCAP offers no real suggestions for improvement. And to be clear, they have to state they are against re-regulation this plainly because if they didn’t otherwise, people would assume they WERE advocating re-regulation.

What does “a balanced approach” mean? Again, this statement is vague to the point of worthlessness. Absolutely consumer protection should be equal to competition, if not tantamount. And yes it should be efficient and fair to customers. Thanks for telling us the obvious.

It is interesting that TCAP just wrote an entire dense, cumbersome document that had literally nothing positive to say about deregulation and left out important facts that might have illustrated it in a positive light. Of course, they say re-regulation is not the answer, but they also go out of their way to attempt to illustrate that nothing about deregulation has been positive.

Let me sum up their “Recommendations” section in one sentence, and keep in mind that I’m not leaving out any important details or specifics:

“Don’t allow anything anti-competitive, make sure ERCOT doesn’t waste money, don’t do anything that increases costs, try to make things easier to understand for customers, and don’t re-regulate.”

Seriously, they wrote a MASSIVE document with nothing positive to say about deregulation, everything negative to say about deregulation, and at the end of the day that distilled sentence is all they have to offer in way of suggestions for improvement. Why would they expend so much time doing research and writing that report if that is all they have to conclude or suggest? They don’t even have any solutions to offer on their webpage, just lots of opportunities to sign various petitions. That seems kind of odd, even lackluster, for a big company that claims to be a consumer advocacy organization, doesn’t it?

In my next post, I’ll take a close look at TCAP as an organization and offer my opinions on their own motivation and agenda.

Texas Electricity, TCAP, and a Biased “History” – Part Three

When I last left off on my critique of TCAP’s “history” of deregulated electricity in Texas, I was moving one by one through their “major findings” section of the document and giving my thoughts and raising questions about their facts and claims. I’m about half of the way through their findings, so without further ado lets jump right in.

5.) PRICE TO BEAT MECHANISM FAILED TO PROTECT CONSUMERS
High natural gas prices, a flawed “price-to-beat mechanism” under Senate Bill 7, and a reluctance of Texas consumers to switch providers contributed to high average electricity prices in Texas for much of the deregulated era. Although natural gas prices have come down in recent years and the price-to-beat has expired, other challenges remain.

Finally, something that is accurate and not misinformed. The Price To Beat line was horribly flawed. Although note that here TCAP admits, although not directly, that people failing to switch providers and remaining “sticky” to higher priced plans and incumbent providers contributed to higher than average electricity prices. Remember when I pointed out earlier that TCAP is basing much of their sensationalized statistical comparison on EIA data? TCAP themselves just confirmed what I said earlier that any evaluation using EIA data is completely worthless. And it compromises 90% of all their data analysis in this report. The fact that people, on whom the decision to shop and switch is incumbent, chose to pay higher than necessary prices isn’t the fault of the Texas electricity system.

COSTS INCURRED BY GENERATORS SHIFTED TO CONSUMERS
Deregulation-related charges known as stranded costs will add more than $7 billion to consumer bills. Texans will continue to pay these charges for years to come.

No complaint here. Some of the stranded costs that consumers have been forced to pay are complete garbage and outrageous. I’ve expressed that opinion before in this article.

RENEWABLE ENERGY GAINS MAY BE TEMPERED BY HIGHER COSTS FOR CONSUMERS
Over the past 10 years Texas has become a leader in the development of wind power. However, the construction of transmission lines to serve West Texas wind generators will increase transmission costs for all Texans. The aggressive pursuit of wind power has created new reliability challenges.

Gee, thanks for taking the time to point this one out, TCAP. So first TCAP wants to complain about how Texas is facing a power generation crisis, and now they’re complaining that the cost of building new transmission lines for wind generation will cost money (stating the extremely obvious), all the while working towards helping stem the power generation problems. Looks like TCAP is trying to have it both ways on this issue.

THE POWER GRID OPERATOR HAS SUFFERED PERSISTENT MANAGEMENT PROBLEMS
The Electric Reliability Council of Texas (ERCOT), the operator of the power grid for most of the state, has a history of management problems. A major market overhaul overseen by ERCOT was completed years behind schedule and substantially above original cost estimates.

Again, no complaint here. The early issues and overspending while under-delivering by ERCOT are indefensible. I just want to be clear that it wasn’t any management problems by ERCOT that caused the price spikes during the cold snap in February of 2011 or the heat and drought issues from August of 2011.

TRANSMISSION SYSTEM CONSTRAINTS HAMPER SEAMLESS FLOW OF POWER
The transmission system in Texas was built to support the old monopoly system, not the dynamic deregulated market. As a result, moving power from parts of the state where power is plentiful to areas where it is needed most has remained a challenge in the state’s deregulated market. Creating a transmission grid to accommodate the deregulated market will cost Texas consumers billions of dollars.

Again, not much to disagree with here. I just don’t see the point of stating the obvious. Improving and building things costs money that is paid for by Texas taxpayers. And again, obviously the grid was not built with deregulation in mind. And to make the market and grid perfect for our needs will require more work. But what’s the point of listing this as a “Major Finding” other than to associate deregulation with something that will be costly? TCAP says they don’t support re-regulation and favor making deregulation work. They then point out that the grid wasn’t built with deregulation in mind. And then they point out that it will be costly to upgrade the grid. So they are against regulation, they find the status quo inadequate, and they certainly seem to imply in this “Major Finding” that the cost of improving the situation is an issue/problem. Again, TCAP is attempting to play all sides. But maybe they’ll suggest a solution in their recommendations section? Wait, I’ll save you the suspense, they do not propose a solution.

That completes my review of TCAP’s “Major Findings” section of their document. They have a couple things correct in regards to standard costs and the early Price To Beat model that has since been scrapped. However, their efforts to state the obvious and point deregulated electricity in a “guilt by association” strategy overshadows any of their salient points.

Finally, in my next blog post, I’ll take a look at the “Recommendations Section” of TCAP’s document and cast a critical eye on their assertions there. Stay tuned.

Texas Electricity, TCAP, and a Biased “History” – Part Two

Previously, I posted Part 1 of my look into TCAP’s (Texas Coalition for Affordable Power) history of deregulated electricity in the state of Texas, including a quick explanation of who TCAP is as an organization. To be honest, I could go page by page and pick apart much of what this “history” is claiming as fact, but I don’t think anyone wants to invest the time to read a 12 part rebuttal of this document by me. In the first part of this series, I explained who TCAP is and raised some questions about some statements and questions from their document’s Executive Summary Page.

Today I’m going to going to take a critical look at their “Major Findings” section of the document. Or at the very least, the first portion of their Major Findings section.

Now, before we begin, it is extremely vital to understand that almost all of the data TCAP & Recharge Texas are using is from the United States Energy Information Agency or EIA. And it is vital to keep this in mind because EIA information is only measured at the State level. It simply compares Texas on a state by state basis with other states. Which means it lumps regulated and deregulated areas together. Additionally, it doesn’t take into account people who don’t take advantage of the choice in deregulated areas and willingly pay rates as high as 50-60% premiums above market. So it isn’t comparing the available rates customers can achieve, just what people ARE paying. And almost half of all Texans in deregulated areas are still with their incumbent providers, often paying much higher rates than the market average. As a result, it paints a flawed picture of the rates and savings available through deregulation. Using any EIA information as a measuring stick is akin to saying the price of food is skyrocketing and making a key part of the metric people who dine every day at 4 star restaurants.

So lets jump right into things.

1.) DESPITE RECENT PRICE DECLINES, TEXANS HAVE LOST GROUND RELATIVE TO CONSUMERS ELSEWHERE.
Although average electricity prices in Texas have declined since a peak in 2008, they nonetheless remain higher than average electric rates charged in adjoining states. Relative to electricity prices nationwide, Texans also have lost ground during the first 10 years of deregulation. For the 10 years prior to the law, Texans paid average prices 6.4 percent below the national average. In the 10 years after deregulation, Texans paid rates 8.72 percent above the national average.

Here is our first encounter with flawed EIA data. And as I mentioned above, the reason is because the data they’re using can’t create an accurate picture of the available rates that have been made available to customers, only a snapshot of what people are paying. But the thing is, in a deregulated market it is incumbent on the consumer to shop around the market and find the best deal, and unfortunately a lot of people don’t do that. This isn’t the first time Recharge Texas has been caught using this imperfect data. Check out the graph below:

Look at red bar, which is the metric TCAP uses to classify electric rates in Texas and compare it to the rest of the country. Look the disparity of the average rates paid by Texans as a whole and rates available in deregulated areas (orange bars), and keep in mind that the red TCAP rate includes both regulated and deregulated areas of Texas. Also remember that some areas of Texas with regulated electricity are the most expensive in the state. Now, take that disparity in those rates and multiply it over the course of 10 years, and you can begin to see how TCAP’s usage of EIA data to view the Texas market paints an inaccurate and incomplete picture. And that picture happens to be unflattering to deregulation, or at least it is the way TCAP is tacitly blaming deregulation.

2.) CHOICES INCREASED, BUT SO HAS CUSTOMER DISSATISFACTION
As the number of electric providers has increased, so has the complexity of electric contracts. The number of discrete billing charges also has grown. Complaints from electricity customers have been much greater during deregulation, as compared to those filed with the Public Utility Commission prior to deregulation.

Yes, the complexity has increased. That was a given and stated from the start of deregulation in 2002, and was part of the accepted cost of doing business. Complaining about it now serves no purpose except to muddy the water. Additionally, suggesting that the rise in complaints is a result of dissatisfaction is stating an opinion as a fact, which is poor journalism and unethical. Once again, this isn’t the first time TCAP and Recharge Texas has attempted to definitively state that increased complaints is a sign of dissatisfaction. I have responded extensively about the possible implications of increases in complaints here. I’d argue that the rise in complaints is a sign deregulation is WORKING. TCAP and Recharge Texas’s continued insistence to claim speak for everyone that it is a sign of dissatisfaction is baseless and unethical.

Just to summarize the increase in complaints can mean many things. For starters, people now have a reason to file complaints BECAUSE they have electric choice. And they’re actively participating in the market, and market participation is a sign of a healthy market. Additionally, the Internet has exploded since deregulation was implemented, and now people have smart phones and internet access everywhere they go, making the ability to file complaints faster and easier than it ever was before during regulation. People can file online, and during regulation people had to commit to waiting on hold for a representative. And lets not forget that the Texas population has increased by almost 20% since 2002, and more people (particularly ones unfamiliar with a deregulated electricity market) mean more complaints. Of course, this is never once mentioned or taken into consideration in TCAP’s history of deregulation.

Oh, and by the way, the 2011 J.D. Power & Associates survey said that Texan’s satisfaction with deregulated electricity was at an all time high.

3.) MARKET POWER ABUSE REMAINS A CONCERN
Although the Texas Legislature adopted a helpful reform in 2011, abuse in the wholesale power market remains a concern. Alleged abuses have contributed to the financial failure of at least one market participant. One major electric company profited by about $4 million from alleged anti-competitive activities — even after paying a punitive settlement in the case.

Market abuse is always a potential problem and exists in every major market in the world. See, The New York Stock Exchange. Fortunately, as Texas gets more familiar and comfortable with the market, reforms are being made, fines are being assessed, and the PUC is gaining more and more power. Abuse will always be a concern. But Texas has done a great job of tightening the ship and making improvements and policing things.

4.) POWER RESERVES HAVE DWINDLED
Texas had the highest generation reserve margins in the nation prior to the implementation of the deregulation law. Texas now has among the lowest. This has led to serious reliability challenges for the state’s power grid.

This is one of the more laughable pejoratives TCAP has leveled at the feet of deregulation. As I mentioned earlier, the state of Texas has grown it’s population almost 20% since 2002. 20%. That is unprecedented growth in a microscopic amount of time as people seek refuge from a poor national economy in a strong Texas state economy. Yet TCAP makes no mention of this in their analysis as to why power reseves have dwindled, which I find laughably shocking seeing how the two are obviously tied together. You know, more people means more energy usage. TCAP should be embarassed and ashamed for this omission.

It’s one thing to take it upon yourself to write a history of deregulated electricity in Texas. But to knowingly use flawed data, and to omit any facts of viewpoints from consideration that point things away from deregulation is just wrong.

Of course, I’m not finished. I’ve highlighted the first 4 “Major Findings,” but am going to stop here before this gets too long to read. There’s still 4 more “Major Findings” to examine, along with the history’s “recommendations” and some analysis of the different graphs and data TCAP is attempting to use to support their case.

Till my next entry.

Texas Electricity, TCAP, and a Biased “History” – Part One

Most people probably haven’t heard of TCAP, the Texas Coalition for Affordable Power. Although, if you’ve read the TER Blog or visited the TER Facebook page with any regularity, you might have seen me comment about TCAP’s public relations face, Recharge Texas. So who is TCAP? TCAP is a membership group of local community politicians who have banded together to negotiate bulk electricity rates. Basically they’re politicians who charge a membership fee and percentage of usage to negotiate the electricity contracts for local government entities:

There is a one-time New Membership Fee equal to the greater of (i) $0.05 per capita of the resident population of the Member  or  (ii) one-half (1/2) of one percent (1%) of the prior calendar year’s total electric bills, not to exceed $14,000.  Also, TCAP members pay a per kWh aggregation fee that is set annually by the Board of Directors.  Over the last three years the aggregation fee set by the CAPP and STAP Boards has been $0.0013 and $0.0010, respectively.  The 2011 fee ranges from $0.0010 to $0.0012 depending upon the member’s location.  Funds raised through the aggregation fee are used to: pay attorneys, energy and public relations specialists; develop and provide interactive web portals for members use; maintain web sites; and promote market reforms that would benefit political subdivisions and their residents.

So why am I bringing up TCAP today? Well, TCAP also claims to be a consumer advocacy group. And yesterday they were blasting out press releases pointing people to a document they put together which they’re humbly calling “Deregulated Electricity in Texas – A History of Retail Competition in Texas.” Apparently they feel themselves the best candidates to write the definitive history of deregulated electricity in Texas. The problem is that their history is completely biased, built by design on faulty, incomplete, and misleading data, offers no constructive ideas or suggestions, and flirts with the personal agenda of TCAP.

I’m going to pick apart their report piece by piece, because to have such a one sided view attempting to paint deregulated electricity in a negative light without highlighting important circumstances, identifying any of the positive results, and shamelessly stating opinions as facts is amoral. And that irritates me. And on top of that, putting this kind of document out there and claiming it is entirely factual is just that much more disinformation Texas consumers have to wade through to understand the truth about the Texas electricity market.

First off, we’ll examine the “facts” that this report claims to examine.

The “Facts” TCAP/Recharge Texas Claim to Examine:

Number One:

Average electricity prices in areas of Texas both inside and outside deregulation have declined in the last two years. However, Texans in deregulated areas consistently pay more for power than Texans outside deregulation.

This is a blanket statement and is patently false. There are regulated areas much more expensive than deregulated areas, such as El Paso, Entergy, etc. Additionally, Austin, which is regulated, is laughably in debt because they refused to to raise rates for 17 years, a decision that can be tied to political interest over the community needs, and are about to add a $20 surcharge to bills to pay the debt. This will make them the highest paid utility in Texas. Of course, TCAP is knowingly using extremely flawed data to come up with these numbers, but I’ll examine that in extreme detail later.

Number Two:

The organization that manages the state’s power grid, the Electric Reliability Council of Texas, has proven to be a poor steward of ratepayer money. ERCOT is supported through fees levied on electricity consumption.

No argument here. However, I would like to point out that it is not the first time a government agency has been bloated. Hard to blame the deregulated system for this. That is like saying Democracy is a failure because the 2 party system in the United States creates huge obstacles. ERCOT has had many issues, but TCAP tacitly blaming those issues on the system of deregulated electricity is poisoning the well.

Number Three:

Reliability issues have begun to emerge under deregulation. There have been two statewide rolling blackouts in four years under the new system, and there have been at least nine reliability emergencies in 2011 alone. By contrast, ERCOT ordered statewide rolling blackouts only once in 30-plus years before deregulation.

This is probably the most angering “fact” they claim to examine. This entire statement is circumstantial and drawing any conclusions about the system of deregulation from the silly weather abberations of 2011 is biased reporting. Reliability issues have come about under deregulation yes, but this statement is tacitly tying them directly TO dergulation. Not one of the hottest summers in Texas recorded history, the worst drought in the Texas region since the late 1700’s, and a 20% population increase since 2005. None of the items I mentioned are highlighted once in TCAP’s entire document as important factors despite the obvious common sense connection. Shockingly enough, extra homes to power require more electricity and weather aberrations have caused problems. But last I checked, the deregulated electricity can’t control the weather or the influx of new residents into the state.

Number Four:

The Texas Legislature has failed to act on important reforms, including proposals to guard against market abuse. The Legislature also diverted money from a bill-assistance fund that was meant to help low-income ratepayers, and instead used much of the money to balance the state budget. This reversed a key commitment included in the deregulation law.

Unsurprisingly, policians making poor decisions is nothing new. Again, this doesn’t make deregulation a bad system. Tying it in with politics is specious. As for the bill assistance fund, again, that was a political decision by Rick Perry. How is that the fault of the deregulated system? And as an interesting piece of irony, TCAP is an organization made of city politicans who want to repeal the Texas elimination of opt-out aggregation, which drastically reduces their power. So they’re mistakenly blaming electricity deregulation for political mistakes, all the while being a collection of politicians that want to insert a layer of political control between customers and electricity companies. Nothing hypocritical about that at all.

Key Questions Raised in “Deregulated Electricity in Texas” Include:

What can be done to reduce confusion in the retail electricity market?

What reforms would help guard the deregulated market against anti-competitive abuse?

How can policymakers guard against waste and inefficiency at the organization that oversees the power grid?

Deregulated Electricity in Texas, first published in 2009 but now updated and expanded, tells the story of electric deregulation from the beginning. It includes sections summarizing key milestones, new pricing charts and updated spotlight articles highlighting key policy challenges.

I read their entire, rather large document, multiple times. I can’t recall where any of these questions were specifically raised. And there certainly weren’t any proposed answers to those questions. As for “telling the story of electric deregulation from the beginning” well, I would certainly argue that their document tells A story.

In my next section I’ll take a look at TCAP’s “Major Findings” section one by one and respond to their claims, specifically their flawed pricing charts and milestones. Stay Tuned.