5/9/2017 The Texas Experience I mplementing Electricity Customer Choice I n Nevada May 10, 2017 Pat Wood III Principal, Wood3 Resources Former Chairman, PUC Texas & FERC The Utility Business Today’s Competitive Transmission & Retail : Not a natural Wholesale Markets Distribution : Generation : subject to monopoly, although a Natural monopoly competition legal one in some states (for now) 1
5/9/2017 Precursors to Competitive Key Features of Texas SB Texas Market 7 (1999) 1995: Wholesale competition bill All IOU customer classes open to competitive choice: 1/1/2002 (30 mos) – Non utilities allowed to generate/sell Competitive businesses/costs unbundled 1996: ERCOT was nation’s first independent system operator Stranded generation cost calculation – Open access across grid Market based renewable portfolio std No more regulated generation System benefit wires charge (low Rates held up to pay down generation income, efficiency, customer education) in advance of retail competition Coops, munis not opened up, opt-in Cost Unbundling Key Texas SB7 Aspects Customers start with affiliated retailer. Initial rates capped for 5 years (Price To Beat). No discounting permitted. Price Cap could rise if natgas costs did Headroom for competition: key goal Uniform terms/cond’ns wires co. tariffs ISO: switching/billing clearinghouse 7 2
5/9/2017 Other Key SB7 Features First Five Years Power To Choose website; Facts Label PTB price changes due to higher gas cost created headroom PUC led Education Campaign Customer switching became very Property Tax and Union provisions robust after 2005 Hurricane season Provider of Last Resort bid out Stranded costs calculated, securitized Retailer certification State budget cuts Low Inc/education $ Retailer bankruptcies; customers moved to Provider of Last Resort Second Five Years Last Five Years Full freedom for affiliated retailers CREZ $7b transmission built Feb ‘08 power outage: forecasting Energy Futures (TXU) bankruptcy Energy market price cap moved up Capacity Market debate June 2008 Natgas price shock Wind hits 18 GW; Solar market entry Smart meters installed statewide Abundant retailer offerings First statewide transmission planning process begun under CREZ Huge influx of wind energy investment 3
5/9/2017 Results: Retail Prices Results: Wholesale Prices AEPC 9.6 ‐ 57% 5.6 Infuse Energy -42% 12.77 ‐ 63% AEPN 5.0 Frontier Utilities 10.0 -50% 13.20 CenterPoint 5.2 Summer Energy 10.4 -50% 13.7 ‐ 63% Oncor 9.7 ‐ 66% 4.5 Summer Energy -54% 12.8 TNMP 5.0 Frontier Utilities 10.6 -53% 14.0 ‐ 65% 13 As of 10/13/16 for 1000 kWh, 12 mo fixed residential rate ERCOT IMM Report, 12/13/2016 product; courtesy PUCT Chmn. Donna Nelson Why Do This? Why Do This Here? NV already has smart meters: enables Better Customer Price & Service clean energy deployment, empowers Economic Development customers to embrace energy efficiency Technology Innovation & load shifting Great location in Western Grid = Gen Hub Size doesn’t matter – Successful retail choice in Rhode Island, Delaware, D.C. 16 4
5/9/2017 Who Would/ Could Do What? Basics for a Nevada Market – Stakeholder involvement w decisionmakers’ oversight FUNCTI ON WHO HANDLES or DECI DES? Generation Siting PUCN or purely local – Wholesale market foundation (or equivalent independent market facilitator) Distributed Generation Competitive providers, distr utility Gen Dispatch/Financial Settlements FERC via RTO/ISO/wholesale mkt – Transition period Wholesale Power Market Oversight FERC – Separate regulated wires business from competitive Transmission Siting PUCN (also regional plan process) businesses Transmission Rates FERC – Unbundle rates, modernize wires tariffs Distribution Siting & Rates PUCN Retail Service Provider Certification PUCN – Stranded cost recovery Retail Rates/Service Offerings Competitive Retailer – Default service (Texas model vs. other states) Retail Power Market Oversight PUCN – Customer education campaign Renewable, Efficiency, Low Income PUCN (or other state agency) 17 Customer Education PUCN, Competitive Retailers What To Worry About Inadequate customer education Timing of generation investment Coordination with neighboring states Inadequate prep for disruptive technology Political interference 5
5/9/2017 Robust I nfrastructure Reliability Regions are separate entities 6
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