The Texas Experience I mplementing Electricity Customer Choice I n - PDF document

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