Texas Electricity: Forever in transition

1
Texas Electricity Forever in transition

• Robert Michaels
• Professor of Economics
• California State University
• Fullerton CA 92834
• rmichaels_at_fullerton.edu
• 
  
• 
  

2
Electricity Last of the great deregulations

• Electricity going to market in over 100 nations
• Intrinsically complex Technology and Regulation
• Public interest efficiency, equity,
  environmental matters
• Failure?
• U.S. switching growing as of eligible volumes
• Share of residentials in switched load rising

3
(No Transcript)
4
(No Transcript)
5
Where Texas stands

• At both retail and wholesale, Texas ERCOT the
  greatest state success story
• Success is
• Efficient, competitive wholesale markets
• Benefits of retail markets available to all users
• Long term predictability of investment climate,
  freedom to contract
• Texas notable for mistakes it didnt make

6
(No Transcript)
7
(No Transcript)
8
(No Transcript)
9
(No Transcript)
10
How to measure success

• Real success and future investments
• Who does the planning?
• Short-term rate effects and long-run efficiency
• Object was to put risks on investors, not
  ratepayers
• Wholesale accurate price signals, new contracts
• Retail New choices -- suppliers, rates, sources
• Do not use measures of regulation to measure
  success under competition

11
Retail What happened

• Competitive suppliers started at PTB, immediately
  went below
• New service offerings
• Power prices and gas prices
• Down vs. up?
• All markets pass costs through
• Consumers value predictability
• Resource diversity issues

12
(No Transcript)
13
(No Transcript)
14
The future of retail markets

• Competition and Switching statistics
• Is stickiness rational? Dallas City Hall
• Mandatory customer reassignments?
• Which customers need help?
• Growth in suppliers and plans
• Innovative rate designs
• New service packages
• New information resources (Houston)
• Here comes Wal-Mart (?)

15
(No Transcript)
16
The future of ERCOT markets

• ERCOT markets continue contract-dominated
• How important is the balancing market?
• Market power in generation? By zones?
• 2009 changes will improve efficiency
• Day-ahead markets and generator commitment
• Nodal prices as signals re both transmission and
  generation scarcity
• Renewables, small generation, and demand response
  are compatible with competition
• But integrating resources like wind not easy