NewEnergyNews: Ten Years of Texas Electric Utility Deregulation

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge: To make every day Earth Day.

YESTERDAY

  • THE STUDY: NEW OPPORTUNITIES IN TRANSMISSION
  • QUICK NEWS, Oct. 20: ELEVEN GOOD THINGS ABOUT SOLAR ENERGY; YAHOO BUYS WIND; SMART THERMOSTATS’ BILLION DOLLAR FUTURE
  • THE DAY BEFORE

  • Weekend Video: The Ocean Speaks Out
  • Weekend Video: Adapting To The Inevitable
  • Weekend Video: The Joy Of Driving EVs Powered By The Sun
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    GET THE DAILY HEADLINES EMAIL: CLICK HERE TO SUBMIT YOUR EMAIL ADDRESS OR SEND YOUR EMAIL ADDRESS TO: herman@NewEnergyNews.net

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    THE DAY BEFORE THE DAY BEFORE

  • FRIDAY WORLD HEADLINE-HOTTEST SEPTEMBER EVER; WORLD’S HOTTEST MONTHS STREAK AT SIX
  • FRIDAY WORLD HEADLINE-EU WIND BEATS FOSSIL, NUKE ENERGY PRICES
  • FRIDAY WORLD HEADLINE-DESERTEC SUCCUMBS TO MIDEAST TURMOIL
  • FRIDAY WORLD HEADLINE-JAPAN UPS PUSH FOR GEOTHERMAL
  • THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, Oct. 16:

  • TTTA Thursday-THE MILITARY FALLS FOR THE HOAX
  • TTTA Thursday-FORTUNE 100 BUSINESSES BOOST SUN
  • TTTA Thursday-IOWA UTILITY BUYS WIND TO CUT COSTS
  • TTTA Thursday-GETTING ENERGY EFFICIENCY FROM THE CLOUD
  • AND THE DAY BEFORE THAT

  • THE STUDY: NEW ENERGY BECOMES PRICE COMPETITIVE
  • QUICK NEWS, Oct. 15: NEW NUMBERS SHOW BIG OCEAN WIND POWER; SOLAR TURNS IN A NEW DIRECTION; FUEL CELL MARKETS TO VARY, GROW
  • THE LAST DAY UP HERE

  • THE STUDY: WORLD WIND COMES ON
  • QUICK NEWS, Oct. 14: THE UTILITY-SOLAR DEBATE OVER WHO PAYS; TECHNICIANS WANTED – APPLY TO WIND; MAKING MULTIFAMILY BLDGS MORE EFFICIENT
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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    Your intrepid reporter

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

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  • Thursday, April 12, 2012

    Ten Years of Texas Electric Utility Deregulation

    Ten Years of Texas Electric Utility Deregulation; Texans talk about electricity providers the way urban epicures discuss recipes.
    Herman K. Trabish, January 24, 2012 (Greentech Media)

    Texas has the oldest and most successful deregulated electricity marketplace in the U.S. A decade ago, deregulation was rolled out by the Electric Reliability Council of Texas (ERCOT) in the wake of California’s $45 billion partial deregulation fiasco.

    By 2008, 80 percent of Texas registered voters favored a competitive electricity market, and, by 2010, 55 percent of residential customers had selected a competitive retail electricity provider or product. In 2011, for the fifth consecutive year, an independent authority named the Texas market the best in the country.

    More importantly, renewable energy in Texas grew from one percent in 2002 to over 8.5 percent in 2011. Wind grew ten times over, from 2.6 million megawatt-hours to 26 million megawatt-hours, and, with over 10,000 megawatts of installed capacity, Texas led all states (and would be fifth in the world if it secedes). It created nearly 10,000 direct wind industry jobs in the process.

    click to enlarge

    “A disproportionate amount of the wind that has been built in the U.S. has been built in those places that have market structures,” American Wind Energy Association (AWEA) Transmission Policy Manager Michael Goggin explained. “Markets provide a uniform, fair-price signal for all of the energy resources. Markets also tend to come with grid operating procedures that make the grid more efficient for all users and reduce the discrimination that wind plants are sometimes faced with.”

    A good market design like ERCOT’s, Goggin said, includes “fast sub-hourly generator dispatch, fast transmission scheduling, wind energy forecasting, and ancillary services markets to efficiently provide flexibility. And markets tend to be large balancing areas, which are a lot more efficient for accommodating variability.”

    The benefits, Goggin added, “are really quite staggering.” Grid operator studies put consumer savings and other returns from electricity markets “in the hundreds of millions of dollars per year,” he said.

    ERCOT’s initial rules and standards, according to ERCOT CEO Trip Doggett, were the product of “thousands of hours of meetings and mark-up sessions” involving market participants and consumer representatives.

    “On January 1, 2002, ERCOT launched the competitive retail electric market -- on time and on budget -- allowing individuals and corporations in most cities (approximately 74 percent of the ERCOT load) to choose power suppliers,” recounted Doggett. In the intervening 10 years, ERCOT has “evolved from a small organization responsible for ensuring a reliable electric grid to the entity that facilitates a market capable of responding to the opportunities of 21st-century innovations” and economic pressures.

    click to enlarge

    ERCOT’s most recent “comprehensive market redesign,” Doggett noted, enabled “locational marginal pricing for generation at more than 8,000 nodes” and added “a day-ahead energy and ancillary services co-optimized market.” The redesign instituted more “efficiency and incentives to invest in the right places.”

    Federal Energy Regulatory Commission Chair Jon Wellinghoff, Doggett pointed out, called ERCOT’s $34-billion market and 335,000-gigawatt-hour marketplace “the most robust retail competition anywhere in the country.”

    The average electricity rate for ERCOT’s 1,150 generators, movers, buyers, sellers and consumers, according to Doggett, is $0.10 per kilowatt-hour.

    “ERCOT has led the field in wind development,” noted Doggett, adding, “We are learning how to successfully manage increased wind integration. We developed the first-of-its-kind wind-ramp forecasting tool to help operators prepare for large and sudden changes in wind production. Our current wind record is 7,400 megawatts, which occurred at 3:06 pm on Oct. 7, 2011, accounting for 15.2 percent of the load at the time. In 2011, 8.5 percent of our energy came from wind generation.”

    Green Mountain Energy Company (GMEC) was one of the first U.S. electricity retailers, one of the first into the ERCOT marketplace and the first to sell renewable energy to Texas residential and commercial customers.

    click to enlarge

    Retail competition has allowed Texans to choose their electricity provider and their preferred source of electricity, explained GMEC’s Helen Brauner. “In Dallas, there may be 30 different rates and all different flavors now.” Some, she said, just sell system power. “We sell green power.”

    GMEC was created by Vermont utility Green Mountain Power “to change the way power is made through consumer choice.” Escaping their first effort in California’s deregulation disaster, GMEC turned to ERCOT.

    “We could see it was promoting competition,” Brauner said. GMEC moved its headquarters from Vermont to Texas. “What we thought would happen has happened,” Brauner said. “A lot more people understand now, and I think we had a hand in it, that electricity and pollution are connected.”

    “Texas has derived immense value from diversifying its energy portfolio,” AWEA’s Goggin said. “Just five years ago it was much more dependent on natural gas [... and] was a lot more susceptible to the natural gas price volatility that does major harm to consumers.”

    More significantly, Goggin said, “Twice in 2011, wind power was instrumental in keeping the lights on in the state.” In February, because of unusually cold conditions, “8,000 megawatts of conventional fossil plants went down and wind was producing above expectations, at about 3,500 megawatts.” And in August, Goggin added, “the state also had power shortages when it was unusually hot and they had some conventional plants that weren’t producing as expected but wind was there producing well above expectations.”

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