How Dregulation Drives Innovation
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Transcript of How Dregulation Drives Innovation
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How DeregulationDrives Innovation
How the Deregulated Energy Market and Customer Choice
Push Technology Further
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More and more people are demanding more and more electrical power.
State regulated markets lack agility to tackle rapid growth.
• Building new power improvements is a slow, bureaucratic process.
• Power utilities & state regulators must negotiate to build new generators and transmission routes.
• They must wrestle with the means of how to pass the expense on to consumers --(aka: state taxpayers)
• Because regulators spend public money cautiously, innovations are often technologically out of date when deployed.
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In deregulated states, competition has been the answer to the problem of growth and expanding power demand.
• Competition removes the public's financial risk for investing in electrical generating plants and transfers it to private investors.
• When customers can choose between rival competitors in an industry, the most successful gives their customers what they want for the lowest price.
• Investors can effectively order their generating companies to cut costs by investing in new technologies, adopting best practices, and improving energy efficiency.
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Market competition has been key in meeting the rising Texas electricity demand since deregulation began in 1999.
• Texas has the second largest population in America, growing to 50 million people by 2040.
• The Electricity Reliability Commission of Texas (ERCOT) estimates peak demand for Texas electricity increased at an annual rate of 2.5% from 1990 to 2006.
• Anticipated growth will require between 60,000 and 80,000 megawatts (MW) of new electricity generation capacity by 2030.
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Houston at night from space showing a 60 mile wide area.Photo courtesy of NASA
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To supply demand, ERCOT has performed many improvements:
• ERCOT consolidated 10 different control centers into one central location.
• Increased staff and resources, created new transmission pricing and interconnection policies.
• Developed statewide planning expertise, and produced detailed annual reports identifying transmission constraints and needs throughout Texas.
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ERCOT reorganization streamlined policies, cut transmission/distribution bottlenecks.
• All transmission rates are "postage-stamp" rates — generating companies pay the same rate throughout the region.
• ERCOT is the central clearinghouse for price and policy — transmission companies rely on one organization with one price.
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Investing in the Grid
• Since 1999, $5.8 billion has been invested in upgrading 69,000 volt lines (69 KV) to 138,000 volt lines (138 KV).
• Since 2008, ERCOT Transmission Service Providers (TSPs) completed 1,137 circuit miles of transmission improvement projects.
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Investing in the Grid
• In 2013 alone, an estimated 2800 circuit miles of additional 345 kv lines are planned.
• Between years 2010 through 2015, an estimated $8.8 billion of improvements are planned.
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Investment in Power Generation:
• Between 1990 and 1997, the state regulated system only added 6 gigawatts (GW; 1 GW= 1,000 megawatts) of electrical generating capacity.
• From 1998 through 2008, 36 GW of electrical generating capacity was added.
• 6.4 GW (most of it green renewable energy) added in 2008 alone.
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Most investment in new generation capacity was in energy efficient generating technologies:• Low-polluting combined-cycle natural gas systems.
• Clean coal generation technologies now cut carbon emissions through Carbon Capture and Storage (CCS).
• Solar and wind power.
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Texas leads the US with more operational wind turbines than Iowa and California combined.
• February 28, 2010: Texas wind turbines delivered a record 6,242 megawatts of power to Dallas, Austin and other population centers.
• 22% of all the electricity consumed in the Texas grid that day came from wind.
• ERCOT has now set the goal deploying 10,000 MW of renewable energy by 2025.
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Smart Meters are the latest consumer innovation being deployed by TSPs and ERCOT.• Provide both retail and transmission companies with consumer power usage for
billing.
• Consumers can get an hourly breakdown of their usage history.
• Software companies are developing home systems for the consumer to monitor their electricity.
• Smart appliances will show consumers real-time usage and cost.
• Consumers can adjust their power usage to increase efficiency and save money.
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Market competition has pushed companies to tailor electricity to customers’ needs.
• Generation is separate from retail.
• Retailers and their customers can choose where they buy power.
• Power generating companies must produce power more efficiently than their competitors.
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Retail Energy Providers build their success by getting the best deal on the Texas Electricity.
• They shape plans to meet consumers' needs.
• They offer consumer incentives that reward both consumer loyalty and paying their bill on time.
• They pass on their savings to their customers.
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In a regulated market, consumer loyalty oron-time bill payment rewards don't happen. Why?
The regulated power company is the only choice.
...or buying a case of candles.
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In a deregulated market, the consumer gets real choices.
• Consumers can choose the cheapest Texas electricity available or they can choose power made using 100% green, renewable technologies.
• They can choose a provider plan that follows monthly market prices or locked-in, fixed rates for up to five years.
• They can choose a provider that rewards customer loyalty and on-time bill paying.
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By competing to win, energy wholesalers and retailers will meet growing consumer demand for:
Better Plans Innovative Technologies Lower Cost
The quickest way consumers cansave money is by shopping around
for a better deal.
Check out www.PowerToChoose.org