Legislative Advertising Paid For by: Julia Rathgeber, Association of Electric Companies of Texas

1005 Congress, Suite 600, Austin, TX 78701 512-474-6725 www.aect.net

2017

The Retail Electric Market in ERCOT

AECT Companies in the Competitive Retail Market

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Areas of Texas Open to Retail Competition

AECT Members Retail Electric Providers

Steps to Electric Competition in Texas

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Wholesale competition legislation passed (SB 373)

May1995

Jan.2002

Retailcompetition legislationPassed (SB 7)

June 1999

Sept. 1999

ERCOT Electric rates frozen

Jan. 2005

July 2001

Texas Choice pilot program begins

Affiliate REPs allowed to offer non-price-to-beat prices

Retail choice begins in ERCOT

Jan. 2007

End of price-to-beat

ERCOT Roles and Responsibilities

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ERCOT: By the Numbers

90% of the electric load in Texas is in ERCOT 75% of ERCOTs load is in the competitive

market, including 7 million meters Over 550 generating units, providing 77,000

MW of generating capacity during peak demand

46,500 miles of high-voltage transmission

ERCOT Responsibilities

System reliability planning and operations Wholesale market settlement for electricity

production and delivery Retail switching process for customer choice Open access to transmission

ERCOT region

SB7 Created a Robust and Competitive Market

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The Role of ERCOT in the Retail Market

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ERCOT Coordinates Among Stakeholders to Support Customer Switching Transactions

Texas is Hot!

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On average, Texas residential customers use DOUBLE the electricity of California residential customers every month.

Source: EIA

Texas Leads U.S. Job Growth

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Texas2,180,000

California810,000 North

Carolina340,000

New York550,000

Washington320,000

Job Growth by State: 2004-2014

Source: State Demographer, Texas Demographic Center

Australia

Spain

Italy

Texas

United Kingdom

South Korea

Brazil

France

India

Canada

Germany

Russia

Japan

China

United States

Big State, Big Consumption

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Source: EIA

Chart1

229

243

307

334

349

352

369

451

489

540

545

779

974

2197

3816

Kwh

Sheet1

Kwh

Australia229

Spain243

Italy307

Texas334

United Kingdom349

South Korea352

Brazil369

France451

India489

Canada540

Germany545

Russia779

Japan974

China2,197

United States3,816

To resize chart data range, drag lower right corner of range.

Robust Smart Meter Infrastructure Driving Innovation and Engagement

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Texas is Highly Competitive

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6 Regions

7 Million Meters

60+ Competitors

300+ Plans per region

The Customer-Led Mandate

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Choice Convenience Control

Data highlighting the growth and success of retail shopping in ERCOT

Benefits of the Competitive Electric Market

Customers have many low Offers Available

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Service Area

Average Fixed-Price Offer

(12-month term, no usage fees/credits)

Lowest Fixed-Price Offer

(12-month term, no usage fees/credits)

Lowest Variable Price

Offer Available

Dec. 2001 prices, not adjusted for

inflation

Dec. 2001 prices, adjusted for inflation

AEP Texas Central

9.4/kWh 5.0/kWh 7.9/kWh 9.6/kWh 12.8/kWh

AEP Texas North

9.4/kWh 5.6/kWh 7.9/kWh 10.0/kWh 13.3/kWh

CenterPoint Energy

8.8/kWh 4.8/kWh 7.8/kWh 10.4/kWh 13.8/kWh

Oncor

8.2/kWh 4.4/kWh 7.0/kWh 9.7/kWh 12.9/kWh

TNMP

8.6/kWh 5.0/kWh 7.8/kWh 10.6/kWh 14.1/kWh

Sources: PUC Historical Data, Bureau of Labor Statistics Inflation Calculator (33.0% inflation since December 2001); www.powertochoose.org offers as of January 2, 2017

January 2017 December 2001

Service Area

Average Fixed-Price Offer

(12-month term, no usage fees/credits)

Lowest Fixed-Price Offer

(12-month term, no usage fees/credits)

Lowest Variable Price Offer Available

Dec. 2001 prices, not adjusted for inflation

Dec. 2001 prices, adjusted for inflation

AEP Texas Central

9.4/kWh

5.0/kWh

7.9/kWh

9.6/kWh

12.8/kWh

AEP Texas North

9.4/kWh

5.6/kWh

7.9/kWh

10.0/kWh

13.3/kWh

CenterPoint Energy

8.8/kWh

4.8/kWh

7.8/kWh

10.4/kWh

13.8/kWh

Oncor

8.2/kWh

4.4/kWh

7.0/kWh

9.7/kWh

12.9/kWh

TNMP

8.6/kWh

5.0/kWh

7.8/kWh

10.6/kWh

14.1/kWh

Electric Price Offers Compared With Other Retail Products

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Sources: Dec 2001 electric rates: Public Utility Commission of Texas; October 2016 electric rates: Power to Choose for 1,000 kWh/usage with no usage fees or credits; Average Residential Electricity: EIA (Dec 2001 and October 2016); All other data: U.S. Bureau of Labor Statistics

Ground Beef 115%

Gallon of Gas 98%

Hourly Legal Services 66%

Dozen Eggs 50%

U.S. Average Residential Electricity 49%

Houston-Galveston Rent 49%

Ground Coffee 48%

Loaf of White Bread 34%

Dallas-Fort Worth Rent 28%

Gallon of Milk 14%

ERCOT Average Lowest Variable Offer -27%

ERCOT Average Lowest 1-Year Fixed Price Offer -49%

Price Change: December 2001 to October 2016

The Number of Competitors and Offers Has Increased

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Source: Public Utility Commission of Texas, www.powertochoose.org

2002

20092016

10 REPs11 Offers

11 13 14 1845

90 97136

258 264276

335305

394 378 365

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q12016

Q22016

32 REPs136 Offers

54 REPs365 Offers

# of Offers1 >

10 10 11 11 17 28 26 32 43 43 52 53 49 56 53 54# of REPs >

1. Number of residential offers in Oncor area at year-end

Texans are fully Engaged in the Competitive Market

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Choice is available to 100% of the competitive ERCOT market, and virtually all consumers have exercised their power to choose electric providers. ERCOT has processed ~42 million choice transactions (~6 per meter) since the

market opened.

Millions of transactions1

Move In Switches

Transactions1

0

1

2

3

4

5

2001-2 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1. ERCOT Monthly Retail Reports. 42m choice transactions ~7m competitive ERCOT meters = ~6 choice transactions per customer.

Electric Price Comparison to non-Competitive Areas in ERCOT

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(5) (10)(20) (20) (18)

37

61 62 59 65

125

(50)

(25)

0

25

50

75

100

125

Percent Change In Texas Residential Retail Electric PricesFebruary 2002 Q1 2016 (latest available consistent data)1

REPs in Competitive Areas

Texas Co-ops Texas Munis

Percent (%)

1 For residential customer using 1,000 kWh; depicts latest available consistent data for end points. From left to right: Competitive Areas AEPC, AEPN, TNMP, ONCOR, CNP; Munis Austin, San Marcos, CPS Energy; Co-ops Victoria, Upshur Rural, Magic Valley. Competitive areas show percent change in average 12 month fixed offer.Sources: Public Utility Commission of Texas; www.powertochoose.org

PUC Electricity Complaints are Down 60% from 2008

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0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2008 2009 2010 2011 2012 2013 2014 2015

PUC Electric Complaints

As the competitive market has matured, customer complaints have fallen.

REPs compete on customer service as well as price and other attributes, contributing to lower PUC complaints

Source: Regulatory Compliance Services; includes all electric industry complaints.

How To Reach Us

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For background on electric markets, environmental data and Electricity 101

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Keep up with pictures and links to latest documents released by AECT

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The Retail Electric Market in ERCOTAECT Companies in the Competitive Retail MarketSteps to Electric Competition in TexasERCOT Roles and ResponsibilitiesSB7 Created a Robust and Competitive MarketThe Role of ERCOT in the Retail MarketTexas is Hot!Texas Leads U.S. Job GrowthBig State, Big ConsumptionRobust Smart Meter Infrastructure Driving Innovation and EngagementTexas is Highly CompetitiveThe Customer-Led MandateSlide Number 13Customers have many low Offers AvailableElectric Price Offers Compared With Other Retail ProductsThe Number of Competitors and Offers Has IncreasedTexans are fully Engaged in the Competitive MarketElectric Price Comparison to non-Competitive Areas in ERCOTPUC Electricity Complaints are Down 60% from 2008How To Reach Us