1 / 33

TPPA UPDATE: Year in Review TPPA Annual Meeting August 1, 2006 Mark Zion, Executive Director, TPPA

Today's Year in Review" Presentation. AN ISSUE-BY-ISSUE NEWS DIGEST"Briefly summarizing a dozen key industry developments over the last 12 months.AN ISSUE-BY-ISSUE PREVIEW"Implications for the future, andSpeakers at this conference who will provide more details over the next two days.It's b

parry
Download Presentation

TPPA UPDATE: Year in Review TPPA Annual Meeting August 1, 2006 Mark Zion, Executive Director, TPPA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. TPPA UPDATE: Year in Review TPPA Annual Meeting August 1, 2006 Mark Zion, Executive Director, TPPA

    2. Today’s “Year in Review” Presentation AN ISSUE-BY-ISSUE “NEWS DIGEST” Briefly summarizing a dozen key industry developments over the last 12 months. AN ISSUE-BY-ISSUE “PREVIEW” Implications for the future, and Speakers at this conference who will provide more details over the next two days. It’s been a busy year…

    4. Summer ‘05 Two Special Sessions: Legislation Positive for TPPA SPECIAL SESSIONS: Key bills passed that are acceptable to public power: renewable energy, telecom. Negative bills did NOT pass. A TEAM EFFORT: TPPA Board, Industry Restructuring Task Force, GRL Committee, government relations staff and attorneys from TPPA member systems.

    5. Attachments: "Nodal" Position, Memo on TPPF Study Throughout the Special Sessions of the Legislature: TPPA Legislative Priorities Maintain the basic SB-7 framework that currently governs the electric utility industry. Stability and continuity are priorities as new electric markets continue to mature. Maintain local control for municipal utilities and electric cooperatives. Local authorities should continue to set rates, set utility policies responsive to community priorities, and decide whether and when to opt-in to retail deregulation. -----ACCOMPLISHED

    6. Major Legislation Summer ‘05 Special Sessions RENEWABLE ENERGY: TPPA worked to: ensure that state mandates (now 5,000 MW by 2015) would continue to not apply to non-opt-in public power systems, allowing their continued leadership in deploying renewable energy via local decisions. avoid costly and overly aggressive mandates and support the moderate approach to wind energy transmission. TELECOMMUNICATIONS: TPPA worked to: delete state-mandated reductions in MOU pole attachment rates and enact new laws that will allow higher pole attachment rates to cover MOU costs. preserve the continued ability of MOUs to provide energy services with a telecommunications component, like remote metering and load management.

    7. IMPLICATIONS Special Sessions: Renewables & Telecomm CONTINUED LEADERSHIP ON RENEWABLES: by public power, including major additions announced by Austin Energy, LCRA, and CPS Energy. $1 BILLION IN RENEWABLE TRANSMISSION: Needed statewide, public power will pay its load ratio share. POLE ATTACHMENT REVISIONS: TPPA workshop, local action. MUNI TELECOM? City participation likely to be decided in Congress, where debate is now underway.

    8. August, ‘05 Federal Energy Bill After years of consideration, in August of 2005, Congress approved and President Bush signed the “Energy Policy Act of 2005” (EPAct). Provisions impact all energy sectors: oil and gas, electricity, renewables, transportation, etc. The federal energy bill was positive for the state as a whole and for public power in Texas.

    9. Federal Energy Bill: Positive Treatment for ERCOT and Renewable Energy ERCOT: The EPAct included no added federal regulation of rates or markets within the Electric Reliability Council of Texas. RENEWABLE ENERGY INCENTIVES: Incentives for renewable energy resources like wind power were provided in the EPAct with the continuance of the federal production tax credit (PTC) and with the creation of the Clean Renewable Energy Bond (CREB) program that helps municipals finance renewable generation.

    10. Federal Energy Bill: Grid Reliability In response to the 2003 blackout, mandatory reliability standards in the 05EPAct will help to ensure dependable operation of the nation’s power grid. Texas already has similar standards and highly reliable electric service.

    11. IMPLICATIONS Federal Energy Bill ERCOT creeps closer toward future federal regulation: maybe next time? Today, ERCOT must determine how to become a regional “reliability entity” per federal rules, with some uncertainty regarding grid practices, utility reporting, and the role of state and federal regulators. Other provisions, like incentives for nuclear, are already having an effect: NRG’s recent announcement of its intent to build additional units at STP.

    12. September, ‘05 Hurricane Rita GENERAL DEVASTATION ELECTRIC UTILITY SYSTEMS IN EAST TEXAS. Entergy Transmission Outages – 82% of system, including nearly 300 transmission lines and 293 substations in the region. Several hundred thousand customers initially without power. DAMAGE TO MUNICIPAL ELECTRIC UTILITIES (MOUS) IN EAST TEXAS. MOUs dependent on bulk power from the heavily damaged Entergy transmission system. Heavy damage to their own local MOU distribution systems.

    13. Seven MOUs in the Path of Rita: Hemphill Jasper Kirbyville Liberty Livingston Newton San Augustine

    14. Public Power Systems Come to the Aid of East Texas RESTORATION ASSISTANCE: Crews, Equipment, Material. Austin Energy Brownsville PUB Bryan Texas Utilities (BTU) College Station CPS Energy Denton Municipal Electric (DME) Floresville Electric Light & Power System (FELPS) Garland Power & Light (GP&L) Georgetown Utility System (GUS) Greenville Electric Utility System (GEUS) Kerrville Public Utility Board (KPUB) Lampasas LCRA Lubbock Power & Light (LP&L) New Braunfels Utilities (NBU) San Marcos

    15. IMPLICATIONS Hurricane Rita Restoration Public power personnel are dedicated, skilled, and willing to assist those in need, even under difficult circumstances. “It could be us next time…” Those who helped in ’05 might need help in the future: 11 MOUs within 100 miles of the coast, another 20 MOUs within 150 miles. TPPA plays a new role and makes a contribution by: Matching MOUs needing / able to provide help. Facilitating coordination: contact lists, email and phone updates to the systems helping with restoration about deployments, restoration needs, conditions. “Running interference” with well-meaning government emergency agencies in Washington, DC and in Austin.

    16. FALL, WINTER ‘06 NATURAL GAS PRICES Post Hurricane Run-Up in Natural Gas Prices Hurricane’s Katrina and Rita, September. Significant damage to Gulf of Mexico natural gas infrastructure (platforms, pipelines, refineries). Gas prices almost doubled between late summer and early winter, and spot prices hit all time record highs in December. Wholesale electric prices increased as well. Corresponding to the rise in natural gas prices. Natural gas is the predominant fuel in Texas for generating electricity: about 70% of ERCOT capacity and nearly 50% of kWh.

    17. Gas Prices Up then Down, and now? --Impact on Consumers With prices on the rise through last winter, public power worked hard to mitigate costs and consumer impacts. Fuel diversity – many have coal, nuclear, wind. Some deferred or delayed fuel factor increases. Many provided energy conservation options, bill payment options, help for special needs customers, etc. Over the last few months, gas prices have fallen to nearly pre-hurricane levels.

    18. Low gas prices now, with futures prices starting to rise in autumn reflecting the forward risk of hurricanes and high winter demand.

    19. IMPLICATIONS Natural Gas Prices Factors that might moderate gas prices: Record amounts of gas now being injected into storage. IF there are no large hurricanes in the Gulf this year? Factors that increase price and volatility: Increasing seasonality of demand. Weather risk. Link between gas prices and oil prices and international events. Elevated and volatile gas prices make other fuels look cheaper and more stable by comparison: renewables, coal, nuclear.

    20. January, ‘06 Permit Issued for New CPS Energy Coal Plant

    22. IMPLICATIONS: CPS Coal Fuel diversity is the best hedge against rising natural gas prices. Environmental issues regarding coal are being resolved: cleaner existing technologies, gasification not yet commercially proven, Texas seeks $1 billion grant for super-clean “FutureGen” plant. Clean, affordable power for San Antonio. CPS was the first TCEQ coal permit issued this century, now seventeen other proposed coal plants are in line. Environmental politics are heating up. TPPA: it would not be advisable for MOUs to join the multi-city intervention proposed in July by the City of Dallas.

    23. Continuing… growing federal attention in Spring ‘06 Rail Transportation - Coal Railroad prices to deliver coal from western mines are up & service is down. A primary federal issue for both TPPA and APPA. Bills regarding national rail policy and railroads’ anti-trust exemption are being discussed by Congress but may not see action in 2006. IMPLICATIONS: Need to improve rail facilities and delivery, to lower prices, to address “captive shippers” problems. Viability of coal imported by boat from South America? Panel discussion Wednesday, 10:30 AM.

    24. Spring, ‘06 SPECIAL SESSION SCHOOL FUNDING … so what has that got to do with electricity? NEGATIVE LEGISLATION was introduced, was opposed by TPPA, and did not pass. Bill to place a tax on coal used in this state. Bill mandating electric bill reductions for public schools. SCHOOL FINANCE: TPPA worked to: emphasize the existing partnership between schools and public power. protect the financial integrity of public power on taxes, fees, mandatory electric rate discounts for schools. INTERIM HEARINGS: While in town for the special session, legislative committees studied electricity prices, deregulation, reliability, and fuel diversity. TPPA participated, telling public power’s “good story” and protecting its interests.

    25. IMPLICATIONS Public Power Continues to be a Partner to Public Schools Whether public schools face a funding crisis or not, public power continues to be very supportive. BUSINESS RELATIONSHIP: Municipally owned electric utilities (MOUs) and other public power systems generally have an excellent business relationship with their local public schools, providing affordable electricity, exceptional customer service, and valuable energy efficiency programs. COMMUNITY RELATIONSHIP: MOUs and public schools are partners on community and educational programs, with MOUs providing extensive support for school and student activities.

    26. April ’06 Rolling Blackouts Unprecedented 100 degree day on April 17th (25 degrees above that day’s normal temperatures in parts of the state). Over 14,000 MW of power plants out of service for normal planned maintenance during the spring months. Heavy demand eventually exhausted the output of the power plants available that afternoon 53,000 MW. ERCOT implemented its emergency electric curtailment plan (EECP) and shed load statewide. Public Power: full cooperation with ERCOT, rolling blackouts initiated, coordination with local officials and local public safety – but, VERY short notice.

    27. IMPLICATIONS April 17th Rolling Blackouts A few of the many “lessons learned”… Operations lessons learned: forecasting, planning for extreme weather during shoulder month maintenance. Communications lessons learned: high level of PUC & legislative concern with ERCOT’s communications before and during the EECP. Public power lessons learned: MOUs coordinated well with local law enforcement given how quickly events occurred. Organizational affinity between MOUs / police departments. Examples: Garland Power & Light has a standing curtailment plan with Garland PD. College Station Utilities communicated in advance with CSPD as curtailments rolled to different feeders. Highlights the need for up-to-date curtailment plans that allow coordination between the electric utility and local law enforcement.

    28. May, ‘06 NODAL PUC finalizes its approval for a new “nodal” wholesale electric market to be implemented by ERCOT in 2009. The two-year stakeholder process to design the nodal market now continues at ERCOT with a transition plan task force. Public Power systems have different views on nodal. Some support nodal. Others oppose nodal. Lawsuit filed in June to challenge nodal: Garland, Brownsville, TMPA. TPPA has long been neutral on nodal. IMPLICATIONS: FUNDING: To fund nodal, ERCOT has requested a surcharge of 6.6 cents per MWh over the next seven years. BUILDING TRANSMISSION: Construction of new transmission will dampen regional price differences after nodal. Example: LCRA building north/south “Clear Springs to Hutto” line. TPPA has long favored additional transmission infrastructure. TIMELINE: The current aggressive timeline for nodal implementation by ERCOT by January, 2009 will continue to be discussed.

    29. Summer, ‘06 ELECTRIC RATES There’s controversy in Houston and Dallas… No, its not about whether the Cowboys should have taken T.O. and is he worth the money? No, its not about why the Texans didn’t draft Vince Young, he certainly would have been worth the money! It’s about the “price to beat” (PTB) charged to 2/3rds of the residential electric customers by the now-deregulated incumbent IOUs.

    30. IMPLICATIONS PTB Controversy & TPPA’s Approach PTB critics are becoming more vocal and more partisan. TPPA and the Price to Beat: The PTB doesn’t even apply to MOUs. TPPA does not condone critics of PTB who cite low MOU rates to bolster their own case. TPPA remains non-partisan on electricity issues. TPPA is confident and proud of the performance of MOUs: Low rates due to local cost scrutiny and consumer orientation. Quality service, support for their communities. Still taking a “wait and see” approach to “opting-in”. New markets are still maturing (the PTB transition doesn’t end until 2007, and nodal is not even in place until at least 2009). TPPA will counter any criticism of public power and will defend MOU’s local control their successful record.

    31. Summer ‘06 RELIABILITY GENERATION ADEQUACY Grid: state is very watchful in the aftermath of the April EECP, for example, new PUC website “conservation alerts”. PUC rulemaking underway on generation adequacy. Adequate electricity reserves for summer of 2006: ERCOT per June forecast: 16.9% SPP (west and east Texas): 16%. Meeting future needs for electricity: By 2010, ERCOT reserve margins are projected to fall well below the 12.5% level needed to maintain electric reliability. The industry is responding with recently announced plans to build new generation: Over 11,000 MW coal; 3,200 MW wind; 2,700 MW nuclear; and 2,300 MW gas. Load growth and the need for more electricity has already been clearly demonstrated this summer, with record usage of electricity across the country…

    32. 7 Grids Set New All-Time Peaks on July 17th

    33. CONCLUSION Just a few of the many issues facing the industry and public power. Continued (and accelerating) change in the electric utility industry. Increased volatility and business risk. Public Power has an great record and will continue to be well served by its: Consumer orientation. Sound business practices. Locally-controlled rates and policies that are responsive to community priorities. United action on statewide issues via the Texas Public Power Association.

    34. Additional Information Check the TPPA website at www.tppa.com for this and other conference presentations. Any questions?

More Related