TexasIsHot – Energy Efficiency

Energy Savings

Jan 25 2012

Ten Years of Texas Electric Utility Deregulation

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.

“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.

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.

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.”

Read More From Herman K. Trabish at GreenTech Media

Tagged , , , , , , ,

Related Posts

Leave a reply

Your email address will not be published. Required fields are marked *


  • "“As the Texas population continues to grow, so will our energy consumption needs. We must have tools that empower the consumer to choose their products and monitor their usage wisely. TexasIsHot.org is a great resource, which is exactly what Texans need in today’s deregulated market.”" - State Rep. Burt Solomons (R-Carrollton), Chairman of House State Affairs Committee
  • "In order to meet our goals, we need programs like the TexasIsHot campaign to help change the way people think about energy." - State Sen. Troy Fraser (R-Horseshoe Bay), Chairman of Senate Natural Resources Committee
  • "Texas leads the nation in wind power because it makes money, not because it makes us feel better. Texans are a practical, penny-wise people who I think will be happy to learn how to save a few bucks on their power bills with the common-sense advice at TexasIsHot.org."-Jerry Patterson, Commissioner of the Texas General Land Office
  • "If every Texas household adopted just a few of the dozens of energy efficiency strategies referenced on TexasIsHot.org, our air would be cleaner, our limited supply of natural resources would be better protected, and our wallets would be heavier..." Kip Averitt (R-Waco), Former State Senator and Chairman of Senate Committee on Natural Resources
  • ”The TexasIsHot campaign targets an important piece of the clean energy effort -- educating Texans on the way we use electricity and quantifying the financial and environmental costs associated with our use. By just reducing the amount of electricity we use and waste, TexasIsHot.org can show people how to save money..." State Sen. Kirk Watson (D-Austin)
  • "Fluctuating energy costs are really hurting Texas families and businesses, but by just making a few easy changes, Texans can cut down on energy waste. TexasIsHot.org is a tremendous resource which arms consumers with the information they need to save themselves money by becoming more energy efficient, and help our environment." State Sen. Rodney Ellis (D-Houston)
  • "Texas is the third fastest growing state in the nation with a net growth of 1,000 people each and every day. This brings many challenges including providing clean and affordable electricity. That is why I'm excited about TexasIsHot.org. This website is an instructional resource that will help Texans save on their energy bills at home and in the workplace..." State Rep. Phil King (R-Weatherford)
  • "Now, more than ever, Texans need to work together to conserve energy and to make more efficient use of the energy we consume. The TexasIsHot.org website is an extraordinary resource for people who want to save money and help conserve our precious natural resources..." State Rep. Rafael Anchía (D-Dallas)
  • "By partnering with the TexasIsHot Coalition we can extend our effort’s reach, leverage our resources, and ensure that Austin’s energy grid continues to be a test-bed for technologies, products, and services that will transform our state’s energy system." Brewster McCracken, Executive Director, Pecan Street Project
  • "The City of Houston is working harder than ever to make Houston green and energy efficient, but we need the help of every citizen. I would encourage everyone to take a moment to explore the TexasIsHot website to learn what we can all do to make Houston, and the rest of Texas, the green and energy efficient example for the rest of the nation." Mayor Annise Parker, Houston
  • "Energy efficiency is one of our top priorities. Partnering with the TexasIsHot Coalition will help us educate citizens and local businesses about energy-efficient practices in order to meet our goal of reducing residential and commercial electric use." Gavin Dillingham, Chief of Sustainable Growth – General Services Department, for the City of Houston
  • "We are excited about the new partnership that the City of Corpus Christi has entered into with the TexasIsHot Coalition. TexasIsHot.org provides a platform to educate policy makers, city employees and citizens on how to save money and help the environment by conserving energy..." Mayor Joe Adame, Corpus Christi
  • "I am excited that the City of Corpus Christi has joined the TexasIsHot Coalition and look forward to working with them to help Texans become smarter energy users. Energy efficiency is by far the best way for people to reduce their bills and help the environment, but we need education and outreach to make this happen." State Rep. Solomon Ortiz, Jr (D-Corpus Christi)
  • "Because of its fast growth and hot summers, Texas has to get smarter about energy conservation. I applaud the efforts of Corpus Christi and TexasIsHot to help businesses and residents reap the benefits of increased efficiency." Senator Juan “Chuy” Hinojosa (D-McAllen)
  • "Energy efficiency is the cleanest, quickest and cheapest way to get smart about energy use, saving both money and the environment. I applaud the TexasIsHot Coalition in their effort to educate Texans about the benefits of energy efficiency..." Luke Metzger, Director, Environment Texas
Get Connected

Enter your email address and receive tips and helpful info from Texasishot.org