ERCOT System Administration Fee Increase
Rapid Power Management is dedicated to educating our clients to make smarter energy decisions. Therefore, we want to pass along this important update about a possible increase to your electricity bill.
ERCOT System Administration Fee Increase
ERCOT, the electric grid operator for much of Texas, has been allowed to increase a fee to the Retail Electric Providers (REPs) which may affect your electricity bill this year. On October 8, 2015 the Public Utility Commission agreed to raise the “System Administration Fee” by 19.3%. The fee increase went into effect on January 1, 2016 and is expected to generate nearly $34.4 million in additional revenue this year. The per-kWh cost of this fee increase is $0.00009. This fee was last increased in 2014.
How will this affect you?
Rapid Power Management is starting to see some REPs pass along the fee increase to the end user utilizing the “change in law” provision of their retail electricity contracts. Please note that electricity contracts almost always include a “change in law” provision allowing the REPs to pass along any additional costs incurred as a result of a change from a governing authority.
The table below details your annual cost increase based on an estimated annual kWh usage number:
Please feel free to reach out to your Energy Manager at any time with questions or concerns. As always, thank you for the opportunity to serve you and your business.
-Rapid Power ManagementRead More
PJM Capacity Cost Increase
Energy Buzz: PJM Capacity Cost Increase
This is to inform you of regulatory changes taking place in the PJM capacity market, which will affect electricity customers in Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia. It is expected that the capacity performance market reform will increase costs for all electricity suppliers and utilities.
Your electricity contract likely contains a “change of law” provision which allows these costs to be passed through to your electricity bills beginning in June 2016. While the magnitude of increased costs depends on a number of variables, our analysis shows that customers can expect anywhere from a 3.0% – 7.4% increase in electricity costs.
As a result of the 2013 Polar Vortex, in which the region was beset by electricity reliability concerns due to unexpected outages of power plants and shortages of natural gas; the Federal Energy Regulatory Commission (FERC) ordered reforms which will increase capacity and strengthen the reliability of the region’s power supply. These reforms allow for additional payments to electricity generators in return for growing their overall generation capacity. This should strengthen reliability during extreme weather events like the 2013 Polar Vortex, resulting in fewer price spikes.
The costs associated with the capacity market changes were published September 9, 2015 and cover the period of time from June 1, 2016 to May 31, 2019. Please review the chart below to budget for the impact of these additional costs. The chart lists the average per-kWh cost increase for customers across PJM.
Note: That this cost varies depending on load factor for your specific electricity account:
Atmos Transportation Customers Can Expect Invoices to Increase Come June
Any customers transporting with Atmos will see increases on a few line items on their invoices come June 1. Final charges are not known as the rates are still under regulatory review. Atmos has proposed the following increases:
|Monthly Customer Charge per Meter||$665.00||$714.50||7.44%|
|Monthly Regulatory Surcharge||$4.80||$4.80||0%|
|Monthly Comsumption Charge per MMBtu per Meter:|
A decision will be made in late May in time for the increase to be reflected on the June invoices. View the Atmos letter here.
If you have any questions or concerns, please contact your Energy Manager.Read More
Natural Gas Prices are Down – Take Advantage Now!
Energy markets across the board have dipped to multi-year lows over the past weeks. In fact, natural gas rates are at their lowest point since 2012 and prior to that, 2002. The main reasons for the historic levels:
- Low Demand – Winter blasts are hitting the Northeastern US but winter was non-existent in November and December.
- Supply – Natural gas production is strong from shale wells.
- Supply – Natural Gas storage is strong at levels higher than both last year and the 5 year average.
Take advantage of the opportunity to save money by locking in a future contract today! With liquefied natural gas (LNG) exports around the corner and the EPA’s plan to retire coal plants, demand for natural gas is set to increase, so how long will these low rates last?
Since you began working with Rapid Power Management, our strategy has been to let the market dictate action – not an arbitrary date in the future. This strategy has been successful for our clients and we work toward lowering your energy costs with every action we take.
We are passionate about educating our clients to make smarter energy decisions. Contact your energy manager today to discuss recent market developments and to secure updated pricing!Read More
Oncor’s Transmission Cost Recovery Factor Increase
Oncor’s billing rates are made up of several different components. One of them, the Transmission Cost Recovery Factor or TCRF, is a charge passed through to all retail customers connected to Oncor’s transmission or distribution system. The charge is updated across each September and March and most customers will see a line item for this on their bill.
In September 2013, the charge for customers with secondary, greater than 10 kW, IDR meters paid $2.778674 per 4CP kW. In March, the charge increased by 26.56% or nearly 74 cents. The most recent charge of $3.516757 per 4CP kW will likely increase again in September.
For larger customers, this could be a decent price increase on TDSP charges and/or power factor penalties.
See below for an example of how the charges have increased since March 2013:
Please let us know if you have any additional questions around this increasing charge. Visit page 106 of the Oncor tariff to see how the charges have changed over the years.Read More
EPA’s CSAPR Reinstated by Supreme Court Decision
The Supreme Court ruled that the Environmental Protection Agency has the right to reinstate limits on power-plant pollution that blows across state lines. The regulation is known as the Cross-State Air Pollution Rule or CSAPR.
Originally overturned in August 2012, the EPA and federal government won the reversal on Tuesday with a 6-2 vote.
This stands to affect approximately 1,000 power plants in 28 states in the eastern half of the United States – plants will either have to adopt new pollution controls and/or reduce their operations. Coupled with the Mercury Air and Toxics Standards (MATS) rule this could further threaten already vulnerable coal plants.
A Wall Street Journal article noted this ruling may hurt Texas the most. Luminant, owned by Energy Future Holdings, Co. and based in Texas, has previously stated they would have to shut down two coal plants if the pollution rules went into effect, and would be faced with possibly spending $1.5 billion to install pollution control equipment at their other plants (www.wsj.com).
Luminant, who is already reeling from this week’s bankruptcy filing, said they “will assess and determine its ultimate business and operational decisions” as more information on the precise requirements are known (www.wsj.com).
Though Texas power plants may be affected the most, other operating regions are seeing electricity prices increase for 2016 and beyond. MidAmerican Energy noted that prices were up anywhere from $0.0005 to $0.0008/kWh in non-ERCOT regions of the U.S.Read More
Texas Capacity Market Argument Shelved
Your efforts have contributed to Texas staving off another layer of government.
Debate and talks around ERCOT implementing a capacity market have been halted. Commissioners Kenneth Anderson, Donna Nelson and Brandy Marty met Friday, February 21 to discuss resource adequacy and shifted their focus from capacity to alternative ways of crafting appropriate reserve margins.
Rapid Power Management thanks you for any effort put forth in contacting the commissioners either by phone call or email. We truly believe this is the best option for the ERCOT market – we are in the clear for now, but it does not mean the issue won’t be considered again.
Click here for a short article on the matter. We will keep you informed of any new updates as they come.
The Rapid Power Management TeamRead More
Texas Power Consumers – Your Action is Needed!
If you agreed with RPM’s assessment of the current and future market situation in our last Energy Buzz, please take the time to write our commissioners. Below is an letter drafted for you to use. You may either directly mail your letter and/or email the commissioners individually.
Public Utility Commission of Texas
1701 N. Congress Avenue
PO Box 13326
Austin, Texas 78711-3326
Re: Petition Against the Introduction of a Capacity Market in ERCOT
I am writing this letter to you on behalf of my company, (your company name), its employees, and our partners. As a Texas power consumer, it is my belief that the implementation of a capacity market would be a large mistake for the ERCOT grid.
Using other capacity markets like PJM as an example, it is clear that the regulations will raise the price of electricity. Texas leads the nation in economic success and job creation and those high rates will in turn burden the current prosperity of the Texas economy. As John Farris with Nucor Steel stated, “there is no need to abandon the current market structure that has powered our state’s economy during the recent recession.”
Additionally, there is no guarantee that a capacity market will prevent rolling blackouts during extreme weather demands or spur new generation growth in our state. These seem to be the main arguments for a capacity market but ERCOT remains the only grid to never have experienced collapse and PJM has actually seen less new generation built than Texas.
Our current energy-only market has provided sufficient reserves year after year. Capacity markets are not the answer and I urge you to keep my and other citizens’ opinions in mind before making a decision.
Texas Power Consumers – Your Action is Needed!
Dear Texas Client,
Please read this email due to the direct effect it has on your future energy costs in Texas. If a capacity market is implemented, your energy costs will rise.
As the State of Texas considers the most significant change to the deregulated energy market since its start in 2002, your opinion and action is necessary. RPM has devoted significant resources into deciphering the pros and cons of Texas moving to a capacity based market. From what we have gathered, creating an additional layer of government regulation and increasing end-user cost for a false market created by regulators is not in the best interest of our clients.
Electricity generation in Texas has functioned under a non-binding target reserve margin of 13.75% to ensure stable grid operation. A mandatory capacity reserve margin could result in excessive unnecessary, unavoidable costs. A reserve margin refers to the amount of available power capacity above the capacity needed to meet normal peak demand levels. That is, the amount of power available above and beyond the normal usage in Texas. The target reserve margin is set by the Public Utility Commission (PUC) in an effort to avoid rolling blackouts during extreme weather circumstances. The PUC is governed by an appointed board of three members.
Recent hearings at the PUC have indicated that two of the three board members may support the implementation of a mandatory reserve margin – meaning a capacity market would be implemented. In basic terms, a capacity market provides guaranteed payments to electricity generators, outside of free market forces, to encourage additional generation investment.
Currently, generators are paid based on the electricity they produce. A capacity market would pay generators regardless of whether they produce power or not.
Why is RPM against a capacity market and for the current energy-only market?
1) Texas consumers are adverse to additional taxes or fees on their electricity bill.
2) The current energy-only market has provided sufficient reserves even during the period of rapid growth in the population and Texas economy.
3) The free market will encourage additional generation when needed.
4) Encouraging fewer regulations/ barriers-to-entry for electricity generators could spur additional investment without raising costs for consumers.
5) Mandatory reserve margins will not guarantee the prevention of rolling blackouts during extreme weather conditions. Additionally, ERCOT has never experienced a grid collapse, unlike many other parts of the US where capacity markets are used.
6) Energy efficiency programs remain in their infancy and such programs have significant room for growth.
7) Innovative, free market solutions like Demand Response programs are just gaining momentum and a great way to deal with times when demand is high.
8) ERCOT will not dip below its 13.75% target reserve margin until after 2018. Please see page 14 of the presentation given by Commissioner Kenneth W. Anderson here.
9) Renewable energy costs continue to decline and implementation continues to grow.
10) Smart meter technology will allow Retail Electric Providers the ability to provide time-of-use pricing for consumers, providing an additional free market option to reduce peak demand.
In addition to the points listed above, please find two links below which dive deeper into the issue.
If you agree with our assessment and the information found in the linked articles below, please take action immediately by contacting the PUC and your local legislator. If you have additional questions or concerns, please call your RPM Energy Manager for further discussion on this important, albeit complicated, issue.
Who Represents Me in the Texas Legislature?
Supporting articles on the subject:
November 2013 Capacity Report: A Retreat From Electric Competition:
Department of Energy Approves Third LNG Export Facility
On Wednesday, August 7, the Department of Energy approved the United States’ third liquefied natural gas (LNG) terminal. The three now approved projects will have the combined ability to export about 5.6 billion cubic feet of gas a day.
The latest approval, an export terminal in Lake Charles, Louisiana, plans to ship 2 billion cubic feet a day. The approval lasts 20 years and allows sales to all countries. The Federal Energy Regulatory Commission (FERC) still has to grant a construction permit and is contingent upon a review of detailed plans.
The first export project to win approval was Cheniere Energy’s Sabine Pass Liquefaction facility in 2011. The terminal was designed for up to six LNG trains, and is currently entered into four 20-year agreements with various customers. Please see below for detailed contract information:
More than a dozen export proposals are pending before the Department of Energy. While demand for natural gas is strong, analysts are predicting that a limited amount of buyers remain. The facilities also cost multiple billions of dollars to build. Taking all of this into consideration, Moody’s Investor Services predict only four export projects are predicted to be built.
The debate on what effect the export facilities will have on domestic prices still remains. Some believe the benefit for the US economy outweighs the fact prices may rise.Read More