Overview of TXU Energy and the Competitive Retail Electric Market

Transcription

1 February 2014 Overview of TXU Energy and the Competitive Retail Electric Market Legislative Ad by Sano Blocker, 1601 Bryan Street, Dallas, Texas 75201

2 2 Overview of TXU Energy

3 TXU Energy Company At A Glance TXU Energy is active in all major areas of Texas open to competition. TXU Energy is the #1 choice in Texas: Market-leading competitive retail electricity provider, powering the lives of more Texans than any other retailer. Delivering superior value through exceptional customer service, competitive prices, and a variety of innovative products and solutions to meet individual needs. Building on a long history of commitment to our customers and communities. 3

4 TXU Energy Providing Competitive Offers TXU Energy leads the market by offering a broad range of plans which include an unprecedented level of support and competitive pricing TXU Energy Offers on Power to Choose (Oncor Area) July 2008 January 2014; /kwh (1,000 kwh level) /kwh Down 35% Average Offer July '08 Jan '14 Down 40% Lowest Offer TXU Energy Customer Benefits Eligible customers are receiving over $37 million in cash back loyalty rewards in Offering monthly saver plans where eligible customers can receive up to $50 back on their monthly electric charges. Continue to provide innovative and market leading tools to help customers manage their usage, including: TXU Energy My Energy Dashboard SM ; TXU Energy Brighten ithermostat; TXU Energy mobile applications. Market leading customer service and satisfaction. TXU Energy delivers the benefits of lower wholesale electricity prices to customers through competitive retail prices and allows customers to manage their electricity on their terms through innovative tools and products.

5 TXU Energy Competitive Offers In The Texas Marketplace To compete effectively, TXU Energy offers a portfolio of plans, products and services designed to fit individual customer needs Competitive Electricity Service Plans Monthly Saver and e-saver plans TXU Energy FlexPower SM prepaid plan Renewable energy plans TXU Energy MarketEdge SM Behind The Meter Services / Innovative Tools TXU Energy MyEnergy Dashboard SM Brighten Personal Energy Advisor Brighten ithermostat Mobile website for txu.com Smartphone apps Other TXU Energy Saving Solutions, Renewables, etc. 5 Brighten Online Energy Store Brighten GreenBack (energy efficiency rebates for business) Distributed Renewable Generation (DRG) surplus purchase program TXU Energy Solar Academy for school districts (business) Solar lease program with Solar City (residential) Electric vehicle support

6 TXU Energy Leading The Way To Help Customers In Need Largest bill-payment assistance program among electricity companies in the nation Helping Texas families in need for over 30 years, providing more than $84 million in bill-payment assistance to assist 455,000 Texans Continuing our dedication with a $5 million commitment in 2014 TXU Energy has the most comprehensive program to assist low-income families and older adults - Jane Bavineau, Vice President, Sheltering Arms Senior Services (Houston) 6

7 7 Overview of the Texas Competitive Electric Market

8 Texas Competitive Market Overview AEP North Area 46 Retailers / 293 Products Oncor Area 53 Retailers / 329 Products Texas retail electric providers (REPs) offer customers many choices to help them manage their electricity usage and bills TNMP Area 48 Retailers / 286 Products ERCOT Boundary (Electric Reliability Council Of Texas) CenterPoint Area 55 Retailers / 330 Products AEP Central Area 51 Retailers / 310 Products 8 Source: Residential REPs/products per website as of 1/30/14

9 Texas Competitive Market The Number Of Competitors And Offers Has Increased Significantly Since Market Open Residential offers in Oncor area (year-end count) # of Residential REPs: ERCOT retail competition has been fierce and increasing 9 Source: Public Utility Commission of Texas,

10 Texas Competitive Market Texans Have An Array Of Offers To Choose Among To Meet Their Needs The Public Utility Commission of Texas requires retail electric providers to classify their electricity plans as one of the following: Rate Type Fixed Indexed Description A product with at least a three-month term and a price that cannot change during the term except for changes in regulation or law. A term or month-to-month product with a price that can change monthly according to a specific formula given by the electric provider. These plans typically use publicly available indices or information in their formulas, such as the New York Mercantile Exchange (NYMEX) natural gas futures contract price or calendars/time-of-day. Example 12-month contract that charges 10 /kwh each month. Some TXU Energy fixed price offers include TXU Energy Smart Deal 12 SM and TXU Energy Green Smart 6 SM The monthly electric price varies with the wholesale price of natural gas (e.g., TXU Energy MarketEdge SM ). % Offers on PTC* ~82% ~3% Variable A month-to-month product with a price that can change monthly at the discretion of the retail electric provider and without prior notification required to the customer. Introductory price of 6.5 /kwh first month that can then increase/ decrease the following month ~15% 10 *Source: Residential plan types offered by REPs to new customers across the 5 major TDU competitive areas per (1/30/14)

11 Texas Competitive Market Texans Choose Among A Wide Array Of Offers To Meet Their Needs Oncor area residential electric offers by term length January 27, 2014 ($/kwh) $0.16 $0.14 $0.12 Price 1,000kWh) $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 Term Length: MTM 3 6 Other Texas average residential price rank has improved by 9 spots vs. other states after retail competition Texans in competitive areas can choose some of the lowest prices available in the U.S. 11 Note: Pricing for Oncor from Power to Choose at 1,000kWh average as of 1/27/2014

12 Texas Competitive Market Texans Are Very Engaged In The Market ERCOT choice transactions processed (millions of transactions) Switch transactions Move-in transactions ERCOT has processed over 35 million choice transactions to date, an average of approximately 5 transactions per customer (i.e., meter). Nearly all Texans have made a choice in the market. 12 Source: ERCOT

13 Texas Competitive Market Texas Generation Is Much More Dependent Upon Natural Gas Than The Rest Of The Nation 2013 Rest of US Generation % of MWh Natural Gas 26% Other 74% 2013 ERCOT Generation % of MWh ERCOT has the highest dependency on natural gas of any other region Natural Gas 41% Other 59% - ERCOT 13 Note: Rest of US Generation reflects US total generation less ERCOT (Texas Regional Entity) generation Sources: EIA, ERCOT

14 Texas Competitive Market Competition Has Helped Drive Lower Retail Electricity Offer Prices NYMEX natural gas and residential electricity prices ; mixed measures NYMEX natural gas ($/MMBtu) $14 $12 $10 NYMEX Average 12-Month Strip Average Competitive Offer Average Lowest 12 Month Fixed Offer 32 Average Lowest Offer 28 Residential electricity ( /kwh) 24 $8 20 $6 16 $4 12 $2 8 $0 1/1 3/30 6/15 9/4 11/19 2/4 4/21 7/7 9/23 12/8 2/23 5/11 7/27 10/12 12/28 3/15 6/1 8/16 11/1 1/17 3/21 6/6 8/22 11/7 1/23 4/9 6/25 9/10 11/26 2/11 4/29 7/15 9/ /16 4 Retail electricity offer prices adjusted quickly in response to declining natural gas/wholesale power costs and other market signals Average electric offers across the 5 TDSP s for residential customers using an average of 1,000 kwh per month. Excludes any 0.0 /kwh introductory offers. Sources: NYMEX;

15 Texas Competitive Market Electric Prices Have Fallen With Competition Even As Other Retail Commodities Rose Price Change: December 2001 to January % 187% 150% 108% 100% 73% 67% 50% 0% -50% Gasoline (gallon) Dozen Eggs Ground Coffee Ground Beef 52% 48% Hourly Legal Services U.S. Avg. Res. Elec. Rate 38% Bread (Loaf) 22% 21% Austin Energy Avg. Res. Rate Milk (gallon) 15% Austin Rent ERCOT Avg. Lowest Offer (Fixed) -17% ERCOT Avg. Lowest Offer (Avail.) - 46% 15 Sources: Public Utility Commission of Texas, U.S. Energy Information Administration, Bureau of Labor Statistics, Zillow

16 Texas Competitive Market Customers Have Very Low Offers Available To Choose January 2014 December 2001 Service Area Average Fixed- Price Offer (12-month term) Lowest Fixed-Price Offer (12-month term) Lowest Price Offer Available Dec prices, not adjusted for inflation Dec prices, adjusted for inflation AEP Texas Central 10.8 /kwh 8.6 /kwh 5.8 /kwh 9.6 /kwh 12.5 /kwh AEP Texas North 10.5 /kwh 8.5 /kwh 5.7 /kwh 10.0 /kwh 13.1 /kwh CenterPoint Energy 10.4 /kwh 8.2 /kwh 5.0 /kwh 10.4 /kwh 13.6 /kwh Oncor 9.8 /kwh 8.1 /kwh 4.9 /kwh 9.7 /kwh 12.7 /kwh TNMP 10.5 /kwh 8.7 /kwh 5.6 /kwh 10.6 /kwh 13.9 /kwh While ERCOT competitive offers have dropped significantly, the latest average U.S. residential electricity prices are up 48% since Sources: PUC Historical Data, Bureau of Labor Statistics - Consumer Price Index (32% inflation since December 2001), offers as of January 2, 2014

17 Texas Competitive Market Competition Has Helped Improve Texas Retail Electric Price Rank...And Enabled Choice State Ranking (Pre-Competition) /kwh KY WA ID WV OR TN ND NE UT WY MT IN MO AL OK MS SD CO MN KS MD SC AR GA DC VA WI LA NC MI AZ OH IA FL DE IL NM TX NV PA NJ CT CA AK RI MA NH VT ME NY HI 40 December 2013 (Latest Available) /kwh ERCOT avg. lowest 12-mo fixed offer December /kwh ERCOT avg. lowest offer December /kwh State price rank improved by 9 spots after competition OK ND WA LA AR WV MO NE ID IL KY SD TN OR MT UT WY GA IN VA IA NC AL MS KS NM AZ OH TX MN FL CO SC NV DC DE PA WI MD MI ME NJ NH CA VT CT AK NY MA RI HI 17 Sources: Energy Information Administration avg. annual residential rates for 2001 & December 2013 monthly data. Average of lowest available absolute prices and 12-month fixed prices in the 5 competitive TDU areas from (12/1/13) for residential customers using an average of 1,000 kwh per month. 17

18 Texas Competitive Market Competitive Electricity Prices In Texas Compare Very Well To Neighboring States Although neighboring states started with a significant price advantage, Texas competition helped close the gap Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org Residential Electricity Prices ( /kwh) Then: December 2001 Now: December 2013 (latest available consistent data) Texas OK LA NM AR Texas OK LA NM AR Competitive Competitive 18 Sources: EIA; PUCT;

19 Texas Competitive Market Competitive Electricity Prices in Texas Compare Very Well To Other Large States Residential electricity prices in the five largest US states December 2013 (latest available consistent data); /kwh Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org New York California Florida Illinois Texas Competitive 19 Sources: EIA;

20 Texas Competitive Market Competitive Electricity Prices in Texas Compare Very Well To Other Natural Gas States Residential electricity prices in natural gas intensive states December 2013 (latest available consistent data); /kwh Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org RI MA NY CA NV FL MS LA TX Competitive 20 Sources: EIA;

21 Texas Competitive Market Competitive Electricity Prices in Texas Compare Very Well With To Other Restructured States Residential electricity prices in restructured states December 2013 (latest available consistent data); /kwh Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org RI MA NY CT CA NH NJ ME MI MD PA DE DC OH IL TX Competitive 21 Note: Excludes 3 restructured states which have not implemented residential choice (Nevada, Arizona, Oregon) Sources: EIA;

22 22 Appendix

23 TXU Energy Commitments Report Card Report Card Commitment Reorganize TXU Energy into a separate and distinct business unit with separate board, management team, and headquarters Maintain headquarters for TXU Energy in the DFW area Deliver 15% residential price cut to legacy PTB customers Guarantee price protection against rising power generation costs through December 2008 for legacy PTB customers Provide $150 million in low-income customer assistance over five years, through 2012 ($125 million, ~10% discount for qualifying customers and $25 million in bill payment assistance) Waive deposits for certain residential customers Form a new Low Income Advisory Committee (LIAC) comprised of leaders in the social service delivery sector Five year commitment, through 2012, to invest $100 million in new tools for customers to manage their own electricity usage through innovative energy efficiency and conservation approaches Status Done Done Done Done Done Done Done Done 23

24 TXU Energy Collaborating With The Texas Social Service Community Through Our Low-Income Advisory Committee (LIAC) The LIAC includes leading members of the social services community from across the state North Texas Representation Zachary S. Thompson M.A., Director Dallas County Health and Human Services Ronnie Lowe, Executive Director Lancaster Outreach Center Mary Lou Almendarez, Director Tarrant County Department of Human Services West Texas Representation Morris Baker, Ph.D., Former Executive Director, Community Action Program, Inc. Of Taylor County East Texas Representation Karen Swenson, Executive Director, Greater East TX Community Action Program (GETCAP) South Texas Representation Jane Bavineau, Vice President, Sheltering Arms Senior Services a division of Neighborhood Centers, Inc. Carol Biedrzycki, Executive Director Texas ROSE Consumer Advocacy Representation Randy Chapman, Executive Director Texas Legal Services Center Community Action Agencies Representation Stella Rodriguez, Executive Director Texas Association of Community Action Agencies Texas Representation Vicki Mize, Manager Texas United Way Tarrant County 24

25 TXU Energy Valuing Supplier Diversity TXU Energy has been recognized for our support of diversity initiatives in the community TXU Energy spent $26 million in 2013, or 19% of total spending for goods and services, with certified minority and women-owned businesses From , TXU Energy spent approximately $148 million with certified minority and women-owned businesses, including about 60% of 2007 spending used to prepare our Irving headquarters for move-in Having diversity in our supplier base can really help us win. Our supplier diversity efforts can help us find leading firms that are hungry to compete for our business, and we and our customers benefit - Jim Burke, CEO, TXU Energy 25

26 Texas Competitive Market Overview Of National And Texas Grids ERCOT Areas With Customer Choice Oncor Area ERCOT AEP North Area CenterPoint Area TNMP Area AEP Central Area 26 Sources: ERCOT, NERC

27 TXU Energy Competing In Texas Competitive Electric Market, The #1 Market In North America For Customer Choice TXU Energy is one of many competitive Retail Electric Providers (REPs) in the ERCOT region of Texas Functions of Retail Electric Providers: Provide primary customer interface, including customer service & billing Provide electricity service plans and value-added services to meet customer needs Help educate customers through marketing, sales, and other activities Functions of Retail Electric Providers: Procure electricity supply and help manage supply risk for customers 27

28 Texas Competitive Market Texas Competitive Electricity Prices Still Track Natural Gas, But Competition Offers Lower Price Options Natural Gas vs. Texas Residential Retail Electricity Prices In Areas Now Open to Competition ; $/MMBtu and /kwh NYMEX Average 12-Month Strip Average Lowest Offer Average Competitive Offer NYMEX Natural Gas, 12-month Strip Annual Average ($/MMBtu) $10 Before Electric Competition With Electric Competition Natural Gas Avg: $5.97/MMBtu (+183%) Residential Electricity Price Annual Average ( /kwh) 1 20 $8 16 $6 $ Natural Gas Avg: $2.11/MMBtu 12 8 $2 4 $0 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 ' Average annual residential electric prices at 1000 kwh/month in the 5 TDU areas opened to competition in 2002; pre-competition prices based on filed tariffs; post-competition prices based on Power to Choose offerings and PUC data Sources: NYMEX, PUC, Power to Choose website

29 Texas Competitive Market Electric Price Change Comparison To Non- Competitive Areas Percent Change In Texas Residential Retail Electric Prices December 2001 December 2013 (latest available consistent data) 1 Percent REPs in Competitive Areas Texas Munis Texas Co-ops Texas IOUs Range: -11 to -51 percent +22 to +55 percent +50 to 100+ percent +2 to +44 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; IOUs El Paso, Entergy, SPS, SWEPCO. Competitive areas show percent change in average lowest offer and average lowest 12 month fixed offer. Sources: Public Utility Commission of Texas; (12/1/13)

30 Texas Competitive Market Positioned Well For The Future Texas competitive market adapts well to changing conditions, under strong PUC oversight PUC Provides Strong Oversight And Market Guidance Provides strong customer protections strengthened critical/chronic care protections, Provider of Last Resort, and REP Disclosures rules Monitors and enforces rules through a dedicated Oversight & Enforcement Division auditing REPs and assessing fines, penalties and other corrective actions as warranted; OPUC serves as consumer advocate Helps educate customers about their electric service choices & options Enhances transparency and stakeholder engagement through open rulemaking process Competitive Market Effectively Adapts To Issues Competitive retail prices down significantly with lower input fuel prices PUC rules expanded in 2010 to provide even stronger customer protections during hot Texas summers & extreme weather events; some REPs offer additional voluntary protections POLR system provides continuity of service if REPs exit the business Competitive Market Drives Continuous Improvement Texas continues attracting new retail innovation and investment Backbone infrastructure upgrades underway that will help keep Texas a national energy leader (advanced meters & CREZ transmission lines) Nodal market design has driven additional wholesale efficiencies 30

31 TXU Energy Educating Texans About Their Choices Television Spots Billboard Online Ads TXU.com Interactive Online Tools 31

32 Additional Resources TXU Energy Energy Future Holdings (EFH) Association of Electric Companies of Texas (AECT) Public Utility Commission of Texas (PUCT) Power to Choose Electric Reliability Council of Texas (ERCOT) Office of Public Utility Counsel (OPUC) 32 Energy Information Administration (EIA)