Overview of TXU Energy and the Retail Electric Market March 2012

Transcription

1 Overview of TXU Energy and the Retail Electric Market March 2012 Legislative Ad by Sano Blocker, 1601 Bryan Street, Dallas, TX 75201

2 TXU Energy Part Of Energy Future Holdings Corp. (EFH) TXU Energy is one of the three separate and distinct businesses organized under EFH, a holding company Today s focus (Ring-fenced) Company name Former company TXU Corp. TXU Energy TXU Power TXU Wholesale TXU Construction TXU Mining TXU Electric Delivery CEO John Young Jim Burke David Campbell Bob Shapard More info holdings.com

3 TXU Energy Competing In Texas Retail 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 2

4 TXU Energy Company At A Glance The TXU Energy brand reflects TXU Energy s business strengths and market-leading position TXU Energy is Active in All Major Areas of Texas Open to Competition TXU Energy is the #1 Choice in Texas TXU Energy is a market-leading competitive retail electricity provider, powering the lives of more Texans than any other retailer. Delivers superior value through competitive prices, innovative products and tools to meet individual needs, and responsive, knowledgeable service Building on a long history of commitment to our customers and communities 3

5 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 Description Example % Offers on PTC* Fixed 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. 12-month contract that charges 9.6 /kwh each month. Some TXU Energy fixed price offers include TXU Energy Texas Choice 24 SM and TXU Energy e- Saver 12 SM ~82% Indexed 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. The monthly electric price varies with the wholesale price of natural gas (e.g., TXU Energy MarketEdge SM ). Or a plan where the monthly electric price varies based on month and/or time-ofday (e.g., TXU Energy PowerSmart 24 SM plan). ~2% 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 ~16% *Source: Residential plan types offered by REPs to new customers across Texas competitive areas per (3/5/12) 4

6 Overview of TXU Energy 5

7 TXU Energy Providing Superior Value To Customers Competitive Offers Offering Texans a broad range of customer-centric plans to choose Energy Efficiency and Conservation Solutions Providing customers innovative energy efficiency solutions and renewable options Customer Care and Assistance Nationally-recognized market leader in providing collaborative, low-income assistance 6

8 /kwh TXU Energy Providing Competitive Offers TXU Energy leads the market 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 March 2011; /kwh (1,000 kwh level) Average Offer July '08 March '12 Down 35% Down 40% Lowest Offer Recent TXU Energy Customer Benefits Lowered new offer prices as much as 8% in October 2008 Cut prices as much as 10% for 300,000+ existing month-to-month customers in November 2008 Reduced offer prices as much as 15% in February 2009 Cut prices by as much as 15% for 250,000+ existing customers on month-to-month plans in August 2009 Lowered offer prices again in August 2009, June 2010 and October Current offers average 35% below summer 2008 offers Eligible customers are receiving over $36 million in cash back loyalty rewards in 2012 TXU Energy is delivering the benefits of lower wholesale electricity prices to customers through competitive retail prices and incentives 7

9 TXU Energy Providing Superior Value To Customers Competitive Offers Offering Texans a broad range of customer-centric plans to choose Energy Efficiency and Conservation Solutions Providing customers innovative energy efficiency solutions and renewable options Customer Care and Assistance Nationally-recognized market leader in providing collaborative, low-income assistance 8

10 TXU Energy Helping Customers Use Less Energy With Innovative Energy Savings Solutions Delivering on a commitment to invest $100 million over five years to help customers manage and reduce electricity usage Brighten SM ithermostat Web-enabled programmable thermostat Helps customers track and monitor heating and cooling costs to stay cool, reduce energy costs, conserve resources Behind The Meter Services / Innovative Tools TXU Energy MyEnergy Dashboard SM Brighten SM Personal Energy Advisor Mobile website for txu.com Smartphone apps Other TXU Energy Saving Solutions, Renewables, etc. Brighten SM Online Energy Store Brighten SM GreenBack (energy efficiency rebates for business) TXU Energy PowerSmart 24 SM plan (Time of Use pricing) Renewable energy plans Distributed Renewable Generation (DRG) surplus purchase program TXU Energy Solar Academy for school districts (business) Solar lease program with Solar City (residential) Electric vehicles 9

11 TXU Energy Helping Make Solar More Affordable The solar lease program is an innovative way for North Texas consumers to go solar with lower upfront costs About SolarLease Financing: A joint program between TXU Energy and SolarCity that has helped North Texas homeowners obtain renewable solar energy systems for a low monthly lease payment SolarCity designs, installs, maintains and provides solar system monitoring over the life of the lease Solar program customers can also benefit from our Distributed Renewable Generation (DRG) offer, which pays customers for surplus power generated by their home DRG system Initial 2010 program, based in part on Oncor solar rebate, received overwhelming response Offer revised in 2011 with $5 million of incentives/price cuts Financing Design Installation Monitoring & Maintenance TXU s got a great program... It s sort of the wave of the future. - Tom Smitty Smith, Texas Director for Public Citizen 10

12 TXU Energy Providing Superior Value To Customers Competitive Offers Offering Texans a broad range of customer-centric plans to choose Energy Efficiency and Conservation Solutions Providing customers innovative energy efficiency solutions and renewable options Customer Care and Assistance Nationally-recognized market leader in providing collaborative, low-income assistance 11

13 TXU Energy Leading The Way To Help Those In Need TXU Energy leads the market in low-income customer assistance through innovation, dedication, and collaboration TXU Energy Aid SM Largest bill-payment assistance program among electricity companies in the nation Helping Texas families in need for 29 years, providing more than $72 million in bill-payment assistance Continuing our dedication through a $25 million commitment over 5 years (through 2012) Year-Round Low-Income Customer Discount The only REP in Texas to provide a self-funded, year-round low-income discount of approximately 10 percent Discount is in addition to the state s LITE-UP Texas seasonal low-income discount $125 million over 5 years to fund our discount through 2012 TXU Energy has the most comprehensive program to assist low-income families and older adults - Jane Bavineau, VP Sheltering Arms Senior Services & Exec. Dir. Of Care for Elders (Houston) 12

14 Overview of the Texas Competitive Electric Market 13

15 Texas Competitive Market Overview AEP North Area 37 Retailers / 242 Products Oncor Area 43 Retailers / 267 Products The Texas competitive retail electric market offers customers many choices to help them manage their electricity usage and bills TNMP Area 36 Retailers / 241 Products ERCOT Boundary (Electric Reliability Council Of Texas) CenterPoint Area 43 Retailers / 266 Products AEP Central Area 39 Retailers / 254 Products Source: Residential REPs/products per (3/5/12) 14

16 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 Source: Public Utility Commission of Texas, 15

17 Texas Competitive Market Texans Value Their Power To Choose And Have Exercised Choice In Record Numbers Texas is the #1 competitive market in the US; many retailers actively compete to serve customer needs Residential customer choice in Texas ; percent of customers 100% 80% 60% 40% 20% Over 87% of residential customers have made an observable choice 0% Sources: TXU Energy estimates for 02-05; letters from Bret J. Slocum to Public Utility Commission of Texas for (latest available) 16

18 Texas Competitive Market Texas Generation Is Much More Dependent Upon Natural Gas Than The Rest Of The Nation 2011 Rest of US Generation % of MWh (latest available data) Natural Gas 23% Other 77% 2011 ERCOT Generation % of MWh (latest available annual data) ERCOT has the highest dependency on natural gas of any other region Natural Gas 40% Other 60% - ERCOT Note: Rest of US Generation reflects US total 2011 generation less ERCOT (Texas Regional Entity) 2011 generation Sources: EIA, ERCOT 17

19 Texas Has An Efficient Competitive Market That Has Helped Drive Lower Retail Electricity Offer Prices 1/1 3/30 6/15 9/4 12/24 3/24 6/9 8/25 11/10 1/26 4/20 7/6 9/21 12/7 2/22 5/10 7/26 10/11 12/28 3/1 5/16 8/1 10/17 1/4 NYMEX natural gas and residential electricity prices 1 January 2007 March 5, 2012; mixed measures NYMEX natural gas ($/MMBtu) $14 $12 $10 NYMEX Average 12-Month Strip Average Competitive Offer Average Lowest 12 Month Fixed Offer Average Lowest Offer Residential electricity ( /kwh) 24 $8 20 $6 16 $4 12 $2 8 $ Retail electricity offer prices adjusted quickly in response to declining natural gas/wholesale power costs and other market signals. 1 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. 18 Sources: NYMEX;

20 Texas Competitive Market Electric Prices Have Fallen With Competition Even As Other Energy Commodities Rose Percent change in price December 2001 March 5, 2012 Lowest Offer on PowertoChoose.org 438% Lowest 12 Month Fixed Offer on PowertoChoose.org 232% 3% -21% -17% -28% -51% -45% -39% Oil Gasoline Natural Gas Competitive Retail Electric Prices in Oncor Competitive Retail Electric Prices in Centerpoint Competitive Retail Electric Prices in TNMP Sources: Public Utility Commission of Texas; (1,000 kwh monthly usage); EIA (Cushing, OK Oil Future Contract 1 Prices; US All Grades Conventional Retail Gasoline Prices); NYMEX (natural gas 12-month strip). All data as of 3/5. 19

21 /kwh /kwh Texas Competitive Market Competition Has Helped Improve Texas Retail Electric Price Rank...And Enabled Choice 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 ID LA ND NE OK WA AR MO UT KY SD WY WV MT OR IA IN KS AZ TN MS NC GA MN VA NM CO OH NV TX IL SC FL DC WI MD MI AL PA DE RI ME CA MA NJ VT NH NY AK CT HI State Ranking (Pre-Competition) Average Lowest Offer Dec /kwh December 2011 (Latest Available) State Price Rank Improved by 8 Spots with Competition Average Lowest 12 Month Fixed Offer Dec /kwh Sources: EIA avg. annual residential rates for 2001 & December 2011 monthly data. Average of lowest available prices and lowest available 12 month fixed prices in the 5 competitive TDU areas from (12/1/11) for residential customers using an avg. of 1,000 kwh per month 20

22 Residential Electricity Prices ( /kwh) 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 15 Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org Then: December 2001 Now: December 2011 (latest available consistent data) Texas Competitive OK LA NM AR Texas OK LA NM AR Competitive Sources: EIA; PUCT; 21

23 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 2011 (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 Sources: EIA; 22

24 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 2011 (latest available consistent data); /kwh Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org NY MA CA RI FL NV MS LA TX Competitive Sources: EIA; 23

25 Texas Competitive Market Competitive Electricity Prices in Texas Compare Very Well With To Other Restructured States Residential electricity prices in restructured states December 2011 (latest available consistent data); /kwh Average Lowest Offer on PowertoChoose.org Average Lowest 12 Month Fixed Offer on PowertoChoose.org CT NY NH NJ MA CA ME RI DE PA MI MD DC IL OH TX Competitive Note: Excludes 3 restructured states which have not implemented residential choice (Nevada, Arizona, Oregon) Sources: EIA; 24

26 Appendix 25

27 TXU Energy Commitments Report Card March 5, 2012 Commitment Reorganize TXU Energy into a separate and distinct business unit with separate board, management team, and headquarters Done Status Maintain headquarters for TXU Energy in the DFW area Done Report Card 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 Done Done Ongoing Ongoing Done Ongoing 26

28 TXU Energy Collaborating With 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, Assistant Director Tarrant County Department of Human Services West Texas Representation East Texas Representation Morris Baker, Ph.D., Former Executive Director, Community Action Program, Inc. Of Taylor County Karen Swenson, Executive Director, Greater East TX Community Action Program (GETCAP) South Texas Representation Jane Bavineau, Executive Director, Care for Elders Vice President, Sheltering Arms Senior Services David Garcia, Operations Manager Kleburg County Human Services Consumer Advocacy Representation Carol Biedrzycki, Executive Director Texas ROSE Community Action Agencies Representation Stella Rodriguez, Executive Director Texas Association of Community Action Agencies Randy Chapman, Executive Director Texas Legal Services Center Texas Representation Vicki Mize, Manager Texas United Way Tarrant County 27

29 TXU Energy Valuing Supplier Diversity TXU Energy has been recognized for our support of diversity initiatives in the community TXU Energy spent more than $43 million in 2011, or over 20% of spending for goods and services, with certified minority and women-owned businesses From , TXU Energy spent approximately $131 million with certified minority and womenowned 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 28

30 Texas Competitive Market Continuing To Deliver Strong Results Customers, market participants and observers are recognizing the benefits that Texas competitive market brings to customers More Proof that Electric Competition is Working July 6, Fort Worth Star-Telegram- Retail Electricity Suppliers Battle Utilities for Customers August 31, Wall Street Journal- Retail Electricity Competition Pumps Billions in Economy February 3, 2009 Texas Retail Electric Market Keeps Top Ranking December 7, San Antonio Business Journal- -Public Utility Commission of Texas- Electricity Deregulation Paying Off for Texans March 23, Fort Worth Star-Telegram- The Consumer Advantage in Texas Utility Market June 30, Texas Energy Report- 29

31 Texas Competitive Market Overview Of National And Texas Power Grids ERCOT Areas With Customer Choice Oncor Area ERCOT AEP North Area CenterPoint Area Sources: ERCOT, NERC TNMP Area AEP Central Area 30

32 Texas Competitive Market 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: $6.38/MMBtu (+203%) 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 YTD 1 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 (latest data as of 3/5/12) 0 31

33 Texas Competitive Market Electric Price Change Comparison To Non-Competitive Areas Percent Change In Texas Residential Retail Electric Prices December 2001 February 2012 / March 2012 (latest available) 1 Percent REPs in Competitive Areas Texas Munis Texas Co-ops Texas IOUs Range: -29 to -51 percent +13 to +49 percent +46 to 100+ percent +5 to +37 percent 1 For residential customer using 1,000 kwh; depicts latest available consistent data for end points (3/12 for competitive areas and 2/12 for other areas) From left to right: Competitive Areas AEPC, AEPN, ONCOR,TNMP,CNP; Munis Austin, San Marcos, CPS Energy; Co-ops Upshur Rural, Victoria, Magic Valley; IOUs El Paso, SWEPCO, Entergy, SPS Sources: Public Utility Commission of Texas; (3/5/11) 32

34 Texas Competitive Market The Texas Retail Electric Market Has Been Very Active ERCOT choice transactions processed (millions of transactions) Switch transactions Move-in transactions ERCOT has processed over 29 million choice transactions to date, an average of approximately 4.3 choice transactions per customer (i.e., meter) Source: ERCOT 33

35 Texas Competitive Market Positioned Well For The Future Texas competitive market adapts well to changing conditions, under strong PUC oversight PUC Provides Strong Oversight & Market Guidance Competitive Market Effectively Adapts to Issues Provides strong customer protections strengthened critical/chronic care protections, Provider of Last Resort, and REP Disclosures rules Monitors & 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 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 driving additional wholesale efficiencies 34

36 TXU Energy Educating Texans About Their Choices Print Billboards Web Television Interactive Online Tools 35

37 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) Energy Information Administration (EIA) 36