The Texas Power Market: An Industry in Flux
Enter your zip code, review plans for your area, and click to sign up. Texas is one of 16 deregulated power markets in the country, and a website called PowertoChoose.org makes it simple for Texans to compare and switch electricity providers. The number of Texas providers has more than doubled since 2004, leading to a competitive power market where companies jockey for market share, race to provide cheap service, and offer perks to try and boost customer loyalty.
Further innovating, many Texas electricity providers now send customers information to help them reduce electricity usage. For example, one Texas provider includes with bills information related to the amount of power used by major home appliances. Many companies are even aiming to give Texans the ability to monitor usage remotely, not out of altruism but rather in an effort to increase loyalty and ultimately lock the customer into additional contractual terms. But is this level of innovation enough?
Texas Power: Then and Now
Like most states in America, Texas faces a number of serious challenges in ensuring continued efficient and reliable power for its end-users. Ninety percent of Texas’ electric load is managed by one independent system operator (ISO), the Electric Reliability Council of Texas (ERCOT). The biggest problems are arguably 1. weak supply through aging infrastructure and lack of sufficient generation capability; and 2. increasing demand from rapid population growth. In 2014, the trade group Texans for Reliable Power warned of regular rolling blackouts in future years without an overhaul of the wholesale power market. Thankfully, rolling blackouts have not yet occurred, though ERCOT did issue ten operational notices due to insufficient grid capacity in August 2015 alone. To add to the current capacity of 74,000 megawatts (MW), ERCOT has approved 12,754 MW of new generation and has 51,100 MW of additional requests under review.
Notably, Texas is America’s top wind power producer. Wind power development in Texas began growing rapidly in 1999 when Governor George W. Bush signed the Renewable Portfolio Standard into law, requiring utility companies to obtain part of their energy from wind power. Now home to nearly 10,000 wind turbines, Texas produced 4 percent of the nation’s wind power and produced 9 percent of its own electricity from wind in 2014. According to ERCOT, power generation from wind has hit several all-time records in Texas this year, leading experts to expect more of the same as additional wind capacity is added to the grid. Over the last decade, coal-fired power plants have supplied around 40 percent of the electric load, though a confluence of factors including tightening emission standards, cheap natural gas, and an abundance of wind power have resulted in coal currently supplying just 25 percent, with thousands more MW of coal-fired capacity likely to be shuttered in the wake of new EPA regulations. Natural gas-fired power plants have risen to nearly 50 percent of production this year, up from 35 percent in May 2014.