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Energy an issue for local businesses: Texas energy rates higher than other states
By Anthony Tosie, atosie@starlocalnews.com
At the "State of Utilities" Luncheon held Wednesday, the Frisco Chamber of Commerce addressed a major issue facing local businesses: the high rate of Texas energy costs.
Guest speaker Geoffrey Gay, chair of the energy and utility practice group at Lloyd Gosselink, Attorneys at Law, addressed the issue head-on.
"There is nothing more important in my mind regarding economic viability [in Texas] than energy and water," Gay said. "Over the last decade, you'll find that rates [around the country] are lower than what you've been paying here."
The deregulation of Texas energy, which was passed into law in 2002, gave the Electric Reliability Council of Texas (ERCOT) the regulatory authority for energy in Texas. Because most of Texas gets energy from the state's sole power grid, the Texas Interconnection, ERCOT is facing major problems.
"There is congestion in the transmission system, and to solve that congestion, ERCOT has to do some maneuvering," Gay said. "What they discovered is our transmission system is not designed to accommodate [sending energy across the state]."
Gay provided an example of how the Texas energy system works, noting that agreements for energy service that are legal through deregulation aren't always possible due to the Texas Interconnection's infrastructure.
"Let's say there's a party in South Texas who's got [an energy service] and there's a person up here in Frisco who wants to buy that power," Gay said. "Our deregulated system says you can do that contract. But when ERCOT looks at the contract, they say, 'wait a minute, we don't have adequate transmission capacity to facilitate that,' and if you try to run all that power into the transmission grid going from south to north, you can potentially burn up the lines and have a cascading blackout around the state."
While the vast majority of Texas is deregulated, some parts of the state are not, such as the Panhandle and portions of East Texas. A comparison of energy prices between the regulated areas of Texas and the deregulated areas showed a distinct difference in energy costs.
"You look at their average commercial rates over the last decade in regulated areas, compared to the average commercial rates in the deregulated area, and what you find is that in each of those years, you are disadvantaged in comparison," Gay said. "Did you know there's potentially $9 billion that commercial customers in deregulated areas have paid in excess of the average cost in the regulated parts of Texas? From a decade-long perspective, folks in the deregulated areas have been losers."
One potential way for companies in deregulated portions of Texas to save money could be wind energy from West Texas, although an effective way to transport the energy doesn't yet exist, Gay said.
"In the west, why you have such cheap power is because there's a lot of wind-generated [energy], and we have struggled to get that power out and flowing into North Texas," he said.
John Detzel, sales director for the Western United States at Direct Energy, agreed that wind energy is a good idea in theory, but noted the economic constraints of bringing that energy to the North Texas area.
"Wind technology is interesting because it sounds good and it feels good when you talk about it, except the transmission lines are expensive and getting it here is a tough thing to do," Detzel said. "The other problem is that it's only effective when the wind blows."
The North Texas area is particularly impacted by the state's energy problem due to rapid growth, Gay said.
"It just so happens that the greatest supply and demand imbalance in this state happens to be where you sit today," he said. "Right here around Dallas, you're the largest net importer of electricity. This area is growing rapidly; it's a challenge to keep up with those needs. You can't build new [power] generation in this area because of containment problems. There's a lot of generation here right now, but it's still not adequate to meet the growth."
According to recent information released by ERCOT, Texas should have enough energy for the upcoming year, Gay said. The future isn't as certain, however.
"ERCOT is now saying that we are going to have adequate supply and adequate reserves [of energy] in 2013. The problem is that they're now projecting significant inadequacy going forward and as we get out into 2020 they're saying we may not have any reserves at all."
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