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14 posts from February 2014


ERCOT: New generation improving Texas electricity outlook

The state's largest power grid goes into the summer demand season with anticipated capacity just slightly below the desired level as of June 1, but improving by August, when usage typically peaks. The Electricity Reliability Council of Texas said today its latest forecast estimates a reserve margin as of June 1 of 13 percent, compared to its 13.75 percent target. The scheduled addition of three new gas-fired power plants by Aug. 1 should bump that up to 16 percent, ERCOT says. The forecast reserve margin in 2014 rises to 15.4 percent, then declines to 14.1 percent in 2015 and 12.8 percent in 2016. Those outlooks are is based on 12-year averages. ERCOT said it will release its forecast based on extreme temperatures and generation outages on March 5.

ERCOT's outlook has become of particular interest politically, as the Public Utility Commission of Texas has been considering adopting a payment system, called a capacity market, to encourage generators to add enough capacity to avoid electricity shortages. The Texas Association of Manufacturers, which opposes adoption of a capacity market, issued a statement in which its president, Tony Bennett, said "the state’s reserve levels are more than adequate to reliably and economically serve customers’ needs into the foreseeable future." He said ERCOT's new forecast shows the PUC "made the right decision to redirect its efforts away a mandated forward capacity market, which would create subsidies and increased costs for Texas consumers."

Friday's reserve margin forecast incorporates revisions ERCOT made to account for changing patterns of electricity use that have had the effect of lessening peak demand on its grid, which serves about 85 percent of Texas' total power demand. “Although population and the economy continue to grow in the ERCOT region, the relationship between economic growth and peak electric demand has changed in the past several years,” Warren Lasher, ERCOT director of system planning, said in a news release. “We believe recent improvements to our load forecasting methodology are providing a more realistic view of the future electric demand we need to be prepared to serve.” Under its previous outlook, called a Capacity, Demand and Reserves (CDR) report, ERCOT had forecast a reserve margin in 2014 barely above the target, then dropping below it in 2015 and continuing to decline.

ERCOT also said it might increase wind power's estimated contribution to the grid. It presently counts only 8.7 percent of installed wind capacity when forecasting how much power will be available at peak usage times. ERCOT said that figure is "conservative," and new analysis shows that 14 percent of capacity can be expected from the state's West Texas wind farms, which are the vast majority of installations, and that coastal wind farms could operate at 27 percent "due to the prevailing coastal wind patterns during late summer afternoons." (Winds in West Texas tend to fall off in those hours.)

-- Jim Fuquay




GM Financial getting into prime auto lending

Fort Worth-based GM Financial will start writing auto loans to prime credit quality borrowers this summer, according to a report by The Detroit News. The company, formerly AmeriCredit and acquired by GM Corp. in 2010, has focused on subprime borrowers. The newspaper, citing an interview with GM Financial CEO Dan Berce, said GM dealers had requested the ability to work with a single lender for all their customer financing. About 300 GM dealers who currently use GM Financial to finance their vehicle inventories will be the first to use GM Financial for prime borrowers, Berce says.

-- Jim Fuquay

Lesson from Europe: Renewable energy = need for capacity payments?

It can be challenging to follow Texas' ongoing debate over whether the state has enough electricity capacity to meet peak demand and what should be done about it. There are odd terms thrown about and totally conflicting claims about whether the state should move to a "capacity market" -- paying generators upfront to make enough supply (capacity) available to meet those relatively few hours of peak demand a few days each summer in Texas.

Texas' deregulated energy market now only pays generators when they sell their power, which has that certain ring of free-market fairness to it. So why change?

Here's a report out of Europe than might help explain part of the problem: The more renewable energy put on the power grid, it says, the greater the need for capacity payments.(And Texas leads the nation in wind power, with 11,255 megawatts connected to the state's biggest power grid, the Electric Reliability Council of Texas. That's about 15 percent of ERCOT's available capacity, according to its latest report, and last year wind provided 9.9 percent of total electricity used in ERCOT.)

The European Union, meanwhile, expects to hit 35 percent renewables by 2020 - not that far away - so they've been forced to face this issue earlier than us.

"In a renewables system, capacity will be scarce and energy potentially abundant," said Andreas Regnell, head of strategy and sustainability at Swedish utility Vattenfall, said at a Feb. 6 conference in Belgium, according to the report by Platt's, which does a lot of specialized reporting on energy topics. What does Regnell's statement mean?  Basically, that when renewables are humming along - the wind is blowing and the sun is shining on solar panels - there's plenty of juice. And it's practically "free," since the expense of renewables is nearly all in the initial  (likely subsidized) construction of the wind farms and solar installations. It displaces other electricity sources, who have to hope to cover their costs even as they run less.

The Platt's report continues: "That makes capacity remuneration mechanisms 'unavoidable' in countries with large shares of renewables with zero marginal costs, such as Germany, said Paul Giesbertz, head of infrastructure and market policies at Statkraft Markets, the German-based arm of Norwegian utility Statkraft."

All that's left, in this view, is designing the best way of doing that. You can read about what alternatives the Europeans are trying for yourself with the Platt's article, here. We don't know what the right answer is, but the article presents the issue in a  way we just haven't seen previously.

-- Jim Fuquay



Fort Worth-Arlington area foreclosure and mortgage delinquency rates drop in December

Fort Worth-Arlington mortgage holders at least 90 days delinquent on their loans remained flat in December from November, but was down from December 2012, according to CoreLogic.

The mortgage delinquency rate, the percentage of loans more than 90 days late, was 4.17 percent in December. The rate was unchanged from November, but was down 0.43 percentage points from December 2012, CoreLogic said.

The U.S. mortgage delinquency rate in December was 5.03 percent, said CoreLogic, a real estate information, analytics and service provider.

The rate of Fort Worth-Arlington foreclosures was 0.99 percent in December, a decrease of 0.18 percentage points compared to December of 2012, when the foreclosure rate was 1.17 percent. The rate is well below the national foreclosure rate of 2.09 percent in December.

The Fort Worth-Arlington area includes Wise, Parker, Tarrant, Hood and Johnson counties.

_ Sandra Baker


Report: EFH bankruptcy near after creditor talks fail

The Wall Street Journal reports that Dallas-based Energy Future Holdings is preparing for a bankruptcy filing after months of talks with creditors have failed to produce an agreement on restructuring nearly $40 billion in loans. Citing unnamed sources, the newspaper said a last-minute deal is possible, but EFH is lining up debtor-in-possession (DIP) loans to keep its operations running during bankruptcy proceedings. The filing has long been expected, as the economics of the 2007 leveraged buyout of the former TXU Energy by big investors was torpedoed by the collapse in natural gas prices. The wholesale electricity market in Texas' deregulated markets is largely driven by the price of natural gas, the fuel behind about 40 percent of the state's power last year.

The Journal says a bankruptcy filing would also mean a split-up of EFH's operations. The company now includes: Luminant Generation, the state's largest electricity producer; TXU Energy, the largest electricity retailer; and 80 percent of Oncor Electric Delivery, the regulated utility that owns the poles and wires distributing power to most of North Texas.

-- Jim Fuquay


One City Place developers receive loan to complete work on office tower

The developers of City Place in downtown Fort Worth have received a $41.5 million loan to complete work and lease One City Place, one of the former RadioShack headquarters at Third and Throckmorton streets.

PCCP, a real estate finance and investment management firm with offices in California and New York, said today it was loaning the money to Spire Realty Group in Dallas. Spire, a privately-held real estate investment and management company, bought the 19-story property in 2011.

One  City Place is a 313,953 square feet multitenant office building, and part of the 1.2 million-square-foot, three-building City Place development. The other tower is called Two City Place. The third building has street-level space for shops and restaurants and a parking garage.

RadioShack sold the property in 2005. The towers were built in the late 1970s. A now-demolished portion was once the Tandy Center outlet mall. 

Ron Bonneau, PCCP’s vice president, said the loan will provide funds for tenant improvements and leasing commissions. 

“The property is best-in-class for the area and has already attracted significant interest from potential tenants,” Bonneau said.

_ Sandra Baker


Lockheed engineers worked on speedskating suit at center of Olympic controversy

Engineers from Lockheed Martin Aeronautics in Fort Worth worked with Under Armour to develop new high-tech racing suits for the U.S. Olympic speedskating team.

But now, after disappointing finishes by U.S. skaters Shani Davis and Heather Richardson at the Games in Sochi, The Wall Street Journal is reporting that some are blaming a design flaw in the suits for slowing the competitors down. The article attributes the concerns to three people familiar with the U.S. team.

Vents on back of the suit, designed to allow heat to escape, are also allowing air to enter and create drag that keeps skaters from staying in the low position they need to achieve maximum speed, these people said. One skater said team members felt they were fighting the suit to maintain correct form.

Kevin Haley, the senior vice president of innovation for Under Armour, which has sponsored the U.S. team since 2011, said he was confident the suits were fast, but, in the absence of medal-winning performances, "we'll move heaven and earth to make them better."

Called the Mach 39, the skintight suit boasted aerodynamic innovations that would give the skaters an American technology advantage against their world rivals.

According to the Baltimore Sun, Under Armour collaborated with Lockheed to fashion the most aerodynamic suit possible, "using computer modeling based on filming the athletes and hundreds of hours of wind tunnel testing." The article said Under Armour used high-speed film of the skaters on the ice, and "worked with Lockheed Martin engineers to analyze how air flows around the skater and setermine key body positions."

In Fort Worth, Lockheed spokesman Ken Ross confirmed that some Fort Worth engineers worked on the suit and issued the following statement, referring other questions to Under Armour.

Lockheed Martin worked with Under Armour's team to create a computational fluid dynamics model to analyze how air flows around the skater. The work included small-scale wind tunnel testing in Lockheed Martin's facilities of different skin materials and development of drag reduction concepts for prototype skins, following by drag testing of specific racing poses at the Glenn L. Martin Wind Tunnel at the University of Maryland. This was a unique collaboration. We're proud to support the US speed skaing team and look forward to seeing them on the medal stand in Sochi.

Under Armour sent the following statement from Haley.

"Under Armour will continue to partner with USA Speed Skating throughout the Sochi competition to help ensure these incredible athletes are best positioned to skate with confidence and capture a spot on the podium. We are committed to providing Team USA with the best possible gear, and Mach 39 is the most scientifically advanced and rigorously tested suit ever featured in Olympic competition.  While a multitude of factors ultimately determine on-ice success, many skaters have posted personal-best sea-level heat times, split times or race times this week, and we're rooting for that to translate into medals over these next couple of days."

In another statement,Ted Morris, Executive Director of USA Speed Skating, said the "evidence does not  suggest that the suits have contributed to the disappointing results to date."

"However, there are many factors that determine Olympic success and we are constantly making adjustments to improve results. We're working with our athletes, coaches, trainers and Under Armour to figure out what we can do to produce better results for Team USA at these Winter Olympic Games."

According to The Journal, several skaters have sent their suits to an Under Armour seamstress to have the vent modified. For his part, Davis isn't blaming the suit.

"I would like to think that it's not the suit," said Mr. Davis, a two-time gold medalist, who finished eighth in the 1,000 meter despite dominating this season's World Cup circuit. "I would never blame the suit. I'd much rather blame myself. I just wasn't able to do it today, but other people were."

-- Steve Kaskovich





Luminant to bring back coal-fired plants ahead of schedule

Luminant Generation said it will bring three coal-fired power units back into production sooner than previously planned as higher Texas power prices make the units more economic. The big Dallas-based electricity generator had shut down the plants, located in East Texas, last fall, saying the state's low wholesale power prices didn't justify their operation. It will now bring back two units by Feb. 15 and a third unit by March 1. They have combined capacity of 1,880 megawatts.

Especially cold weather in Texas and much of the nation in recent months has driven up both the price of natural gas and of electricity in deregulated markets. Natural gas is the No. 1 fuel for generating electricity in Texas, but coal is close behind. "Power prices have risen in recent weeks following the rise in natural gas prices due to the cold weather across the nation that is increasing demand," Luminant spokesman Brad Watson said in a prepared release. "By bringing these units back online, we not only make more electricity capacity available for Texas' grid, we make more natural gas available for Texas and the rest of the nation that would otherwise have been used for electricity generation here."

-- Jim Fuquay


Report: RadioShack preparing to close about 500 stores

The Wall Street Journal is reporting that RadioShack is preparing to close about 500 stores in the coming months as it continues to restructure its operations.

The story, which quotes people familiar with the matter, says it's unclear which stores will be closed and when the closing will begin.  But it's not unusual for retailers to announce store closing early in the year, after the holiday returns come in.  The chain has about 4,300 company-owned stores.

RadioShack said it does not comment "on rumor or speculation."

On Wall Street, the news sent RadioShack shares down by 10 percent, or 26 cents, to $2.23 about an hour before the close.

A new management team led by Joseph Magnacca, who was hired from Walgreens about a year ago, is working to turn around the consumer electronics retailer, which has lost money for seven straight quarters.  Magnacca has opened a series of concept stores, trimmed inventories, reorganized store displays and arranged new financing.

He has also launched a new marketing campaign, including a well-received Super Bowl ad using 1980s celebrities to highlight the efforts to refresh the outdated brand.

RadioShack expects to report fourth-quarter results later this month.

-- Steve Kaskovich


Read more here: http://www.star-telegram.com/2014/02/03/5535901/radioshack-scores-big-with-self.html#storylink=cpy




Texas Health Resources, Cigna form care initiative

About 17,000 North Texas patients insured by Cigna health plans and treated by about 250 primary care doctors in the Texas Health Physicians Group on Jan. 1 became part of an accountable care program, the parties said Monday. "Under the program, THPG physicians will monitor and coordinate all aspects of an individual's medical care to proactively manage interventions and improve overall well-being," they said in a prepared release. Cigna said it's the insurer's fifth accountable care initiative in North Texas. Texas Health, the second-largest hospital system in North Texas, also has a number of accountable care programs with different partners. THPG has more than 800 medical professionals at more than 230 locations in the area.

-- Jim Fuquay 


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