Tarrant Business

Energy Future holdings loses $569 million in first quarter

Energy Future Holdings lost $569 million in the year’s first three months, as slightly higher revenues were more than offset by the Dallas-based power company’s high interest costs and other charges. At the same time, the company said its cash on hand rose to $2.3 billion and said it should be able to meet debt obligations until October 2014. The former TXU Corp. has been in restructuring talks with creditors and has disclosed the possibility it could seek a Chapter 11 bankruptcy petition.

The company sold slightly less electricity overall. Its number of residential power customers slipped 3.6 percent to just over 1.5 million, a long-term trend that its retail arm, TXU Energy, has fought to reverse.

-- Jim Fuquay

Texas electric supply tight but improving

The state's largest power grid says electricity supplies could be tight during hot summer weather, but it also said its longer-term outlook is improving. The Electric Reliability Council of Texas, which serves about 85 percent of the state's electricity demand, said in its final summer forecast that it could initiate  calls for conservation on the hottest days. "We are expecting above-normal temperatures throughout summer in most areas," said Kent Saathoff, an ERCOT executive advisor.

ERCOT said it expects a peak power demand of 68,383 megawatts, just slightly more than the existing record of 68,305 megawatts. A megawatt is enough to power about 200 Texas homes during the hottest afternoons, when air conditioners are blasting. Power generation available to meet that demand is estimated at 74,438 megawatts, which includes 925 megawatts of new capacity from a McLennan County coal-fired facility and 700 megawatts in new wind power capacity. The state's ongoing drought isn't expected to create problems, which can result if cooling water for power plants is restricted.

ERCOT's summer 2014 outlook calls for a reserve margin of 13.8 percent, right at the grid's preferred minimum of 13.75 percent. The reserve margin is the excess of estimated capacity over estimated peak demand. That's up from ERCOT's December estimate of 10.9 percent. The margin was boosted by additions of more than 1,500 megawatts of gas-fired, solar and wind capacity expected to come online by next summer, plus the earlier start-up of two new gas-fired plants previously announced by Panda Power.

-- Jim Fuquay

New study critical of tax collections by Oncor Electric Delivery

A Texas group of cities and municipalities that has been critical of Texas' deregulated electricity market says in a new report that Oncor Electric Delivery, the utility operating most of the power grid in North Texas, has collected more than $500 million from ratepayers to cover federal income taxes that were never paid. The Texas Coalition for Affordable Power, which released the study, negotiates power purchases for about 160 member cities, including Arlington and several other Tarrant municipalities. The group acknowledges that Oncor's practice is legal, but is worried about two bills before the Texas Legislature that would restrict state regulators' power to limit utilities' ability to include such "phantom" taxes in their rate base. TCAP proposes not allowing utilities to collect money from ratepayers that is not used to pay taxes, or at least keeping the Public Utility Commission's power to consider unpaid taxes when it sets regulated rates. Although wholesale power generation and retail sales of electricity are deregulated in Texas, the utilities that distribute power to users remain under PUC regulation. Oncor's tax collections have not been passed along to the federal government because its parent, Energy Future Holdings, has had no federal income tax liability. EFH has been losing money since the former TXU was acquired in a $44 billion buyout in 2007.

-- Jim Fuquay

Energy Future Holdings discloses bankruptcy talks

Dallas-based Energy Future Holdings, the former TXU Corp., said today it is considering a prepackaged bankruptcy for its biggest units under Chapter 11 of the federal bankruptcy code. According to the filing with the Securities and Exchange Commission, it has discussed with creditors restructuring $32 billion of debt to give it "a sustainable capital structure" and minimize the time in bankruptcy court. Affected are units composed of EFH's unregulated subsidiaries, which include Luminant Generation, the state's largest generator of electricity, and TXU Energy, the state's largest electricity retailer. "The companies and the creditors have not reached agreement on the terms of any change in the comapanies' capital structure" and are not currently engaged in negotiations, the filing says.

-- Jim Fuquay

Texas added most new wind capacity in 2012

Texas, already the biggest producer of wind power in the United States, added 1,826 megawatts of capacity last year, the most among the states, according to a new report by the American Wind Energy Association. The additions gave Texas 12,214 megawatts of capacity, which AWEA pointed out was more than total U.S. wind  capacity of about 10,000 megawatts in 2006. California, Kansas, Oklahoma, Illinois and Iowa trailed Texas in wind capacity additions last year, while Nevada and Puerto Rico had their first wind installations. There are now 15 states with at least 1,000 megawatts of wind power capacity, AWEA said in its annual report. Texas has six of the nation's largest wind farms, but Oregon's Shpherds Flat in the past two years has become the largest project in the country with 845 megawatts of capacity. Texas' largest installation is the Roscoe wind farm operated by E.ON Climate & Renewables about 50 miles west of Abilene.

Iowa led the nation in the percentage of its energy demand filled by wind power, at 24.5 percent, just ahead of South Dakota's 23.9 percent, AWEA said. Minnesota, North Dakota, Oklahoma, Colorado, Idaho and Oregon all got at least 10 percent of their electricity from wind in 2012. Texas, the biggest electricity user in the country, got 7.4 percent of its total demand from wind, AWEA said. That's lower than wind's 9.2 percent share of power used in the Electricity Reliability Council of Texas, the state's largest power grid, which includes most of West Texas and all of the Texas Gulf Coast, where most of the state's wind installations are found. Luminant Generation, the state's largest power generator and part of Dallas-based Energy Future Holdings, was No. 10 among U.S. power providers with  wind capacity in their mix, while CPS Energy, San Antonio's municipal power company, was No. 8.

-- Jim Fuquay

 

 

Panda Power lands financing for second electricity plant in Temple

Dallas-based Panda Power, which in the past eight months has announced natural gas-fired power plants in Temple and Sherman, said today it has the financing for a second Temple unit, which it expects to go into operation by summer 2015. Panda said the new combined-cycle facility will be 758 megawatts, the same size as its first Temple unit, which was announced in July 2012. Combined cycle refers to a power plant that burns natural gas in a turbine to spin a generator, then uses exhaust heat from the turbine to make steam to drive another turbine and generator. Panda has not disclosed the cost of its projects, but in July it said it signed a $300 million contract with Siemens AG for construction and long-term service. A consortium of Siemens and Bechtel will build the newly announced unit. Panda's Sherman unit, announced in September, is of identical size. The first Temple unit and the Sherman unit are both expected to go into operation by late 2014.

ERCOT adopts new demand reduction pilot program

The Electric Reliability Council of Texas (ERCOT) approved a pilot this summer creating a new program to cut electric use during peak demand when power supplies are tight. "The Weather-Sensitive Emergency Response Service pilot is open to electric users — either as individual customers or as part of an aggregated group of consumers — who can reduce power use by at least 100 kilowatts, about the amount 20 homes use during peak demand," ERCOT said in a news release. Participants will be paid "based on how much they reduce demand." ERCOT can use this option when reserves drop below 2,300 megawatts, earlier than existing ERCOT programs.

“During the hottest hours of summer peak days, electric use by residential consumers represents about half of total demand, due mainly to increased use of air conditioning,” said ERCOT CEO Trip Doggett. “This pilot will provide new incentives for participants to reduce that weather-related consumption and support reliability for the entire grid."

ERCOT recently released its summer weather outlook, which sees "a significant chance that ERCOT will need to issue Energy Emergency Alerts and appeal for conservation on some days during the upcoming summer season." ERCOT manages power to 23 million Texas customers - representing 85 percent of the state's demand.
-- Jim Fuquay

More residences switching electricity providers

Electricity retailers could face consolidation as Texas and other competitive markets mature, attendees at a Grapevine power conference attendees were told this morning. While more residential customers than ever are willing to switch providers, the influx of competitors and lack of demand growth could be creating a retail bubble, said Rob Wilhite of DNV KEMA, the conference sponsor.
-- Jim Fuquay

PUC Chair: no decision on energy market likely until fall

Donna Nelson, chair of the Public Utility Commission of Texas, said Thursday that it likely will be fall before the agency decides how to respond to whether the state should adopt some form of payment to generators to assure an adequate supply of electricity at peak demand periods. Nelson, speaking at the IHS CeraWeek energy conference in Houston, said the agency really needs to be at full strength before making a ruling. Commissioner Rolando Pablos resigned March 1, and the two remaining members, Nelson and Kenneth Anderson, are on opposite sides of the issue. Nelson has favored some version of so-called "capacity" payments to balance supply and demand, while Anderson opposes capacity payments.

"We have studied it a lot," Nelson acknowledged. "We've made thoughtful progress," she said, but "we need a third commissioner to decide." Texas since it deregulated much of its electricity market more than a decade ago has employed an "energy only" market, in which generators only earn revenue when they sell power. Capacity markets have tools for generators to receive payments in compensation for operating enough capacity to meet anticipated peak demand. Low wholesale power prices have not given generators adequate incentive to add new capacity, but capacity markets generally add costs that must be passed on to energy consumers. 

-- Jim Fuquay

Another tight summer for electricity, ERCOT says

Electricity supplies could be "very tight" this summer, the state's largest power grid predicted Friday. The Electric Reliability Council of Texas said sufficient resources should be available to meet anticipated demand, but the forecast is also call for hotter and drier-than-average weather. "Current estimates indicate that we likely will see very tight conditions on the hottest days," said Kent Saathoff, vice president of grid operations and system planning for ERCOT. "There is a significant chance that ERCOT will need to issue Energy Emergency Alerts and appeal to consumers to reduce their energy use on some of those days."

ERCOT issued its final outlook for spring and a preliminary assessment for summer. "Although we expect to have more resources available for summer demands than we projected at this time in 2012, we also expect higher demand this year," Saathoff said. The preliminary summer assessment anticipates a peak demand of 67,998 megawatts (MW), based on a weather outlook similar to that of 2010 and a slower-growth economic outlook. ERCOT anticipates 73,708 MW of generation capacity before accounting for power plant outages, which typically total about 2,600 MW during an operating day. One MW can serve about 200 homes during peak demand periods. "This assessment counts wind power at 8.7 percent of its installed capacity, and ERCOT stakeholders are currently evaluating whether to recommend increasing that capacity value based on performance in recent years," ERCOT said. The final assessment for summer 2013 will be released in May

-- Jim Fuquay