Texas State Senate Bill 7
Passed June 18, 1999 , Senate Bill 7 was designed to bring retail competition to the electric utility industry in Texas beginning in January, 2002. Following the passage of Senate Bill 7, many changes occurred.
• Retail customers could now control which retail electric provider they purchased electricity from.
• Increased competition allowed for a decrease in the price of electricity to the end user.
• Allowed for the creation of new services and products in the industry such as startup retail electric providers and aggregators.
• The bill froze the electric rates charged by the incumbent retail providers as of September 1, 1999 creating a (higher) default rate called “price to beat,” however, the incumbent retail providers do have the ability to petition the Public Utility Commission of Texas (PUCT) for fuel factor increases which significantly affect the total cost of electricity which customers pay.
To avoid any conflict of interest, the incumbent providers and the local lines and wires companies were required to become separate entities.
Rates
Your electricity rate is based on several components. Deregulation allows for certain charges to be on a fixed rate, while other charges remain as pass through fees.
Fixed components include
• Energy (per kWh) Charge
• Ancillary Fees • Congestion
• ERCOT administrative fees
• Fuel surcharges
• Meter Fees
Pass Through (variable) components include
• TDSP (lines and wires) fees
• Taxes (if applicable)
Factors That Influence Energy Prices:
• Weather
• Production
• Rig Count
• Natural Gas Storage Injection / Withdrawal
The correlation between natural gas and electricity pricing:
• The majority of electricity generation in Texas is produced by natural gas. Because of this, there is a direct correlation between natural gas pricing and electricity pricing.
• Natural Gas pricing is a function of supply and demand which is affected by production, storage levels and weather.
• Injection season ranges from April to October, when the natural gas usage is lowest (and injected into storage)
• Withdrawal season ranges from November to March when natural gas is mainly consumed(and withdrawn from storage)
• D&D Energy Solutions studies several aspects of the natural gas market including weekly storage reports, rig count, and weather patterns. These variables help project future pricing which D&D Energy Solutions uses to time the market to lock in the most beneficial rates.
