From the article:

“The Texas Department of Criminal Justice (TDCJ) has taken steps to get the best deal for Texas taxpayers by tendering electricity supply contracts for its facilities in deregulated areas. For calendar year 2012, about half of TDCJ’s 111 prison units will be supplied by Constellation New Energy, negotiated on TDCJ’s behalf by Texas Energy Aggregation (TEA), an energy consulting and brokerage firm.”

“Williford says the TDCJ Utilities Strategy Team chose TEA after careful consideration, because they had very reasonable rates and could offer market timing sensitive negotiations with the retail electric providers (REPs). Their negotiation capabilities, based on intra-day market prices, allowed TDCJ to avoid an additional $400,000 to $500,000 in electricity cost over the cost avoidance realized by favorable market conditions alone.”

To read the full text of the article, click HERE.

Contrary to recent misleading headlines and editorials, opening the electric monopolies to competition has greatly benefited Texas consumers and our economy. You now have a tremendous opportunity to control your electric expenses and lock in the lowest rates since before deregulation.

Energy is the most volatile commodity in the world. Prices change every minute. You now have the ability to control your own costs by locking in an electric rate when prices drop.

Imagine if you could put enough gas in your car to drive it for several years; when you filled up your tank would be more critical than where you filled it up. I paid over $4 per gallon for gasoline last July, and by December it was under $1.40 at the same gas station.

Now that prices are down, imagine this: you agree to buy all of your gasoline from the same store for a year or more, and they would sell it to you at $1.40 per gallon, regardless of what OPEC, the oil companies, or speculators do to the market. This is the opportunity that Texas’ electric deregulation has given you.

Texans blazed a new trail with their dereg model, and we are improving it. Thirty new energy bills are on the table this legislative session to strengthen customer protections.

A recent news story by Jay Root used a headline citing a study commissioned by Cities Aggregation Power Project (CAPP) stating that rates were “up 64% since deregulation enacted”. Their study quoted residential prices between 1999 and 2007. The only problem is that retail deregulation began in 2002, and the report also ignores that rates have tumbled through 2008 and 2009 to the lowest rates in years.

The attorneys who commissioned this report refer to themselves as a “non-profit consumer group” and also fail to mention that they have collected millions of taxpayer dollars for bad advice. They now seek to blame the entire system using old and misleading data to dupe an uneducated public. Jay Doegey then wrote an editorial accusing others of the same thing.

He said, “They finance weighty-looking reports and skewed polling data. They hide behind the very complexity of the market in an attempt to explain away its flaws”

This is clear, pure, intellectual dishonesty, Mr. Doegey, and it only contributes to customer confusion. How do you sleep at night? I would like to publicly challenge you to a debate on the topic in person or in print to clarify these issues for the public. Maybe we can do in front of City Managers and taxpayers whose money you have taken.

CAPP’s concern that large energy consumers would relocate their business in other states was also without merit, as quite the opposite has happened. My own large commercial clients can now find deals at or below when dereg began.

Renowned economist Ray Perryman quotes that Texas is leading the nation in job creation, with 58% of all new business investment in the nation in 2007 alone, and the largest portion is in the energy sector. Private investors have pumped over $40 billion into building more than a hundred new generating plants to better position us to continue that growth.

Texas has now surpassed California to become the #1 wind energy producer in the country, making the US the top producer globally. The former regulated monopolies had absolutely no incentive to control costs or invest in smarter, greener technology. With diversification from overdependence on natural gas and a few more customer protections, we will continue to lead the nation in growth and innovation.

That could change soon, according to a recent article in the Houston Chronicle, which says that Texas state regulators will soon raise the cap on how much wholesale electric producers – power plants – can charge retail electricity providers, a charge that is sure to be passed on to the end user.

The cap is set to increase August 1, 2012, and could go up again on May 31, 2013.

Incentive for Growth

According to regulators, the real purpose of the cap increase is to spur the development of additional power plants in Texas, a crucial need made apparent by weather events that strain the electrical grid like last year’s February freeze and summer heat wave.

According to T.J. Ermoian, president of Texas Energy, “it’s becoming more and more important to understand all the factors that go into energy pricing in order to secure the best electrical contract for your needs.”

“As the energy landscape becomes more and more competitive, buying electricity in Texas will only get more complicated. Add to that Texas’ rapidly growing residential and commercial population, and the increased demand they will generate, and it’s easy to see that it’s more important than ever to make well-informed decisions when signing electrical contracts.”

To read the original article in the Houston Chronicle, click HERE.

About Texas Energy

Texas Energy is an electricity consulting firm based in Waco, Texas that helps commercial electricity customers make smart energy buying decisions. Texas Energy serves cities across the ERCOT grid, including: Abilene, Corpus Christi, Lufkin, Midland, Nacogdoches, Odessa, San Angelo, Temple, Tyler and Wichita Falls.

Texas Energy doesn’t merely sell consumers electricity and then disappear. We help consumers buy energy smarter, cheaper and easier. We offer valuable, unbiased advice about options and ideas to minimize consumers’ energy expense. By building long-term relationships, we serve as a useful partner who can recommend engineers, vendors and other opportunities from word of mouth experience. Our goal is to provide consumers the highest level of customer service.

Other places for savings to consider:

• Have you considered installing IDR “smart meters”?
• Demand response (voluntary load shedding) opportunities?
• Reconfiguring meters to increase load factor and reduce delivery charges?
• Auditing bills to search for overcharges, tax issues or malfunctioning meters?
• Addressing power factor correction to reduce delivery charges?
• Blend/extend options, contract buyout arrangements?
• Filing PUC complaints to resolve issues? (we have filed nearly 40 PUC complaints, where necessary, with a 100% rate of resolution on behalf of our customers.

Please feel free to call Texas Energy any time for free advice, questions or quotes. We’re not brokers; we’re fixers.

In a relatively young industry and a rapidly changing market, energy purchasing has become complicated and confusing. Changing laws, contract terms, evolving market design, shifting federal rules, economic factors and much more affect the landscape. Very few school boards, administrators and city managers have the knowledge, time or desire to tackle the challenge, especially if they only visit the topic every couple of years. An energy professional who follows these changes on a daily basis can offer valuable advice worth many times the small fee that they are paid, simplifying the job and reducing liability.

Texas Energy offers a simplified option for school, municipal, non-profit, commercial, and even residential customers to find the best price, electric provider and contract terms for their needs.

Reasons to use Texas Energy as your energy professional:

• Texas Energy is licensed by the Public Utility Commission with a mandate to serve consumers’ needs first, not the needs of any energy provider
• Texas Energy serves as a contract manager, working with consumers and their providers to simplify their job and resolve any issues on the consumer’s behalf
• Texas Energy closely watches the market for opportune times and lets consumers know when there are opportunities to renew or extend their current contract, as much as two years before their current deal ends
• Texas Energy has negotiated over 2,500 commercial energy contracts for nearly 1,000 customers
• If Texas Energy is successful in securing a contract for the consumer, they are paid a fixed residual fee through the provider the consumer chooses. All energy consultants are paid a fee for their services
• Texas Energy was selected by the State of Texas as one of the top three most qualified consultants in the nation, and at the lowest fee among them
• If they choose, clients never have to deal with an energy company again. Texas Energy has people right here in Texas, available to handle any issues
• To achieve the best results, you would need skills in all of these areas:
• Commodities futures trader
• Contract attorney
• Public Utility Commission attorney
• Electrical engineer
• Economist
• Credit analyst
• Customer service rep
• Weatherman
• Clairvoyant

It’s extremely important that consumers seek the advice of an energy professional. It’s like playing any sport: if you practice daily and someone else plays every two years, who is going to get the best score? The same concept applies to energy.

Please feel free to call Texas Energy any time for free advice, questions or quotes.

Don’t drown in an energy pool! While some small cities and schools may benefit from being in a pool, each customer has unique needs and characteristics. It’s important to remember that one size does not fit all, and rarely does any pool combine the best price along with terms to suit everyone’s needs.

When to reconsider going for a swim:

• Large schools and cities are big enough to be their own pool and will find relatively no cost benefit from aggregating with other users, especially compared to the compromises.
• Pricing also varies greatly in different areas of the state, by customer size, and also individual load factor. Joining a pool could mean subsidizing others’ rates.
• By participating in a pool, you may have to give up the ability to have a contract that is unique to your own needs, timing and decision making process. For example, a school district that recently overbuilt new facilities will not have the same considerations as one that is consolidating campuses.
• You know better than your provider what changes in usage, if any, you might make during your contract. There is a premium attached to any rate which requires the provider to assume your risk of gain or reduction in usage, along with meter adds or deletes. The more accurately you can project your needs, the less risk the provider will have to assume, and generally, offers will be more aggressive.
• Rapidly changing market conditions and the number and quality of available pool participants at any moment will dictate whether a pool is the best option or not.

Smart pools consist of a group of users with different and complementary load profiles. The best pools combine users who fill all times of the day and days of the week, as well as months of the year, presenting a fuller block of power. This meets the need of wholesale generators who want to keep their equipment running 24/7/365; much like one truck, fully loaded, is always more efficient than two trucks half loaded.

Texas Energy’s bulk of customers are churches, non-profits, and schools. Our pools ensure that all members have a better combined load profile, not just bulk purchase benefits.

Just like hunting, timing is absolutely critical when locking in an energy contract. For some, it is like getting the deer in sight, then having to climb down from the tree, running back to the village, and asking permission to shoot from 10 people. The price is constantly moving, and if companies depend on a group to make a decision, the company’s ability to respond quickly to the market will be significantly impaired. Additionally, if bidders are required to guarantee their rate for several hours or even overnight, there will be a premium tacked on to the rate for making the provider assume the risk of a jump in the market. Understanding the profit and risk factors are all important to negotiating the best deal.

Texas Energy recommends:

• Reviewing all contracts, providers and details in advance of final offers so that every consideration except final price has been discussed and settled beforehand
• Having the committee assign a single decision maker with the authority to make contract approvals on short notice
• Setting a short window, not multiple hours or days, during which to select offers or lock prices
• Time = money = risk for energy providers. If you need days to convene a board for an after-hour decision, you will pay a high premium for this convenience
• One single board member, armed with misinformation (or just enough knowledge to be dangerous) can create enough doubt and fear to create paralysis – derailing months of preparation.

It’s crucial to have a systematic approach when comparing providers, contract terms and offers. Companies that have a plan in place will be ready to “pull the trigger” when the best rates come into sight.

When fearful or confused, it’s human nature to make no decision at all, rather than a bad one. This can also lead to the suggestion, “keep things just like they are”. This perspective benefits the organization’s current provider. Texas Energy has seen a fearful school board accept an energy contract rate priced $1million per year higher than readily available competitive rates from other providers. They got a “good deal” compared to their previous rate, but significantly higher than if its current provider had been made to compete. It’s sad but true, and it happens all the time.

CLICK HERE TO VIEW

During these times of budget crunches, Texas Energy can show consumers how a little knowledge will reduce energy costs with just a little education:

All electric meters have a mechanism that measures kilowatt hours, similar to a car’s odometer. Commercial “demand” meters also have a “speedometer,” which measures your monthly peak when the most power is flowing at any given time.

The regulated portion of your bill, referred to as demand, delivery, or TDSP charges, are based upon your annual peak, not just what you use in any given month. Your minimum delivery charge is “ratcheted” at a minimum of 80% of that peak charge.

This is why baseball and football fields often pay hundreds or thousands of dollars each month in electric delivery costs during months when they have zero usage. This also causes schools to pay high delivery charges all summer long based on a peak they may have hit in May, August or September. The biggest problem is that few customers are aware of these rules, and they do not take steps to address this or avoid setting new peaks.

This also means that if a tenant moves out of a building but keep the meter energized, he will still pay based upon the last year’s peak, even if no energy is used. Few customers know that they can request a reset on that meter at no charge to drastically reduce delivery charges. If customers can cut their peak by half, they can also have the peak demand reset.

For nearly eight years, Texas Energy has spearheaded legislation to fix this unfair system that disproportionately affects churches, schools, performing arts and athletic facilities. We are proud to announce that this law finally passed in 2011 as HB 1064. It will reduce charges by millions of dollars across the state for meters with a low “load factor” (average usage compared to peak usage).

Texas Energy is actively engaged in testimony before the Public Utility Commission to ensure that consumers’ interests are served. It could still take years in some cases before each utility has reviews before the Public Utility Commission to rework rate tariff formulas, and customers actually see the effect on their bill.

In the meantime, consumers can avoid “turning everything on at once” on any single meter and hitting high peaks. Texas Energy can provide a detailed usage history report showing when these peaks occur, how to avoid them, and help you to quantify the actual costs in making these changes. The team at Texas Energy also works with facilities people to explore other options that can reduce these charges, such as re-metering, purchasing your own transformers, computer controlled systems, etc. We do not sell equipment or engineering services, so we can give you unbiased feedback from our clients regarding realistic returns for making these changes.

Reasons to avoid this option:

• Competition has reduced profit margins among providers who have found new ways to greatly increase their margin by insuring level delivery costs.
• Risk always increases cost. Providers look at your historic delivery costs and add some “padding” to be sure they will not lose on any deal.
• Delivery costs are still regulated. They are easily calculable and any changes in laws can typically take years before being enacted, well beyond the end of your energy contract. Many bundled contracts still allow providers to pass any regulatory increases to the customer, without necessarily giving you the benefit of any decreased costs.
• Recent legislation in HB 3693 requires school and municipal customers to reduce energy consumption by 5% each year. You may be unknowingly giving your provider a large portion of your realized savings from these efficiency measures.
• Texas Energy Aggregation spearheaded recently passed legislation (HB 1064), which will significantly reduce delivery costs, especially on athletic facility lighting. The fine print of some bundled contracts may allow your provider to capture these savings, while passing any regulatory increases along to you.

Understanding what affects delivery costs and taking steps to control them is crucial. Knowledge and expertise are always preferable to a fear-based decision making. A qualified electricity consultant, working with your facility managers, can offer valuable advice and a superior contract management strategy to help you reduce, control and accurately project these costs.