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Parent of Texas REP Says Electricity "Essential Part of Life", Texans "Deserve Electric Service 100% of the Time" (Will REP Cease Disconnects for Non-Pay?)
The parent of a Texas retail electric provider, in a push for a mandated reserve margin and centralized capacity market, has said that electricity is, "an essential part of life," and therefore, "Texans expect and deserve electric service 100% of the time" (emphasis added).
Specifically, NextEra Energy Resources, LLC told the Public Utility Commission of Texas, in comments in support of a mandated reserve margin and centralized capacity market, that, "Importantly, electricity is not a commodity. Rather, it is an essential part of life - Texans expect and deserve electric service 100% of the time."
If electricity is an "essential" part of life, however, and if Texans "deserve" electric service "100% of the time," then it is unconscionable for anyone to oppose policies which would ensure that Texans have this vital and life-preserving electricity service on the hottest days of the year, when the loss of electricity, by whatever means (resource inadequacy or otherwise), could mean death, due to prolonged heat.
However, opposing a policy to ensure Texans have electricity "100% of the time" during critical summer months, when customers are most vulnerable to the dangers posed by the loss of electricity (and not all vulnerable customers are covered by current disconnection protections and not all days with life-threatening heat qualify for the NWS-triggered DNP moratoriums), is exactly what a subsidiary NextEra Energy Resources, LLC has done in the past.
Specifically, on at least two occasions (Projects 35973 and 37142) Gexa Energy, a subsidiary of NextEra Energy Resources, LLC, opposed a mandatory moratorium on the disconnection of Texas customers for non-payment, which had been sought by consumer advocates. Gexa Energy specifically joined in the comments opposing the moratorium filed by the Alliance for Retail Markets, but Gexa was specifically cited as a participating member of ARM in the project, and we consider ARM's comments to reflect the view of Gexa (and to be clear, both of these projects occurred after Gexa had been acquired by NextEra Energy f/k/a FPL Group).
Notably, in Project 37142 (2009), consumer advocates had said that, "The effect of weather and high electric rates is a dangerous combination particularly for vulnerable populations including the elderly, low income families and the medically fragile."
Consumer advocates continued in their 2009 comments that, "the provision of electricity to the citizens of this state is a necessity, not a luxury. It is critically important that we create safeguards when we deem them necessary. By adopting this rule [the proposed disconnect moratorium], I believe we would be taking a step in the right direction to prevent the deaths of more Texans in the coming months."
"The current and future Texas weather for the remainder of the summer poses an imminent peril to the public health, safety, and welfare," consumer advocates had said in 2009.
"While it is not the opinion of the Petitioners that a disconnect moratorium can or will prevent all heat related deaths in the State of Texas, it is our position that adopting the proposed emergency rule will assure that such deaths will not occur because of lack of electricity in someone's place of residence," consumer advocates had said in 2009.
However, Gexa, in joining the ARM comments opposing this disconnection moratorium petition, said that the, "Proposed Summer Disconnect Moratorium Provides No Benefits to Customers" (emphasis added).
Note how this was characterized. Gexa, in joining the ARM comments, did not state that the disconnection moratorium benefited customers in the summer at the expense of problems created in the fall (high deferred balances, for example), which we concede was one of the cruxes of ARM's argument. Instead, however, Gexa, in the ARM comments, said that a disconnect moratorium provided "no" benefits to customers.
However, this is plainly inconsistent with NextEra Energy Resources, LLC's view that electricity is, "an essential part of life," and that Texans "deserve electric service 100% of the time."
While we can reconcile an opinion that the disconnection moratorium would not be prudent, because its benefits are outweighed by its costs, as consistent with NextEra Energy Resources, LLC's view on the essential nature of electricity, we cannot reconcile the fact that a disconnection moratorium would provide "no" benefit to customers with the view that electricity is, "an essential part of life," and that Texans "deserve electric service 100% of the time." If electricity is essential, and deserved 100% of the time (as NextEra Energy Resources, LLC now claims), any step to ensure that customers are not disconnected during the most vulnerable times of the year, and that customers continue to receive this "essential" electric service during the summer, must be seen as a benefit (again, we concede there may be tradeoffs negating this benefit, but the Gexa/ARM comments specifically said that there was "no" benefit at all from a disconnect moratorium).
NRG Energy, Inc., in its comments filed yesterday, also made similar comments regarding the threat to public health and safety posed by outages that may result from resource inadequacy, which NRG argued compels a mandated reserve margin and capacity market.
"The frequency and duration of outage events resulting from inadequate reserves are a threat to economic growth and can endanger the public," NRG said in comments filed yesterday.
NRG further specifically described the dangers of lower reserve margins as, "public health dangers" (emphasis added).
NRG in its comments filed yesterday did not elaborate further on what such public health dangers are, so therefore we must, admittedly, speculate as to what dangers are created by the interruption of electric service through resource inadequacy.
However, we believe it is fair to believe, due to NRG's use of the term "public health dangers," that NRG was describing customers for whom electricity is essential for health, and not merely referring to certain municipal loads for which the loss of electricity poses a danger but not necessarily a "health" danger depending on how broadly you wish to use the term "health" (e.g., the loss of electricity to a traffic light creating a hazardous situation).
Although this distinction is not of particular importance, we do note it because individual residential customers for whom electricity is essential are more likely to be disconnected for non-payment than these municipal loads needed for public safety.
In short, when NRG says that the loss of electric service poses public health dangers, we take it to mean it poses a danger for those customers for whom electricity is an essential service, either due to a medical condition, or age (and such customers may not necessarily be exempt from DNP depending on their specific condition, or if it is simply an age-related issue).
Therefore, if NRG argues that outages caused from resource inadequacy create public health dangers, these same dangers must be created regardless of the reason for the interruption of electric service, including if the loss of electricity was because the customer was disconnected for non-payment.
However, NRG's subsidiary Reliant did not offer support for the 2009 disconnect for non-pay moratorium sought by consumer advocates (and to be clear, this project was opened after NRG closed on its purchase of Reliant in May 2009). Although Reliant did not specifically oppose the petition, it offered no support for the petition either, and merely referenced its voluntary disconnection moratorium policies, suggesting that the market could address this issue through customer choices and preferences for REPs offering enhanced protections.
As an aside, we note a significant difference, in terms of public health risks, from discrete, rotating 15-minutes outages from which "critical loads" are protected (unless NRG claims that resource inadequacy could not be managed by these procedures and lead to a cascading failure), versus public health risks from disconnections for non-pay, which can lead to days, if not weeks, without electric service. Yet despite the more severe risks from prolonged disconnections, the REP parents are urging action to cure the potential for rolling 15-minute outages, but have not taken any action to prevent, on a mandatory basis, the days-long loss of essential electric service which occurs through DNPs
Although Reliant's voluntary actions should be applauded, if the loss of electric service truly poses a "public health danger" as NRG Energy, Inc. now claims, then leaving a disconnection moratorium for vulnerable customers to the market, instead of a mandate, would be unconscionable (aside from customer inertia, at the time of the petition, customers may have had to wait up to 45 days to be switched to their new REP offering more protections, and customers may have had to pay a costly termination fee to leave their REP, making reliance on the market impractical).
We stress that we do not mean to say that we supported either of the sought disconnect moratoriums or that REPs were wrong to oppose them. Rather, we highlight the inconsistency in the positions taken by the REPs in the disconnection proceedings, and the current position of their parents with regards as to whether the loss of electric service poses a danger to the public requiring government intervention.
While in the disconnection moratorium proceedings the REPs never specifically repudiated the public health threat alleged by consumer advocates, the REPs' opposition (or lack of support) for the moratoriums indicates that the REPs did not believe that this was a serious threat which warranted government intervention. Now, however, parents of REPs are painting the interruption of electric service as a public catastrophe which compels government action.
In short, when REPs were going to lose money by treating the loss of electricity as a public health threat, they opposed such treatment. Now their parents, who stand to gain billions (by not behaving any differently, we might add) by treating the loss of electricity as a public health threat which compels a government mandated reserve margin, suddenly embrace this view.
Warning about the dangers posed by potential outages from potential resource inadequacy should therefore be viewed skeptically, given that subsidiaries of the companies now making this claim did not view the loss of electricity as a public health threat compelling Commission action in the past
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September 24, 2013
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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