If Texas Market Advocates Ever Wanted To Push To Open Entergy To Customer Choice, The Door Could Soon Close (Act Fast)
July 13, 2016 Email This Story Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
For advocates seeking to expand retail choice, the Entergy Texas service area remains one of the lowest hanging fruits, which oddly has not drawn much attention despite seemingly lower barriers to choice versus other favorite targets such as Indiana, Wisconsin, Michigan (full choice), and California (full choice) which have not seen any success (apart from a likely marginal increase in California allowable retail choice)
Entergy Texas serves approximately 434,000 customers.
Although the easiest time to advocate for any transition to competition would have been during the period of debate concerning Entergy Texas' future RTO membership (MISO vs. SPP, with the ERCOT option not reconsidered after the legislature put the brakes on a prior ERCOT integration) so that the issue could be addressed holistically, with Entergy Texas now part of MISO, it is at least in an RTO which can nominally accommodate retail choice (though not as well as ERCOT or to a lesser extent PJM)
And an Entergy Texas residential customer using 1,000 kWh per month pays $108 in their monthly bill, well in excess of the competitive offers available in ERCOT.
While much has been made of 2009 legislation which froze the then-contemplated integration of Entergy Texas with ERCOT, the legislation did not introduce substantively different criteria for a transition to competition versus the otherwise applicable criteria for a qualifying power region. While such legislation nominally left the Public Utility Commission of Texas with authority over any Entergy transition to competition, we understand if choice advocates view the issue as a legislative one, and that any transition would need to get local lawmakers on board.
Moreover, it is important to remember the context of the 2009 Entergy transition to competition legislation. At that time, all of the Entergy EDCs were part of the Entergy System Agreement, which resulted in Texas enjoying low rates subsidized by Arkansas and Mississippi ratepayers. As several Entergy operating companies (including Entergy Texas) are leaving or have left the system agreement, and as costs of ERCOT power have declined while Entergy bills have increased, and with lingering concerns over federal control over certain MISO policies and costs, it's fair to say that Entergy Texas ratepayers are in a much different position than they were seven years ago, and lawmakers would understand that previous reasons for favoring the status quo at Entergy Texas no longer apply, notwithstanding their efforts to preserve the status quo by stopping ERCOT integration.
Yet there has been no serious push to revisit Entergy's competitive status given these changed circumstances. While sitting on the fence for several years has, to date, not endangered any future movement to bring choice to Entergy Texas (Entergy Texas backing away from taking a stake in Union Power Station was a bullet dodged), such vacillation may cause Entergy Texas to be a lost cause if the inertia continues, as the service area passes a point of (almost) no return, due to new stranded costs.
That's because, as reiterated in a new report on Entergy's MISO integration (PUCT Docket 40979), Entergy Texas is planning to add capacity from a CCGT by June 2021. Entergy Texas has announced it is aiming to build its own 800-1,000 MW CCGT at its Lewis Creek site in Texas. If the plant is approved, it would introduce a new, much higher hurdle for any transition to competition at Entergy Texas
While Entergy Texas owns other generation, the generation is generally at least around 40 years old, and stranded costs of such generation could be manageable the same way such costs were for the ERCOT utilities. However, building a new CCGT with a 40-50 year life would dramatically change the cost/benefit analysis of any stranded costs as it relates to choice implementation.
Accordingly, as certain markets look bleak (even if ESCOs "win" in New York, given all the regulation that isn't being challenged in court, the market could easily wither like Connecticut), choice advocates should renew their focus on markets likely to be converted to choice, and the issue at Entergy has become more pressing as the utility plans for its future supply needs which could close any window to successfully advocate for a transition to competition in the region.