Energy Choice Matters talks with our own David Roylance about demand-response pricing and ERCOT caps

Industry blog Energy Choice Matters spoke today with Prism principal David Roylance about a growing movement toward demand-response solutions among retail electric providers in Texas, among other trends:

At the residential level, in addition to “no-risk” plans paying residential customers for called reductions, …Roylance reported that REPs are now offering customers compensation, usually in the form of a flat fee, for allowing the REP to cycle the customer’s air conditioner or pool pump.

In his interview, Roylance noted changes in commercial and industrial contracts as new policies from ERCOT are soon set to take effect:

Additionally, Roylance said that in advance of the higher price caps, C&I customers are contracting 12-18 months prior to the expiration of their current contracts, for delivery dates starting as late as 2015, compared to contracting only three to four months prior to delivery, which was previously predominant.

Roylance also offered some perspective on a potential shift toward a capacity market:

Roylance noted that in Texas, about 30-40% of a customer’s electric bill, depending on the customer, consists of, essentially, regulated charges from transmission and distribution. Adding a capacity market could push that to near 50%.

The other problem that Roylance explained is with the current capacity market discussion in Texas there is no direct line of sight the capacity payment will result in building of generation. Just raising everyone’s rates by invoking a capacity market does not guarantee that generation gets built.  Any conversation about a surcharge or a capacity market should be accompanied with line of sight commitments to build generation, Roylance said.

Read the full article here:

More on ERCOT and demand-response solutions:

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