Despite lots of smart meters, ERCOT holds challenges for DR, TOU

July 14, 2020

The Texas PUC has a smart meter program for every wires utility in ERCOT but unlike other jurisdictions, it has no say in how they are used once installed, representatives from the state told the National Town Meeting on Demand Response in Washington, DC.  Smart meters provide a platform for the market to come in and help consumers find what they are looking for, said PUC Commissioner Donna Nelson.

Reliant is one of the largest retailers in Texas, with 1.5 million mass market customers and it is working on smart grid products to help differentiate itself from competitors in a commodity marketplace, said its VP of Residential Segment Marketing Bill Harman.  What the firm tries does not always work either.

“When we initially entered with our time-of-use [TOU] product, we had a fairly healthy spread between the peak and off peak pricing,” said Harman.  “It's been a year and a half or so, if I remember right, there was probably a 12¢ to 15¢ spread between the low price and the high price.”

Customers had no idea how much they used between 3:00 and 6:00 in the afternoon and they did not want to pay far more for those peak hours.  Nobody signed up for the initial plan.  Reliant cut back on the spread between peak and off peak and that took away any fears of ballooning prices and brought more customers to TOU.

The firm has also worked hard to get as much information to its customers as possible about how much power they are using if they have a smart meter.  Customers with a smart meter and an email address can get weekly updates on their use and their projected bills and Reliant has plenty of other options for communicating that information.

Reliant and its dozens of competitors enjoy the major relationship with customers -- and that did not help with Oncor's rollout of smart meters, said the utility's Senior VP of Asset Management & Engineering Jim Greer.  The firm's smart meter rollout program caused a customer backlash and made it go back to customer service basics, which it had left up to sister firm TXU Energy.

Retailers in Texas are working on rolling out DR via smart meters but the kind of wholesale DR that has taken off in several FERC-regulated RTOs is not in ERCOT.  The Texas market runs two emergency DR programs but so-far its energy-only model has not led to much economic DR.

RTOs with capacity markets have seen DR take off and ERCOT is highly unlikely to get one of those with the two sitting PUC commissioners, after Chairman Barry Smitherman resigned last week to join the commission that regulates oil and gas, generally opposed to the concept.  But PJM saw energy-based DR before its reliability pricing model took off and FERC is trying to grow the resource in energy markets with its recent order on compensation.

The Texas PUC is trying to make up for the loss of coal plants expected to close rather than pay for pollution control equipment to meet new EPA standards -- and making more opportunities for DR in the ancillary services market has been one goal.  But, it is too early to say what will come out of that process, said Nelson.

© 2011 Modern Markets Intelligence Inc.  IMPORTANT: This article was reproduced from the July 14, 2020 issue of Smart Grid Today with the limited permission of the owner.  To view the full story on Smart Grid Today’s website, please visit http://www.smartgridtoday.com/public/Despite_lots_of_smart_meters_ERCOT_ltbrgtholds_challenges_for_DR_TOU.cfm.