# Presentation: 694878

## Slide 1

## Slide 2

## Electricity Cost of Service and Market Rates (Retail and Wholesale) Session 2

**Electricity Cost of Service ****and Market Rates ****(Retail and Wholesale) Session 2**

- Roger L. Sacquety
- February 2001
- Bangladesh Ministry of Energy and Mineral Resources

## Electric Sales and Revenue 

**Average Revenue per Kilowatthour for ****the Residential Sector by State, 1999**

**Electric Sales and Revenue **

## Electric Sales and Revenue 

**Average Revenue per Kilowatthour for ****the Commercial Sector by State, 1999**

**Electric Sales and Revenue **

## Electric Sales and Revenue 

**Average Revenue per Kilowatthour for ****the Industrial Sector by State, 1999**

**Electric Sales and Revenue **

## Electric Sales and Revenue 

**Average Revenue per Kilowatthour ****for All Sectors by State, 1999 **

**Electric Sales and Revenue **

## Number of Major Participants in the Electric Power Industry, 1999

**Number of Major Participants in ****the Electric Power Industry, 1999**

## Retail Prices of Electricity Sold by Electric Utilities (Cents per Kilowatthour)

**Retail Prices of Electricity ****Sold by Electric Utilities **(Cents per Kilowatthour)

**By Sector, 1973-1999**

## Status of State Electric Industry Restructuring Activity as of February 2001

-    1 Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Illinois,  Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New
- Jersey, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas,
- Virginia, and West Virginia.
-    2 New York.
-    3 None
-    4 Alaska, Colorado, Florida, Indiana, Iowa, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, North Carolina, North Dakota, South Carolina, Utah, Vermont, Washington,
- Wisconsin, and Wyoming.
-    5 Alabama, Georgia, Hawaii, Idaho, Kansas, Nebraska, South Dakota, and Tennessee
-    Source: Energy Information Administration.

**Status of State Electric Industry ****Restructuring Activity ****as of February 2001**

## Vertically Integrated Utility

## Generation

- California restructuring required investor-owned utilities to sell their generating assets
- 53,157 megawatts of total net summer capability, with more than half owned by nonutilities
- Utilities were required to sell their output to the California PX and buy their electricity exclusively from the California PX

## Generation

- California is interconnected with the other States of the Western Systems Coordinating Council and relies on about 11,000 megawatts of out-of-state capability
- California normally exports electricity in the winter and imports electricity in the summer

## Issues Affecting Generation

- Capability decreased 2 percent from 1990-1999, while retail sales increased by 11 percent
- Unusually low water level, losing about 3,000 megawatts of capacity from the Northwest
- 10,000 megawatts of total capability out of operation due to forced and/or planned outages

## Issues Affecting Generation

- High cost of emissions and emissions constraints
- Natural gas price increases and El Paso natural gas pipeline explosion
- Uncertainty for independent electric generators to receive payment

**Issues Affecting Generation**

## Natural Gas Transmission

- By increasing the pressure on two unaffected pipe-lines, 85 to 95 percent of the 2.1 Bcfd flow through the Carlsbad area has been restored. El Paso is awaiting the Office of Pipeline Safety’s final approval of repairs.

## Natural Gas Spot Prices 

- Prices for Canadian supplies started to increase following the rupture on the El Paso system to the south
- Each wave of cold weather has caused prices to increase
- Prices have been higher recently in order for financially-strapped PG&E to attract supplies

## Transmission

- Federal Energy Regulatory Commission oversees Independent System Operator (CAL-ISO) which administers the grid, accounting for 75 percent of California grid
- The three utilities had to give up the operation of their transmission lines to the ISO, while still owning them
- Transmission constraints limit the amount of electricity that can be moved between Northern and Southern California (see map)

## Major Transmission Facilitiesin California and Western U.S.

**Major Transmission Facilities****in California and Western U.S.**

## Distribution

- Distribution facilities continue to be operated by the three traditional utilities and regulated by California PUC

## Retail Sales

- 24 California ESP’s accounted for about 10 percent of electricity sales in the State in 1999, but electricity still delivered by utility
- Where rates were capped, the effect of the higher power acquisition prices was not seen by the consumer – instead the provider absorbed the higher costs (i.e., PG&E, SCE)
- Where rates were not capped, the consumer paid the higher costs (i.e., San Diego)

## Conclusions

- Generating capacity tight
- Transmission line constraints
- Natural gas prices much higher than normal
- California utilities purchasing electricity at higher rates than they are allowed to sell at
- Generators and fuel suppliers are reluctant to sell to bankrupt utilities

## Average Revenue for CaliforniaUtilities Sales to All Sectors

## California Electricity Customers by Utility

- (All Customer Classes Combined)

- Note: Average number of customers, based on actual utility data through October 2000 and estimated number of “Other” customers.

## The Status of the California Electricity Situation

**The Status of the California ****Electricity Situation**

## California’s Major Electric Transmission Lines 

**California’s Major ****Electric Transmission Lines **

## California’s Electricity Market

**California’s Electricity Market**

## California’s Electricity Utility Service Areas

**California’s Electricity ****Utility Service Areas**

## California Market Map

## California Electricity Profile

**California Electricity Profile**

## California Electricity Profile(continued)

## California Electricity Profile(continued)

## California Electricity Profile(continued)

## California Electricity Profile(continued)

**Figure 1. Utility Generating ****Capability by Plant Type, 1998**

## California Electricity Profile(continued)

**Figure 2. Utility Generation ****by Primary Energy Source, 1998**

## California Electricity Profile(continued)

## California Electricity Profile(continued)

## California Electricity Profile(continued)

**Figure 3. Utility Generation of Electricity ****by Primary Energy Source, 1988-1998**

**California Electricity Profile**(continued)

## California Electricity Profile(continued)

**Figure 4. Utility Delivered Fuel Prices ****for Coal, Petroleum, and Gas, ****1988-1998 (1998 Dollars)**

## California Electricity Profile(continued)

**Figure 5. Estimated Sulfur ****Dioxide Emissions, 1988-1998**

## California Electricity Profile(continued)

**Figure 6. Estimated Nitrogen ****Oxide Emissions, 1988-1998**

## California Electricity Profile(continued)

**Figure 7. Estimated Carbon ****Dioxide Emissions, 1988-1998**

## California Electricity Profile(continued)

## California Electricity Profile(continued)

**Figure 8. Nuclear Power Capacity ****Factor Comparison, 1988-1998**

## California Electricity Profile(continued)

**California Electricity Profile**(continued)

## Electric Sales and Revenue 

**Electric Sales and Revenue **

## Wholesale PowerCalifornia ISO

- A unique feature of California’s electric utility industry restructuring legislation, AB 1890 which was signed into law in September 1996, was to create a separate Power Exchange (PX)* and Independent System Operator (ISO).  The California ISO is an unbiased, not-for-profit corporation that on March 31, 1998 assumed computerized command of the long-distance, high-voltage power lines that deliver electricity throughout California and between neighboring States and Mexico.  The State’s three investor-owned utilities were required to release control, but not ownership, of these long-distance transmission lines to the ISO which in turn acts as the electricity traffic control center for California.  The legislation that created the ISO guarantees that all power marketers who wish to do business in California will have the opportunity to generate and/or deliver power over the ISO-controlled power grid.  The ISO is an integral part of the State’s mission to foster competition, provide consumer choice, and offer safe and reliable service.

## Wholesale PowerCalifornia ISO

**Wholesale Power****California ISO**

**Notes: **
-   MWh = Megawatthour.
-    *The California PX ceased operations on January 31, 2001. For details see _http://208.152.75.64/index.asp_.
-   ** Load served by power from the CalPX is only a fraction of California’s statewide load.

## Wholesale PowerCalifornia ISO

**California ISO**
**Real-Time Market Clearing Prices**
**January 29 - February 4, 2001**

## Wholesale PowerCalifornia ISO

**California ISO **
**Hourly Total System Loads**
**January 29 - February 4, 2001**

## Wholesale PowerCalifornia ISO

**Highlights**
- On three days this week (Monday, Thursday, and Friday) the low price was either identical to or just below the high price.  As a result, the weekly average low price was 70 percent above last week’s figure.

## Wholesale PowerPennsylvania-New Jersey-Maryland Interconnection LLC (PJM)

- PJM is the largest centrally-dispatched electric control area in North America and the third largest in the world.  PJM Interconnection became the first operational Independent System Operator in the United States on January 1, 1998, managing the PJM Open Access Transmission Tariff and facilitating the PJM Interchange Energy Market.  PJM's objectives are to ensure reliability of the bulk power transmission system and to facilitate an open, competitive wholesale electric market.  Today, PJM handles almost 8 percent of the country's electrical power, with a pooled generating capacity of over 56,000 megawatts.  With the implementation of the PJM Open Access Transmission Tariff on April 1, 1997, PJM began operating the Nation's first regional bid-based energy market.  PJM has become one of the most liquid and active energy markets in the country.  PJM enables participants to buy and sell energy, schedule bilateral transactions and reserve transmission service.  PJM provides accounting and billing services for these transactions.

## Wholesale PowerPennsylvania-New Jersey-Maryland Interconnection LLC (PJM)

**Daily Clearing Price Information, January 29 - February 4, 2001***

**Notes: **
-   MWh = Megawatthour.
- * The prices presented here represent the weighted average prices at PJM's Western Hub which has been verified as an acceptable proxy for "system prices." All daily prices are estimates only provided by the ISO and are subject to future revision by the ISO within five days after the end of the calendar month.

## Wholesale Power Pennsylvania-New Jersey-Maryland Interconnection LLC (PJM)

**PJM Interconnection**
**Weighted Market Clearing Prices**
**January 29 - February 4, 2001**

## Wholesale Power Pennsylvania-New Jersey-Maryland Interconnection LLC (PJM)

**Highlights**
- This week's high price fluctuated significantly during the first part of the week while the daily low and average prices remained steady.

## Wholesale PowerNew York ISO

**Wholesale Power****New York ISO**

## Wholesale PowerNew York ISO

**Wholesale Power****New York ISO**

**Notes:**
- MW = Megawatt.
- MWh = Megawatthour.
- LBMP = a pricing mechanism that prices energy congestion and marginal losses at every generator bus in the New York control area.
- The prices presented here represent the energy prices of LBMP energy and do not include bilateral contract prices.

## Wholesale PowerNew York ISO

**New York ISO Day-Ahead Market (DAM)**
**Daily Prices**
**January 29 - February 4, 2001**

## Wholesale PowerNew York ISO

**New York ISO Day-Ahead**
**Demand Forecast**
**January 29 - February 4, 2001**

**Wholesale Power****New York ISO**

## Wholesale PowerNew York ISO

- The weekly average daily price, high price and low price were lower than the previous week, but total system demand was comparable to the previous week.

**Wholesale Power****New York ISO**

## Wholesale PowerISO New England

- ISO New England Inc., based in Holyoke, Massachusetts, was established as a not-for-profit, private corporation on July 1, 1997, following its approval by the Federal Energy Regulatory Commission (FERC).  The ISO assumed the responsibility for managing the New England region's electric bulk power generation and transmission systems and administering the region's open access transmission tariff.  Beginning on May 1, 1999, the ISO also began administering the restructured wholesale electricity marketplace for New England.  The energy market is a residual market (that is, it encompasses all energy that utilities cannot supply for themselves from their own resources or through bilateral contracts), which typically constitutes about 25 percent of total system demand.  The ISO also currently administers four ancillary service markets, which provide the entire system requirements for these services.  The FERC has recently approved a major market redesign for the ISO markets, which will be implemented over 2001-2002.

## Wholesale PowerISO New England

**Daily Clearing Price and System Demand Information, January 29 - February 4, 2001***

**Notes: **
-   MW = Megawatt.
-   MWh = Megawatthour.
-   * The prices presented here represent energy prices for the residual market on an unweighted basis. They are unweighted because the proportion of the total market that the residual market represents has not been calculated yet. Ancillary services are not included. The average daily price is computed by adding the 24 hourly clearing prices supplied by ISO New England and dividing the sum by 24. All daily prices represented are provided by the ISO and are subject to future revision by the ISO.

**Wholesale Power****ISO New England**

## Wholesale PowerISO New England

**ISO New England Residual**
**Market Clearing Prices**
**January 29 - February 4, 2001**

## Wholesale PowerISO New England

**ISO New England Total**
**System Demand**
**January 29 - February 4, 2001**

## Wholesale PowerISO New England

**Highlights**
- All weekly average prices were less than the previous week despite exceedingly high prices on Monday and Wednesday.