I’m lying to my programmable thermostat, a Honeywell Home wifi-enabled smart programmable model. I want to quit, but I have to do it to get what I want. Am I wrong?
Here is what I mean. I buy electric power from my local electric monopoly on a time-of-use rate. From 3 PM to 6 PM on weekdays during July and August the price I pay is about 4X the offpeak rate. (May, June, Sept, and Oct the peak is about 3X the offpeak rate.)
It makes sense to shift power consumption, particularly for the largest energy consuming device in most Arizona homes: the air conditioner. After the thermostat was installed the first order of business was setting the schedule. This is when the lying started.
You see, my thermostat has a handy programming interface that aims to make it simple for consumers to use. You tell it what temperatures you want when you wake up, while you are away during the day, when you return in the evening, and while you sleep. It does the rest!
Which would be great except there is no way to tell it to shift load away from my TOU peak rate period. So, as the image shows, I am telling the thermostat I wake at midnight, leave the house at 2:45 PM, return at 3:00 PM, and go to sleep at 7:30 PM. None of those things are true, but I trick the thermostat into saving me money.
I’m estimating that I save about a $1 every weekday by pre-cooling the house before 3 PM and then letting the temperature rise (to about my limit at 83F). Actually I save a bit more than $1/weekday in July and August and a bit less in the other months from May to October. By the end of October I expect to have saved enough to cover the price of the thermostat.
The chart below shows my average July energy use per hour during weekdays, but excluding July 11. On July 11 the local utility called an “energy conservation event,” and I’m enrolled in a program that lets them temporarily reprogram my thermostat to save energy when the grid is stressed. Turns out that they do what I am trying to do, though maybe they are a little better at it than I am.
I’d like to do even better. The red line in the chart represents my July average. Notice the V-shape indicating that energy use bounces back steadily. The blue line is the performance on July 11 when the local utility was in control. They achieved more of a U-shape, delaying most of the recovery until after the peak rate ended.
Either I need to tell better and more elaborate lies to my thermostat, or it and me learn how to communicate better together and I can finally tell it the truth.
The truth might not set me free, but it might allow me to boost my energy savings another 20 or 30 percent. I’d like that.
Been a bit of a crazy week in Texas electric power markets. I’m writing this on Friday, July 15, 2022–the week is not over yet–but maybe things have settled down for the next few days. On Wednesday the wholesale price in ERCOT hit its $5,000 cap on the energy price for a while in the afternoon. At the same time prices in bordering power systems ranged between $75 and $125 per MWh.
On Thursday afternoon the price in ERCOT was about $50 MWh while neighboring prices were all over $100. In fact, most of the time power prices are a little cheaper in Texas. There are currently a few small High Voltage Direct Current (HVDC) connections between ERCOT and its neighbors, but these HVDC interties are not readily available for commercial use and are too small to capture all of the potential gains from trading across the regions.
Connecting ERCOT with neighbors has been proposed before, a few times, and gets shut down in Austin by two groups (A) folks worried about loss of Texas jurisdiction over a Texas interstate market, and (B) industry consumers who believe they benefit from trapping low cost wind and solar power output in state. High-cost power generators actually do benefit from blocking interties.
(A) is a real concern, there are benefits from regulation in Austin rather than Washington DC. Among other things, ERCOT serves as an alternative “experiment” in RTO design that can serve as contrast to the other US RTOs which are all regulated by FERC in Washington DC. Oversight by a single agency cannot help but dampen some reasonable exploration of possibilities simply because the experts there will hold views about the best ways things should be done. In any case, the two most promising intertie projects both secured rulings from FERC saying the projects would not upset existing jurisdiction over ERCOT. Still, political opposition delayed and in at least one case halted development.
(B) is just wrong headed. Interties will yield lower average prices and less volatile prices in ERCOT. It doesn’t take a detailed analysis to demonstrate the point: just look at the picture and then imaging how things would change if, say, 5 GW of power could be brought in through four or five interties spread around the state. Not too hard to imagine prices in ERCOT would have nearer $1,000 than $5,000 MWh on Wednesday (and, yes, prices in neighboring areas would have been higher, but because surrounding areas are connected through the rest of the country prices in those areas might have climbed from $120 to something like $150. On Thursday power flows could have gone the other way, maybe pushing ERCOT prices from $50 to $100 while bring down neighboring prices from $120 to $110 or so.
The price changes are all guestimates. With a commercial power market model it would be easy enough to do quality estimates. (For a large fee, I can have one done! Contact me!) In fact the regulatory documents filed surround the Tres Amigas power state and the Southern Cross transmission project likely both contain this kind of analysis. While they would be out of date, they would provide some sense of the scale of benefits.
In addition, Texas has a lot of land suitable for wind and solar power generation. The ability to produce and ship that power out of state would further boost the state’s position as an energy development powerhouse. At the present we are getting into more frequent wind-on-wind competition leading to curtailment of clean energy. We are a likely soon to see some solar-on-solar competition, too.
Finally, during extreme conditions, both in Summer peaks and Winter peaks, interconnections can be lifesaving. No one needs to be reminded that people died in Texas during Winter Storm Uri because of the days long outages suffered by some consumers. Even with a handful of added interties it is likely ERCOT would have suffered outages during the February 2021 winter storm. However, the amount of load shedding would have been smaller and easier to rotate across consumers, with lifesaving results.
The ERCOT market is become more volatile and prices are higher than they would otherwise be because influential market participants and parochial interests in Austin have frustrated efforts to link up. The Southern Spirit transmission project–I think it is an adaptation of the Southern Cross project–continues to work its way through commercial and regulatory hoops. ERCOT needs it and a handful more reaching north and west.
The Arizona Corporation Commission regulates privately-owned electric utilities in the state (and more, here is their self-description). Many states have their regulators appointed, but in Arizona the ACC commissioners are elected in state-wide races. Two positions are open in the November election. Recently the three Republican candidates appeared in an informal debate hosted by Arizona PBS.
About midway into the program the candidates were asked whether retail electric power should be opened to competition. The discussion begins at the 31:24 mark. Below I mostly summarize some key points, though I cannot help but to interject when necessary.
Candidate Kim Owens replied, “No, it is very clear. … We tried it, it did not work.” As part of her answer she claimed that “in every state, in every year” consumers ended up paying more (referencing the fundamentally unsound analysis published by the Wall Street Journal in 2021.) She reiterates this “always, everywhere worse” claim multiple times.
This is a false claim, but not necessarily one that even reasonably informed people would know is false. (Some discussion and links here.) If Owens wasn’t competing for a position of power over electric consumers and producers in Arizona she could be forgiven for not knowing. However, she is competing for a position of power; she is morally obligated to become better informed.
Candidate Nick Myers responded, “Unknown,” adding that the court case that paused implementation of retail competition in Arizona required the ACC to take additional steps before competition could begin. Those additional steps were never taken. Myers disputed Owens’s remark about Texas, citing a Baker Institute report (but he appears to be confusing this report on competition and prices with a second report on Winter Storm Uri). Myers said that until additional conversations are had over competition in Arizona we do not know whether retail competition can work here.
Candidate Kevin Thompson began by suggesting Republicans tend to favor free markets whether for energy or anything else, and he is always going to lean toward customer choice. He then explained why he thinks California’s failed experiment does not apply (it was wholesale competition that failed, but retail competition under discussion in AZ) and Texas’s winter storm failures do not apply (FERC’s report shows retail competition in Texas was not to blame, other policy choices caused the problems).
Then the candidates began a, um, let’s call it a “more interactive discussion.” Owens said Texas prices during the storm hit the maximum of “$9,000 kWh” (actually it was $9,000 MWh, so she is off by a factor of 1,000; it is an easy thing for a non-specialist to confuse, but again, Owens wants to be one of the power elite). “They kept the lights on, but it was a pretty price that they paid,” she concluded.
Of course, they (ERCOT) did not keep the lights on for everyone. Importantly for the discussion, it was shareholders of competitive power suppliers in Texas who paid most of that “pretty price” but customers of monopoly utilities in Texas will be paying that “pretty price” through bill adders for many years to come. The outrageous power bills Owens mentioned befell the roughly 0.5% of retail customers who signed up for a type of market-rate power contract that cannot be offered in Arizona (as per that 2004 court case and the Arizona state constitution).
Myers next pointed out the kWh vs MWh hour distinction, suggesting Owens is inexperienced, and Owens retorted, “Did someone get a $16,000 electricity bill?” She’s made opposing competition a theme of her campaign. The interactive discussion continues.
Myers noted, as I injected above, that very few customers made a very deliberate choice to accept a pure wholesale rate and take on the risks that come with it, and he added such rates cannot be offered in Arizona. Thompson jumped in to say the $9,000 MWh price was in the wholesale market, it was not a bill that retail customers paid. He is totally missing her point about customers of Griddy, some of whom received outsized electric bills (though the company did not collect on these bills after the storm).
Thompson said, “deregulation–well, not deregulation–customer choice is a such a complex issue, and that’s why we need to have stakeholder meetings.” I heartily approve of the term “customer choice” over the misnomer “deregulation” or the aspirational term “electric competition.” Consider that no candidate for the Arizona Corporation Commission has ever proposed not regulating the sale of electric power in the state. (Is there a Libertarian Party candidate?) The alternative up for discussion is whether or not some sort of regulated market might be better than the current regulated monopoly approach. Regulated vs. regulated, not regulated vs. deregulated.
Owens reports she is the only candidate that has committed against allowing competition in the state. There is a bit of back and forth about the law passed a few months back that repealed the remaining pro-competition parts of the state’s 1998 law. All candidates agreed that the law was passed and they would uphold that law. Owens said the opposition to the law came from the big environmental groups who want to push through the Green New Deal. <Insert eyeroll emoji here.>
The topic shifts to water utilities about the 43:15 mark, yielding just under 12 minutes of discussion on the possibility of retail electric competition. Just 12? It felt much longer. It seems like there is a “time flies when you are having fun” joke to be made here, but I can’t come up with one.
Of course these are just the three Republican candidates. Two of them will survive the Republican Primary and land on the general election ballot in November. There they will face two Democratic candidates: incumbent Sandra Kennedy and newcomer Laura Kuby. There is, in fact, a Libertarian candidate: Nathan Madden is running a write-in campaign.
There are two positions to be elected this fall, so the Republican primary features competition while the Democrats managed to avoid competition in the primary. There is probably a joke to be made here, too. I guess watching candidates engage in debate has drained the humor out of me.
The Libertarian slate is either half full or half empty, depending on how you look at it.
Federal and state governments declare emergencies or disasters for many reasons. Currently in Arizona an estimated 25 emergency or disaster declarations are in effect. Most common reason in Arizona right now are wildfires, major storms and flooding, and a few continuing Covid declarations. Arizona has both a Covid 19 emergency declaration and a Covid 19 major disaster declaration. A FEMA dataset shows 838 emergency and disaster declarations across the U.S., though not all remain active.
Emergency declarations trigger a number of steps to facilitate government actions like disbursing funds and making it easier for state and federal responses to coordinate responses. In most states with laws prohibiting price gouging typically declaration of an emergency triggers application of the law.
We might notice that prices had peaked about two weeks before the Governor declared the emergency and that prices have continued to fall in the nearly two weeks since. The price gouging law remains in effect only for 15 days unless extended. The enacting of state authority appears to have had no effect so far, as prices in Kentucky track the fall in prices in neighboring states.
As the law prohibits prices “grossly in excess of the price prior to the declaration” (Ky. Rev. Stat. § 367.374), permits prices to rise with fluctuations in commodity markets, and allows for other cost increases, it seems wholly unlikely the law will have any economic effect or legal consequences at all. In fact, that may be just fine with the Governor.
The real emergency in Kentucky was political, not economic. Consumers are unhappy about high gasoline prices. Understandably so; even after adjusting for inflation prices have been at record levels. Unhappy consumers are unhappy voters. Unhappy voters want to see elected officials do something. The Governor did something, and next time he is running for office he can remind voters that he did.
Of course he’ll leave out the part his “something” had absolutely zero effect and he expected it to have zero effect. The news release was the point. Governor Beshear wants voters to know he is “on their side.” Empty symbolism is good enough for Kentuckians in the Governor’s eyes.