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Public Power Pool
500 West 13th Street
Austin, Texas 78701
(512) 233-5780 |
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Who is affected by deregulation?
What does deregulation mean for local governments?
Will deregulation mean lower electric prices?
What makes electricity different from other commodities?
What is aggregation?
What is an aggregator?
What experience does P3 have with deregulation and power supply contract procurement?
Should local governments adopt a wait and see approach in this new market?
What should local governments do to secure the best rates, terms and conditions possible?
How do local governments aggregate their electric load to save money?
Why should my local government join P3?
Why should I join P3 if a retailer has already offered me a good price?
Why should I join P3 instead of another aggregator?
What are the steps in P3’s competitive procurement process?
Why should I pay for profile analysis?
Once I join, who will bill my electric usage?
Who do I pay?
Will there be a switch gap?
What happens if my power goes out?
How does a local government join P3?
Who is affected by deregulation?
All customers of TXU, Reliant (HL&P), CP&L, WTU, and First Choice (TNMP) and any other investor owned utility. For now, local governments served by rural co-ops and municipally-owned utilities are not affected.
What does deregulation mean for local governments?
In 1999, the Texas Legislature deregulated the Texas retail electric industry starting January 1, 2002. Electric rates are no longer regulated. Local governments must procure contracts for electric rates, or pay default rates that are designed to be higher than market rates.
Will deregulation mean lower electric prices?
Deregulation may or may not mean lower prices. It will mean, however, that there will be good deals and bad deals. Larger consumers are in a better position to secure lower rates than smaller consumers.
What makes electricity different from other commodities?
Unlike almost all other commodities, electricity cannot be stored, but has to be used when it is generated. This means that there is significant risk for power suppliers. This accounts for one of the fundamental truths about the electric market—it is all about risk and risk management for all the parties involved. In the new Texas retail market, these risks will be borne by consumers who do not negotiate a contract with a retailer.
What is aggregation?
Aggregation occurs when a group of customers join together to purchase electricity as a group, thereby securing better rates and contract terms than individual members could procure on their own.
What is an aggregator?
Aggregators are entities that assemble customers together to seek better deals than the customers could get on their on. An aggregator may not take title to electricity except in very limited circumstances. Aggregators work with members and negotiate for them to obtain the best deal possible. Perhaps the closest analogy is a buyer’s agent in a real estate transaction.
What experience does P3 have with deregulation and power supply contract procurement?
P3 currently manages electric commodity management for over 100 local governments in Texas. P3 has executed four separate procurements, and has been described by large retailers as the best in Texas. P3 members are saving over $38 million annually compared to price-to-beat. Not only do these governmental entities save money, but they receive power under the most favorable terms and conditions procured in the market.
Should local governments adopt a wait and see approach in this new market?
Absolutely not. Though the market is relatively new, over three years of experience has shown us local governments that did not shop for the best deal, and stayed with the traditional supplier, paid at least 10% more than entities that correctly negotiated for power supply.
What should local governments do to secure the best rates, terms and conditions possible?
Local governments should begin by understanding their electric usage and investigating possible options. Simply put, local governments should decide how they are going to access the market. The options are procuring alone, hiring a consultant, or joining an aggregation.
How do local governments aggregate their electric load to save money?
Local governments can aggregate their electric demand by joining an aggregation program, such as Public Power Pool, or P3.
Why should my local government join P3?
P3 brings expertise and a proven track record in the new market—unique assets that can benefit your taxpayers. P3 knows that aggregation works and how to do it to maximize the benefits.
Why should I join P3 if a retailer has already offered me a good price?
If you can get a good price on your own, P3 can obtain a better one using the enhanced market power of being the largest customer in Texas. Further, electricity contracts are about more than just price—they are about risk management. P3’s proven competitive procurement process minimizes risks for all parties, resulting in better pricing.
Why should I join P3 instead of another aggregator?
P3 has three distinct features that are not available from other aggregations.
• Proven performance: P3 staff has negotiated contracts for millions in electricity in Texas, savings its members $38 million annually
• Lowest administrative cost: P3’s administrative fee of .48% is the lowest available, and is approximately 1/3 of the standard aggregation fee
• No cross-subsidization: P3 uses a unique methodology to avoid cross-subsidization of savings, meaning that you receive the full benefit of your load profile instead of the average benefit available to all members of an aggregation
• No surprises: P3 members know their total electric costs at all times, meaning that members are fully informed and can make rational business judgments.
What are the steps in P3’s competitive procurement process?
• P3 gathers load profile data for all of its members and analyzes that data to group its members into various pools based on their load characteristics. These pools will be grouped into blocks, which will be how the contract is awarded to retailers.
• P3 provides its members a procurement proposal. Members have 30 days to evaluate the proposal and decide whether to participate. The notice will include a minimum savings projection. P3 members that do not withdraw in the 30 days are bound for the procurement cycle.
• Once the 30 days pass, P3 will seek bids from REPs and begin negotiating with a short list of suppliers to improve pricing and terms and conditions.
• Throughout the negotiation process, P3 members are kept updated on the status of contract negotiations. Each member is represented on a technical committee that reviews all significant decisions. P3 will provide explanations for all information in order for the member to feel comfortable with the terms and conditions being offered. The process concludes with P3 requesting the best and final executable pricing from the provider, and then moves forward to execute those contracts.
Why should I pay for profile analysis?
Electric rates for each electric meter are based upon the load profile for that meter. By obtaining the load profile analysis, you will have the information necessary to shop the market on your own if you should choose to do so. You will also have what is necessary to evaluate proposals from suppliers. The cost for this is $250 of initial dues plus $30/meter.
Once I join, who will bill my electric usage?
Your electric bill will continue to come from one of the registered Retail Electric Providers (REP) in Texas.
Who do I pay?
You will pay your electric bill to the REP who was awarded your contract. The P3 aggregation fee will appear on your billing statement as a line item, similar to a tax. The REP will collect this fee when you mail your payment and forward the aggregation fee to P3.
Will there be a switch gap?
P3 cannot guarantee that there will not be any problems when accounts switch from one REP to another. Our experience tells us that there were many problems at the beginning of deregulation with accounts not switching on time, or billing statements not being received for months after contract initiation. Our most recent procurement resulted in a 98% switch rate and members received all billing statements within the time allotted for the contract. P3 monitors the switching and billing process for our members to ensure compliance with all contract terms.
What happens if my power goes out?
If you lose electricity due to a downed power line or any other mechanical failure you should contact your transmission and distribution service provider (TDSP). Be sure to tell the person answering the phone that your provider said to call them directly. You will need to have the address of the location experiencing difficulties, as well as the ESID number when you contact the TDSP.
How does a local government join P3?
Local governments join P3 by adopting a resolution approving the Articles of Incorporation and Bylaws of P3. This resolution also must appoint a representative to P3 and authorize initial dues.
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