What Lies Ahead for the Texas Electricity Market?

This was the burning question on everyone’s minds in the Texas power and utilities industry post-August 2019 when wholesale electricity prices reached the legal cap of $9,000 per megawatt hour. On Aug. 12, the state set a record demand of 74,531 megawatts, and only 2,500 megawatts remained in reserves. Thankfully, the state was able to prevent extreme measures such as rolling blackouts.

For customers, this crisis was most likely communicated with a text message from their retail electricity provider to conserve power. Nothing more than possibly a higher bill. However, for those in the electricity industry, this was an utter game-changer. It signified a major shift in practically every aspect of how to generate, sell and consume electricity.

This also happened to be the crux of the matter at Tilting The Grid, a conference dedicated to discussing and addressing the issues affecting the retail electricity sector. The Texas electricity market is ever-changing, extremely competitive and highly tumultuous – but it’s also laden with untapped opportunities for greater change. Hosted by Integrate, Tilting The Grid convened the industry’s disruptors – including Griddy, Energy Ogre, Innowatts, and Chariot Energy – to discuss what’s on the horizon for 2020.

Here’s what they said about the future of electricity in Texas.

In his keynote address, Griddy CEO Greg Craig admitted that the August price spike caused his company to lose customers. However, data revealed that despite the August bill shocks, customers on average saved 6% on their electricity bill in 2019. At the conference, the wholesale electricity provider announced big changes to its customer communication model and data usage insights.

“Technology has enabled a transfer of power from companies to consumers,” said Craig. “We have a responsibility to deliver data around consumers’ usage traits and deliver those insights so they can make better choices.”

This, in essence, is how the Griddy model works. Griddy delivers insights to customers about their usage via the Griddy app. If wholesale electricity prices are high, Griddy advises customers to conserve. Prior to 2019, said Craig, if customers did nothing to optimize their energy usage, the customers still saved at least 25% on their electricity bills. Griddy, though, is looking to take this strategic use of demand response data even further.

During one period of high demand, Griddy was able to drop aggregate member energy consumption by 20% with one push notification from its mobile app, said Craig. “But here’s the point,” Craig said. “What if everyone was wholesale and had push notifications? The next time a price spike happens, we could get more than a 50% drop in consumption from Griddy customers.”

Griddy is also working on making energy-saving choices on the customers’ behalf, such as changing the temperature of their smart thermostat, with authorization. Ultimately, Griddy smooths ERCOT’s demand curves and hopes to delight customers while doing it, according to Craig.

Innowatts, an innovative leader in advanced energy analytics Energy Impact Partners, Energy Ventures, Shell Venture, EEI and Spanish utility Iberdrola, proposed a different solution for mitigating future price spikes by shifting the demand time via electricity plans that incentivize using power when demand is low. Based on two years of meter data, Innowatts saw on average an 11% decrease in electricity bills when customers switch to a free weekends electricity plan from a fixed rate plan, even when overall energy usage increased 5%, according to Eric Danziger, Chief Revenue Officer at Innowatts.

“Customers just want a bill they can manage every month,” said Karl Trollinger, CEO of Texas Electricity Ratings. “Some customers are super into [energy usage], but the vast majority just want a low rate and check that box off. A high bill is the number one cause for people to leave”

This goes directly against Griddy’s model. While Griddy also advertises a low bill, it encourages customers to become educated on their energy usage and actively seek to reduce it rather than a “set it and forget it” type of plan. So what’s the right answer? Paul Ring, the panel moderator and Editor in Chief of Energy Choice Matters, then asked the speakers, “Griddy has one model, and the only way to avoid high wholesale costs is to reduce usage. Is there any other way to solve high electricity bills through a different residential plan or something more formalized?”

Brian Armentrout, Director of Marketing at Chariot Energy, a Texas solar electricity company, said customers want to be educated and want more options on how they consume power, referencing the different plans customers can choose for solar, including rooftop solar, community solar that’s shared, and net metering where homeowners can sell their excess solar energy to the power grid.

The Texas retail electricity market is ever-changing, extremely competitive and downright volatile. And oftentimes, it feels like its future is uncertain. Nevertheless, it’s laden with untapped opportunities to disrupt the current system and bring about great change to the Texas market and beyond.

The companies that participated in Tilting The Grid are exemplars of the newfound responsibility REPs have to proactively drive innovation and educate customers. As experts in the REP space, we realize deregulation is still new, and its evolving every day. 20 years ago, we were still in the dark ages. Today, look where we are: Our electricity provider is sending texts to us telling us to conserve power based on our unique usage pattern!

So, what will the next year (or five) bring us? According to the experts at Tilting The Grid, look forward to more technology integration, more consumer education and more responsibility from REPs to help curve demand and lessen the load on the electric grid. But, of course, you’ll have to wait until next year’s conference to know for certain!

Tilting the Grid is brought to you by Integrate Agency, a fully integrated marketing services agency specializing in the REP space.