A Texas Utility Offers a Nighttime Special: Free Electricity

Source: By CLIFFORD KRAUSS and DIANE CARDWELL, New York Times • Posted: Monday, November 9, 2015

Sherri Burks in Dallas loaded her dishwasher in preparation for the 9 p.m. start of free hours of electricity from TXU Energy. Credit Brandon Thibodeaux for The New York Times 

DALLAS — In Texas, wind farms are generating so much energy that some utilities are giving power away.

Briana Lamb, an elementary school teacher, waits until her watch strikes 9 p.m. to run her washing machine and dishwasher. It costs her nothing until 6 a.m. Kayleen Willard, a cosmetologist, unplugs appliances when she goes to work in the morning. By 9 p.m., she has them plugged back in.

And Sherri Burks, business manager of a local law firm, keeps a yellow sticker on her townhouse’s thermostat, a note to guests that says: “After 9 p.m. I don’t care what you do. You can party after 9.”

The women are just three of the thousands of TXU Energy customers who are at the vanguard of a bold attempt by the utility to change how people consume energy. TXU’s free overnight plan, which is coupled with slightly higher daytime rates, is one of dozens that have been offered by more than 50 retail electricity companies in Texas over the last three years with a simple goal: for customers to turn down the dials when wholesale prices are highest and turn them back up when prices are lowest.

A TXU Energy billboard in Dallas promotes the utility’s free nights plan. Such plans help utilities manage abundant wind energy. Credit Brandon Thibodeaux for The New York Times 

It is possible because Texas has more wind power than any other state, accounting for roughly 10 percent of the state’s generation. Alone among the 48 contiguous states, Texas runs its own electricity grid that barely connects to the rest of the country, so the abundance of nightly wind power generated here must be consumed here.

Wind blows most strongly at night and the power it produces is inexpensive because of its abundance and federal tax breaks. A shift of power use away from the peak daytime periods means lower wholesale prices, and the possibility of avoiding the costly option of building more power plants.

“That is a proverbial win-win for the utility and the customer,” said Omar Siddiqui, director of energy efficiency at the Electric Power Research Institute, a nonprofit industry group.

For utilities, the giveaway is hardly altruistic. Deregulation in Texas has spurred intense competition for customers. By encouraging energy use at night, utilities reduce some of the burdens, and costs, that the oversupply of wind energy places on the power grid.

Similar experiments are underway elsewhere.

In Italy, customers of Enel, a leading utility, can receive incentives for keeping their electricity use below a predetermined level at times of highest demand.

In Maryland, Baltimore Gas & Electric allows customers to earn rebate credits on their bills for every kilowatt-hour less that they use during certain high-demand times. The program is run by Opower, which manages similar programs for several utilities.

And in Worcester, Mass., National Grid has installed a home energy management system from Ceiva Energy in about 11,000 homes, connecting a range of devices like smart plugs, high-tech thermostats and digital picture frames that display the home’s energy use along with the photos.

But no major market has gone as far as Texas, which is conducting a huge energy experiment made possible by the nearly universal distribution in recent years of residential smart meters that can receive and transmit data on electricity.

“Texas is head and shoulders above everybody else with really unique packages for the consumer,” said Soner Kanlier, a retail energy markets expert at DNV GL, a consulting firm based in Oslo, Norway.

Texas is a unique power market, one that makes it better suited for innovation than most others. It is by far the largest deregulated electricity market in the country, spawning scores of retail power competitors hungry to make new customers and keep old ones.

“You can be green and make green,” said Scott Burns, senior director for innovation at Reliant Energy, which has plans to offer incentives to increase night and weekend electricity use.

Wind accounts for about 10 percent of the power in Texas. Credit James Durbin/Midland Reporter-Telegram, via Associated Press 

Energy experts say smart meters have not yet reached their potential and have made little difference in total power use. In many cases, utilities have monopolies and fixed rates, and they do not want to see customers bled away by renewable energy sources, so they have little incentive to use the new data source in creative ways, experts say. Texas is trying to be the exception, though experts say it will still take more time to assess the impact.

“The American consumer wants choice,” said Jim Burke, TXU’s chief executive. “Consumer choice, with its impacts and benefits, will drive the future of the power industry.” But he quickly added a note of caution: “I think the pace at which it evolves is the unknown.”

Executives freely acknowledge that the range of residential electricity plans they offer is overwhelmingly a marketing tool.

“We’re all trying to grow, and it’s a very competitive market,” said Manu Asthana, president of the residential division of Direct Energy, which offers various plans.

Commercials on television and radio, billboards on highways, and aggressive social media campaigns promise joyful, or at least free, cooking, cooling and gadget-playing at certain hours.

“Every morning, every evening, ain’t we got fun?” goes one TXU jingle, mimicking the jaunty song that became popular in the 1920s. When customers ask for information or complain on the phone or by Twitter post or Facebook comment, company agents go over their electricity needs and habits to find the right plan for them. Otherwise, power executives say, the customer can easily be lost.

“Time of use” plans are growing in popularity in Texas, according to figures compiled by the Electric Reliability Council of Texas, or Ercot, the operator of the power grid and the manager of the deregulated market for 75 percent of the state.

In June 2013, 135,320 households had enrolled in “time of use” plans in the Ercot region. That number climbed to 290,328 — out of more than six million residences — in September 2014. And although nearly 63,000 residences dropped out of the program over that time — in part because rates are typically higher under the plans at peak hours — Ercot officials believe that the number of households enrolled continues to grow.

Consumers estimated that the plans were saving them as much as $40 or $50 a month during the peak summer season.

“We are still in the formative stages of this,” said Paul Wattles, an Ercot senior analyst for market design and development. “If we can reach critical mass — and 290,000 is already a pretty good number — but if that number started to double or triple, you could start seeing a significant shifting of load, and that is the whole point.”

Ms. Burks, the law firm business manager, is part of that shift — and she is not motivated by environmental concerns.

“I never thought about it,” she said. In fact, she leaves lights on and even the television on when she leaves the room.

“I’m really wasteful now,” she said. “The first thing I tell my guests is my electricity is free after 9.”