Customer choice of electricity providers will come to most Texans on January 1, 2002. In one of the most far-reaching actions of the 76th Texas Legislature, state lawmakers passed Senate Bill 7and began a restructuring of the Texas electric industry to allow for retail competition.
"Opening up the electric generation market to competition will lead to lower rates within three years," said state Sen. David Sibley (Waco), author of the bill. "Senate Bill 7 will revolutionize the way electricity is provided and sold in Texas. In addition, the law includes significant consumer protections and environmental clean-up requirements. ... While restructuring has had mixed results in other states, I believe Texas has adopted a plan that will be good for the consumer, good for the environment and good for business."
Opposing senators say Texas should wait and see how similar systems now being implemented in other states pan out before deregulation is tried here. Carthage Senator Drew Nixon spoke against the bill, citing deregulation failures in other industries such as airlines and banking. Nixon argued that there is too much at risk, "There will be some unintended consequences of this bill. I don't think anyone knows exactly what's gonna happen with that and that does concern me folks, for we're talking about changing something that every citizen of the state needs to have good, reliable, reasonably priced access to."
As of Sept. 1, 1999, electric rates were frozen on for the 70% of the state's 8.6 million electric customers served by an investor-owned utility. On Jan. 1, 2002, when competition for electric service begins, those of us who are residential customers of an incumbent utility like TXU (or HL&P, etc.) will see our rates automatically drop 6%. The incumbent utilities must provide electricity at this price level - known as the "price to beat" - to their already existing customers for 36 months or until at least 40% of that utility's market is served by a competitor. From 2002 on, electric customers will be free to comparison shop between providers to try and save even more on their monthly bills or find the blend of products and services that best fulfills their needs.
Senate Bill 7 does not affect customers of municipal-owned systems or electric coopera tives unless their governing boards decide to open their markets to competition.
Other key features of SB 7 include:
In the regulated market, utilities are assigned a specific area to serve and are obligated to serve all customers in that area. In return for meeting that obligation, their regulated rates are set at a level that allows them to recover their costs, including their investment in service facilities, and they are afforded a reasonable opportunity to earn a reasonable return. Customers have few decisions to make about their electric service, since they typically have no choice of supplier and only a few service or rate options.
Currently, we (residential customers) deal with one company for all our electric needs:
After restructuring, we will deal with Retail Electric Providers (REPs) who may be affiliates of our old utility (for example - TXU service company) or new REPs entering the market. REPs will compete to sell customers electric service. They will purchase power from the generation market and resell it to the customer. The REPs will bill customers and operate their own customer service center.
SB 7, in a effort to protect the little guys, stipulates that during the initial three years of competition, an REP will not be allowed to serve only commercial customers. If a REP serves an aggregate load in excess of 300 megawatts within Texas, not less than 5% of its load must serve residential customers or the REP will pay a penalty to the system benefit fund.
The generation part of the industry will also become competitive. Like the REPs, the power plants will be owned and operated by independent suppliers or by unregulated affiliates of existing utilities (for example - TXU generating company). The power they generate will be sold at market prices to any and all REPs. Across the state, an organization called the Independent System Operator, or its equivalent, will coordinate delivery of power from generators to retail electric providers to ensure availability and maintain system reliability.
To guarantee competition, SB 7 stipulates that a power generation company can only own and control 20% of the installed generation capacity capable of delivering power to a power region. In the case of TXU, which currently controls about 38% of the generation capacity in this area, the company must submit a market power migration plan to the PUC and begin to sell off or otherwise relieve itself of excess capacity.
The only piece of the electric utility business that will remain regulated after restructuring is the transmission and distribution part of the industry. The T&D business will deliver electricity for all generators and retail electric providers. It will be responsible for reading meters, transmitting meter reading data to appropriate providers, billing the retail providers for wire service, restoring service after storms or making other repairs to maintain reliability, and extending wires into new areas.
The T&D charges will probably represent about 40% of the residential customer's bill. Which means that while there is potential for cost savings resulting from the electric generation portion of the business, the delivery of power - a significant portion of your monthly bill - will remain relatively fixed.
Other areas where you are likely to see the benefits of a competitive market:
The electric utility industry is changing dramatically in Texas: the PUC is busy working out the details to ensure fair competition and the utility companies are repositioning their generation and customer service operations for eventual competition. There will also be another state legislative session before the market opens in 2002. So what it will look like when you open your eyes on Jan. 1, 2002 is only a guess (but it should be interesting).
Article based on information from a presentation by Marc Moseley to FW PES Chapter, Sept 21, 1999 and press releases from Texas Senate and Sen. David Sibley.
Last summer, spot market prices for electric power in the Midwest shot through the roof, prompting a major investigation by local public utility commissions and the Federal Energy Regulatory Commission (FERC). The cause was accredited to a heat wave, weather-prompted outages, transmission constraints, a contract default by a power marketer in the financial paper market, lower reserves margins, lack of sufficient generation planning due to the transition to deregulation, panic by marketers to cover naked positions in futures contracts, greed by marketers holding large blocks of power feeding a bidding war, and lack of market controls in the young, emerging, competitive marketplace. With enough blame to go around, I think there may have even been some thrown on El Nino and Y2K. But official analyses downplayed the event and predicted we would not see the summer spikes repeated to such an extent.
Guess what! During the last week of this July, the spot market price for one megawatt-hour of firm power hit $8,000. That's about 200 times what traders are used to paying. This beat the spot price of last June of $7,000. Last year's fiasco drove a number of power marketers to bankruptcy. This year, Cinergy Corp. of Cincinnati acknowledged its July 30 losses from defaults on contracts to several power marketers reached $73 Million and that it, too, was considering quitting the power marketing business.
This year, no one was blaming deregulation of the electric industry. Instead, they blamed the heat. In the face of new record demands being set by most of the regional utilities, many utilities found the time to thank their customers for turning air-conditioners up to 80 degrees, doing their laundry at midnight and taking other energy saving actions. Some thanked industrial customers with interruptible contracts for cutting back production. No significant outages were reported. Supply was tight, but not impossible to get - at the right price.
To avoid price spikes like those of the Midwest, California had regulations in place limiting the highest price the spot market could hit. But California recently raised that limit by a factor of three, recognizing the general direction of spot prices under short supply is indeed up. In spite of all the promises that deregulation will bring lower prices in the long run, competition has to be recognized as a double-edged sword that will cut both ways in the short run. It will cut prices during periods of ample supply, and may cut supply and spike prices during periods of high demand.
A couple of members have responded to the article in October Signals on IEEE's corporate branding study and the decision to go with an image that does not center around the diamond logo. In addition to the letters, I have included some samples of logos under consideration. I'd be interested in hearing your opinion.)
My take on the "branding," we need to keep the logo. If the "young" ones are coming out of school and don't recognize it, they need to go back and take a EE fundamentals course all over again!!!! I did not know the part about the kite, I love it. But I did/do know the relationship between current and fields based on the right-hand rule.
Gerry Ourada
I have been working in electronics for 26 years. I have spent that time learning my craft and the various peripheral disciplines that accompny being a professional electronics engineer. It has been an exciting career, and has been filled with controversy over nomenclature, symobology, shorthand script, abbreviations, anagrams, jargon, and technical terms, be they arcane, rare, obsolete, obtuse, abstract, or just plain confusing. In all that time, however, the one symbol that could be instantly recognized (by myself at least) was the IEEE logo.
Now, it seems that the logo is is to be replaced by a simpler, more "corporate" image, such as the letters "IEEE." My contentions are this:
Bob Scully, PE, NCEE
IEEE-USA OFFERS FREE MAGAZINE PREVIEW - To receive a free copy of the fourth-quarter issue of Today's Engineer, the quarterly magazine from IEEE-USA with management, communication and marketing strategies for the fast-track technical professional, go to www.joinup.org/todaysengineer. Sign up for four Year 2000 issues at the member price of $19.95, and receive one free issue before the end of this year. The fourth quarter issue will focus on Internet for managers and includes an article by Dr. Vinton G. Cerf, one of the pioneers of the Internet, projecting some one-billion devices on the Net by Jan. 2003 (a compounded growth rate of 33% every six months).
US STUDENT MEMBERS INVITED TO APPLY FOR WISE INTERNSHIP - Each year, IEEE sponsors up to three US student members for the Washington Internships for Students of Engineering (WISE) program. During their ten week summer program, WISE Interns interact with policy-makers in Congress and the Executive and examine public policy issues of concern to engineers. Interns receive a $1,800 stipend, plus travel reimbursement and lodging at the George Washington University in Washington, DC. The application deadline for the Summer 2000 program is Dec. 3. For more information see www.wise-intern.org
RELAXATION IN ENCRYPTION EXPORT CONTROLS A VICTORY FOR IEEE-USA - On Sept. 16, the White House announced that President Clinton would lift current controls on the export of encryption technologies, thus responding to privacy groups and industry lobbyists concerned about the ability of US companies to compete in the rapidly growing global market for telecommunications and e-commerce. The decision marks a legislative victory for IEEE-USA, which has supported removing export restrictions, noting that strong encryption technologies are already widely available in the global market. Federal law enforcement and national security agencies have long opposed this move out of concern that the proliferation of encryption technology will benefit criminals and terrorists. To answer these fears, the Administration is expected to request additional funding to beef up government computer security and to help law enforcement agencies crack encrypted communications by suspec! ! ted criminals.
R&E TAX CREDIT SURVIVES TAX RELIEF VETO - Hopes for extension of the Research and Experimentation Tax Credit dipped when President Clinton announced his plans to veto the Tax Relief and Refund Act of 1999. The House Ways and Means Committee, however, moved quickly to mark up new legislation (H.R. 2923) on Sept. 24, which will extend various expiring tax provisions, including the R&E Tax Credit. The credit would be extended through June 30, 2004 and the Alternative Incremental Credit would be increased. It is expected that this extension bill will move quickly through both houses and to the President's desk.
IEEE-USA WORKS TO RESURRECT IRA/PENSION PORTABILITY IMPROVEMENTS - President Clinton's decision to veto the Tax Relief and Reform Act of 1999 (H.R. 2488) put into jeopardy legislative proposals to improve various tax incentives for retirement security. In particular, Section II of the Tax Relief Act included provisions that would have increased IRA contribution limits incrementally from $2,000 to $5,000, increased income limits on eligibility to contribute to Roth IRAs, allowed employers to set up salary reduction IRAs, and allowed catch-up contributions for taxpayers 50 years of age and older. On Sept. 21, IEEE-USA urged (www.ieeeusa.org/forum/POLICY/99sept21.html) Congress to pass these IRA expansion provisions. IEEE-USA is also urging members to write their Senators and Representative in support of these IRA improvements (congres s.nw.dc.us/cgi-bin/alertpr.pl?dir= ieee&alert=ieee118), as well as enhanced pension portability (congress.nw.dc.us/cgi-bin/alertpr.pl?dir=ieee&alert=ieee120).
"REMEMBERING MR. SCIENCE: A Tribute to George E. Brown, Jr." co-sponsored by IEEE-USA, AIChE, ASME, and AESS on September 27, honored the late Congressman, a key figure on the House Science Committee. Among the speakers were Congressman Rush Holt (D-NJ), The President's Science Advisor Neal Lane, NSF Director Rita Colwell, and Chairman of Lockheed Martin's Executive Committee Norman Augustine.
INS VISA SNAFU FURTHER MUDDIES IMMIGRATION WATERS. IEEE-USA PROPOSES SOLUTION - "Green cards, not guest worker visas, are the answer," says Paul Kostek, President of the IEEE-USA, speaking of the recent announcement by the Immigration and Naturalization Service that it issued as many as 20,000 unauthorized H1-B non-immigrant visas in FY 1999. In a letter to President Clinton, Kostek noted the administration's dilemma: "Since it would require an Act of Congress to create such a large number of visas, resolving the problems created by this error pose several unattractive options."
"Obviously, if the INS does not have authority to reduce the total for FY2000, it did not have the authority to increase the total for FY1999; the agency cannot simply create visas whenever it loses count," said Kostek, a key figure in the opposition to the H1-B increase last year from 65,000 visas to the 115,000 authorized for fiscal 1999 and 2000. "It seems likely that no matter which approach the Administration follows, there will be litigation."
"Surely we can devise a better system for skilled immigration than the current combination of the H1-B fiasco and the utterly failed bureaucratic paper chase of labor certification. Since every year 50,000 to 60,000 permanent employment-based visas remain unused, and since most H1-B workers want to be permanent immigrants, the most fair way to resolve industry's concerns that it not be penalized for the INS error would be to use those unused employment-based visa," Kostek noted.
"We are ready to work with your administration, and the Congress, to develop and implement a better way to allow industry to hire the skilled workers they need, promptly: as immigrants, not guest workers," Kostek concluded.
NATIONAL ENGINEERS WEEK 2000 TO HIGHLIGHT A CENTURY OF GREAT ENGINEERING ACHIEVEMENTS - Plans for the most ambitious National Engineers Week in the 49-year history of the event have been unveiled by the National Engineers Week Committee. The week, February 20-26, 2000, will showcase a host of new projects and programs intended to spread the message of engineering's importance to society, but plans also include a concerted effort by engineering societies and businesses to actively recruit minorities and women into their ranks.
One effort aimed at raising public awareness of engineering is the selection of the Great Engineering Achievements of the 20th Century, to be announced at a National Press Club luncheon in Washington during E-Week 2000. Considering the staggering engineering accomplishments of the past one hundred years - the US moon landing, construction of the Hoover Dam, creation of the interstate highway system, invention of the artificial heart, computers and the Internet, to name just a few - the selection is certain to challenge the team of experts who will make the final decision. The selection marks a rare collaboration between the National Academy of Engineering and more than 60 professional engineering societies that will help stimulate public discussion on the impact of engineers and engineering on the quality of life in the 20th century.
Another major project for National Engineers Week begins October 27 with a Washington summit of business and engineering society leaders to discuss how to increase the number of minority and women engineers. Entitled "The Business of Diversity," the summit will investigate how best to tackle the problem of so few minority and women engineers working today, as well as ways for the engineering societies to diversify their memberships. For more information see www.eweek.org.
"HELP YOUR CHILD EXPLORE SCIENCE" - The National Science Teachers Association (NSTA) has published a free brochure for parents, "Help Your Child Explore Science." The brochure provides useful tips for parents on how they can incorporate the skills of science into everyday experiences and foster scientific thinking among young learners. For a free copy of the brochure, write to Parent Information, National Science Teachers Association, 1840 Wilson Boulevard, Arlington, VA 22201; or visit the NSTA website at www.nsta.org.
THE GUIDE TO MATH AND SCIENCE REFORM (www.learner.org/theguide/) is a searchable database with concise information on projects, resources, and organizations devoted to reforming K-12 science and mathematics education. A listserv is also available where subscribers can receive the latest news and information about on-line updates.
BAKKEN PACEMAKER DESIGNATED AS INTERNATIONAL MILESTONE OF ELECTRICAL ENGINEERING - A medical invention has a new place in the history books this week. Medtronic co-founder Earl Bakken's prototype of the first transistorized, wearable pacemaker was designated as an "IEEE Electrical Engineering Milestone."
Bakken's external, transistorized pacemaker, developed in 1957-58, was an important step in the transition from desk-top to fully implantable devices. Prior to Bakken's invention, cardiac pacemakers were bulky, vacuum-tube units operated by AC power. The devices greatly restricted patient mobility, and power failures could be disastrous. Bakken produced the prototype for Dr. C. Walton Lillehei, a leading pioneer in open-heart surgery at the University of Minnesota. Bakken's pacemaker, the first designed for clinical use and the first to be used on humans, was successfully used for treating children who had developed heart block after surgery. The unit was produced commercially by Medtronic, and liberated hundreds of patients from their power-cord tethers, demonstrating the safety and effectiveness of the pacemaker for long-term use.
Recognizing our Section members for their long-time commitment to the profession on the anniversary of their joining IEEE.
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A traveler is driving to Millinocket. He comes to a fork in the road and sees a farmer. The farmer is from one of two families: truth tellers or liars. What question can the traveler, knowing this, ask the farmer to find out which is the road to Millinocket?
Answer to last month's Brainbuster:
The probability that two people have different birthdays is 364/365. The probability that three people have different birthdays is
P = [364/365] [363/365]The probability that n people have different birthdays is
P = [364/365] [363/365] ... [366 - n/365]When n = 23, P = 0.493. So for a group of 23 people, the probability 1 - P that at least two have the same birthday is about 0.5.
Jean Eason, Editor