Update on Retail Prices in the

ERCOT Competitive Electric Market !

Fall 2012!

Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc. 1005 Congress, Suite 600 • Austin, TX 78701 • phone 512-474-6725 • fax 512-474-9670 • www.aect.net

2

The ERCOT Competitive Retail Electric Market is Providing Strong Customer Benefits!

Key Takeaways

–  Price offers are substantially lower than prices available just before competition began, especially when adjusted for inflation.

–  Retail electric prices have fallen even as other energy commodity prices – such as gasoline, crude oil, natural gas and coal – have risen.

–  Texas’ national electric price ranking has improved since the market opened in 2001.

–  Every competitive area in ERCOT has variable and 1-year lock offers available that are far lower than the national average price and nearly all state averages.

–  Among states like Texas that depend heavily on natural gas for power generation, Texas prices compare favorably, with even lower prices available to those in the competitive market.

–  The ERCOT market provides efficient market prices that track natural gas prices.

–  Since 2007, Texas’ prices have fallen while other states’ prices have risen.

3

Service Area Lowest Fixed-Price

Offer (12-month term)

Lowest Available

Offer

Dec. 2001 prices, not

adjusted for inflation

Dec. 2001 prices, adjusted

for inflation

AEP Texas Central

9.3¢/kWh 7.0¢/kWh 9.6¢/kWh 12.5¢/kWh

AEP Texas North

8.5¢/kWh 5.3¢/kWh 10.0¢/kWh 13.1¢/kWh

CenterPoint Energy

9.2¢/kWh 6.0¢/kWh 10.4¢/kWh 13.6¢/kWh

Oncor

8.5¢/kWh 5.3¢/kWh 9.7¢/kWh 12.7¢/kWh

TNMP

8.7¢/kWh 6.0¢/kWh 10.6¢/kWh 13.9¢/kWh

Lower Prices Available Today than Before Competition Began

Sources: PUC Historical Data, Bureau of Labor and Statistics, www.powertochoose.org offers as of November 1, 2012

4

Texas’ National Price Ranking Has Improved Since 2001

0 2 4 6 8

10 12 14 16 18 20 22 24 26

LA

WA KY

O

K

ID

AR

IN

W

V

TN

ND

M

S

OR

W

Y

SD

M

T U

T IL

NC

TX

M

O

NE

S

C

AL

NV

VA

FL

IA

K

S

AZ

MN

G

A O

H

NM

C

O

DC

PA

M

D

DE

W

I R

I M

A M

E

MI

CA

NH

N

J V

T C

T N

Y

AK

H

I

0

2

4

6

8

10

12

14

16

18

KY WA ID WV

OR TN ND NE UT

WY

MT IN MO AL OK

MS

SD CO

MN KS MD SC AR GA

DC VA WI

LA NC MI

AZ

OH IA FL DE IL NM TX NV PA NJ CT

CA AK RI

MA

NH VT

ME

NY HI

Source: EIA average annual residential rates for 2001 and April 2012 monthly data (latest available information). Average lowest available price from powertochoose.org Web site as of 7/15/12 for a residential customer using an average of 1,000 kWh per month.

¢/kW

h ¢/

kWh

2001 State Ranking (Pre-Competition)

July 2012 State Ranking (Latest Available) Average lowest 12-month fixed price

offer in competitive market in July 2012:

8.6¢/kWh

5

Every Competitive Area in ERCOT Has Variable and 1-Year Lock Offers Available that are Lower than the National Average Price

Sources: PowerToChoose.org offers as of April 16, 2012, U.S. Energy Information Administration, latest available data

0"

2"

4"

6"

8"

10"

12"

14"

16"

18"

20"

LOWEST"DALLAS/FT"W

ORTH"PRICE"

LOWEST"ABILENE"PRICE"

LOWEST"DALLAS/FT"W

ORTH"PRICE"9"1"YR"

LOWEST"LEWISVILLE"PRICE"

LOWEST"CORPUS"CHRISTI"PRICE"

LOWEST"HOUSTON"PRICE"

LOWEST"ABILENE"PRICE"9"1"YR"FIXED"

Louisiana"

LOWEST"LEWISVILLE"PRICE"9"1"YR"FIXED"

Washington"

LOWEST"HOUSTON"PRICE"9"1"YR"FIXED"

Kentucky"

Oklahoma"

LOWEST"CORPUS"CHRISTI"PRICE"9"1"YR"FIXED"

Idaho"

Arkansas"

Indiana"

West"Virginia"

Tennessee"

North"Dakota"

Mississippi"

Oregon"

Wyoming"

South"Dakota"

Montana"

Utah"

Illinois"

North"Carolina"

Texas"(Statewide)"

Missouri"

Nebraska"

South"Carolina"

Alabam

a"Nevada"

Virginia"

Florida"

Iowa"

Kansas"

Arizona"

Minnesota"

Georgia"

US"AVERAGE"

Ohio"

New"M

exico"

Colorado"

District"of"Columbia"

Pennsylvania"

Maryland"

Delaware"

Wisconsin"

Rhode"Island"

Massachuse[s"

Maine"

Michigan"

California"

New"Ham

pshire"

New"Jersey"

Verm

ont"

Connec]cut"

New"York"

Alaska"

Haw

aii"

CENTS&PE&R&KW

H&

RESIDENTIAL&RETAIL&ELECTRICITY&PRICES"All&Data&from&July&2012&

Na>onal&Average&

Sources: PowerToChoose.org offers as of July 15, 2012, U.S. Energy Information Administration, July 2012 data (latest available)

6

Retail Electric Price Offers Have Fallen Even as Other Energy Commodity Prices Have Risen

320% 209%

101%

43% 31%

-13% -41%

Oil Gasoline PRB Coal Natural Gas Inflation ERCOT Avg. Low Fixed Offer

ERCOT Avg. Lowest Offer

Sources: Public Utility Commission of Texas, U.S. Energy Information Association, NYMEX Commodity Exchange, Bureau of Labor Statistics, Power to Choose Notes: Commodity prices latest available as of November 13, 2012. Inflation covers period from 2001 to 2012

Percentage Change in Commodities

December 2001 – November 2012

7

Texas Market Compares Favorably to Other States Utilizing Natural Gas as the Primary Generation Source!

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

AK NY CA ME MA RI FL NV TX MS LA

¢/

kWh

Average Residential Electric Price Among Natural Gas-Intensive States July 2012 (Latest Available Consistent Data)

Sources: Energy Information Administration (data as of July 2012); EIA natural gas-intensive states; powertochoose.org as of 7/15/12.

Average Lowest Available 12-Month Fixed Price Offer in ERCOT Competitive Market

(July 2012): 8.6¢/kWh

Note: Texas statewide average price includes prices from both competitive and regulated areas of the state.

8

ERCOT market providing efficient Market prices

4

8

12

16

20

24

28

32

$0

$2

$4

$6

$8

$10

$12

$14

1/1

3/30

6/15

9/4

11/1

9

2/4

4/21

7/7

9/23

12/8

2/23

5/11

7/27

10/1

2

12/2

8

3/15

6/1

8/16

11/1

1/17

3/21

6/6

8/22

11/7

1/23

4/9

6/25

9/10

¢

¢

NYMEX  natural  gas  and  residen2al  electricity  prices  January  2007  –  October  8,  2012;  mixed  measures  NYMEX  natural  gas  ($/MMBtu)  

¢

¢

¢

¢

Average  Lowest  12  Month  Fixed  Offer  Average  Compe22ve  Offer  NYMEX  Average  12-­‐Month  Strip  

                             Residen8al  electricity  (¢/kWh)  

Average  Lowest  Offer  

¢

2007   2010  2008   2009   2011   2012  

1 Average electric offers across the 5 TDSP’s for residential customers using an average of 1,000 kWh per month. Excludes any 0.0¢/kWh introductory offers. Sources: NYMEX; www.powertochoose.org

9

-35

-15

5

25

45

65

TX C

ompe

titiv

e

MA CT

TX S

tate

wid

e

LA

ME RI

Nat

ural

Gas

Sta

tes

(-TX)

CA NV FL

NH

DE IL

NY

MS

AR

Res

truc

ture

d St

ates

(-TX

)

DC

US

(-TX)

VT

NC

PA

WA W

I

NJ

SC

IN

MT

OK

TN

IA

KY

AK

OR

AL

MD

CO

MN

OH

UT

VA

AZ SD

WY

NM

GA M

I

WV

ND

KS ID

MO

HI

NE

Residential Price Changes (%) - Jan 2007 - July 2012

Since January 2007, Texas’ Prices Have Fallen While Others Have Risen

Source: EIA average annual residential rates for January 2007 and July 2012 (latest available data), powertochoose.org for January 2, 2007 and July 15, 2012

Texas -8%

Gas-Dependent States (excl. TX)

2%

US Average (excl. TX)

23%

Lowest Competitive Offer Prices in Texas

-28%

Restructured States

(excl. TX) 18%

10!

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