COST CONSIDERATIONS Electricity prices in Texas exploded during Winter Storm Uri due to ERCOT’s push to encourage generators to deliver power to the market. The massive bills resulting from the surge that bankrupted some power companies prompted some legislative action. *PRICES DISPLAYED REPRESENT AVERAGES RECORDED ACROSS ERCOT’S SYSTEM AT MIDNIGHT AND NOON
$ 16B MISTAKE
ERCOT’s independent market monitor Potomac Economics said pricing should have been reduced from $9,000 per megawatt-hour as of Feb. 17 at 11:55 p.m. However, it remained there for an additional 32 hours and cost $16 billion.
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$10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 0
2/13/21
2/14/21
2/15/21
2/16/21
2/17/21
2/18/21
2/19/21
AVERAGE REAL TIME PRICING ACROSS ERCOT SYSTEM Electricity prices per megawatt-hour jumped during the winter storm.
SOURCES: ELECTRIC RELIABILITY COUNCIL OF TEXAS, POTOMAC ECONOMICS COMMUNITY IMPACT NEWSPAPER
the horizon as ERCOT is predicting high demand this summer due to “hot and dry conditions” and the growing regional population. And although ERCOT has said it is prepared for the summer heat, the grid regulator noted extreme weather could once again result in power shortfalls. The grid was tested mid- June with an unexpected, weeklong call for power conservation. Some experts and lawmakers have also questioned whether legislative adjustments made this spring will produce long-range reliability improvements. “There has never been a more incredible disaster, economic or life and death, than what we had. And the Legislature has just ignored it, really,” University of Houston Energy Fellow Ed Hirs said. Seasonal swings Lawmakers’ focus on the grid this spring came in response to a winter weather emergency that killed over 100 Texans and left large portions of the state without power or water for days in freezing temperatures. But even the expected heat of a Texas summer could snarl the balance of electric supply and demand over the coming months. ERCOT in May released its seasonal assessment highlighting a projected summer peak demand of 77,144 megawatts this year, a new high for the grid by 3%, against an expected capacity of 86,862 MW to be available at peak hours. ERCOT said that balance is “su cient” for generation, although less than 65,000 MW of that capacity comes from more seasonally
consistent thermal and hydroelectric sources. “Theproblemis,yougetadaythat’snotaverage,and the grid begins to fail,” Hirs said. “ERCOT, the [Public Utilities Commission of Texas] and the Legislature are playing roulette with the Texas consumer.” Examples of such situations nearly played out for Texans this spring. In both April and June, ERCOT o cials warned of “tight” grid conditions and possible energy emergencies, due in part both to generators’ maintenance and temperatures that surpassed ERCOT’s expectations. National grid regulator North American Electric Reliability Corp. also identi ed possible instability this summer in the ERCOT region, labeling Texas at “elevated risk” to energy emergencies in its seasonal forecast. May projections from the National Oceanic and Atmospheric Administration also show a 40% to 50% for “warmer than normal” temperatures in Central Texas through August. ERCOT o cials also noted the potential for adverse conditions if demand surges whilewinds are not blowing or the sun is not shining this summer, although generation reserves and rising battery storage capacity should help cover the state’s needs. DougLewin, StoicEnergypresident andaprevious state legislative sta er, said ERCOT typically excels in the summertime and commended its broader view of possible worst-case scenarios this year as an improvement over its winter forecasts. Still, he said some unresolved issues leave a lingering risk for operations statewide.
Feb. 2020
$18.27
Jan. 2021 Feb. 14-19 2021
$20.79
$6,579.59
That is a in prices from January 2021 31,548% increase
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On top of seasonal adjustments, Texas lawmakers recently capped their biennial legislative session by passing several bills aimed at their stated priority of xing the conditions during the deadly February winter storm. Since the session wrapped May 31, however, lawmakers and analysts have been split on the merits of what reached Gov. Greg Abbott’s desk during the 87th legislative session and whether the changes are enough to help Texans in the long run. Another test of the grid capacity could now be on
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