Texas’ summer power prices expected to rise

By: Ryan Maye Handy |

Wholesale summer power prices in Texas  are expected to rise after the shutdown of three coal-fired power plants last year. But by how much — and what kind of impact those increases will have on electricity bills — might not be known until the summer is over, regulators say.

“We are going into a summer where people are going to be paying a lot, potentially paying a lot more,” said Commissioner Brandy Marty Marquez, who serves on the state’s Public Utility Commission. “We are not really sure what we are going to see.”

The Electric Reliability Council of Texas, which oversees 90 percent of the state’s power grid, expects that it will lose more than 7,000 megawatts of power capacity by this summer. (One megawatt is enough to power 200 homes on a hot Texas day.) Much of that power, around 4,000 megawatts, comes from the loss of three of the state’s largest coal-fired power plants.

The retirements have temporarily resolved a long-standing Texas problem: the grid had too much power, which helped keep prices low. But as supply shrinks this summer demand is expected to drive prices up.

The retirements have also reduced ERCOT’s summer power reserves below the state’s recommended level, raising concerns among lawmakers that Texas could face a summer of power shortages.

ERCOT is charged with ensuring that Texas has enough power to meet demand on the hottest summer days, when electricity consumption peaks. In 2010, ERCOT in 2010 adopted guidelines calling for the grid’s generating capacity to exceed demand by at least 13.75 percent.

The difference between generating capacity and demand is called the reserve margin.

ERCOT’s forecasts for the summer of 2018 show that the reserve margin will fall to of 9.3 percent, down from earlier forecasts of more than 18 percent and well below ERCOT’s recommended level. ERCOT has said that fluctuations in reserve margins are not uncommon, and ERCOT’s report noted that more power is expected to come online by 2019.

Peak power demand in ERCOT is expected to grow by average of 1.7 percent every year for the next decade. The projected summer power peak for 2018 of just under 73,000 megawatts would blow past the all-time record of 71,110 megawatts in August 2016, according to ERCOT.

ERCOT plans to release its summer power demand forecast on March 1, when it will address concerns about spiking prices and lower power reserves.

Texas’ summer power prices expected to rise