by Kiah Collier, Texas Tribune
For years, the state’s main power grid operator has warned of high electricity prices and even power outages during the hot summer months.
It’s rarely been as bad as feared. But experts say the latest startling forecast from the Electric Reliability Council of Texas (ERCOT) looks to be more accurate, although they downplayed the potential impact to residential customers.
ERCOT on Thursday said it expects to see record-breaking prices and demand for power this summer that could require it to take emergency measures to maintain supply – and force customers to curb power usage. It identified a variety of factors expected to put a strain on the grid on top of record-breaking demand, including delayed power supply projects and the closure of three major coal-fired power plants.
That will result in “tight operating reserves” – numbers released Thursday show ERCOT expects to have barely enough power to meet demand from June through September, which will result in sky-high power prices at certain times.
“The ERCOT market has experienced a series of new peak demand records over the last few years as Texas’ economy continues to grow at record pace,” ERCOT President and CEO Bill Magness said in a statement. “We expect high peak demand will continue this summer.”
A hot, dry summer – which is expected – and any unplanned outages of power plants would compound the problem, said Rice University associate professor Dan Cohan.
“I sure hope we can dodge a bullet this time,” he said. “But the odds are stacked against us, and not many Texans see this bullet coming. This summer could be the wake-up call that drives major efforts for conservation and new build-outs of natural gas, solar, and storage to prepare for the next one.”
But, he said, “Markets are tough to predict, especially since weather will play a big role, so we don’t know exactly what will happen.”
Bill Peacock, vice president of research at the Texas Public Policy Foundation, a conservative think tank, said the market is working exactly like it’s supposed to, but it’s been unfairly manipulated by renewable energy subsidies that he blames for reliability problems and the premature closure of coal plants – a notion many dispute.
It’s important that ERCOT and the state’s Public Utility Commission allow prices to go high this summer, Peacock said. That’s because it will spur investment in “peaking” power plants – those that run when there is high demand.
“We have more than enough baseline to take care of us,” he said.
Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin, said ERCOT has been predicting some version of summertime doom and gloom for at least the past decade so it’s easy to shrug off this warning. While there is certainly cause for concern, he said, a variety of factors will have to coalesce to result in extreme impacts like widespread power outages.
And he said residential customers, who mostly pay fixed prices, aren’t likely to see a big change in their bills. Price spikes are more likely to affect large-scale commercial power purchasers and utility companies that sell power, he said. That would eventually trickle down to consumers, but it’s hard to say when and by how much. (Texas’ electric prices are also generally lower than other states’ to begin with, he said.)
Webber said the risk of vulnerable populations losing power during a time when air conditioning is all but a requirement is always a concern and that “we need to watch that.”
“But I think generally we’ll be fine,” he said.
Disclosure: The Texas Public Policy Foundation, Rice University and the University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.