ERCOT ends rolling blackouts; 40 GW of generation out, prices at $9,000/MWh

ERCOT anticipated that no more than 6.5 GW of wind and 304 MW of solar would be available at winter peak, in its final Seasonal Assessment of Resource Adequacy for winter 2020-21.

Dan Woodfin, ERCOT senior director of system operations, said during a morning media call Feb. 18 that ERCOT has consistently reported the nameplate capacity of wind and solar capacity forced offline by the weather, but acknowledged that these resources have often overperformed ERCOT's expectations for this winter.

For the hour ending at noon CT, ERCOT's wind fleet had produced at an average level of almost 6.9 GW, and utility-scale solar had produced at an average level of almost 1.7 GW.

WEATHER CONDITIONS

Asked if the moderation of weather conditions had contributed as much or more to ERCOT's ability to eliminate rotating outages than the restoration of generation, Woodfin said, "It probably had a bigger impact."

After three days with ERCOT's population-weighted average Fahrenheit temperatures in the teens, the average was 24.6 degrees F on Feb. 17 and is forecast to remain in the high 20s degrees F before moving above freezing on Feb. 20, according to CustomWeather data.

The moderation of temperatures affected the situation in several ways, Woodfin said.

"As we started restoring load, we found that there was less load on the circuits than there had been [when they were switched off]," Woodfin said. "Less load was a function of businesses being shut down."

But another factor was that residential load, with less need to operate heating systems, was lighter "due to less cold temperatures," Woodfin said.

Outages that persisted Feb. 18 may have been due to one of the following issues:

Ice storm damage on the distribution system

• The need to restore service manually, rather than by remote switching
• Large industrial facilities that voluntarily went offline to help during this energy emergency

STRATOSPHERIC PRICES

As rotating outages continue, ERCOT has administratively set real-time locational marginal prices at $9,000/MWh, the systemwide offer cap.

This was in response to a Public Utility Commission of Texas order that scarcity pricing should reflect the value of lost load, which has been determined as $9,000/MWh, as long as rotating outages persist, at least until the next PUC regularly open meeting.

The PUC on Feb. 15 ordered the suspension of a rule that would have required a change in the systemwide offer cap from the current $9,000/MWh to the larger of two numbers: $2,000/MWh or 50 times the natural gas index price, which ERCOT has designated as the price at Katy, Texas.

On Feb. 17, that Katy price was $359.14/MMBtu; therefore, the power price cap would have been $17,957/MWh, if the rule had not been suspended.

The threshold that normally triggers the systemwide offer cap change from the $9,000/MWh, known as the "HCAP," to the larger of either $2,000/MWh or 50 times the fuel index price, known as the "LCAP," is when the year-to-date cumulative Peaker Net Margin exceeds $315,000, considered to be three times the annual cost of new entry for a natural gas peaking generator.

HYPOTHETICAL PROFITS SOAR

PNM is a measure of how much net revenue a hypothetical natural gas generator might have earned in a year, given real-time power prices and spot natural gas prices. The 2020 total was less than $50,075. ERCOT's record high PNM was almost $150,000 in 2019, according to Potomac Economics, ERCOT's independent market monitor.

The PNM was $445,900.80 as of 4 pm Feb. 17, the latest date available on the ERCOT website.

ERCOT's board of directors plan a urgent meeting for 10 am CT Feb. 24 to discuss this winter event and the grid operator's performance.

And Texas House speaker Dade Phelan has asked the House State Affairs and Energy Resources committees to conduct a joint hearing to review factors leading to the large amount of electric generation dropping off the system and subsequent statewide rolling blackouts. The hearing is scheduled for 9 am CT Feb. 25.

The PUC has its next regular open meetings scheduled for Feb. 25-26, but that schedule may be adjusted to accommodate the hearing in the state House of Representatives.