Summer heat comes early for ERCOT as prices spike to $80s/MWh

Houston — Electric Reliability Council of Texas wholesale spot power prices have jumped higher than the five-year March average high as parts of the state hit 90-degree weather more than a month early.

Hub prices across the ERCOT footprint have climbed between 22% and 39% week on week as temperatures started to spike March 23 across the state into the upper 80s and low 90s degrees Fahrenheit, in contrast to the 50s and 60s just a few days earlier. Many areas expected near-record high temperatures.

The sudden spike in temperatures has pushed up power demand across the state. ERCOT peakload has averaged 52,542 MW so far in March, 11.4% above the five-year March peakload average of 47,175 MW, according to ERCOT data.

Peakload averaged 47,380 MW March 22-26, 10% higher than the previous week's average, according to ERCOT data.

"ERCOT anticipates there will be sufficient generation to meet the demand on the system during the spring season, even if loads increase due to unseasonable temperatures," ERCOT spokeswoman Leslie Sopko said to Platts. "However, it is worth noting that one warm week does not necessarily mean the rest of the spring season will continue to be as warm."

Spot prices

Higher prices were not far behind the rising power demand.

ERCOT Houston Hub peak day-ahead locational marginal prices jumped into the low $80s/MWh for March 23 flow, 25% higher than the five-year March average high price, according to ERCOT data. South Hub also spiked into the low $80s/MWh, 29% higher than the five-year average. North Hub climbed in to the upper $70s/MWh, 33% higher than the five-year March average high price, while West Hub reached into the md-$70s/MWh, 31% higher.

Taking a wider look, Houston Hub on-peak has averaged in the upper $20s/MWh so far this month, up 51% from the February average, according to ERCOT data. The trend continues across the footprint with North Hub on-peak up 45% month on month and South Hub up 37% month on month to both average in the upper $20s/MWh so far in March, as West Hub prices averaged in the mid-$20s/MWh, a 26% increase month on month.

In contrast, spot gas prices are near record lows due to high supply levels across the country following mild winter weather. Houston Ship Channel spot gas has averaged $1.705/MMBtu so far this month, down 8% month and month and dropping 41% year on year, according to S&P Global Platts data.

Weather

Temperatures have reached some of the highest levels in years, and the mercury is rising more than a month earlier than it normally starts spiking for the hot, humid Texas summer.

In Houston, temperatures have averaged 71 degrees so far this month, 8.8 degrees above normal and higher than the 5-year March average temperature of 65.14 degrees, according to the US National Weather Service. The average first 90-degree day is typically seen no earlier than May in the Houston region.

In Austin, month-to-date temperatures have averaged 67.6 degrees, 9.1 degrees above normal and above the 5-year March average temperature of 62.48 degrees. In Dallas, March temperatures have averaged 63.2 degrees so far this month, 6.3 degrees above normal and above the 5-year March average temperature of 60.26 degrees.

The 6-10 day temperature probability outlook had near normal to above normal changes for warmer weather in Texas, while the three-month temperature probability outlook indicated greater chances for above-normal temperatures across the entire state, according to the National Weather Service.