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Texas power prices jump almost fivefold in August as grid logs new load records

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Texas power prices jump almost fivefold in August as grid logs new load records

Extreme heat in Texas that drove demand to new highs spurred a year-over-year surge in wholesale power prices in the Electric Reliability Council Of Texas, or ERCOT, in August, as spot pricing elsewhere across the country declined.

The average price of on-peak day-ahead power for August in ERCOT soared 479.1% year over year, from $39.98/MWh to $231.52/MWh. Spot power prices for August elsewhere in the U.S. averaged in the high $20s to the high $30s per MWh, reflecting losses of about 1.7% to as much as 50.7% versus the prior year.

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ERCOT system-wide demand set back-to-back records, reaching a new weekend high of 71,864 MW on Aug. 11, and consecutive all-time highs of 74,163 MW and 74,531 MW on Aug. 12. The previous record was 73,473 MW, set July 19, 2018.

ERCOT's new all-time high peak demand reached in August reflected a 6.6% increase from the year-ago month. August peak demand in other U.S. power markets was lower than in the previous year.

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Helped by elevated power prices, generator margins significantly improved in Texas. Implied heat rates, or the efficiency rates at which the market cost of power equals the cost of burning fuel to produce electricity, surged 733.4% year over year in August for gas-fired generators in ERCOT and jumped 297.3% to as much as 335.5% for the grid operator's coal-fired generators depending on the type of coal used.

Nationally averaged implied heat rates in August were 69.3% higher on the year for gas-powered generators and up 15.2% to as much as 26.3% for coal-fired generators.

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Underlying gas prices at hubs serving U.S. generators were approximately 30.0% lower across the board year over year in August, with indexes spanning the high $1.70s to the mid-$2s per MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities pages.