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Factbox: ERCOT sets more power demand records, quadruple-digit real-time power prices

Houston — After setting all-time peakload records last Wednesday and Thursday, the Electric Reliability Council of Texas set more records Saturday and Sunday with real-time prices at quadruple-digits, leading to Monday's forecast of another new record in the afternoon, with reserve levels likely to cause concern.

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ERCOT peakload set a record of 72.2 GW Wednesday and 73.3 GW Thursday, and on Friday, the forecast for Monday called for a peakload of 75.6 GW, but that forecast had moderated as of Monday morning to about 74.3 GW. As of about 4:30 pm CDT Monday, ERCOT was reporting 73.1 GW of load and about 3.8 GW of reserves. If ERCOT's operating reserve capacity falls below 2,300 MW, the grid operator could declare an Energy Emergency Alert, and if it falls far enough, ERCOT might call for planned firm load shedding to preserve grid integrity and prevent an uncontrolled, cascading blackout.

"Little spare capacity exists to respond to any large unexpected swings in generation or load, as ERCOT reported only around 1.5 GW of available offline capacity during the peak afternoon hours," said Travis Whalen, a senior analyst at S&P Global Platts Analytics.

If an EEA is declared, ERCOT could deploy about 3 GW of Emergency Response Service resources, mostly demand response.

At around 3 pm, real-time prices were mostly averaging in the $50s/MWh, but by 3:30 pm, some triple-digit averages were taking place in the Houston and South Hubs and in the load zones across most of Texas. In far West Texas, prices were $1,000/MWh at one generator and topping $1,900/MWh at another.


ERCOT spokeswoman Leslie Sopko said around noon CDT Monday that her organization had not issued appeals for conservation, but would alert the media "if conditions change."

"We would only issue an appeal if there is a reliability concern for the electric system," Sopko said.

In contrast, Reliant, the retail electricity subsidiary of NRG Energy, sent an email Sunday to customers asking them to "please help us lighten the load by reducing your electricity usage [Monday] from 2 pm to 6 pm.

ERCOT's Sopko said her organization expected "record-breaking temperatures and record electricity usage today."

Over the weekend, ERCOT reported weekend demand records set two days in a row -- 71.1 GW Saturday and 71.4 GW Sunday. Before this year, the weekend demand high was 68.4 GW set in July 2017.

At around 3:45 pm CDT Sunday, the time when the new record was set, real-time prices across all hubs hit as high as $1,110/MWh.


Asked whether the prices seen so far have been enough to incentivize the development of new generation, Andrew Barlow, a spokesman for the Public Utility Commission of Texas, said, "That's obviously up to the market, but we believe the system is functioning as designed and desired."

Power markets are "trending toward high efficiency in terms of supply," Barlow said, "so we're encouraging proponents who enjoy the benefits of an energy-only market like lower-than-average pricing on a national scale to accept this aspect of the process as well."

David Cherney, PA Consulting Group energy market expert, on Monday said this past week's high prices in ERCOT would not be sufficient to loosen supply availability because "power generation facilities ... have useful lives that span decades."

"That said, the last week's uplift in ERCOT's power pricing certainly provides some confidence to investors that the ERCOT market has tightened," Cherney said. "We expect that generation investors will be carefully assessing the total pricing uplift, and regulatory response if any, across the entire summer of 2018, as well as evaluating how pricing may evolve over the next few years, prior to committing capital."


The pricing situation may be affecting small retail electricity providers. In late May, ERCOT executed a mass transition of about 9,800 customers from Breeze, a wind-oriented REP, to providers of last resort, because of a collateral issue exacerbated by new rules and big jumps in ERCOT's prices.

"The credit situation occurring with ERCOT's credit requirements coupled with the binary outcomes in real-time pricing creates real issues for small players to enter the market and compete whether it be on the retail side or the generation side," said Adam Sinn, a power trader with Aspire Commodities in Houston. "I believe it'll be more difficult to get hedges sold off of new generation, so while prices may be up in the forwards there's no guarantee someone will want to take a small player's credit risk."

--Mark Watson,

--Jeff Zhou,

--Edited by Rocco Canonica,