Today in Energy

February 11, 2011

New Texas wholesale power market weathers extreme cold

Facing its first major test during the extreme cold weather on February 2, 2011, the new Texas wholesale market produced supply scarcity prices of $3,000 per megawatt-hour (MWh) for about six hours – the average price in 2010 was about $40/MWh. Prices quickly returned to more normal levels. The cold weather caused an electricity supply shortage in Texas. Over 50 generators tripped offline, ultimately leading to rolling blackouts for an estimated 1.2 million customers.

Cold temperatures returned February 10, 2011. The system operator for most of Texas (ERCOT) set a new winter peak load record of 57,282 MW (eclipsing the 56,334 MW record set last week), but did not suffer a similar supply shortage.

The chart shows that real-time energy prices for February 2, 2011 rose to the system-wide offer price cap at 5:15 a.m. and mostly stayed there until 11:30 a.m. Real-time prices typically account for less than 5% of the energy cost of power and, thus, this event should have a negligible effect on retail rates. By the afternoon, prices had dropped to around $50 per MWh - a more typical real-time price.

More than 7,000 megawatts (MW) of power plant capacity was out of service or not producing at its expected level as of 9:00 a.m.

The ERCOT made public appeals for conservation, reduced the system voltage, and ultimately asked utilities to shed 4,000 MW, or about 8% of load. Rolling blackouts –– controlled, 10-45 minute interruptions of electric service –– extended until about 1:30 p.m. Critical facilities were exempt, such as hospitals and nursing homes.

Power plants in typically warm climates do not always have the same cold-protective measures in place as their northern counterparts; frozen and broken pipes, frozen coal piles, frozen transmitters, and natural gas supply disruptions are among the reported issues plaguing Texas generators. Generators in Arizona and New Mexico tripped as well, but those regions have a greater ability to purchase power from their neighbors. ERCOT's Texas grid has only limited connections to the rest of the grid, which limits its import/export capability.