Texas Power Tops $5,000 for First Time Amid Frigid Weather

Jan 06, 2014 3:15 pm ET

Jan. 6 (Bloomberg) -- Spot wholesale electricity in Texas topped $5,000 a megawatt-hour for the first time as frigid weather boosted demand and prompted the grid operator to import generation from Mexico and ask users to conserve power until at least tomorrow.

The temperature in Dallas was 20 degrees Fahrenheit (minus 7 Celsius) at 10:30 a.m. local time, down 17 degrees from the average low for the day, according to AccuWeather Inc. in State College, Pennsylvania. Houston was projected to see a low of 22 degrees, 23 below normal.

“Ercot this morning got hit with multiple plant outages because they had temperatures below freezing and they are not really designed for that,” Kate Trischitta, director of trading at Consolidated Edison Inc.’s wholesale energy trading division in New York, said in a telephone interview.

Power consumption on the Electric Reliability Council of Texas Inc. network, which covers most of the state, averaged 53,369 megawatts for the hour ended at noon, a 6.7 percent increase from the day-ahead forecast of 50,034 megawatts, according to the grid’s website.

One megawatt is enough to serve about 500 homes during mild weather and about 200 homes during periods of peak demand, according to Ercot.

Texas Prices

Spot prices at the North hub, which includes Dallas, more than tripled to $87.20 a megawatt-hour for the hour ended at noon from the same time Jan. 3, after rising to $5,258.88 during the 15-minute interval ended at 7:15 a.m., according to grid data compiled by Bloomberg and the grid’s website.

“This is the first time prices hit $5,000,” Robbie Searcy, a spokeswoman for Ercot in Austin, said in an e-mail. “We saw demand go to 55,486 megawatts in the hour ending 8 a.m. and have had some generation challenges.”

Ercot canceled a warning issued earlier today of possible rotating blackouts. The conservation request is expected to remain in effect until tomorrow morning because demand is projected to be about the same as this morning, Dan Woodfin, Ercot’s director of system operations, said in a conference call with reporters.

“We have brought on all available electric generation and have deployed all demand response programs that have contracted with Ercot to reduce electric use in emergency situations,” Woodfin said earlier in an e-mailed statement.

Plant Shutdowns

In the call with reporters, Woodfin said Ercot was importing this morning about 800 megawatts of generation from the Eastern U.S. and about 180 megawatts from Mexico as two plants in north-central Texas were forced offline because of the weather. About 3,700 megawatts were lost between midnight and 8:15 a.m., half from the weather and half because of other issues, Woodfin said. He said he didn’t have information on what types of plants were shut.

“We will need all the generation to stay available during tomorrow morning’s peak as well,” Woodfin said.

The last time Ercot imposed rolling blackouts was in February 2011 during cold weather and icy conditions that led to a series of unplanned power-plant shutdowns. The winter peak load record was set on Feb. 10, 2011, when demand reached 57, 265 megawatts, Searcy said in the call with reporters. The blackouts typically affect residential customers and small businesses and are typically limited to 10 to 45 minutes before being rotated to a different neighborhood, Ercot said.

The high prices came as the coldest air in almost 20 years swept over the central U.S. toward the East Coast.

Wind chills plunged past 50 degrees below zero Fahrenheit in parts of the upper Midwest before dawn. Chicago’s high today won’t reach zero and may just hit that tomorrow, according to the National Weather Service. New York City, which had a pre- dawn reading of 54, will drop to 6 by tomorrow.

Spot electricity on the Illinois hub rose to $176.15 a megawatt-hour at noon local time from the same hour on Jan. 3. Prices in New York City fell 63 percent to $68.34 a megawatt- hour for the hour ended at 1 p.m. New York time from $183.31 on Jan. 3.

--Editors: Bill Banker, Charlotte Porter