Texas missed out on drop in power prices last year

By L.M. Sixel
January 13, 2020

Wholesale electricity prices last year fell nationwide except in one place — Texas. Here, they soared when an August heat wave gripped the state and repeatedly sent wholesale power prices up to the state’s maximum price of $9,000 per megawatt hour.

In most of the U.S., average annual wholesale prices fell 15 to 30 percent in 2019 compared with the previous year, a reflection of lower natural gas prices, according to the Department of Energy.

But in Texas, day-ahead wholesale electricity prices averaged $38 per megawatt hour in 2019, an increase of 13 percent over the 2018 average, according to the Energy Department. The higher average price was caused by the state’s tight power supply cushion, record demand and surcharges.

Monthly wholesale prices in Texas were the highest in August, a month when punishing triple-digit temperatures and record-setting demand forced the state’s grid operator, the Electric Reliability Council of Texas, to issue emergency alerts, including voluntary conservation measures, to prevent rolling blackouts. The surge in demand set off price signals that prompted power generators to produce more power and for consumers to use less, according to the Energy Department.

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