Texas Power Prices Briefly Surpass $9,000 Amid Scorching Heat
By Chris Martin and Naureen S Malik August 12, 2019
With temperatures in Dallas approaching 100 degrees Fahrenheit (38 Celsius), the Electric Reliability Council of Texas warned that it was increasingly likely the electricity system could experience shortages — a prospect that may prompt regulators to ease environmental restrictions and allow generators to run at maximum capacity. The region’s power supply cushion has fallen close to 2,500 megawatts, less than 5% of total demand on the system.
Wholesale electricity prices have shot up by as much as 21,147% to $3,848.69 a megawatt-hour across the Texas grid. On Monday, they jumped 36,000% to average as much as $6,537.45 a megawatt-hour across the Texas power grid. It’s a record that has turned the Lone Star State into the most expensive place to buy power in all of America’s major markets.
“Prices could hit the ceiling” at $9,000 a megawatt-hour, said Flannan Hehir, a power analyst at energy data provider Genscape. “We’re already a bit tighter than we were at this point yesterday.”
The unprecedented market rally highlights how volatile the Texas power market has become as coal-fired power plants, which have seen their profits squeezed by cheap natural gas and renewable energy resources, continue to close. Texas’s grid operator has been warning for months that plant retirements and increasing electricity demand has left it with slim supply margins.