Texas, ERCOT, and the Electricity Outlook for Summer 2014

By Vernon Trollinger, June 9, 2014, News

Texas, ERCOT, and the Electricity Outlook for Summer 2014

Image Air_Conditioners_2865.JPG By Alvimann courtesy of Morguefile.com

According to predictions from the Electric Reliability Council of Texas (ERCOT) meteorologist Chris Coleman, the chances are very good that Texans will face a milder to normal summer this year. “The summer of 2014 is not anticipated to be hotter than any of the past four summers.” The hottest weather potential for Texas will likely creep in towards late July. The National Weather Service’s three month outlook shows temperatures will have a 40% to 50% chance of being above normal throughout most of the state and especially in the panhandle.

By the Numbers

More than half of the summertime peak electrical load is used by residential consumers. Not surprisingly, ERCOT has prepared to take the heat when August arrives. ERCOT’s all-time record for power consumption was 68,395 Megawatts (MW) on August 3, 2011. ERCOT expects this summer’s demand peak to reach approximately 68,000 MW. Current installed capacity is about 74,000 MW. Texas, ERCOT, and the Electricity Outlook for Summer 2014While 13,359 MW is renewable; the 12,824 MW coming from wind is technically figured in at a lower amount because wind is an intermittent source. ERCOT forecasts a reserve margin of 13.75 percent which climbs to 15 percent when six new gas-fired generating units with a combined 2,153 MW of capacity come online August 1 —just in time for things to get hot.

Still, while ample supply dims the threat of rolling blackouts, there may be times when the summer heat makes ERCOT encourage conservation.

Eye on Fuels and Price Caps

The US Supreme Court in April upheld the U.S. Environmental Protection Agency’s right to enforce its Cross State Air Pollution Rule (CASPR). For Texas, that affects its coal-fired generators —about 26% of the overall generation capacity. Most Texas coal-fired plants burn bituminous coal brought in by train from Wyoming’s Powder River Basin. US coal consumption has been rising due to increasing natural gas prices. However, the effects of MATS and what eventually happens with CASPR is already making coal too seem too expensive a fuel to clean up after.

Natural gas prices, meanwhile, have been increasing following this past winter’s bitter cold, but, according to the EIA’s May 6 Short Term Energy Outlook (STEO), prices are expected to flatten over the coming year as production and distribution pipelines build. In Texas, new gas-powered power plants are currently under construction with projected completions running from 2015 -2017.

More People, More Energy

Now while all that sounds reassuring, the key factor driving Texas energy prices (other than weather) is rising demand. More people and businesses are moving into Texas, so, more power plants are needed.

June 2 saw the Texas Public Utility Commission (PUCT) raise the wholesale electricity market price cap from $5,000/MWh to $7,000/MWh.The PUCT’s idea is to attract more generating investment in Texas with better opportunities for profit. This price cap mainly effects retail energy providers who purchase electricity on the wholesale market. Consumers with variable rates and indexed plans could see occasional price spikes in their bills — so it’s best to lock in prices with a fixed rate. However, the cost of periodic spikes may eventually trickle down into the rates Texas residential consumers pay over the very long term.

Remember, it always pays to lower your cooling costs by setting your thermostat higher when you’re away, doing laundry during off-peak hours, and using fans to help circulate the air in your home. For more cool ideas on how you can save money in Texas during Summer 2014, check out our energy efficiency tips.


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A native of Wyomissing Hills, PA, Vernon Trollinger studied writing and film at the University of Iowa, later earning his MA in writing there as well. Following a decade of digging in CRM archaeology, he now writes about green energy technology, home energy efficiency, DIY projects, the natural gas industry, and the electrical grid.

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