Please be aware that on March 5th, The Electricity Reliability Council of Texas (ERCOT) released its preliminary Seasonal Assessment of Resource Adequacy (SARA) report for summer 2019.
In this report, ERCOT has once-again forecasted higher prices throughout the summer season. Rising temperatures, shrinking reserves and larger than expected demand could set Texas up for the perfect storm.
“Prior to each season, we consider a range of potential risks to determine whether there will be sufficient capacity to meet the expected peak load forecast,” said ERCOT President and CEO Bill Magness. “In all of the scenarios studied, we identified a potential need to call an energy alert at various times this summer.”
Last year saw increased wholesale and retail prices in Texas due to low reserve margins and hot weather, and this year looks to bring more of the same.
“We know they (prices) will increase,” said Pete Warnken, ERCOT’s manager of resource adequacy.
Reserve margin is a measure of an electric system’s available capacity relative to the capacity needed to meet normal peak demand levels. Regulatory bodies usually require producers and transmission facilities to maintain a constant reserve margin of 10-20% of normal capacity as insurance against breakdowns in part of the system, or sudden increases in energy demand.
Texas is heading into the 2019 summer months with a historically low reserve margin of only 7.4%, just over half of ERCOT’s minimum reserve target of 13.75%. In comparison, last year Texas entered the summer months with a higher reserve margin of 10.62%, yet still saw significant price spikes due to power scarcity fears.
Record electricity demand this summer could test the capacity of the Texas grid. ERCOT is forecasting a summer peak load of 74,853 megawatts (MW) and a total capacity of 78,154 megawatts (MW).
While the anticipated operating reserves for this summer will be even tighter than experienced last year, it is important to note that ERCOT has a number of mechanisms and tools to maintain system reliability. One such tool is a program that compensates customers willing to temporarily reduce their demand during emergency situations.
The final summer SARA report will be released in May and will reflect the expected summer weather conditions.
WHAT THIS MEANS TO YOU
Customers who have yet to secure a fixed rate, as well as those who are currently floating on index or variable rates, should consider taking immediate action before the start of the upcoming 2019 summer season.
Large power users who have the ability to curtail their energy consumption in response to emergency alerts are encouraged to take advantage of EMEX’s demand response programs and receive compensation during emergency situations. Click here to read about EMEX’s demand response services.
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