News Release
March 01, 2013

ERCOT expects another tight summer

Conservation needed on hottest days

March 1, 2013, Austin, TX -- The amount of electricity available to serve consumer demand will be tight again this summer, according to information released today by the Electric Reliability Council of Texas (ERCOT), which operates the power grid and manages the electric market for most of the state.

"Current estimates indicate that we likely will see very tight conditions on the hottest days," said Kent Saathoff, vice president of Grid Operations and System Planning for ERCOT. "There is a significant chance that ERCOT will need to issue Energy Emergency Alerts and appeal to consumers to reduce their energy use on some of those days."

ERCOT issued two reports today: the final Seasonal Assessment of Resource Adequacy for spring and a preliminary assessment for summer. Sufficient resources will be available to meet anticipated spring demand, as long as extreme weather well beyond expected conditions does not occur during the early part of the season when power plants are undergoing maintenance to prepare for summer.

The preliminary summer assessment anticipates a peak demand of 67,998 megawatts (MW), based on a weather outlook similar to that of 2010 and a slower-growth economic outlook. ERCOT anticipates 73,708 MW of generation capacity before accounting for power plant outages, which typically total about 2,600 MW during an operating day. One MW can serve about 200 homes during peak demand periods. This assessment counts wind power at 8.7 percent of its installed capacity, and ERCOT stakeholders are currently evaluating whether to recommend increasing that capacity value based on performance in recent years.

"Although we expect to have more resources available for summer demands than we projected at this time in 2012, we also expect higher demand this year," Saathoff said.

"Current trends call for a summer that is hotter and drier than normal," said Chris Coleman, ERCOT meteorologist. "Although we don’t anticipate prolonged heat waves like those in 2011, we expect conditions in many areas to be similar to 2012."

Power demands in the ERCOT region are highest in summer, primarily due to air conditioning use in homes and businesses. The ERCOT region’s all-time record peak occurred on Aug. 3, 2011, when consumer demand hit 68,305 MW. Although the summer of 2012 was much milder than the record-breaking conditions that marked the previous year, ERCOT still experienced new monthly peaks in June, July and September.

The final assessment for summer 2013 will be released in May. ERCOT will continue to assess conditions to determine if additional actions should be taken to help protect system reliability this summer. Those actions could include bringing "mothballed" units, resources that are not currently operating but could be brought back to operational status, back on-line for the peak season.

The ERCOT Board of Directors in February 2012 approved a protocol revision that authorized ERCOT to contract for these resources if the additional capacity would likely be needed to prevent an emergency situation. That same month, the board also approved changes to help ensure steps taken to protect reliability, including deployment of operating reserves, did not result in prices that did not reflect the scarcity conditions. Because generation companies in the ERCOT market are paid only for the energy they provide to the market, prices during scarcity conditions are designed to provide necessary revenues during fewer operating hours. If generators cannot recover their costs, they are unlikely to invest in new resources.

The Public Utility Commission of Texas (PUC) in 2012 increased the system-wide offer cap, the highest price at which power can be offered into the market, to $4,500 per megawatt-hour (MWh) in August 2012, with annual incremental increases scheduled up to $9,000 in summer 2015. The cap will go up to $5,000 per MWh this summer. ERCOT also has set the cap as the price for units that are called upon in scarcity conditions.

Balancing supply and demand

ERCOT has taken other steps in the past year to address ongoing resource adequacy concerns as electric demand grows faster than generation is being built to serve those electric needs. These efforts focus primarily on encouraging consumers to use less electricity during the periods of highest demand.

A pilot began in 2012 to encourage more consumers to provide Emergency Response Service by reducing their electric use within 30 minutes after receiving direction from ERCOT. That pilot, which pays eligible participants for this service, has been extended through summer 2013. For the first time, residential consumers are now able to participate, through aggregators, in the grid operator’s paid demand response efforts.

Other steps ERCOT has taken to support reliability focus on increasing consumer awareness of system conditions. Last summer, ERCOT launched the ERCOT Energy Saver mobile app that provides current load information and offers push notifications to consumers when conservation is needed. ERCOT also began posting non-binding real-time prices for the next hour on its website to increase awareness for consumers who may want to reduce their energy use when wholesale prices are expected to rise.

Efforts to encourage investment in new generation continue both at ERCOT and the PUC.

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Seasonal Assessments of Resource Adequacy

Spring 2013 final

Summer 2013 preliminary

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to 24 million Texas customers -- representing about 90 percent of the state's electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 43,000 miles of transmission lines and 550 generation units. ERCOT also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 6.7 million premises in competitive choice areas. ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. ERCOT's members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities (transmission and distribution providers), and municipal-owned electric utilities.

Contact
Robbie Searcy (512) 225-7213
rsearcy@ercot.com