Texas Spot Power Prices Jump Almost 100-Fold on Tight Supply

image is BloomburgMedia_SD6UXDDWLU6800_09-05-2024_12-00-07_638508096000000000.jpg

Power lines near Austin, Texas, US, on Friday, Aug. 25, 2023. Texas narrowly skirted a statewide power emergency yesterday after unexpected rain brought temporary relief from record heat, but despite Thursday's wet respite triple-digit temperatures are expected for days to come. Photographer: Jordan Vonderhaar/Bloomberg

Texas electricity prices soared almost 100-fold as a high number of power-plant outages raised concerns of a potential evening shortfall. 

Spot prices at the North Hub, which includes Dallas, jumped to more than $3,000 a megawatt-hour just before 7 p.m. local time, versus about $32 at the same time Tuesday, according to data from the Electric Reliability Council of Texas. 

This morning, Ercot, as the state’s main grid operator is known, issued a “watch” for a potential capacity reserve shortage from about 7-9 p.m., meaning the buffer of spare supplies could fall to low enough levels to call on back-up generation, cancel or delay outages or curb usage. 

The conditions are the tightest of the year so far and raises the risk of prices rising to the $5,000 cap — which they last did on April 16, when Ercot also warned of a potential shortfall. Unusually hot weather in the region has boosted demand for cooling and lowered the efficiency of many power plants. Wind output has also fallen from a day earlier and there are more outages. 

“Ercot has not called for conservation this evening,” it said by email. “The grid is operating under normal conditions at this time.” 

The high prices may force big consumers, including Bitcoin miners, to curtail their operations for a few hours. Batteries are also expected to ramp up to keep the grid stable. 

The impact on consumers will depend on their retail contract, with the state requiring households to pick a third-party supplier and decide ahead of time if they want to lock in prices for a month or even years. Retailers have been prohibited from fully exposing residential consumers to wholesale prices since February 2021. 

(Updates prices in second paragraph.)

©2024 Bloomberg L.P.

By Naureen S. Malik


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