Texas grid may have less room for error

The Texas electric grid will have less cushion than expected next summer between power demand on the hottest days and generation capacity, grid operators cautioned in a long-term study released Monday.

The Electric Reliability Council of Texas now projects that the margin of capacity over projected peak demand will fall slightly below the 13.75 percent that ERCOT prefers as it tries to prevent rolling blackouts.

The latest report anticipates that electricity generators will be able to produce 74,633 megawatts of power next summer, with peak electric use projected as 65,952 megawatts. That’s a 13.2 percent margin.

Last May the council, which operates most of the state grid, projected the 2013 reserve margin would be 14.3 percent.

The difference resulted from changes in Moody’s economic forecasts for Texas, which affect projected demand, and from companies’ plans to take plants online or offline, said Warren Lasher, the council’s director of planning, in a conference call to discuss the report.

ERCOT said the 2014 margin now is projected to be 10.9 percent – higher than forecast in May but well below the projected margin for this year. Lasher said, however, that the margin in 2014 could climb as high as 13.6 percent, depending on when three plants now under construction are completed.

“As generation units that are under study get added to the list, the outlook will change over time,” Lasher said.

In October, Texas’ Public Utility Commission voted to double the cap on wholesale power prices at peak times, hoping to encourage construction of new generating capacity. The agency had estimated that capacity reserves will fall below required levels in a few years.

The grid operator had nine emergency alerts in 2011, including one during unseasonably cold weather on Feb. 2 that resulted in rolling blackouts. There have been no such alerts so far in 2012, and the council attributes that to public conservation and improved resource planning by generators.

“Although peak demand is expected to grow less quickly than previous economic predictions indicated, we should continue to encourage new generation and develop more demand response options to reduce our electric use during periods of highest use – the hottest hours of the hottest days of summer,” said Trip Doggett, CEO of the Electric Reliability Council of Texas, in a written statement.

In a separate report Monday, the Texas Coalition for Affordable Power said that electricity prices were lower and reserve margins were higher before the system was deregulated in 2002.

Texas residents have paid $10.4 billion more than they would have under continued regulation, said the coalition, a critic of the deregulated system that created competitive wholesale and retail power markets.

Texas electricity prices, meanwhile, now exceed the national average, which was not the case before deregulation, according to the study.

“We have gone through many years of very high prices in Texas under this system,” said Jake Dyer, a spokesman for the Texas Coalition for Affordable Power. “While they have now come down 10 years later, we are still facing reliability issues and our projected margins have gone down.”