ERCOT prices plunge, but 34 GW remain offline, 166,000 are still without power

Austin, Texas — The Electric Reliability Council of Texas on Feb. 19 ended its energy emergency declaration tied to this week's winter storm and freeze, as temperatures moderated and as generation was restored. Real-time prices plunged from almost $9,000/MWh at 9 am CT (1500 GMT) to less than $5/MWh at 2 pm CT.

"There is enough generation now to return to normal operations, and we don't believe we will need to go back [to emergency conditions]," ERCOT President and CEO Bill Magness said in a Feb. 19 media call. "There may still be some outages that have to do with fallen trees or broken equipment."

No additional capacity-related outages were needed overnight to keep the power supply and demand in balance, and "only a few generating units tripped," ERCOT said in an earlier statement.

PODCAST: Severe winter storms deal a blow to much of US oil, gas production

As of 3 pm CT Feb. 19, about 34 GW of generation remained on forced outage due to the winter weather, of which 20 GW was thermal and the rest wind and solar.

As of 4 pm CT, ERCOT's wind fleet was generating almost 6 GW, and its utility-scale solar capacity was generating 2.2 GW. In its final Seasonal Assessment of Resource Adequacy for the winter of 2020-21, ERCOT anticipated no more than 6.5 GW of wind and 304 MW of solar would be available at winter peak.

As of about 3 pm CT, Texas had almost 166,000 utility customers without service across the state, according to PowerOutage.us, mostly in the central and southern areas. These were the top five utilities, in terms of customer outages according to their respective outage maps:

• Oncor: 85,827 customers, or 2.3%;
• Austin Energy: 21,049 customers, or 4.1%;
• American Electric Power Texas: 10,991 customers, or 1%;
• Central Texas Electric Cooperative: 10,619 customers, or 24.6%; and
• Navasota Valley Electric Cooperative: 6,195 customers, or 18%.

CustomWeather projected population-weighted temperatures to average 28.5 degrees Fahrenheit on Feb. 19, up from 27.6 degrees F Feb. 18, 25 degrees F Feb. 17 and below 20 degrees F for the previous three days.

As of about 3 pm CT Feb. 19, The Weather Channel reported temperatures of 39 degrees F in Austin, 37 degrees in Dallas, 46 degrees in Houston, and 45 degrees in San Antonio.

Financial implications

When asked how much winterizing generation and various facilities to be able to withstand such a brutal winter storm would cost, Magness said his staff would not know, as ERCOT owns and manages no generation or other assets, but simply acts as sort of an "air traffic controller" for power.

However, the financial ramifications were showing up Friday, with ERCOT notifying market participants that their settlements would be less than usual, because two retail electric providers, Griddy Energy and MQE, had "insufficient funds ... to pay the amounts owed" by them.

Griddy owed almost $1.2 million and MQE owed $377,265, according to the market settlement notice.

"In an attempt to protect the overall integrity of the ERCOT market by mitigating the disruption of defaults, ERCOT is using its available discretion under the Protocols to adjust collateral for Counter-Parties on a case-by-case basis, dependent upon the CP's activity in and risk to the market," ERCOT said in a market notice at 2:37 pm Feb. 19. "ERCOT encourages CPs and their represented entities ... to work through available financial or business transition options during this time."

Also, ERCOT encourage qualified market participants to contact ERCOT credit officials in advance if they believe they may be unable to pay an expected invoice, which would will allow ERCOT to prepare to use available collateral to cover any shortfall.

Stakeholder, lawmaker meetings

Several stakeholder, regulatory and legislative meetings are scheduled in the week beginning Feb. 22 that might have longer term effects on the ERCOT power market.

For example, the Public Utility Commission of Texas has its next regular open meetings scheduled for 9:30 am CT Feb. 25-26, but that schedule may be adjusted to accommodate legislative hearings. The PUC at this meeting may rescind the Feb. 15 suspension of scarcity pricing rules, which allowed the market to continue to set $9,000/MWh as the systemwide offer cap, when high prices had persisted to the point that the cap would otherwise have changed to the larger of either $2,000/MWh or 50 times the natural gas price at the Katy, Texas, price point.

On Feb. 17, that Katy price was $359.14/MMBtu; therefore, the power price cap would have been $17,957/MWh, if the rule had not been suspended.

The trigger mechanism that would normally cause that change in systemwide offer cap is when the Peaker Net Margin exceeds $315,000, considered to be three times the annual cost of new entry for a natural gas peaking generator.

PNM is a measure of how much net revenue a hypothetical natural gas generator might have earned in a year, given real-time power prices and spot natural gas prices. The 2020 total was less than $50,075. Before 2020, ERCOT's record high PNM was almost $150,000 in 2019, according to Potomac Economics, ERCOT's independent market monitor.

The PNM was $582,272.80 as of 4 pm Feb. 18, the latest date available on the ERCOT website.

The Texas Senate's Business & Commerce will meet at 9 am on Feb. 25 to "examine extreme weather condition preparedness and circumstances that led to the power outages as directed by" ERCOT. The committee will review generator preparedness and performance, utility outage practices, natural gas supply, renewable generation reliability and overall ERCOT system resilience.

And Texas House speaker Dade Phelan has asked the House State Affairs and Energy Resources committees to conduct a joint hearing to review factors leading to rolling blackouts and what changes might be necessary to avoid future power interruptions. The hearing is scheduled for 9 am CT Feb. 25.

Acknowledging that ERCOT staff would soon be sending request for information to various generation operators to determine what were the factors in forced outages, Magness said, "Texas cannot afford for this to happen again."

ERCOT's board of directors plan a urgent meeting for Feb. 24 to discuss this winter event and the grid operator's performance, and PUC members are ex-officio members.