Texas power prices hit quadruple digits during one of hottest days on record

At 105.2 degrees F, Aug. 17 was the Electric Reliability Council of Texas' second-hottest day, in terms of population-weighted high temperatures, since CustomWeather started collecting the statistic in 2015. The power market set systemwide hub real-time prices in quadruple digits for 6.5 hours in the afternoon and evening.

ERCOT's power demand on Aug. 17 approached its 85.4-GW all-time record, set Aug. 10, but did not break it, possibly because ERCOT and the Public Utility Commission of Texas requested voluntary conservation of power use from 3 pm to 8 pm CT.

ERCOT had previously extended a weather watch for extreme heat that began Aug. 6 until Aug. 18, but triple-digit high temperatures and heat indexes are forecast across most major metro areas in the market most days through Aug. 25.

The National Weather Service on Aug. 18 had excessive heat warnings and advisories for about 230 of Texas 254 counties, plus southern Arkansas, all of Louisiana, southwest Mississippi and almost all of Oklahoma.

ERCOT's 10:30 am CT Aug. 18 load forecast indicated demand would likely peak at 86.4 GW Aug. 18 but remain below the current 85.4-GW record thereafter through Aug. 25.

ERCOT's systemwide hub real-time prices topped $100/MWh at 1 pm CT Aug. 17 and stayed above that level through 9:30 pm CT. Real-time prices exceeded $1,000/MWh around 2 pm CT and mostly stayed in quadruple digits through 8:45 pm CT. Excluding short periods in triple digits, these prices averaged more than $3,200/MWh, from a minimum around $1,027/MWh to a maximum around $5,078/MWh. Locational marginal prices can exceed the $5,000/MWh offer cap when transmission congestion is included.

Including Aug. 17, ERCOT's systemwide hub real-time prices have exceeded $1,000/MWh on 10 days so far in August.

Supply factors

One factor favoring surging real-time prices Aug. 17 was a dearth of wind output, as ERCOT recorded the system's fleet producing at an hourly average level of less than 5.5 GW during the peak hour ending at 5 pm CT, which is about half the 10.4 GW that ERCOT modeled in its summer 2023 Seasonal Assessment of Resource Adequacy as the likely wind output level during the seasonal peak.

During Aug. 18 trading on the Intercontinental Exchange, ERCOT North Hub day-ahead on-peak prices plunged nearly $197 to price around $188/MWh for Aug. 21 delivery. The weekend package fell $34.75 to price around $210/MWh. The balance-of-the-week on-peak package rose $57.50 to around $422.50/Mwh.

One factor mitigating price spikes is the low price of natural gas and strong gas-fired generation performance.

In Aug. 18 trading, Houston Ship Channel spot gas slid about 7 cents to $2.36/MMBtu for Aug. 19-21 delivery, according to assessments by Platts, part of S&P Global Commodity Insights.

For June 1 through Aug. 16, ERCOT's generation fleet has produced an average of 765 GWh a day, up 9% from 703.4 GWh/d for the same period of 2022, according to ERCOT data collected by S&P Global.

For June 1 through Aug. 17, ERCOT's power burn has averaged 6.1 Bcf/d, 760 MMcf/d more than the same period of 2022's 5.3 Bcf/d.