Texas Grid Says Efficiency Slowing Peak Demand Growth

Electricity demand growth is slowing in Texas even as the population and economy expand, the state’s main grid operator said today in a new 10-year outlook that may fuel opposition to a mandatory power reserve proposal.

Reserves are being boosted by greater consumer use of energy-efficient light bulbs and appliances and other factors, the Electric Reliability Council of Texas Inc. said in the report. The planning reserve margin, or power available in excess of peak demand based on normal weather patterns, will be 13 percent as of June 1 and 16 percent by Aug. 1 as 2,100 megawatts of gas-fired plants come online, Ercot said.

“Although population and the economy continue to grow in the Ercot region, the relationship between economic growth and peak electric demand has changed in the past several years,” Warren Lasher, Austin-based Ercot’s director of system planning, said in the grid’s statement.

The new figures may affect a proposal before the Texas Public Utility Commission that would implement a mandatory reserve margin, which could lead to capacity payments to generators for keeping spare power available.

The proposal’s supporters have said a mandatory margin is needed to ensure reliability. Opponents argue it will increase electricity costs for consumers without improving reliability. State lawmakers have told the PUC that only the legislature has the authority to implement such a market change.

PUC Chairman

PUC Chairman Donna Nelson, who previously spoke in support of the proposal, said Feb. 25 at a conference in Austin that the commission should “step aside” and let the legislature make the decision if it wants to. The commission hasn’t said whether it will take a formal vote.

“The state’s reserve levels are more than adequate to reliably and economically serve customers’ needs into the foreseeable future,” Tony Bennett, president of the Texas Association of Manufacturers, said in a statement after the release.

Today’s outlook relies on 12-year average weather patterns and a load-forecasting methodology that focuses on growth in customer premises, instead of general economic and employment growth figures, Ercot said.

New generation plants opening this year are also adding to the reserve margin. Calpine Corp. will expand its Deer Park Energy center by 165 megawatts. Panda Power Funds LP, a Dallas-based private-equity firm, will start up the 720-megawatt Sherman plant and the 717-megawatt Temple. The Lower Colorado River Authority is bringing online the 510-megawatt Ferguson facility near Austin.

Ercot also said it’s analyzing whether the grid can rely on more power from commercial wind farms during peak demand than the 8.7 percent of installed capacity included in the current outlook.

To contact the reporter on this story: Harry R. Weber in Houston at hweber14@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Richard Stubbe, Margot Habiby

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