Jan. 6 (Bloomberg) -- Spot wholesale electricity in Texas topped $5,000 a megawatt-hour for the first time as frigid weather boosted demand and prompted the grid operator to import generation from Mexico and ask users to conserve power until at least tomorrow.
The temperature in Dallas was 20 degrees Fahrenheit (minus 7 Celsius) at 10:30 a.m. local time, down 17 degrees from the average low for the day, according to AccuWeather Inc. in State College, Pennsylvania. Houston was projected to see a low of 22 degrees, 23 below normal.
“Ercot this morning got hit with multiple plant outages because they had temperatures below freezing and they are not really designed for that,” Kate Trischitta, director of trading at Consolidated Edison Inc.’s wholesale energy trading division in New York, said in a telephone interview.
The developments may spark debate over a proposal in Texas to pay producers to keep a set amount of power in reserve for use during periods of high demand. The proposal is on the agenda for a Jan. 9 Texas Public Utility Commission hearing.
Power consumption on the Electric Reliability Council of Texas Inc. network, which covers most of the state, averaged 50,342 megawatts for the hour ended at 2 p.m., an 8 percent increase from the day-ahead forecast of 46,629 megawatts, according to the grid’s website.
One megawatt is enough to serve about 500 homes during mild weather and about 200 homes during periods of peak demand, according to Ercot.
Spot prices at the North hub, which includes Dallas, more than doubled to $55.56 a megawatt-hour for the hour ended at 2 p.m. local time from the same time Jan. 3, after rising to $5,258.88 during the 15-minute interval ended at 7:15 a.m., according to grid data compiled by Bloomberg and the grid’s website.
“This is the first time prices hit $5,000,” Robbie Searcy, a spokeswoman for Ercot in Austin, said in an e-mail. “We saw demand go to 55,486 megawatts in the hour ending 8 a.m. and have had some generation challenges.”
Prices can rise above a $5,000 price cap on the Ercot grid, raised from $4,500 in June 2012, when adding transmission congestion and costs associated with dispatching other generating units, Searcy said. The PUC has approved raising the cap to $7,000 in June and to $9,000 in June 2015.
Ercot canceled a warning issued earlier today of possible rotating blackouts. The conservation request is expected to remain in effect until tomorrow morning because demand is projected to be about the same as this morning, Dan Woodfin, Ercot’s director of system operations, said in a conference call with reporters.
“We have brought on all available electric generation and have deployed all demand response programs that have contracted with Ercot to reduce electric use in emergency situations,” Woodfin said earlier in an e-mailed statement.
Woodfin said in the call that Ercot imported about 800 megawatts of generation from the Eastern U.S. and about 180 megawatts from Mexico early today as two plants in north-central Texas were forced offline because of the weather. About 3,700 megawatts were lost between midnight and 8:15 a.m., half from the weather and half because of other issues, Woodfin said. He said he didn’t have information on what types of plants were shut.
The grid was close to issuing an Emergency Level 3 alert to institute rolling power outages if another unit had gone offline, he said.
“We will need all the generation to stay available during tomorrow morning’s peak as well,” Woodfin said.
Luminant’s Comanche Peak 1 reactor was “at reduced power so workers can do repairs on a heater drain pump” after it experienced a loss of sealant around 6 a.m. today, Lara Uselding, a spokeswoman for the U.S. Nuclear Regulatory Commission in Arlington, Texas, said in an e-mail.
NRC data shows the unit, about 66 miles (106 kilometers) southwest of Dallas, was operating at full capacity before the pump issue. Comanche 1 reactor’s nameplate capacity is 1,215 megawatts and summer capacity is 1,205 megawatts, according to the U.S. Energy Information Administration.
Luminant hasn’t determined if the issue was caused by the weather, spokesman Brad Watson said. Luminant, the largest generator in Texas, is a unit of Energy Future Holdings Corp.
The last time Ercot imposed rolling blackouts was in February 2011 during cold weather and icy conditions that led to a series of unplanned power-plant shutdowns. The winter peak load record was set on Feb. 10, 2011, when demand reached 57,265 megawatts, Searcy said in the call with reporters. The blackouts typically affect residential customers and small businesses and are usually limited to 10 to 45 minutes before being rotated to a different neighborhood, Ercot said.
The high prices came as the coldest air in almost 20 years swept over the central U.S. toward the East Coast.
Wind chills plunged past 50 degrees below zero in parts of the upper Midwest before dawn. Chicago’s high today wasn’t expected reach zero, according to the National Weather Service. New York City, which had a pre-dawn reading of 54, will drop to 6 by tomorrow.
The Tennessee Valley Authority, which serves nine million people in parts of seven southeastern states, expects electric use on its system to approach a winter record tomorrow at just below 32,000 megawatts, it said in a statement today.
Spot electricity at the Illinois hub advanced 77 percent to average $79.68 a megawatt-hour at 1 p.m. local time from the same hour on Jan. 3. Prices in New York City fell 21 percent to $130.38 a megawatt-hour for the hour ended at 3 p.m. New York time from $164.28 on Jan. 3.
To contact the editor responsible for this story: Dan Stets at email@example.com