HOUSTON (Reuters) - Real-time power prices in Texas spiked briefly on Tuesday after two power plants shut amid a heat wave and an increase in power demand, according to the grid agency’s website on Wednesday.
Real-time power rose from less than $50 per megawatt-hour at noon to $360 per MWh at 3:30 p.m. CDT after the sudden loss of a 604-megawatt power plant, then spiked to $4,900 at 4:45 p.m. after a second 609-MW plant tripped, according to information posted on the Electric Reliability Council of Texas (ERCOT) website.
Prices neared the $5,000 MW price cap for real-time power, which is used to balance supply and demand, for about six price intervals, or about 30 minutes, an ERCOT spokeswoman said.
Tuesday was the first time power prices approached the $5,000 cap since it went into effect on June 1.
The unexpected plant shutdowns did not jeopardize the reliability of the grid, the spokeswoman said. Power reserves remained above 3,000 MW so no advisory or emergency steps were triggered.
While ERCOT did not call for conservation, at least one large retailer deployed a demand response program for the first time this summer.
Most consumers will not see the impact of the higher wholesale price due to its short duration and the popularity of fixed-rate contracts.
The unidentified power plants shut down as hotter-than-normal weather stretched across the state Tuesday.
Houston’s high hit 96 degrees Fahrenheit, five degrees above normal; Dallas hit 100, seven degrees above normal; and San Antonio’s high reached 101, also seven degrees above normal, according to AccuWeather.com.
ERCOT power demand peaked at 63,411 MW in the hour ending at 5 p.m., more than 1,300 MW below ERCOT’s Tuesday forecast.
Raising the price cap is part of a push by the Texas Public Utility Commission to encourage investment in new power plants to supply the state’s $29-billion wholesale market, where electric demand is growing faster than generation is being built.
The previous cap of $4,500 was hit for about 13 minutes earlier this year. In 2012, a $3,000 cap was hit for about 90 minutes.
In 2011, real-time prices reached the price cap for more than 28 hours during a prolonged heat wave and drought that strained power supplies.
The real-time cap will rise to $7,000/MWh in 2014 and to $9,000/MWh in 2015.
Tuesday’s real-time prices were near or above $2,000/MWh for at least 45 minutes and above $200 for another 45 minutes.
In early August, hotter-than-normal weather across the state pushed electric consumption to near-record levels, but real-time prices rose only to $120 per MWh.
Generation owners in the state include Luminant, a unit of Energy Future Holdings, which is owned by Kohlberg Kravis Roberts & Co LLP and several private equity firms; NRG Energy Inc; Calpine Corp; NextEra Energy Inc and Exelon Corp.
Reporting by Eileen O'Grady in Houston; Editing by Bob Burgdorfer and Andre Grenon