| HOUSTON, Sept 13
HOUSTON, Sept 13 Calls for electric conservation
and rolling outages failed to materialize in Texas this summer,
despite warnings from the grid operator, as electric supplies
were ample to keep air conditioners and refineries running
smoothly even during heat waves.
Lack of drama on the electric front made life simpler for
Texas grid officials but has puzzled utility regulators and may
complicate efforts to rewrite market rules to attract new
generation to serve the state's $29 billion deregulated power
Power demand "used to be pretty close, with an almost
algorithmic connection between growth in economic activity and
load growth," said Ken Anderson, a member of the Texas Public
Utility Commission (PUC). "That's disconnected: it's just not
there anymore," Anderson said at a recent public meeting.
Texas produces and consumes more power than any other state
and grid officials with the Electric Reliability Council of
Texas (ERCOT) feared strong economic growth might lead to a
repeat of the summer of 2011 when they were forced to cut power
to industrial companies on several record hot days.
Anderson said it may be a combination of factors that kept
summer power demand from reaching the 68,383-megawatt level
forecast by ERCOT even without public appeals for conservation
or extremely high power prices.
Power demand this summer peaked on Aug. 8 at 67,180
megawatts, the third highest in history, but nearly 2 percent
below ERCOT's forecast.
While Texas homes typically use twice as much power as the
average U.S. home due to air conditioning, a growing number of
informal and voluntary programs that curb power use during peak
afternoon hours and costlier wholesale market caps may be behind
2012's missing summer demand.
Brookfield Office Properties, which owns 8 million square
feet of office space in Houston, offers one example of an
informal conservation program.
Brookfield voluntarily curbed power use on at least 10 days
this summer when prompted by its retail electric supplier about
the potential for high heat and power demand.
"We do what we can by dimming the lobby lights and turning
off non-essential loads, such as fountains and decorative
lighting," said Wayne Harner, Brookfield's vice president of
technical services in Houston.
The widespread installation of smart meters across the state
and devices that can control home appliances remotely are
allowing more customers to take advantage of programs that offer
incentives to shift use of power-hungry appliances to off-peak
hours when prices are lower, electric retailers said.
A program from TXU Energy offering customers free
electricity on nights or weekends has attracted 100,000
residential customers, beating the company's expectations, said
Jennifer Pulliam, a TXU Energy product director.
"This has been the single most popular product family we
have launched in the competitive market to date," she said.
The company could not disclose how much electric demand has
been shifted to lower-cost hours.
"I believe we are seeing some degree of shift," Pulliam
said. "What we don't know is if it's a sustained shift."
CPS, San Antonio's municipal utility, said voluntary
programs that curb electric use during extreme weather cut 120
MW from what the utility would have expected in early August.
One megawatt can serve about 200 average Texas homes in the
summer when air conditioners run for extended hours.
"Our objective is to reduce load on the hottest days of the
year," said Rick Luna, manager of demand management analysis at
CPS. Expanding the program may allow the fast-growing utility to
delay construction of future power plants.
LAGGING POWER USE
While the Texas economy is expanding faster than other
states, the correlation between growth and electric use has
become harder to forecast since the 2008 recession.
In the 1980s, power demand grew at twice the rate of U.S.
gross domestic product (GDP), but over the past decade the
economy has become less electric intensive due to more
energy-efficient building codes and new lighting and appliance
standards, according to the U.S. Energy Information
"Over this decade, we expect the relationship to evolve to
around 0.5 to 0.6 percent for every 1 percent increase in GDP,"
said Kristian Bodek, a director for North American power at IHS
CERA. "For the 2020s, we expect it to drop to 0.4 percent."
ERCOT will update its demand forecast model by December to
better reflect this changing relationship between population and
economic expansion on power use, said Warren Lasher, ERCOT's
director of system planning.
Anderson said ERCOT must improve its ability to forecast
Texas short and long-term power needs because billions of
dollars are at stake.
An uneventful summer should not be viewed by regulators as a
reason to delay action to solve the thorny market design issues,
said Mike Pickens, associate director for IHS CERA.
"The challenge is that it could give them a false sense of
breathing room, but the fact still remains that ERCOT needs to
build another 10,000 megawatts by the end of the decade," said
Pickens, who focuses on ERCOT power market fundamentals.
Power companies in Texas include TXU Energy and Luminant,
both units of Energy Future Holdings, which is owned by Kohlberg
Kravis Roberts & Co LLP and other private equity firms;
NRG Energy ; Calpine Corp ; CenterPoint Energy
and Exelon Corp.