HOUSTON Feb 28 The Texas grid agency issued a
healthier outlook for the state's summer electricity supply on
Friday after lowering its expectations for growth in peak power
consumption in the years ahead.
The Electric Reliability Council of Texas (ERCOT) projects
electricity demand will peak this summer at 68,096 megawatts,
850 MW, or 1.3 percent, above last summer's peak, but 209 MW
below the state's hottest summer in 2011 when extreme weather
and drought strained electricity resources at the same time new
power plant construction stalled.
The new 2014 peak forecast is 1,700 MW, or 2.4 percent below
the ERCOT forecast issued last May, reflecting months of work by
the agency to better understand changing patterns of electric
use, said Warren Lasher, ERCOT director of system planning.
Although Texas' population and economy continue to grow,
"the relationship between economic growth and peak electric
demand has changed in the past several years," Lasher said. "We
believe recent improvements to our load forecasting methodology
are providing a more realistic view of the future electric
demand we need to be prepared to serve."
Separately, NRG Energy officials said they will not
bring about 760 MW of generation online for the peak summer
season as they have in previous summers, citing ongoing low
Summer electric use in Texas has become a critical question
for the grid operator, regulators, generators and consumers.
The Capacity, Demand and Reserves report from the Electric
Reliability Council of Texas (ERCOT) was delayed from December
while ERCOT updated its forecasting methods after Texas Public
Utility Commissioner Ken Anderson said the existing method
produced results that were "wildly off."
Friday's report shows the state's electric power reserve
margin, a cushion against blackouts, will be 13 percent this
summer, below the agency's minimum target of 13.75 percent and
below last year's forecast.
The cushion may increase to 16 percent if about 2,100 MW of
new generation currently under construction is completed before
summer demand is expected to reach its highest in August, ERCOT
With lower peak demand expectations in future summers,
however, ERCOT's latest reserve-margin forecast improves
considerably from prior-year reports.
The reserve margin climbs above the 13.75 percent target in
2015 and 2016 as a few new power plants come online. The
previous forecast showed summer reserves shrinking to single
digits in 2018, while the latest forecast maintains a 10 percent
reserve through 2020.
Regulators have said that slower growth in peak-power demand
lessens the urgency in the continuing debate over reform in the
$35 billion wholesale power market.
However, the report is unlikely to end calls from major
power generators that market reform is needed sooner, rather
than later, to give companies time to plan, finance and
construct new generation.
Citing a draft of Friday's report, Thad Hill, chief
executive of Calpine Corp, said the summer forecast
would show future peak load growth some 30 percent below the
state's actual load growth since 2009.
"Reports of the death of load growth have been much
exaggerated," Hill said on an earnings call earlier this month.
ERCOT said its latest forecast expects peak demand to grow
by 1.3 percent a year over the next decade, compared to actual
growth of about 1.1 percent a year in the past 10 years.
NRG officials told analysts they disagree with the 1.3
percent growth outlook.
"We remain bullish on our overall ERCOT position, but we
need to be prudent about our investment of maintenance dollars
in marginal assets," Mauricio Gutierrez, NRG's chief operating
officer, told analysts Friday in disclosing NRG's plan to keep
its older gas-fired units at the Bertron station mothballed.
Other major power producers in Texas include Luminant, a
unit of Energy Future Holdings, owned by Kohlberg Kravis Roberts
& Co LP ; NextEra Energy ; and Exelon Corp