Texas power prices nearly triple to record high as heat bakes state

(Reuters) - Spot power prices in Texas almost tripled to a record high for Friday as the state’s grid operator took emergency measures for a second time this week to keep the lights on as consumers cranked up their air conditioners to escape a heat wave.

High temperatures in Houston hit 100 degrees Fahrenheit (38 Celsius) or more every day from Aug. 7-15 but were expected to ease to a near normal 96 F on Friday, according to AccuWeather.

The combination of heat and humidity will make it feel more like 108 F in Houston this afternoon.

The Electric Reliability Council of Texas (ERCOT), grid operator for much of the state, called on consumers to conserve energy and issued energy emergency alerts on Tuesday and Thursday after the shutdown of some generation and curtailment of some power lines caused reserves to fall.

Next-day power prices at the ERCOT North hub soared from $265 per megawatt hour (MWh) for Thursday to $751 for Friday, their highest on record, according to Refinitiv data going back to 2010.

On Thursday, real-time prices rose to ERCOT’s $9,000/MWh offer cap for several 15-minute intervals for a second time this week. That was the fourth time prices hit that cap after January 2018, May 30 and Aug. 13.

Spot is the price during the 16 on-peak hours the following weekday, while real-time is the current price in 15-minute intervals.

ERCOT issued alerts this week - Tuesday’s alert was its first since January 2014 - even though peak demand of 74,181 megawatts (MW) on Tuesday and 70,969 MW on Thursday fell short of Monday’s record high of 74,531 MW.

With the heat expected to linger over the weekend, ERCOT projected demand would rise to over 73,200 MW on Friday and 74,000 MW on Aug. 19.

One megawatt can power about 1,000 U.S. homes on average, but as few as 200 during periods of peak demand.

ERCOT has more than 78,000 MW of generating capacity to meet demand this summer but has said its planning reserve margin for this summer was a historically low 7.4% because several generators have retired even as demand rises.

Generators are retiring because power prices have declined in recent years as growing supplies of cheap natural gas from shale formations, like the Permian in West Texas, flood the market. Gas produces a little less than half the electricity in Texas.

Reporting by Scott DiSavino; Editing by Steve Orlofsky