Texas power demand sets record high as heat wave bakes U.S. Southeast

(Reuters) - Demand for electricity in Texas hit a record on Monday as consumers cranked up their air conditioners to escape a heat wave that is currently baking much of the Southeastern United States, according to the state’s power grid operator.

High temperatures in Houston, the state’s biggest city by population, hit 100 degrees Fahrenheit (38° Celsius) on Monday and could go higher on Tuesday, according to AccuWeather forecasts. The normal high in Houston is 96 F at this time of year.

The U.S. National Weather Service issued heat advisories for much of the Southeast. In Houston, the combination of heat and humidity will make it feel more like 111-113 F on Monday and Tuesday.

The Electric Reliability Council of Texas (ERCOT), grid operator for much of the state, reported demand hit 74,531 megawatts (MW) at 5 p.m. CDT (2200 GMT) on Monday and could approach 75,000 MW on Tuesday. The prior all-time high was 73,473 MW on July 19, 2018.

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

Despite high demand, next-day power prices at the ERCOT North hub traded well below their one-year high of $209.25 per megawatt hour last week at just $70 for Friday and $80.25 for Monday.

ERCOT has more than 78,000 MW of generating capacity to meet demand this summer, but warned low reserves could force it to issue alerts urging customers to conserve energy. [nL1N20S0PR]

ERCOT has said its planning reserve margin for this summer was a historically low 7.4% because several generators have been retired even though demand is rising.

The reserve margin is the difference between total generation available and forecast peak demand, with the difference expressed as a percentage of peak demand.

Generators are being retired because power prices in the state and across the country have declined for 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 of the electricity in Texas.

Lower power prices make it difficult for some generators, like those operating old coal-fired plants, to make money selling electricity.

Ercot North prices fell to an average of $33.87/MWh over the past five years (2014-18) from $41.37 during 2009-13 and $59.19 during 2004-08.

Reporting by Scott DiSavino; editing by Bill Trott and G Crosse