(Reuters) - Electricity prices in Texas soared this week as utilities scrambled for supplies to meet surging heating demand in the middle of a historic winter storm, prompting regulators to order a cap on prices.
Millions of Texans are without power after grid operator The Electric Reliability Council of Texas (ERCOT) instituted blackouts as electric heating demand overwhelmed generation, some of which was knocked offline by the extreme weather.
Next-day power for Wednesday at the ERCOT North hub, which includes the cities of Dallas and Fort Worth, spiked to a record of $8,800 per MWh, a nearly six-fold jump from $1,489.75 the previous day.
In response, the state's Public Utility Commission ordered the operator to cap prices here at $9,000 per MWh on Wednesday.
The extreme weather has forced about 34,000 megawatts (MW) of generation off the system, ERCOT said on Monday, or 40% of roughly 82,000 MW of expected capacity.
Around 2.7 million customers were still without power in Texas, according to local power companies.
(Graphic: ERCOT North hub next-day power price jumps to record high, )
ERCOT’s website showed wholesale power prices deliverable over the next five minutes broke above $10,000 per MWh earlier this week. Prices were over $9,000 earlier on Wednesday morning.
Real-time prices were less than $50 per MWh before the cold blast hit Texas.
“The surge in prices is due to the simultaneous constriction in supply due to freeze-offs and a surge in demand for heating,” said Marshall Steeves, energy markets analyst at IEG Vantage, adding that the price spike is affecting residential and commercial users.
“Homeowners who depend on power for home heating will be particularly impacted while businesses and manufacturers will face a spike in rates.”
Temperatures are expected to rise after mid-week which should help the market balances normalize, he added.
“There isn’t a massive impact to the futures curve which tells me that this event is short-lived and of course highly dependent on the current weather pattern,” said Robert DiDona of Energy Ventures Analysis.
Reporting by Swati Verma in Bengaluru; Editing by Christian Schmollinger and Sonya Hepinstall
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