November 21, 2013 / 12:05 AM / 4 years ago

Texas grid agency to delay 2014 reserve-margin report

HOUSTON, Nov 20 (Reuters) - The Texas grid agency will delay the December release of an annual report that updates the state’s electric supply outlook for the critical summer period when soaring temperatures strain available power resources.

The board of the Electric Reliability Council of Texas (ERCOT) decided to delay the report’s planned release in early December after criticism from Public Utility Commissioner Ken Anderson on Tuesday.

Summer electric consumption in Texas has become a critical question for Anderson and the other utility commissioners who are working with ERCOT to find ways to boost power resources to avoid rolling blackouts.

The prospect for blackouts in Texas has increased after extreme weather and drought strained generating resources in 2010 and 2011. Coupled with the slow pace of new power-plant construction, regulators worry that electric supply will not keep pace with rising demand in the $29 billion wholesale market.

ERCOT normally issues its Capacity, Demand and Reserves (CDR) report in early December to give the market its first look at the upcoming summer’s supply and demand outlook.

ERCOT President H.B. “Trip” Doggett initially told the ERCOT board that the agency planned to issue “parallel” reports in early December showing two forecasts for future power use. One report would be similar to previous ERCOT reports based on economic projections from Moody’s Investors Service while a second projection will use new methodology still being developed by ERCOT staff.

Anderson criticized that idea, saying the forecast based on Moody’s economic data has been “wildly off.”

“Putting out a CDR with bad numbers is meaningless,” Anderson said. “The commission as a whole expected the CDR to have the new methodology in order to inform us in our discussion and debate,” he said.

After some discussion, ERCOT Chairman Craven Crowell called for the report to be delayed until after a Dec. 10 board meeting to make sure ERCOT leaders are comfortable with the new load forecasting methodology.

State regulators and the grid operator have made a number of wholesale market changes and debate continues on more radical changes to encourage investment in new power plants.

Last year, ERCOT said the region’s reserve margin - a cushion against blackouts - would be 13.2 percent, below the agency’s minimum target of 13.75 percent.

The report forecast a declining reserve margin through 2022 even with some new power plants and the return of some mothballed power plants to meet summer power needs.

A lower reserve margin increases the chance of a power outage from ERCOT’s target of only once in 10 years.

While the Texas economy is expanding faster than other states, the correlation between economic activity and electric use has become harder to forecast since the 2008 recession leading utility regulators to question the CDR report’s accuracy.

Major power producers in the state include Luminant, a unit of Energy Future Holdings which is owned by Kohlberg Kravis Roberts & Co LLP, NRG Energy, Calpine Corp , NextEra Energy and Exelon Corp.

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