Were regulators right to push power prices to the maximum in Texas?
FacebookTwitterEmail
Yi-Chin Lee, Houston Chronicle / Staff photographer
With power generators knocked offline and outages rolling across Texas on Feb. 15, wholesale electricity markets in Texas presented a puzzle. Power was trading between $1,000 and $2,000 per megawatt-hour, a very high price, but not one that reflected the severe power shortages crippling the state.
That evening, the Public Utility Commission stepped in, ordering the state’s grid manager, the Electric Reliability Council of Texas, to declare a level three emergency and push wholesale prices to the maximum allowed, $9,000 per megawatt-hour, where they stayed for much of the next few days.
Article content
For investors and companies that spent years ignoring climate risks, the storm that buried much of Texas in frost and snow earlier this month is sending a wake-up call that’s reverberating even in Canada.
In recent years, at least three Canadian utilities had spied opportunities for predictable cash flows in the loosely regulated Texas electricity market, but they failed to foresee the climate-related risk.
We apologize, but this video has failed to load.
Try refreshing your browser, or Canadian power companies face climate change reckoning after Texas s free-wheeling electricity grid freezes Back to video
One of those companies, Mississauga-based Just Energy Group, a retail utility providing power from natural gas and renewable energy sources, told investors this week that it is now teetering on insolvency after incurring an estimated $315 million in losses as a result of the Texas storm. Analysts who pegged the company’s liquidity at $138 million, said
Texas Grid Operator Warns Of Defaults As Credit Crisis Develops zerohedge.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from zerohedge.com Daily Mail and Mail on Sunday newspapers.
Dive Brief:
Almost half of the Electric Reliability Council of Texas generation was forced offline at its peak during last week s power crisis that left millions without electricity for days, according to new data released by the grid operator.
At its highest point, approximately 48.6% of ERCOT s power generation 52,277 MW of the grid operator s 107,514 MW in installed capacity was forced out due to the extreme weather conditions. This caused a critical supply shortage just as demand ramped up, and creating emergency conditions early Monday morning that forced the grid operator to initiate rolling outages throughout much of last week.
The grid operator was dangerously close to succumbing to a much more devastating situation, ERCOT President and CEO Bill Magness said while presenting the data Wednesday. Dangerously low frequencies could have plunged most of Texas into a multi-week black start event, he said.