August 13, 2019 / 12:59 PM / a month ago

Texas power demand to hit record again as heat wave bakes U.S. Southeast

Aug 13 (Reuters) - Demand for electricity in Texas on Tuesday will break a record high that was hit on Monday as consumers keep their air conditioners cranked up to escape a heat wave baking much of the U.S. Southeast, according to the state’s power grid operator.

High temperatures in Houston, the state’s biggest city, will reach 100 degrees Fahrenheit (38° Celsius) for a seventh day in a row 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 113 F on Tuesday.

The Electric Reliability Council of Texas (ERCOT), grid operator for much of the state, projected demand will rise over 75,100 megawatts (MW) on Tuesday, topping Monday’s preliminary peak of 74,531 MW. That beat the prior all-time high of 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 EL-PK-ERTN-SNL traded well below their one-year high of $209.25 per megawatt hour (MWh) last week at just $114.25 for Tuesday and $80.25 for Monday.

For one 15-minute interval on Aug. 12, however, real-time prices hit $6,537.45/MWh, which several traders said was a record high.

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.

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

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 retiring because power prices in the state and across the country 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.

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

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