March 1, 2012 / 10:07 PM / 8 years ago

UPDATE 1-Texas grid warns of tight summer power supply

* Grid agency expects to use emergency procedures this summer

* NRG Energy has restarted 688 MW of idled generation

* STP reactor seen back before summer demand kicks in (Adds detail from agency, companies)

By Eileen O’Grady

HOUSTON, March 1 (Reuters) - The Texas electric grid operator warned on Thursday that the state will likely see another hot summer that will strain power supplies.

Texans consumed a record amount of electricity in the summer of 2011, when air conditioners revved up during the state’s hottest summer on record. The Electric Reliability Council of Texas (ERCOT) declared emergencies on a half dozen days in August to avoid rolling power outages.

“Based on the National Weather Service’s three-month outlook, we are expecting above-normal temperatures this summer - though not as extreme as last summer,” said Kent Saathoff, ERCOT’s vice president of grid operations and system planning said in a statement.

Saathoff said ERCOT expects to use emergency procedures and conservation calls when supplies are tight to avoid rolling outages or a larger statewide blackout.

In a preliminary report ahead of the summer, ERCOT said it raised its peak demand projection to 67,492 megawatts, nearly 1,300 MW above what would be expected in a “normal” weather scenario, but 887 MW below the 2011 peak of 68,379 MW.

ERCOT has warned that rolling outages could occur more frequently over the next few summers as an electric surplus shrinks dramatically as plants retire due to stricter environmental rules and new-plant construction is hampered by low wholesale prices and a lack of available financing.

Saathoff said the agency was working with state regulators to expand programs to curtail power load in emergency situations and to recall idled power plants to supply additional power.

The grid agency expects to have 73,300 MW of available generation, little-changed from last year as completion of a new coal-fired plant in the state has been delayed one year.

ERCOT took the unusual step to sign “last resort” contracts last summer to bring back 400 MW of mothballed generation as a cushion against blackouts, but some units were unable to restart on short notice.

About 1,500 MW of generation in ERCOT that is currently mothballed could be returned to service with one to four months notice, the agency said.

The ERCOT board late last month approved a process to allow the agency to recall idled units for capacity, but Saathoff said ERCOT has no plans currently to do so.

He said the preliminary report was designed to alert generation owners of upcoming conditions “and let them make the business decisions of whether to bring back mothballed units.”

If extended generation problems are seen before May 1, ERCOT could pursue the option of recalling old units, Saathoff said.

NRG Energy, the state’s second-largest generator, has brought three older, natural gas-fired units totaling 688 MW out of mothball status for the summer, said NRG spokesman Dave Knox on Thursday.

“The remaining generation we evaluate on a weekly basis,” he said.

NRG executives said this week that Unit 2 at the South Texas Project nuclear plant should return to service from an extended outage in mid-April, well before summer demand builds.

Luminant, the state’s largest power supplier, has not made a decision to restart mothballed units, a spokeswoman said Thursday. Luminant has about 1,655 MW in mothball status.

However, a federal court’s move to delay implementation of a new air pollution rule is expected to allow Luminant to continue to run two, 583-MW units at its Monticello coal-fired plant this summer. Luminant earlier planned to shut the units.

ERCOT market participants and state regulators are working to balance the short-term need for more supply to avoid blackouts with the longer-term need to send price signals to encourage construction of new power plants in the state. (Reporting by Eileen O’Grady; Editing by David Gregorio and Lisa Shumaker)

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