Drought of 2011 put grid to the test

Elec­tric­ity

Austin American-Statesman - - BUSINESS - B RE­SERVE MAR­GIN PRO­JEC­TIONS Year Dec. 2012 Forecast may 2012 Forecast Con­tact Lay­lan Copelin at 445-3617. Con­tact Gary Dinges at 9125987. Twit­ter: @gdinges

of the power in­dus­try and the Pub­lic Util­ity Com­mis­sion of Texas as the de­bate con­tin­ues on what, if any­thing, should be done to en­cour­age the con­struc­tion of more power plants.

Two PUC mem­bers, Ken An­der­son Jr. and Rolando Pab­los, have ar­gued that the mar­ket is be­gin­ning to re­spond to the pro­jec­tions of power short­ages and changes the PUC has made to grid op­er­a­tions. How­ever, Donna Nel­son, the PUC chair­man, has ar­gued that ratepay­ers may have to pay in­vestors to add gen­er­at­ing ca­pac­ity to avoid the threat of black­outs.

On most days, ERCOT has plenty of power, but the 2011 drought and record tem­per­a­tures tested the grid’s lim­its and un­der­scored a long-range prob­lem — in­vest­ment in new gen­er­a­tion has slowed to a trickle and, so far, has not kept up with the grow­ing de­mand for elec­tric­ity. Low prices for nat­u­ral gas, a fuel for gen­er­at­ing elec­tric­ity, are un­der­cut­ting the prof­itabil­ity of other gen­er­a­tion.

ERCOT tries to main­tain a re­serve mar­gin of 13.75 per­cent over its pro- jected de­mand for elec­tric­ity, but the forecast shows it dip­ping to 13.2 per­cent for next sum­mer and de­creas­ing to­wards 7 per­cent by 2018. The state’s con­sul­tants, The Brat­tle Group, have warned that a re­serve mar­gin of 8 per­cent or less could prompt as many as 20 rolling black­outs dur­ing a record sum­mer such as 2011.

The ERCOT forecast, up­dated ev­ery six months, con­sid­ers new gen­er­a­tion that is ex­pected to come on­line, as well as vari­ables such as weather and eco­nomic con­di­tions.

Mon­day’s forecast shows im­prove­ment in the re­serve mar­gins over the May forecast for 2014 and be­yond, but the im­prove­ment in­cludes a slightly slower rate of eco­nomic growth, which would in turn slow de­mand for elec­tric­ity.

That forecast ex­pects non-farm em­ploy­ment in the ERCOT re­gion to grow by more than 2.5 per­cent in the next few years, a higher growth rate than has oc­curred in re­cent years but lower than other sce­nar­ios.

“Ev­ery eco­nomic sce­nario we eval­u­ated in­cluded a sig­nif­i­cant in­crease in the 2014 to 2016 time frame,” said 2013 13.2% 2014 10.9% 2015 10.5% 2016 8.5% 2017 8.4% 2018 7.1% Source: Elec­tric Re­li­a­bil­ity Coun­cil of Texas 14.3% 9.8% 6.9% 6.5% 5.8% 5.8% War­ren Lasher, ERCOT’s di­rec­tor of Sys­tem Plan­ning. “When the next (forecast) comes out in May, we may need to ad­just that out­look based on the eco­nomic trends at that time.”

The re­serve mar­gin for 2013 dipped slightly since last spring be­cause it is un­clear whether some new gen­er­a­tion coming on­line will be avail­able by Au­gust, typ­i­cally the hottest month of the year.

Whole­sale elec­tric­ity prices are av­er­ag­ing less than $30 per megawatthour this year, too low to be prof­itable for most gen­er­a­tors, but prices can spike dur­ing times of high de­mand.

The PUC has in­creased the whole­sale price cap from $4,500 per megawatt-hour, ef­fec­tive next sum­mer, to $7,000 in 2014 and $9,000 in 2015.

The PUC is also de­bat­ing whether to in­crease ERCOT’s op­er­at­ing re­serves, ef­fec­tively rais­ing prices by mak­ing less gen­er­a­tion avail­able ex­cept in emer­gen­cies, and cre­at­ing a pro­gram to en­cour­age cus­tomers to curb power us­age dur­ing the hours of peak de­mand, mostly on sum­mer af­ter­noons. her get the new busi­ness up and run­ning. Her first lo­ca­tion, which closed re­cently to make way for a new mixed-use devel­op­ment, was on South La­mar Boule­vard near Tread­well Street.

Once the North Austin project is done, Seely says Yi plans to re­open in South Austin.

“Tim­ing-wise, it just makes sense to do this first, then go back south,” Seely said, cit­ing the in­tense in­ter­est the Shoal Creek Boule­vard build­ing is re­ceiv­ing.

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