Temperatures plunge, energy demand climbs

Wholesale natural gas and electricity prices rise as cold grabs hold of Texas

WHOLESALE natural gas and electricity prices climbed Wednesday as bitter cold gripped Texas and much of the South and sent power demand surging.

With temperatures falling into the 20s and teens, Texans from Midland to Houston cranked up their furnaces, driving winter power demand to an all-time high, according to the Electric Reliability Council of Texas. Electricity consumption Wednesday morning reached nearly 66,000 megawatts, shattering the old record of about 63,000 megwatts set earlier this month, when another cold front swept across the country.

The low temperatures strained the ERCOT system, which covers about 90 percent of Texas, and the merchant

power companies that supply it. A handful of power plants tripped offline early Wednesday morning, ERCOT said. Wholesale electricity prices in Texas, which typically average about $25 per megawatt hour, spiked as high as $2,266, the highest since March 2014.

In Louisiana, natural gas prices at Henry Hub, the national price benchmark, hit $3.25 per million British thermal units, up from $2.92 the week previous.

As with the deep freeze that hit the Northeast at the turn of the New Year, Texas’ record-breaking cold will likely be a boon for companies that produce and sell natural gas.

Texas leads the nation in natural gas production, and the state’s natural gas companies have already had a banner month thanks to an East Coast cold snap that sent natural gas spot prices above $6 per million British thermal units at the Henry Hub earlier this month — more than double the normal price.

The spiking demand for natural gas also boosted Texas refiners as Northeast power plants opted to burn fuel oil to make electricity as prices there spiked about $20 per million British thermal units.

Houston-based NRG Energy and Calpine reported no issues at their plants in Texas.

Bloomberg News reported that Marathon Petroleum Corp.’s refinery in Garyville, La., had a power outage early Wednesday while Valero Energy Corp.’s Meraux refinery southeast of New Orleans lost power late Tuesday.

Royal Dutch Shell said it had some minor issues at its Louisiana refinery that temporarily led to increased flaring, but declined to provide additional details.

Yi-Chin Lee / Houston Chronicle Ryan Gabbart uses a hair dryer to thaw out his outdoor tankless gas water heater in the Heights Wednesday. Gabbart woke up without hot water in his house.

Steve Gonzales / Houston Chronicle Juan Salas keeps an eye on the arrival time of his mother’s flight at George Bush Intercontinental Airport Wednesday. His mother’s flight was canceled Tuesday because of the ice storm.