FERC to look for incidents of market manipulation during storm.
FERC to screen for potential manipulation in gas, electricity
The Federal Energy Regulatory Commission said Monday it would examine power market activity over the last week for incidents of market manipulation as cold weather ravaged power grids in Texas and other states.
In Texas, the state’s grid operator reported that half of the state’s generating capacity went offline due to the cold or weather-related fuel shortages, forcing widespread blackouts and causing wholesale power prices to spike to more than 300 times normal levels.
FERC investigators will be screening both natural gas and electricity markets for signs of manipulation, as part of “ongoing surveillance of market participant behavior,” the commission said.
The damage, financial and human, is still being tallied following the outages that extended for more than four days and, at their peak, left more than 4 million Texans without electricity and heat amid bitterly cold temperatures.
On Monday, the retail power company Just Energy Group said it lost $250 million in Texas wholesale power markets last week when prices soared to the state maximum of $9,000 per megawatt hour and stayed there for days. Wholesale prices typically run between $20 and $30 per megawatt hour this time of year.
In a press release, the company said it is still assessing the extent of the losses, but they could drain its cash and threaten its ability to stay in businesses “unless there is corrective action by the Texas government.”
Analysts expect the extended period of soaring prices to force some retail power companies out of business. Since customers tend
to have contracts at fix rates, the retail power companies must absorb most of the astronomical costs.
Jesson Bradshaw, CEO of concierge service Energy Ogre, which helps 100,000 customers find retail electricity plans, said the power crisis could deal the market a blow as companies get forced out.
“If we have 100 participants and that number gets cut in half, it’s less competitive than it was before,” he said. “More competition tends to be better for consumers.”
The power blackouts in Texas during last week were worse than those during California’s wildfires last year, according energy research firm S&P Global Platts.
The Electric Reliability Council of Texas, the manager of the state’s self-contained power grid, said about 43,000 megawatts of power went offline during the worst of the power crisis, representing about half of the system’s capacity estimated at about 86,000 gigawatts, S&P Global Platts said.
Texas was short about 20,000 to 25,000 megawatts
of power, or enough to power 4 million to 5 million homes for three straight days.
By comparison, California Independent was short by 1,500 to 2,000 megawatts for two nights during the height of the summer wildfire season last summer, S&P Global Platts said.
“ERCOT’s difficulties made California’s rolling blackouts last summer appear trivial,” said Aneesh Prabhu, an S&P Global Ratings credit analyst.
Last week’s bitter cold was unprecedented in its duration and expanse, knocking out power generators and bringing down
transmission lines across the state just as Texans cranked up their thermostats. The mismatch between supply and forced ERCOT to implement rolling blackouts to maintain the grid’s stability, officials said.
Peak hourly power demand hit 69,200 megawatts on Feb. 14 and 15, surpassing the previous winter peak demand record of 65,900 megawatts in January 2018. In Texas, peak winter power demand is typically about 55,000 megawatts, Platts said.
The rolling blackouts shut down pumps at municipal water systems and
snuffed out heating systems that led to frozen and broken water pipes in homes, businesses and schools.
The blackouts are blamed in 48 deaths statewide, including at least 30 in the Houston area. Authorities say victims died of exposure to the cold, the loss of essential medical devices and carbon monoxide poisoning as people sought warmth by running cars, portable generators and barbecue grills indoors.