The Electric Reliability Council of Texas, which runs most of the state's electric grid, said last week that it expects to enter Energy Emergency Alert conditions -- meaning electric demand is nearing or surpassing available supplies -- on "multiple occasions" this summer. During these emergency conditions, the wholesale price of power spikes to $3,000 per megawatt-hour, and Texas electric customers may be exposed to these high prices unless they shop for a low electric rate.
Although ERCOT provided some good news -- it does not forecast the need for rolling outages this summer unless there is extreme, record heat and a higher than anticipated number of power plants that unexpectedly trip offline -- ERCOT's preliminary summer assessment confirms that Texas electric rates will repeatedly spike this summer, to levels at the price cap of $3,000 per megawatt-hour, due to a shortage of generating capacity in the state.
"Based on expected resource availability and demand levels driven by anticipated above-normal temperatures, there is a significant chance that ERCOT will need to declare an Energy Emergency Alert (EEA) on multiple occasions during the summer of 2012 and issue corresponding public appeals for energy conservation; these EEA declarations are not likely to result in the need for rotating outages," ERCOT said.
The Energy Emergency Alerts include several steps, from first appealing to the public to conserve energy, to ordering certain large customers to take their load off the grid (e.g. interruptible customers), to finally rotating power outages.
Regardless of what level of Energy Emergency Alert is reached, it indicates that electric demand cannot be met with available supplies. At these times, all power plants are ordered to turn on, including the most expensive plants which usually do not run. The "dispatch" of these high-cost, peaking power plants pushes the wholesale price of power to $3,000 per megawatt-hour when shortage conditions hit.
When this happens, it is not uncommon to see retail electric providers pass through these costs to their customers, sometimes through rates that are as high as 25 cents to 30 cents per kilowatt-hour.
Because those rates are more than three times higher than what Texas electric customers can currently find in the market, customers need to shop for a low electric rate now, while they are still available.