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What Will a Hot Summer Mean for Electricity Companies in Texas?

February 27, 2012

2011 was a tumultuous year for Texas electricity companies and consumers as the state was brought to the brink of continuous blackouts during two extreme periods of hot and cold. A deep freeze experienced earlier in February last year put electricity generation equipments out of commission and knocked down several power plants. Come August, an extremely hot summer threatened more blackouts, prompting the grid operator to make repeated calls for energy conservation.

The reserved electricity capacity in the State could not cope with the growing demands for Texas electricity from commercial, residential and industrial consumers. The margin last year was only 17 percent, pushing electricity rates up with the threat of rolling blackouts that were averted as consumers exercised their power to choose their energy options and heeded calls for conservation. This year, the immediate future of Texas electricity and how it will affect electricity companies and consumers will depend on what the weather brings, particularly another threat of a piping-hot summer.

Hot Summers and Texas Electricity

With an extremely hot summer, equipment and other power plant machineries from Texas electricity companies break down from the resulting drought hot temperatures bring. Drought means lack of water, and water is the main ingredient needed to cool down the gas, nuclear and coal-fired power plants that produce Texas electricity. According to Electric Reliability Council of Texas  (ERCOT), another hot summer could affect and put at risk at least 3,000 megawatts of generated electricity, which will definitely affect electricity rates and put the state in another round of rolling blackouts.

Conservation or Rolling Blackouts

According to ERCOT President Tripp Doggett during a recent State House hearing, the consumers in the State of Texas will have to make a choice between ramping up conservation efforts for Texas electricity or risk dealing with rolling blackouts if the State encounters another extremely hot and scorching summer as last year.

In 2011, ERCOT announced Texas electricity emergencies and called on the general public to exercise conservation to bring down consumption rates. Unlike other States, Texas has its own electric grid that is independent from other states, and this isolation will prove detrimental in seeking emergency capacities from neighboring grids – putting the state at a unique electricity risk.

Long Term Solutions

The ability of the Texas grid operator to keep electricity flowing smoothly across a rapidly growing state would depend on how adequate available power plants will be. However, according to ERCOT, there are no scheduled power plants of significantly large generating capacities that will come online this year. Some mileage may come from previously mothballed plants to restart operations, but aside from that no substantial capacities are expected to be added to the current margin.

Texas electricity regulators are encouraging the construction of additional power plants as long term solutions to address this capacity issue as peak demands continue to rise as the State continues to grow. Consumer groups fear that new power plants would mean higher electric rates. Environmentalists on the other hand are calling on more focused conservation measures to address the issue, pushing the Demand Response program wherein consumers will actually get paid by reducing consumption during peak hours – a program that has taken little mileage in Texas.

Another option Texas electricity commissions are looking into are making regulatory changes that would make it more convenient for wind energy generators to store large amounts of electricity in batteries. One example is the 36-megawatt battery capacity in Notrees, West Texas that is expecting completion during 2012.  This and other long term solutions are being pursued by State officials and key players in the Texas electricity industry. Until then, electricity companies and consumers would have to deal with the imminent threats the coming hot summer would bring.

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