ERCOT, the manager of Texas' electric grid, issued an emergency alert Saturday. Apparently, a single power plant malfunctioned, went offline and single-handedly cut into the 2,300 megawatts of extra capacity we keep on reserve for just such occasions.
To keep that number from plunging further, ERCOT called on its demand-response reserves, which is basically a really technical way to say it asked some industrial customers to back off on their power usage. This is the second time this month the grid has issued an emergency alert. On January 6, a cold snap, two large, malfunctioning power plants, some scheduled power-plant maintenance and seasonal mothballing conspired to push the grid to the breaking point. Electricity spot prices rose above the state-mandated cap for nearly an hour. We were literally importing power from Mexico.
At first glance, this could feed into the narrative being spun by members of the industry that the construction of new power plants needs to be subsidized by Texans through a capacity market. It's a controversial proposal currently under consideration at the Public Utility Commission of Texas, and it likely has the votes to pass. As we've reported, two of the three commissioners have already signaled interest in a "mandatory reserve margin" that doesn't sound achievable without a capacity market.
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These commissioners, and industry members, say wholesale electricity prices are too low to justify the construction of new power plants. Without them, they warn, this state's growing energy needs and population may soon outstrip electric capacity. But those dire warnings are based on chronically inaccurate forecasts, skewed heavily by a hellacious 2011 heat wave, the likes of which haven't been seen before or since.
And if you look at the string of close calls in the last few years, the problem doesn't seem to be demand. During a cold snap in winter 2011, a number of plants went offline because of poor weatherization, triggering an actual rolling blackout. Earlier this month, cold weather knocked out two really huge power plants, and ERCOT sent out a plea for conservation. About two weeks later, the weather was beautiful, and demand was meager, but enough power plants were out for maintenance that the loss of just one pushed the grid into alert status. This wasn't a crisis of capacity -- just bad planning for what sound like non-essential, routine outages, and yet another plant failure.
It's easy to see why generators want a capacity market. By some estimates, it'll cost Texas consumers $14 billion over the next decade and a half. An over-abundance of natural gas has pushed wholesale electricity prices down and kept them there. It should be telling that the same crowd that warned against market intervention in the salad days is now begging for it.
The emergency alerts are indeed worrisome, particularly two in as many weeks. But the causes for them -- and other recent emergencies -- don't add up to a multi-billion-dollar energy tax on consumers, who have no guarantee that it'll be spent on new power plants.