ERCOT Reserve Margin Shrinks to 7.4%

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Find out how ERCOT's low reserve margin will affect your Texas electricity bills.
ERCOT’s anticipated low reserve margin this summer will test the Texas grid’s ability to meet customer demand.

Can ERCOT juggle its energy reserves all summer long?

The predicted amount of electricity the Texas grid will have to spare is less than what was available in the summer of 2018. According to forecasts by the Energy Reliability Council of Texas (ERCOT), the reserve margin of electricity will be 7.4%. That’s down from the 8.1% reserve initially announced in December and down sharply from last summer’s 11% reserve margin. These margins help avoid a Texas energy emergency.

While ERCOT officials are not worried, Chair of the Public Utility Commission of Texas DeAnn Walker has call the slim margin “pretty scary.” The closure of several power plants has added to her anxiety. She expressed her concerns in an open meeting of the commission last month. She also asked ERCOT staff if 7.4% in reserve is enough to keep the Texas electricity grid operating reliably.

During peak summer demand as generation reserves fall below the minimum level required, ERCOT can take steps to ensure grid reliability. Those steps include using switchable resources in adjacent electricity grids, buying emergency responsive service, releasing ancillary services, and reducing voluntary load. If these do not succeed in meeting demand, ERCOT can implement rolling blackouts.

“At that reserve margin level, it’s likely that we will have to take advantage of those additional resources,” ERCOT senior director of system operations Dan Woodfin said. “We will likely have to do that on a number of occasions this summer, but there’s not an indication at this point in time that we will have to implement rotating outages.”

With a lower reserve margin, conservation measures for Texas summer electricity could be more frequent. Texas consumers with month-to-month and prepaid plans may see higher electricity rates from retail electricity providers. That’s almost a certainty during the high heat in late summer months.

How is the ERCOT reserve margin calculated?

Twice a year, ERCOT releases a Capacity, Demand and Reserves Report which looks forward over the next ten years. It shows annual projections of how much demand ERCOT expects from Texas electricity customers and how much supply ERCOT expects to have available. The supply expectation includes current power generating plants, scheduled plant closures, and anticipated new generating power. The reserve margin is the percentage of supply above the forecasted peak demand.

Power generators in Texas keep ERCOT informed about impending plant closures and new projects such as solar farms and wind farms. New projects and adjusted timelines for these projects influence the ERCOT reserve margin calculation for the Texas electricity market. For instance, a delay in Luminant’s West Texas battery project would have decreased this year’s reserve margin. Since the battery project opened on time, it’s completion did not change the reserve margin calculation.

Powering your home

If you haven’t taken the time to shop Texas electricity rates in awhile, now is the perfect time to look. The spring weather means retail electricity prices are coming down before they swing back up in the summer. You could save hundreds of dollars per year when you switch electricity plans. All the information you need is right here at Texas Electricity Ratings.

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