R eal-time energy prices in ERCOT surged to the $9,000-megawatt-hour cap on Tuesday, the result of triple-digit temperatures sweeping across Texas and high power consumption.
More typically real-time prices remain below $30 and only on two other occasions in grid history have they reached the $9,000 cap. But prices hit the mark Tuesday afternoon and remained there for 45 minutes. Average real-time prices also hovered above the $1,000 mark for more than two hours. Such high prices eventually trickle down into home rates.
Average real-time prices also reached elevated levels on Monday and at one point on that day topped $6,500 per megawatt hour. ERCOT likewise marked a new all-time peak demand record on Monday — 74,531 megawatts at about 4:30 p.m.. That record beat the previous one of 73,259 MW set by Texas energy consumers on July 29, 2018.
Although Tuesday’s consumption peak was slightly lower than Monday’s, the grid’s operating reserves on Tuesday nonetheless were tighter. This prompted the grid operator to issue its first emergency conservation alert in five years.
“Extreme heat across the state resulted in high usage today,” said ERCOT President and CEO Bill Magness. “Declaring an (Emergency Energy Alert) allowed us to access tools to maintain reliability, and we appreciate everyone’s response to the conservation appeal.”
The last such alert was issued in January 2014.
Wholesale prices also hit the $9,000 on May 30, although this earlier spike was the result of an apparent error. Houston-based Calpine afterwards acknowledged a data mistake on its part caused the market-wide surge.
In a complaint filed with the PUC, energy company Aspire Commodities said it lost money because of this earlier spike and called upon ERCOT to retroactively order a price correction. It said the brief event cost the market in excess of $18 million and could have bankrupted several retail electric providers if ERCOT had allowed it to continue.
Wholesale energy prices in ERCOT typically cannot exceed $9,000 per MWh because the grid enforces a “system-wide offer cap” that limits the price generators can seek when selling into the real-time market.
ERCOT’s $9,000 price cap is the highest such cap in the nation. The System Wide Offer Cap stood at $1,000 per megawatt hour during the early years of deregulation, in 2012 it increased to $3,000, to $5,000 in 2013, to $7,000 in 2014 and finally to $9,000 in June of 2015.
The only other $9,000 price spike in the ERCOT market occurred in January 2018.