Here is a quick timeline of what occurred in ERCOT over the last day and half:
- ERCOT hit a record winter peak of 69,150 MW early Monday morning
- Shortly thereafter, multiple generators began tripping offline due to facilities literally freezing up in the cold temperatures (pipes and infrastructure at coal and gas plants, wind turbines, etc.)
- ERCOT deployed ERS and LR customers
- ERCOT quickly ordered the TDSPs to shed firm load through rotating outages, which are continuing now; ~90% of the outages have been due to rotating firm load shedding, 10% have been due to TDSP infrastructure
- Gas supplies are extremely tight
- Industrials and all interruptible have been curtailed
- Gas power plants in some cases struggling to get gas
- 1 unit at South Texas Project (STP) Nuclear Plant is offline this morning and has been since
- Gas daily cleared at $180 / MMBtu over the weekend
- PUC issued emergency order last night to direct ERCOT to count firm load shed volumes in the calculation of spot prices, virtually guaranteeing we will remain at the $9,000 / MWh price cap until firm load shed is no longer needed
- Prices for ancillary services have also been at or in some cases above the $9,000 / MWh offer cap.
- There are likely to be multiple REP defaults
- Generators with forced outages have massive losses potentially
This is not over as the grid is still woefully undersupplied and we don’t know the extent of the damage to the power plants. ERCOT continues to be at or near all-time winter highs with the expectation based on current temperatures that the high demand will continue through today, likely into Wednesday morning and potentially further into the week. Forecasts for today calling for even colder weather are sustaining high demand. What’s really exacerbating this issue is that more than 30,000 MW of generation continues to be in a forced outage due to frozen pipes, frozen wind turbines, or a lack of gas. This is forcing ERCOT to call on all available demand response load and into implementing EEA 3 status, which is detailed further below. Without these measures in place, demand would hit or exceed the previous Winter Peak and could be testing the Summer all-time Peak Demand record.
All Emergency Responsive Reserve (ERS) and Load Resource (LR) have been called to assist in lowering Peak Demand. If you look at the light green line, you can see that the Forecast Demand is expected to far exceed available capacity and reserves and that without Demand Response and Rolling Outages, demand would outpace available supply. Expectations are that LR and ERS will continue to be called for the next 24 hours in an attempt to reduce this demand.
Additionally, ERCOT has issued an EEA level 3 because electric demand is very high right now, and supplies can’t keep up. Reserves have dropped below 1,000 MW and are not expected to recover within 30 minutes; as a result, ERCOT has ordered transmission companies to reduce demand on the system.
This is typically done through rotating outages, which are controlled, temporary interruptions of electric service. This type of demand reduction is only used as a last resort to preserve the reliability of the electric system as a whole.
In these situations, each utility is required to lower the demand on its system based on its percentage of the historic ERCOT peak demand. While each utility is responsible for determining how to implement the required demand reduction, most utilities use rotating outages for this purpose. Rotating outages primarily affect residential neighborhoods and small businesses and are typically limited to 10 to 45 minutes before being rotated to another location.
As a result of the above demand/supply imbalance, ERCOT prices have been at or near the $9,000/MWh price cap since about midnight last night and could persist for the next 24 hours in a similar fashion. Per the PUC Order mentioned above and excerpt below, the clearing prices that are currently showing as cleared below High System Wide Offer Cap of $9,000, will probably be resettled and be cleared at or near the $9,000 cap.
I. Energy Prices Lower than System-Wide Offer Cap During Load-Shed Event
ERCOT has informed the Commission that energy prices across the system are clearing at less than $9,000, which is the current system-wide offer cap pursuant to 16 TAC § 25.505(g)(6)(B). At various times today, energy prices across the system have been as low as approximately $1,200. The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply. If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest.
Utilities Code § 39.151(d) gives the Commission “complete authority” over ERCOT, the independent organization certified by the Commission pursuant to § 39.151. Further, 16 TAC § 25.501(a) provides that ERCOT determines market clearing prices of energy and other ancillary services in the ERCOT market unless “otherwise directed by the commission.”
Pursuant to this authority, the Commission determines that adjustments are needed to ERCOT prices to ensure they accurately reflect the scarcity conditions in the market. Accordingly, the Commission directs ERCOT to ensure that firm load that is being shed in EEA3 is accounted for in ERCOT’s scarcity pricing signals. The Commission further directs ERCOT to correct any past prices such that firm load that is being shed in EEA3 is accounted for in ERCOT’s scarcity pricing signals.