Texas to raise energy prices and suspend price cap amid winter storm
https://www.power-technology.com/news/texas-to-raise-energy-prices-and-suspend-price-cap-amid-winter-storm/The Electric Reliability Council of Texas (ERCOT) has announced sweeping changes to the state’s energy pricing structure amid the ongoing winter storm, including higher energy prices and the suspension of a spiralling energy price cap.
The storm, which has killed at least ten people and trapped millions more without power as energy infrastructure has frozen solid across the state, has led to Governor Greg Abbott declaring a state of disaster across Texas. ERCOT has also come under fire for failing to provide reliable power to the citizens of Texas and this week, the Public Utility Commission of Texas (PUC) ordered the council to take action to cut state-wide power demand by 10,000MW, in order to alleviate the crisis.
The commission’s first order will see energy prices raised to better balance supply and demand, with the former dramatically outpacing the latter amid the crisis. The current Texas offer cap, the highest price available for power, is set at $9,000 per MWh. However, the storm has caused energy prices to plummet as low as $1,200 per MWh, a discrepancy that PUC described as “inconsistent with the fundamental design of the ERCOT market, [where] energy prices should reflect the scarcity of supplyâ€.
The news has been greeted with dismay by many in Texas, with Austin-based radio station KVUE reporting that this would translate to higher bills for Texans, both during and after the current crisis.
However, the PUC’s second order could help protect customers from potential exploitation of these raised prices. ERCOT’s energy prices are capped by two thresholds, known as the low and high system-wide offer caps. The lower figure is set at $2,000 per MWh or 50 times the price of natural gas, whichever is higher, while the higher cap is the figure of $9,000 per MWh....