Archive for August, 2011

Texas grid operator to pay for four mothballed plants to return to service
The Texas grid operator signed contracts with two power generation companies to put four mothballed units back into service for the rest of the summer to keep the lights on.

The Electric Reliability Council of Texas said Tuesday in a news release that it will pay NRG Energy Inc. and Garland Power & Light the cost of turning on the natural gas-fired generators to keep them on standby. High temperatures have boosted demand for electricity across the state, and the drought could soon put power plants out of commission for lack of cooling water.

“This has been a highly unusual year for ERCOT, with record-breaking temperatures starting as early as May plus an increasing demand for electricity as the state’s economy and population growth fuel greater energy use,” ERCOT chief executive Trip Doggett said in a public statement.

“Without rainfall in the near future, we anticipate increased generation outage rates because of power plant cooling water issues,” he said.

The move calls into question whether ERCOT’s competitive market can ensure reliability on its own when the weather surprises.

The units returning to service amount to an additional 400 megawatts of capacity, about half the size of a new coal-fired unit, but hopefully enough to keep Texas out of rolling outages in an emergency.

ERCOT estimates the cost to keep the units on call at $5.85 million. If the plants must generate power, ERCOT would also pay for fuel. The contract ends in October. ERCOT costs are shared by member electricity companies, which tend to pass along those costs to customers.

ERCOT will use the units only in an emergency. That avoids interfering with the competitive electricity market.

“We don’t know if or how much these units will be needed, but if needed, the cost will be minor when divided by the 23 million consumers in the region and when compared to the much higher costs and problems from statewide rolling blackouts,” Doggett said.

The Public Utility Commission had instructed ERCOT to consider all available options to ensure reliability after grid emergencies earlier this summer. In early August, ERCOT came close to calling for rolling outages across the state as hot weather boosted demand for electricity and many power plants struggled in the heat.

The ERCOT deregulated electricity market is designed to make sure Texas has enough power plants at the lowest possible price. The free market is supposed to allow generators to respond to price changes to build generators or shut them down, thus keeping supply and demand in balance.

That’s why NRG already brought one mothballed plant back into service during the spring.

“It made the right business decision, and looking at the weather, it made the right decision for taking care of customers,” said NRG spokesman Dave Knox

Read Full Post »