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Texas Electricity: 2013 Outlook Improves

ERCOT, the agency responsible for maintaining the Texas electricity grid, has updated its 2013 forecast of supply and demand for electricity in the state.  The new outlook still shows the spread between supply and demand being uncomfortably tight, but shows an improvement over earlier projections.

Planners like to maintain a reserve margin of 13.75%.  The reserve margin is the safety cushion between the amount of available capacity in the system and anticipated demand.  Having adequate reserve margin helps protect consumers against the possibility of an unexpected loss in capacity or an unexpected spike in demand.

An example of an unexpected loss in capacity occurred in February of 2011 when a powerful winter storm brought a handful of power stations down as the frigged temperatures and ice caused equipment failure.  As a result, officials were forced to implement rolling brownouts in parts of the state including the Dallas/Fort Worth area.

An example of a spike in demand occurred late that same year when a record heat wave had air conditioners running on high from Houston to Dallas.  On this occasion, blackouts were narrowly avoided.

ERCOT projects the reserve margin will drop to 13.75% next summer.  By 2014 that number is expected to drop to 10.9%.

The state has recently undertaken several steps to try to improve the supply of electricity including raising wholesale electricity rate caps by 200%.  This move will eventually lead to retail electricity providers raising rates.  Electricity rates in Texas are near multi-year lows.

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