Texas power prices jump to record high as heat bakes state

Sept 5 (Reuters) - Spot power prices in Texas soared to a record high for Thursday as consumers cranked up their air conditioners to escape another brutal heat wave.

High temperatures in Houston were expected to hit 99 degrees Fahrenheit (37 Celsius) on Thursday and 100 or more through Sunday before easing to the mid 90s next week, according to AccuWeather.

The combination of heat and humidity will make it feel more like 108 F in Houston Thursday afternoon and above 110 over the weekend. The normal high in the city at this time of year is 92 degrees.

Next-day power prices at the ERCOT North hub EL-PK-ERTN-SNL soared from $130 per megawatt hour (MWh) for Wednesday to an all-time high of $973.75 for Thursday, according to Refinitiv data going back to 2010. That tops the previous record of $751 on Aug. 15 during the last heat wave to hit the state.

The Electric Reliability Council of Texas (ERCOT), grid operator for much of the state, called on consumers to conserve energy on Thursday and Friday.

“When electricity demand and heat reach levels like we expect ... we ask Texans to consider taking a few steps to help keep power flowing for all of us,” ERCOT President and C Bill Magness said in a release.

ERCOT demand peaked at 68,546 megawatts (MW) on Tuesday, a record for September, and was expected to top 69,700 MW on Thursday and 72,200 MW on Friday. The grid’s all-time peak was 74,531 MW on Aug. 12.

One megawatt can power about 1,000 U.S. homes on average, but as few as 200 during periods of peak demand.

ERCOT has more than 78,000 MW of generating capacity available to meet demand this summer but has warned its planning reserve margin was a historically low 7.4% because several generators have retired even as demand rises.

Generators are retiring because power prices have declined in recent years as growing supplies of cheap natural gas from shale formations, like the Permian in West Texas, flood the market. Gas produces a little less than half the electricity in Texas.

Lower power prices make it difficult for some generators, like those operating old coal-fired plants, to make money selling electricity.

Ercot North prices fell to an average of $33.87/MWh over the past five years (2014-18) from $41.37 during 2009-13 and $59.19 during 2004-08. But with price spikes this summer, prices have averaged $53.64 so far in 2019.

Reporting by Scott DiSavino; Editing by Steve Orlofsky