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ERCOT comes close to all-time peak energy demand

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I recently read an article about ERCOT coming close to its all-time peak demand last Wednesday as it saw the third highest level of use, according to the ISO. According to the article, demand maxed out at 67,180 MWs from 4 to 5 PM, but ERCOT experienced no problems meeting that level of demand with over 74,000 MWs of supply available, including 2,300 MWs of wind power. This was the highest level of demand in 2013 so far, due to it being a rather mild summer.

What does this mean for business customers?

Unlike the rest of the country, Texas was above normal last week by about 3 degrees on average. With that, demand was expected to be high and potentially even break the old demand record of 68,379 MWs. This ended up not happening as demand peaked at 67,180 MWs. Day-ahead prices were trading higher in expectation of a hot day, but real-time prices didn’t materialize as a result of lower demand than expected combined with the wind generation of 2,300 MW. With supply plentiful and demand less than expected, the real-time prices for the day ended around $36/MWh. The fallout for the term prices followed the short-term markets. With no price spikes, the summer 2014, 2015 and 2016 prices also fell creating a very good buying opportunity for customers. Summer on-peak term prices fell off by $10 to $15/MWh in one day as a result of the lack of price volatility in the real-time market this week. These drops helped calendar strips fall by $1 to $2 in some locations. Business customers that were waiting to lock up a longer-term contract probably found the best value last week then they have in over a year.

Bottom line: Businesses should pay attention to the energy market on a regular basis to lock in the best long-term energy contract possible, which may help the business’ bottom line.

Posted: August 12, 2013

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