Extreme cold weather brings northern air as far south as the Gulf of Mexico. Fox News senior meteorologist Janice Dean and more.
With nearly 3.5 million homes and businesses in Texas without electricity Monday afternoon, government officials came looking for answers, and one may come from an unexpected source: the auction system used by the Electric Reliability Council of Texas.
The council, which manages the electricity grid and manages the deregulated energy market for 75% of the state, has issued advance warnings for the warning of energy alarms. But bitterly cold temperatures and a rare snowfall caused an increase in demand for electricity and gradually came to a halt while cold weather caused many of the state’s wind turbines to spin and reduced oil and gas production. Electricity generators that rely on fossil fuels were also affected.
Spot electricity prices in the West Hub in Texas have risen above the grid by $ 9,000 per megawatt-hour. Power usually costs $ 25 per megawatt hour.
The increase in prices was equal to the cost of a Tesla amount of $ 900. A levy usually costs about $ 18.
TEXAS POWER NET hit by extreme storm
“The price at auctions can be quite high when there is scarce,” says Meredith Angwin, a 30-year-old utility industry veteran and author of the book ‘Shorting the Grid’.
The high prices were due at least in part to the way the five-minute auction system was designed. ERCOT conducts real-time auctions to meet its power needs.
Any bid accepted will receive the clearance price for that round. If bidders who do different bids all accept their bid, everyone will be paid the highest price.
ERCOT did not respond to a request for comment from FOX Business.
Angwin notes that local transmission operators do not intentionally allow prices to get out of control, but they are “happy when it happens.”
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She says operators’ need to ‘move away’ from the model that allows the five-minute auctions to set prices and return to the model where the public utilities commission sets a guaranteed rate of return.
“Reliable electricity is too important to just go, well, sometimes it won’t be there, whatever,” Angwin said.