With nearly 3.5 million Texas homes and businesses without electricity on Monday afternoon, state officials were searching for answers, and one can come from an unexpected source: the auction system used by the Electric Reliability Council of Texas.
The council, which operates the electricity grid and manages the deregulated energy market for 75% of the state, issued warnings about pre-storm warnings. But bitter-cold temperatures and a rare snowfall caused an increase in demand for electricity and resulted in rolling power outages as cold weather led many of the state’s wind turbines and reduced oil and gas production. Electricity generators that rely on fossil fuels were also affected.
Spot electricity prices in Texas’ West hub peaked at $ 9,000 per second. Megawatt-timers loft. Electricity typically costs $ 25 per. Megawatt-time.
The price increase was equivalent to the cost of charging a Tesla that reached $ 900. typically costs around $ 18.
“The price of auctions can go pretty high when there is a shortage,” said Meredith Angwin, a 30-year veteran of the utilities industry 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 is designed. ERCOT conducts real-time auctions to meet its power requirements.
Any bid accepted will receive the clearing price for this round. If bidders who make different offers all get their bids accepted, they all get the highest price.
ERCOT did not respond to FOX Business’ request for comment.
Angwin notes that regional transmission operators do not deliberately let prices get out of control, but they are “happy when it happens.”
She says operators need to “move away” from the model that allows five-minute auctions to set prices and return to the model where the Public Utilities Commission sets a guaranteed return.
“Reliable electricity is too important to just go, oh well, sometimes it won’t be there no matter what,” Angwin said.
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