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ERCOT overhauling power forecasting methods for Texas


Figuring out how much power Texas is going to need a decade into the future has never been easy.

Forecast how many people are going to move to Texas. Calculate what the temperature difference between Dallas and Austin is on a given day seven years from now. Predict oil booms, manufacturing trends, economic crises…

And that process has come under fierce scrutiny in recent months. New market rules, economic fluctuations and changes in energy patterns are bringing into question long-held assumptions about the severity of the state’s power needs.

The Electric Reliability Council of Texas, the quasi-governmental agency that runs the state’s power grid, is in the midst of a five-month process to redraw its forecasting methodology. And this week Public Utility Commissioner Brandy Marty testified that a decision on whether to restructure the market in which electricity is generated and sold would have to wait for an updated projection on the state’s future power needs.

In an interview this week, Warren Lasher, ERCOT director of system planning, said no official changes have been made yet. But the new methodology could lower existing forecasts.

From weather modeling to economic growth projections to the impact of energy efficiency trends, everything is under review.

“It’s possible the economy is becoming more efficient in using electricity,” Lasher said. “The building [efficiency] standards are getting stronger, wholesale price caps are increasing … lots of things are happening that are likely to reduce power load going forward.”

The overhaul at ERCOT comes in the midst of a historic debate over the restructuring of the state’s power market. Regulators are considering giving generators a subsidy for new plants.

Despite steady population growth around the state, construction has come to a virtual standstill. And the specter of rolling blackouts in the years ahead is a hot topic in Austin.

But now those opposing the subsidy are questioning whether that threat is being overstated.

In July, state Sen. Troy Fraser, R-Horseshoe Bay, said publicly that ERCOT was putting too much weight on the historically high temperatures in 2011.

For years, ERCOT had largely relied on workforce projections in its power forecasts. But that measure has not worked as well in recent years, said Public Utility Commissioner Ken Anderson.

“These load forecasts are always overshooting the market,” he said. “The question in my mind is do we have a problem. I’m not going to pay people for [building more plants] until I know the forecasts are within the realms of reasonableness.”

According to a report released Friday by the Texas Coalition for Affordable Power, which represents cities on utility issues, a 2007 forecast by ERCOT overstated this year’s highest level of electricity demand by 7 percent. The so-called peak load day usually comes on the summer’s hottest day.

ERCOT is trying to predict the future of an energy market that has undergone radical transformation over the last five years, from the evolution of wind power to explosive population growth, said Michael Webber, deputy director of the Energy Institute at the University of Texas, who also works as a consultant.

“We had a couple decades of stability, but now we’re halfway through a decade of rapid change in how we produce and consume energy,” he said. “No matter how good [ERCOT is] everyone is sure they could have done it better. It’s no different than Monday morning quarterbacking.”

And as the debate over whether to subsidize power plant construction nears its crescendo, such criticisms are not expected to abate.

Fraser is already putting pressure on ERCOT to hold off raising the targets for the margin between generating capacity and expected peak load until a final decision on whether to restructure the market for electricity.

“I’m pleased they’re adjusting [the forecasting], but I still disagree with them,” he said.