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ERCOT report empowers fans of Texas’ current electricity market

By: Nicholas Sakelaris |

Summer electricity demand could increase by more than 8,400 megawatts for the majority of Texas by 2021, according a report released by Electric Reliability Council of Texas Friday.

That’s not nearly as bad as older forecast models showed, which means the momentum to shift Texas’ electric market away from its current energy-only structure will continue to lose steam.

Peak demand is measured on the hottest summer day with all the state’s emergency protocols like demand response and calls for conservation working at full strength.

But the amount of wind and natural gas power will also grow right alongside it, mostly with new wind and natural gas power.

ERCOT’s 10-year Capacity Demand and Reserve report shows load forecasts won’t be nearly as bad as the dire predictions that have come in the past. This is the first power forecast to use the new methodology that looks at population growth, new home construction and weather.

“Although population and the economy continue to grow in the ERCOT region, the relationship between economic growth and peak electric demand has changed in the past several years,” said Warren Lasher, director of system planning for ERCOT. “We believe recent improvements to our load forecasting methodology are providing a more realistic view of the future demand we need to be prepared to serve.”

To get an idea of how much demand will be needed, forecasters look at the reserve margin, which takes the total power generation available and subtracts that from the forecasted load.

The reserve margin will actually increase from 13 percent in 2014 to 15.4 percent in 2015. It’s not until 2020 that it falls below double digits. The forecast shows demand pushing past 70,000 MW by 2019.

Previous predictions showed the reserve margin shrinking at a much more rapid pace, sparking debate in Austin about how to stimulate the development of new power plants in the state.

Power generators have been pushing for a capacity market where a new charge is added to electric bills to pay power producers for their extra capacity.

Consumer groups and big electricity users have strongly opposed the change, saying it will cost Texans billions on their electric bill. The Texas Coalition on Affordable Power (TCAP) says the report is good news for policymakers and consumers.

“This report provides further evidence that the current energy-only market is working and that any move to increase prices by subsidizing generation companies would be unfounded,” R.A. Dyer, a policy analyst for TCAP.