US DOE, Energy Information Admin.
[From Site] A prolonged August heat wave in Texas produced two periods of very high wholesale prices in the Electric Reliability Council of Texas (ERCOT), the wholesale market operator for most of the State. Day-ahead, on-peak wholesale power prices for August 2011 rose far above the range of prices seen during the previous five Augusts (see chart above).
The increase in wholesale prices may appear in retail bills more quickly in Texas than they would in other states, as Texas mandates that most retail customers choose a competitive electricity supplier – thus removing the traditional cost-of-service retail rate regulatory process which often delays the blow of high wholesale prices.
Several signals of market stress in Texas played out in August 2011:
- Weather: extreme, sustained, widespread heat in August 2011 in Texas
- Load levels: record-breaking system demand outstripping the expectations of system operators
- Prices: a shortage of operating reserves resulted in very high real-time and day-ahead wholesale prices…