Electricity Markets

Texas regulators urge pipeline, power plant coordination

Texas regulators are urging natural gas pipeline owners to defer pipeline integrity work until after the summer to make sure power plants have access to fuel when they need it during a period when a demand record is expected to be set.

“When integrity testing of gas transmission pipelines can be scheduled to take place outside peak electric generation months, without safety risk, we encourage you to take this approach to protect citizens from losing their air conditioning, fans, and lights during the hot Texas summer,” 

Railroad Commission Chairman Christi Craddick and Public Utility Commission Chairman DeAnn Walker said in a June 25 notice to pipeline and power plant operators.

Natural gas-fired power plants make up 40 percent of the capacity in the Electric Reliability Council of Texas footprint, according to Walker. “With our state’s robust economy and growing population, demand is higher than ever,” Walker said. “Therefore, teamwork is the key to a successful summer for all Texans.”

The Railroad Commission oversees the state’s pipeline system.

The Railroad Commission’s oversight and safety division and the PUC’s infrastructure and reliability division are monitoring the situation and can help power plants meet their natural gas supply and transmission needs, the notice said. 

Assuming normal weather, the Electric Reliability Council of Texas expects peak demand to hit about 72,750 megawatts this summer, up from the previous record of 71,100 MW set in August 2016, according to a report released in May.

ERCOT anticipates it will have a reserve margin of 5,425 MW, or 11 percent, according to the grid operator's Seasonal Assessment of Resource Adequacy report.

ERCOT tries to have a reserve margin of at least 13.75 percent to provide a buffer in case electric use is higher than expected or power plants and transmission unexpectedly go offline.

"This anticipated record demand, combined with recent plant retirements and delays in some planned resources, is expected to result in tight reserves that could trigger the need for ERCOT to deploy such resources as ancillary services and contracted emergency response service capacity to maintain sufficient operating reserve levels," the grid operator said.

ERCOT said it expects higher power prices during peak demand periods will spur voluntary load reductions and an increase in power sold in the market by industrial facilities.

Increasing power demand is coming amid a wave of power plant retirements. ERCOT expects to have 78,200 MW of available generation this summer, down from 81,600 MW last summer.

ERCOT on June 27 reported in a tweet that it set a new June peak demand record, reaching 69,031 MW between 4 and 5 p.m. This is more than 1,100 MW higher than the peak set on June 1.

Among the Texas plants that have retired since late last year are Vistra Energy's 1,800-MW Monticello, 1,200-MW Sandow and 1,200-MW Big Brown plants. They all burn coal.