Texas’ ERCOT is bracing for its biggest energy test since last winter’s deadly deep freeze

When energy companies are operated as public utilities and the prices are set, customers know what to expect. They know that if it’s an usually cold winter and they’re using more heat, they’re going to pay more — but the prices rates will remain the same. But under Texas’ system, energy rates can suddenly soar if one signs up for a variable-rate plan — and a year after Texas’ energy crisis of February 2021, memories of blackouts and price gouging are resurfacing as the Lone Star State prepares for its coldest weather so far this season.

Texas suffered record cold temperatures in February 2021, and millions of Texans lost power during the cold snap because its system had not been properly winterized. Texans who had signed up for variable-rate plans and didn’t lose power found themselves getting socked with sky-high bills; for example, Texan Scott Willoughby (who lives in Dallas suburb) received a bill for $16,752.

Now, in early February 2022, journalists Naureen S. Malik and Brian K. Sullivan report in Bloomberg News, Texas is facing “the biggest test since extreme cold and blackouts killed hundreds almost a year ago.”

“Demand on the grid operated by the Electric Reliability Council of Texas, or ERCOT, is forecast to peak at 71,806 megawatts on the morning of February 4 — a level that has never been seen outside the summer season before,” Malik and Sullivan explain. “In February 2021, demand was poised to climb to an all-time high before widespread outages darkened the second-largest U.S. state for days.”

Harsh memories of February 2021, according to the Bloomberg reporters, are “creating a fear premium” in anticipation of a “deep chill.”

Malik and Sullivan note, “On-peak power for ERCOT’s North hub, which includes Dallas, closed at $800 for February 4 on the Intercontinental Exchange after topping $1000 in trading Monday, traders said. By comparison, Wednesday power fetched $60 and Thursday almost $560, a trader said.”

Matt Rogers, president of the Commodity Weather Group, told Bloomberg News that Texas is expecting its “strongest cold event so far this winter, but not nearly as cold as last winter.”

According to Malik and Sullivan, “The Lone Star State still faces challenges later this week such as icing on turbines and snow and sleet that could impede solar generation, Rogers said. Overall temperatures could run about 25 to 30 degrees below normal in some places, although the cold snap will only last two to three days, whereas a year ago it lingered much longer.”

Temperatures in Dallas were expected to reach a low of 14F.