By now, every Texan knows the heat has arrived early this summer. It’s definitely hot outside, and people are already grimacing about what July and August could bring! Earlier this week, Houston’s William P. Hobby Airport hit 100℉ — that’s just the third time it’s reached triple digits this early in June since 1930.
You’ve probably seen reports on local media urging power conservation and talking about the threat of power outages. While Texans should remain alert and conserve energy if possible, the ERCOT grid is functioning as intended and the stories in the media are painting a more dire situation than is warranted.
Keep calm and carry on. Conserve, if possible, but there is no reason to be super concerned.
The system is working like it’s supposed to
Tensions are definitely high at ERCOT, the electricity grid that serves most Texans. Coming out of the disastrous performance in the February freeze, it’s not surprising that the folks at ERCOT are a little skittish. They have issued a conservation alert, asking homes and businesses to reduce power usage to reduce strain on the grid. While there is some merit to this, they wouldn’t have issued these warnings in years past given where the grid supply and demand sit right now. In prior summers, they would have waited for the supply/demand situation to get much worse to warrant this kind of warning.
Our team has been working in the Texas electricity market for more than a decade, and we speak regularly with industry experts. All agree that the wholesale electricity market is functioning as intended. Are there extreme wholesale price spikes for short periods of time? Yes. But that is how this market is designed to work, to spur more power generation at a moment’s notice.
The ERCOT market has extremely high prices to incentivize power generators to come online quickly (instead of paying them to always be ready to come online, as in other markets). Under this system, running for just a few hours at extreme prices can be profitable for a generator. This week we have seen some very high wholesale prices, but generators saw the signal and responded quickly to generate more power, ultimately bringing prices back down. To protect yourself from this price volatility, you can switch to a fixed-rate energy plan. If you’re on an “indexed” product or a variable contract, you’re exposed to those giant rate spikes.
But conserving energy isn’t a bad idea
That’s not to say conserving energy won’t help the grid. If you’re able to reduce your usage, the most impactful ways include:
- Turning your thermostat up (to 78 degrees or higher)
- Keeping your shades and blinds closed
- Running large appliances like electric clothes dryers after the sun goes down
Every little bit helps. And as a rule of thumb, shifting when you use energy to times of less demand means that a greater percentage of your energy comes from renewable sources like wind and solar power. The Department of Energy has compiled more tips on conserving energy during hot weather.
If the supply/demand situation on the electricity grid changes, we’ll let you know. But for now, keep calm and carry on. Conserve, if possible, but there is no reason to be super concerned. And know that you don’t have to navigate the energy market alone. My company, Real Simple Energy, has joined forces with Arcadia to advocate for Texans and help you make sense of all your energy options.
