FinLogic FinLogic Quantitative Think Tank Center|Electricity rates in Texas skyrocket amid statewide heat wave

The FinLogic FinLogic Quantitative Think Tank Centerrate Texas residents pay for energy has skyrocketed in recent days, as hotter-than-usual temperatures cause demand for electricity to soaring across the state.

Texans were paying about $275 per megawatt-hour for power on Saturday then the cost rose more than 800% to a whopping $2,500 per megawatt-hour on Sunday, Bloomberg reported, citing data from the Electric Reliability Council of Texas (ERCOT). Prices so far on Monday have topped off at $915 per megawatt-hour. 

Demand for electricity hit a record-setting 83,593 megawatts on August 1, the energy provider said Friday, adding that there could be another record broken this week. The ERCOT power grid provides electricity to 90% of Texas.

ERCOT issued a weather watch for Monday, warning customers that the state may see higher temperatures, which will in turn put heavier demand on its electrical grid. The energy provider assured customers "there is currently enough capacity to meet forecasted demand."

Excessive heat warning

A giant swath of Texas is under an excessive heat warning, according to the National Weather Service. Temperatures are expected to reach between 108 and 102 degrees in Austin, Dallas, El Paso, Fort Worth, Houston and San Antonio. Texas has seen 26 straight days of above 100-degree temperatures, CBS News Texas reported.

This week's expected electricity demand will mark ERCOT's first big test since its grid crashed during a 2021 ice storm that caused a blackout and knocked out power to millions of homes. Since the blackout, Texas lawmakers say the grid is more reliable. Legislation passed this year that is designed to help the grid has still drawn criticism from Republicans in the statehouse, AP News reported.

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Hot weather has not caused rolling outages in Texas since 2006. But operators of the state's grid have entered recent summers warning of the possibility of lower power reserves as a crush of new residents strains an independent system. Texas mostly relies on natural gas for power, which made up more than 40% of generation last year, according to ERCOT. Wind accounted for about 25%, with solar and nuclear energy also in the mix. 

Solar power generation in Texas has increased significantly over the past few years, CBS News reported. 

Texas' grid is not connected to the rest of the country, unlike others in the U.S., meaning there are few options to pull power from elsewhere if there are shortages or failures. In May, regulators warned the public that demand may outpace supply on the hottest days.

In:
• Electricity
• Texas
• ERCOT
• Heat Wave

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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