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Saturday, May 12, 2012

It Will Be Hot in Texas This Summer

There is no mistaking it - our own government is purposely destroying the United States of America. - Reggie

And thanks to federal policies the state likely will run out of electricity.

Texas, the most energy-intensive state in the nation, could be facing a severe electrical shortage this summer. How could such a thing happen? Mainly, it's the result of a long series of federal interventions that have finally left the state turning in circles about what to do next.

First, the gory details. Last summer the state was hit with a heat wave in which the temperature was over 100 degrees for almost a month. Since most cities are barely habitable without air conditioning, electrical consumption rose to record levels. Whereas the state normally consumes around 40,000 megawatts of electricity, demand rose briefly to 60,000 (1,000 MW is the size of a large coal or nuclear plant). On several days the state came within about 300 MW of a statewide brownout.

Aggravating all this was the state's new complex of windmills with 10,000 MW of "nameplate" capacity, nearly all of which proved virtually useless during the crisis period. Windmills have the unfortunate habit of going limp during summer doldrums when the wind doesn't blow. The state's entire wind capacity -- largest in the nation and celebrated by environmentalists all over the country -- operated at less than 10 percent of capacity during the summer heat wave.

Now after another year things are not much better. Not much new capacity has been built and with the state's economy humming, things could get much hotter. In late April, the state hit a warm spell at a time when many generators are shut down for maintenance work to prepare for the coming summer. Day-ahead prices spiked to $500 per megawatt-hour -- more than ten times their usual price of around $30 per mwh-h. Yet that was just a taste of things to come. Last summer prices soared briefly to $5000 per mwh-h -- prompting state regulators to take the unfortunate step of putting a cap of $3,500 on electrical prices. Although it might seem inconsequential, in fact it may be those few hours a year that makes building a new power plant worthwhile. Power plants are like The Christmas Store. They may stay open all year waiting for that one rush of business that makes their entire season. Texas has a completely deregulated market that pays power companies only for electricity delivered, not for capacity built. By taking away those few days when power companies can cash in, the regulators are making a bad situation much worse.

The root of Texas' electrical problems goes back to the bad old days of federal price controls of natural gas and the years Texas and Louisiana spent being exploited by the rest of the nation.

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