According to the NOAA, the summer of 2018 was one of the hottest on record in numerous regions, including Texas. Because of these substantially warmer temperatures, had the integrated Texas electric system had not been expertly planned and managed, many of us could have experienced a very uncomfortable summer.
Electric reliability is paramount to our wellbeing, work, and daily routines. Rolling brownouts – a controlled means of reducing electric usage when demand exceeds supply – can occasionally occur during peak electric usage periods. High demand for electricity and extreme temperatures stress the ERCOT (Electric Reliability Council of Texas) energy infrastructure, an intertwined network of wires, substations, meters, generation units, and other devices. In short, delivering power is a complicated business.
“It’s the grid that makes possible the amazing, 24/7 electricity supply that we enjoy today and every day,” says Ned Ross, Director of Corporate and Regulatory Affairs for Direct Energy. “Power dispatched from power plants to a large network of wires is controlled by ERCOT. Most people do not realize that power isn’t stored; power is produced and consumed almost instantaneously, so controlling supply and demand is critical. ERCOT personnel perform this task 24 hours a day for 85 percent of the state’s electricity load and 25 million Texans.”
Power delivery in competitive areas is achieved in ERCOT through three sectors: transmission and distribution utilities, or “TDUs,” power generators, and retail electric providers (“retailers”). Let’s explore each of these.
How does ERCOT do what it does?
ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas (PUCT) and the Texas Legislature. Staff includes engineers, mathematicians, meteorologists, and other specialists necessary to manage power delivery. Between April 2010 and July 2017, Texas’ population grew 12.6 percent according to the U.S. Census Bureau. Its electric system was designed to handle the extra needs. TDUs own and operate the large wires called transmission lines, but ERCOT manages the power flowing across those wires.
Power generators are in constant communication with ERCOT to ensure plants are ready to run when called upon. Fuel-dependent plants already have sufficient fuel to operate, and renewable plants like solar and wind farms are monitoring sun and wind speeds, respectively, to predict available power generation. During extreme weather events, like the record breaking temperatures we’ve seen, these units are put to the test and pushed to their limits, and fortunately for us, they passed!
Retailers, like Direct Energy, track their customers’ needs, many submit their power dispatches directly to ERCOT, and customers receive the power that is needed. Retailers are focused on customers first – they aren’t distracted by other aspects of the energy business. The division of responsibilities across three entities makes each specialized task more efficient and responsive. This structure explains why recovery efforts were so rapid after Hurricane Harvey – each sector focused on its expertise and delivered results rapidly. Lower usage generally results in lower prices in ERCOT. Prices are driven by supply and demand, so lower demand means the price for energy tends to drop. An added benefit is that the least efficient plants run last, so preventing those units from starting reduces emissions. “This balance between use and price is the idea behind Direct Energy’s Reduce Your Use Rewards,” explains Ross. “When customers can lower the amount of energy they use, especially during high demand periods, they are rewarded with a discount from Direct Energy. Saving energy helps the Texas power grid and the environment while customers save money.”
How does all this affect the price I pay for electricity?
According to Ross, Texas has one of the best electricity markets in the world because – without the government setting prices — retailers have to compete for customers’ business, offering the best service and plan choices for the best price.
“State leaders have done a great job of allowing the markets to work. Energy leaders from around the world come to Texas to see how this works, how this ever came to be,” notes Ross. “The most successful and sophisticated energy companies in the world invest here with confidence and bring expertise that perpetuates the Texas leadership position. That investor confidence and an innovative environment leads to products and services customized for Texas consumers .”
Retailers in the Texas market compete for business by coming up with innovative and effective plans that best fit lifestyle and budget demands. You need a fixed price that you pay each month? Would you like nights and weekends for free since that’s when your family spends more time at home? Or is supporting renewable energy markets in Texas most important to you? Texas’ retailers have to design energy plans that Texans want if they’re going to succeed. As a result, Texans get a wide choice of competitive plans.
Speaking of renewable energy, Texas is the largest producer of wind energy in the country, and solar resources are vast and a promising growth market for Texas. At 22,600 megawatts of capacity and over 10,000 wind turbines, wind energy accounted for 15.7 percent of the energy provided in Texas during 2017.
Wrapping renewables into the energy grid bolsters the supply of energy and helps sustain the state’s valued natural resources. It’s also a matter of economics. The high cost of operating coal-fired plants makes renewable resources more attractive for investors. According to Forbes, from 2007 to 2016, 531 coal units representing 55.6 GW of capacity were retired across the U.S., while renewables continue to grow year after year.
“Because ERCOT is able to keep the supply of power steady and predictable,” notes Ross, “we at Direct Energy are confident in offering the wide variety of plans and prices we do. It’s one less thing homeowners need not worry about because state lawmakers, the Public Utility Commission, and ERCOT have crafted a competitive energy market that is stable, consistent and reliable.”
More from this collection
The Energy Department
From the oil fields of West Texas to the climate change debates in Austin to the wind turbines in the Panhandle, energy is ever-present for Texans. The Energy Department is a collection of stories, tips, and guides on how energy impacts you, your home, and your community. Read more thanks to our sponsor, Direct Energy.