The expectation of a continuing supply shortage drove a rare sustained increase in prices in ERCOT's day-ahead market. In ERCOT's North Zone, hourly day-ahead prices for key afternoon hours exceeded $1,000/MWh for nine days (August 4-5, 8-10, 23-26, and 28-29) and reached $2,600/MWh twice (August 9 and 25). Average daily on-peak, day-ahead electricity prices (that is, prices for the 16-hour time block from hours ending 7:00 a.m. to 10:00 p.m. CDT on weekdays, excluding NERC holidays) exceeded $200/MWh on 11 days (August 3-5, 8-10, 23-26, and 29). They rose over $500/MWh on three days (August 5 and 8-9).
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Here's a snapshot for a week in the period showing how dysfunctional the relationship between wind output, and peak demand, was in Texas during the heat of August:
The high prices of power were not the result of high natural gas or other fuel prices. Spot natural gas settlement prices at the Houston Ship Channel reported by the InterContinental Exchange fell from $4.25 per million British thermal unit (MMBtu) in early August to as low as $3.88/MMBtu on August 28. The average price for August 2011 has been only $4.05/MMBtu. At a price of $4.00/MMBtu, a fairly inefficient natural gas-fired combustion turbine with a heat rate of 12,000 Btu/KWh would be profitable at any price over about $50/MWh – less than a tenth some of the peak settlement prices in August.
Here's a snapshot for a week in the period showing how dysfunctional the relationship between wind output, and peak demand, was in Texas during the heat of August:
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