By John Fainter
Texas ongoing drought and despite rains it continues has put terrific pressure on many aspects of our economy not the least of which is the electric power industry. The challenge is unprecedented for an industry that has been one of the most reliable parts of the states economy for decades.
The most immediate concern is whether dwindling water supplies will hurt electric generators ability to produce the power we need. Texas continues to add homes hospitals factories and offices statewide not to mention other energy-intensive services like irrigation drinking water treatment and wastewater treatment.
How is it all connected? Most power plants nuclear coal-fired and most natural gas-fired units operate by heating water into high-pressure steam which turns a turbine that generates electricity. The steam is cooled back into water then used again in a loop over and over with very little consumed. Cooling for this water is provided by a separate stream of water most of which is also reused or returned to the environment.
Thats why many power plants are located near a lake or a pond built for this purpose. Diversion of water is necessary for electric generation but in total only a small percentage of the water used for the process is actually consumed.
Thankfully the drought hasnt done much to limit generation so far. According to the Electric Reliability Council of Texas which serves as the central dispatcher for most of the states electricity production and delivery only 24 megawatts of ERCOTs 84400 megawatts of installed generation capacity have been forced offline because of lack of water. But ERCOT has warned that could rise to 434 megawatts by May if East Texas receives only half of its usual rainfall. If theres no rain at all about 3044 megawatts could be forced out of service and cause serious likelihood of electricity outages for the state.
Worse the hotter it gets the more power communities demand and the less water we have available. Moreover new regulations from the Environmental Protection Agency expected this summer may require plants to build new cooling towers which result in greater water consumption on balance than systems used today.
Combined with our growing economy were facing a serious electricity supply pinch.
In fact were facing challenges to ensure an adequate supply of electricity regardless of drought. ERCOT has warned that given a repeat of 2011 our supply of reserve power could come up short this summer. Also new regulations issued by the Environmental Protection Agency could force some power plants to shut down or cut back on generation.
As customers were all enjoying lower electricity prices because of depressed fuel costs. However the steep fall in the price of natural gas has resulted in wholesale electric prices that have fallen so much that building new power plants in Texas has become less attractive to investors. In Texas competitive market power plant builders and owners carry all the financial risk of construction and operation of a plant. Yet since it opened in 1995 the competitive market has been exceptionally successful at driving the construction of needed generation including gas coal and wind.
So were at a crossroads. The Public Utility Commission of Texas and ERCOT both are examining what changes can be made in wholesale market rules and protocols that would give investors new incentives to risk their capital to build power plants in Texas all while maintaining a strong competitive market. Its a complicated market but were all looking for ways to ensure the most cost-effective generation is built in the state.
Theres no silver bullet to any of these challenges. No one regulatory change no one new reservoir no one type of power plant will overcome these challenges. Energy efficiency and conservation programs will help and eventually the extensive use of smart meters should help consumers reduce their demand when its particularly high.
But we in the electric utility industry in Texas are well aware that the public is counting on us to work closely with state regulators and ERCOT to keep power as reliable as it has been. Our economy depends on it.
John Fainter is president & CEO of the Association of Electric Companies of Texas href=>< href=>http://aectnet.wordpress.com/ href=>> .
