The Electric Reliability Council of Texas (ERCOT)—the grid operator that manages 85% of Texas’ electric load and which has been grappling with surging power demand as the state battles a long heat wave and devastating drought—on Tuesday said it had asked two generation owners to activate four mothballed units to address critical power shortages.

The operator said it executed short-term contracts with NRG Energy and Garland Power and Light for the return of two natural gas units each. The units could make available a total of about 400 MW as needed through October 2011 to guard against rolling blackouts across the ERCOT region.

“This has been a highly unusual year for ERCOT with record-breaking temperatures—starting as early as May—plus an increasing demand for electricity as the state’s economy and population growth fuel greater energy use,” ERCOT CEO Trip Doggett said. “In addition, we are facing the worst drought in Texas history. Without rainfall in the near future, we anticipate increased generation outage rates because of power plant cooling water issues,” he added.

In a letter (post-dated Aug. 18) to Chairman Donna Nelson of the Public Utility Commission of Texas, Doggett outlined other "unusual" challenges faced by ERCOT this summer, including difficulties with coal transportation due to railroad delivery delays resulting from the flooding in the Midwestern states, which had resulted in reductions in available fuel for certain coal-fired units.

Nelson directed ERCOT to “look at all available options to ensure the reliability and adequacy of the ERCOT transmission grid at this critical juncture.” She wrote in an Aug. 12 letter that “The record breaking heat and drought have placed increased stress on the generation facilities operating within ERCOT, increasing the likelihood of the unplanned mechanical breakdown of generation units at a time when our electric demand is soaring.”

The temporary contracts for the mothballed plants are based on the pricing methodology used for reliability-must-run units under the ERCOT market rules. The payments will be figured on a cost-recovery model, meaning the owners get paid for their fixed costs—staff, maintenance, etc.—as well as a cost for fuel.

To minimize the impact of this temporary reliability tool on other market participants in the competitive market, the four units will be called on only when necessary to avoid emergencies so the units will not displace units that are online and bidding into the market, Doggett said.

“We don’t know if, or how much, these units will be needed, but if needed, the cost will be minor when divided by the 23 million consumers in the region and when compared to the much higher costs and problems from statewide rolling blackouts which these units will help avoid,” Doggett said.

Sources: POWERnews, ERCOT, PUC