Average electricity prices in Texas rose by 13 percent during 2019, a trend that sets the state apart from all other areas of the country. The figures, reported in statistics from the Department of Energy, reflect the sharp spike in prices that occurred last August during the major heat wave, which saw wholesale electricity prices hit the $9,000 per megawatt hour cap on several occasions.
In other parts of the country, wholesale electricity prices dropped by between 15 and 30 percent. But in Texas, average prices climbed to a staggering average of $162 per megawatt hour for the month of August, more than four times higher than the $38 average from August 2018.
The high prices last summer were caused by a shortage of supply and unprecedented levels of demand. Going into the hot summer season, the Electric Reliability Council of Texas (ERCOT) was already predicting that supply could get tight due to the fact that its reserves amounted to just 8.6 percent of total power production. Typically, ERCOT aims for reserves in the region of 13.5 percent.
As prices spiked in August, ERCOT was forced to implement emergency measures to prevent brownouts. Although the regulator expects summer 2020 to be demanding, it will have larger energy reserves. Thanks to new solar and wind projects coming online, reserves are expected to rise to 10.6 percent.