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ERCOT reserve margins likely to dip below target: IMM

Several coal- and natural gas-fired power plants are shutting down in Texas within the next year. This is expected to drop ERCOT’s reserve margin below their target threshold, which board members are expecting will strengthen power prices in the coming years.

Recently announced planned retirements of 4,500 MW of generation capacity in the Electric Reliability Council of Texas, plus the indefinite shutdown of another 118 MW, would likely push reserve margins below ERCOT’s target of 13.75%, ERCOT stakeholders learned Tuesday.

During the ERCOT Board of Directors meeting Tuesday, Bill Magness, ERCOT president and CEO, said his staff was working to determine whether any of the resources announced for retirement are needed to maintain system reliability, which may prompt the grid operator to negotiate reliability-must-run contracts. Magness said these analyses should be completed by the board’s December 12 meeting.

On Friday, Vistra Energy announced plans to close two coal-fired power plants, Big Brown southeast of Dallas and Sandow northeast of Austin, totaling about 2,400 MW of nameplate capacity in early 2018, after announcing on October 6 the planned retirement of its 1,800-MW Monticello coal plant in northeastern Texas in January.

Talen Energy informed ERCOT on September 27 that it intended to retire the 300-MW Unit 1 of its Barney Davis gas-fired power plant on the Texas Gulf Coast.

And on October 5, ERCOT issued notice that the city of Garland, Texas, planned to indefinitely shot two gas-fired units at its Spencer plant outside Dallas, with a combined capacity of 118 MW.

Beth Garza, who heads Potomac Economics’ independent market monitor unit for ERCOT, said that if none of these units are needed for reliability, “we’re looking at a much different situation going into the summer of 2018 than we had in what I call the ‘fat and happy’ times we’ve seen over the past few years.”

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