ERCOT Houston Hub Calendar Strips

April 26, 2023

Forward power prices are on the rise and Real-time (market index) prices still show volatility.  Energy consumers became complacent in a backward dated market where near-term prices were higher and decreased over longer periods of time in outer years, offering great savings opportunities given where current market prices are at this point in time.  The market is currently in a Contango market state, where the future prices of a commodity are higher than the near-term prices as depicted in the graph above.  As a result, a short term contract that begins at the prompt month, will have a lower price compared to a longer term contract, all things being equal.

*Texas Senate Bills 6 & 7 passed last week. SB 6 would direct the State to use taxpayer funds to solicit bids to build up to 10 GW of new natural gas-fired generation n the state, which would power approximately 2 million homes.  This generation would be reserved for days when demand levels are high and a potential for emergency conditions.  This also represents a costly tax on consumers.

*SB 7 encourages more generation in ERCOT that could start up and be online within 2 hours and run for at least 4 hours. This would essentially be a new ancillary service that would be fulfilled by either quick-start natural gas combustion turbines or battery technologies.  Texas could have more battery capacity than California in the next 1-3 years.

*Excerpts from Constellation Energy Market Update