HOUSTON, May 1 (Reuters) - Texas will again face the prospect of rolling blackouts and more frequent calls for conservation on the hottest days this summer as projected demand grows faster than generation is being built to serve those needs, the state's independent grid operator warned in a report.
The Electric Reliability Council of Texas (ERCOT), which oversees the grid for most of the state, said power reserves - the minimum capacity needed to cushion against extreme weather or unplanned outages - will fall to about 9 percent this summer, well below the agency's minimum target of 13.75 percent to avoid blackout risk.
"We are expecting above-normal temperatures throughout summer in most areas of the ERCOT region," said Kent Saathoff, an ERCOT executive adviser.
"To help ensure there is enough generation to serve consumer needs, we likely will ask people to conserve power during the hottest hours of the hottest days," Saathoff said in a release.
High temperatures drive electric demand for air conditioning in Texas. Residential customers use more than half the electricity being consumed during the peak hours, Saathoff said.
If power-plant outages exceed normal levels during peak demand periods or if the state experiences the record heat similar to 2011, "ERCOT also may need to implement Energy Emergency Alert actions, with the possibility of rotating outages if needed to protect the grid," Saathoff added.
ERCOT expects peak power demand to reach 68,383 megawatts, slightly above the 68,305 MW all-time record set Aug. 3, 2011, amid a prolonged heat wave and drought.
The grid agency said it has 74,438 MW of generation to serve the region.
That includes 925 MW of new coal-fired generation from LS Power's Sandy Creek power plant in McLennan County. Completion of the plant was delayed more than a year.
In Texas, one MW is enough electricity to power about 200 homes when electric use is highest, typically between 3 and 7 p.m. during the hottest days of the year.
A lack of new power plant construction and two extremely hot summers strained power supplies in 2010 and 2011, adding urgency to an ongoing discussion among regulators on ways to encourage new generation to serve the state's $35 billion deregulated market.
Other power generators in the state include Luminant, a unit of Energy Future Holdings, which is owned by Kohlberg Kravis Roberts & Co LLP and several private equity firms; NRG Energy ; Calpine Corp ; NextEra Energy Inc and Exelon Corp.
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