Extreme Temperature and Power Rates

Due to one of the coldest weeks on record, Texans are ramping up their electric heaters. The state usually has peak energy demand mid-summer… with air conditioners turned on full blast. But right now, peak energy demand in ERCOT coupled with some offline power units (and low-producing solar in snow) means that electricity prices are going sky-high.

A lot of retail energy providers are about to go bankrupt. The average retailer hedges about 95%-98% of their power book and prays for no outlier demand or pricing spikes/events. Most energy retailers have a fixed rate customer with their customers… so the retailer has to go to the open market and purchase that last 2-5% of unhedged demand in day-ahead or real-time pricing. The problem is that when there is suddenly way more energy demand, the retailer finds that they are maybe only 75% hedged… and market prices to cover are skyrocketing.

The smartest retailers know to use Amperon. Amperon helps retailers predict demand and pricing across different power markets. They project demand with far more accuracy than any public sources. But even with Amperon, a lot of these REPs might be in a tough spot.