Calpine exec says ERCOT power market ‘balanced on a razor’s edge’
The Electric Reliability Council of Texas wholesale power market is “balanced on a razor’s edge” as the region’s “economic reserve margin” slides to near 10%, Steven Pruett, Calpine’s chief commercial officer, said Friday.
During Calpine’s fourth-quarter 2014 earnings call with analysts, Pruett said the company, one of the largest generators in ERCOT, stands to benefit as the economic reserve margin — “the reserve margin beyond which point resources are dispatched at scarcity prices” — has been slipping without raising much concern from most market participants.
Pruett said ERCOT’s economic reserve margin on a weather-normalized basis fell from just over 14% in 2011 to just under 12% last year. In 2015, the margin is at about 11%, and in 2016 it is projected to fall to just above 10%.
