For CoServ and the grid, August is a crucial month

For CoServ and the grid, August is a crucial month

 

By NICHOLAS SAKELARIS | CoServ

In August, consecutive 100-degree days are common in North Texas and air conditioners work overtime. 

It’s no surprise, then, that this month is typically when CoServ Members use the most electricity. August is also critical when forecasting electric load, because it takes careful planning and a deep understanding of the market to buy the right amount of electricity – before it’s needed and at the lowest price.

COVID-19 threw a wrench into this planning process because more people stayed home in the spring and not all businesses opened or began operating at full capacity in early summer.

“With COVID-19, it’s difficult to predict what’s going to happen two weeks from now, let alone two months from now,” said Gary Franzen, Director of Energy Services who leads CoServ’s wholesale electricity planning and purchasing efforts.

“It’s definitely affected our usage patterns,” he said. “Unfortunately, so many of our businesses are going through a very hard time with a loss of customers and therefore a loss of load.”

At the same time, residential usage has increased because more people are working from home. And this could mean higher than anticipated summer demand and peak loads for CoServ. Gary said 75 to 80 percent of CoServ’s peak demand comes from residential Members and is driven primarily by the nearly constant demand for air conditioning.

THE COSERV WAY

CoServ employs several tools to keep Members’ electric rates low and ensure there’s enough power to meet demand.

Wholesale electricity prices can change drastically, and the Public Utility Commission of Texas has set a maximum price of $9,000 per megawatt-hour. This limit was reached for several hours in August 2019 when demand nearly matched available generation capacity.

CoServ shielded Members from these high prices with power purchased months earlier at a lower price that kept their rates stable, at about 9 cents per kilowatt-hour. Contrast this with some consumers in the deregulated electricity market who paid $9 per kWh. Why? Because they were customers of a company that offers them electricity real-time wholesale prices, which are generally lower - until they are not.

CoServ does buy some electricity in the wholesale market, but Gary explained that most of the power is purchased ahead of time and the prices of these advance purchases are locked in at the time of purchase.

In addition, CoServ started purchasing power from the 100 MW Lapetus Solar project in West Texas in January. The 800-acre solar farm has a locked-in price and a guaranteed output. And if the solar panels don’t produce enough power, the company that owns Lapetus will supply other renewable energy to make up the difference. 

“It provides stability for our rates, because that portion of our power supply is purchased at an attractive price we can count on,” Gary said.

THE COVID-19 WILD CARD

For their load modeling, CoServ’s Energy Services team studies weather forecasts and previous years’ usage. This is why COVID-19 remains such a wild card.

“We are doing our absolute best to keep prices low through these uncertain times and hedge as effectively as we can – that’s our goal,” Gary said.

The morning rush of families getting everyone ready for work and school probably seems like a distant memory for many CoServ Members – and it shows in the electric load usage since the COVID-19 quarantine began.

From mid-March to mid-June, residential electricity usage was down significantly from 7 to 10 a.m. compared to the same period in 2019; usage during the 9 a.m. hour was down 24 percent.

“This load curve is the new normal for now. You’re seeing some usage drop off in the morning from what we are used to because no one’s leaving home to go to work,” said Tommy Nylec, Director of Engineering for CoServ.

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