As CPS Energy prepares for the possibility of extreme summer heat, President and CEO Rudy Garza said Monday the utility will be relying heavily on renewables to help it meet local demand.
Seven utility officials gave reports on CPS Energy’s summer preparedness to the utility’s board of trustees, echoing that the utility is ready for another hot summer. Their statements follow a recent report by the Electric Reliability Council of Texas (ERCOT) noting that Texas could see brownouts between June and September requiring immediate load reduction, should the state face the kind of intense summer temperatures it did last summer.
“This is the first summer I think you’ll see that we’re going to have to rely on renewables to meet that growth,” Garza said. “In the summer months, wind and solar are very [prolific] so it’s not a bad thing that renewables are going to be leaned on maybe to a greater extent than they have in the past.”
Of the utility’s roughly 7,252-megawatt portfolio, about 1,500 megawatts, or 21%, come from renewable sources.
The utility approved a new generation portfolio earlier this year that will phase out coal completely by 2028 and will add another 500 megawatts from wind, 1,180 from solar and 1,060 from battery storage over the next seven years. It will also add 1,380 megawatts from combined-cycle natural gas and about 800 from reciprocating internal combustion engines that run on natural gas or diesel. One megawatt is enough to power about 200 Texas homes on a hot summer day.
ERCOT’s projected peak demand for the summer is 82,739 megawatts. The state’s grid operator said in the report that it has approximately 97,000 megawatts of capacity available for the summer peak load.
However, ERCOT’s 2022 summer report underestimated what the peak demand would be, and on several occasions ERCOT officials called for Texans to conserve energy as power reserves plummeted. ERCOT saw the record for power demand broken 11 times last year as the state was brutalized by its hottest summer on record, with demand topping 80,000 megawatts for the first time ever in July.
The state’s grid experienced eight “tight” periods last summer that each lasted about 15 minutes long, Garza told trustees Monday. Garza told the San Antonio Report he and CPS Energy staff are not concerned about ERCOT’s summer outlook report but are paying attention to it.
Texas could either experience another extremely hot summer or it could see slightly cooler conditions as it transitions out of the La Niña weather pattern, said CPS Energy’s meteorologist, Brian Alonzo.
“This year, with all the rain we’ve gotten, we’re going into the summer better off than we did last year,” Garza told trustees. “The ground itself is cooler because of the rain so the intensity [so far this year] isn’t as bad, because you’re not getting the ground adding to it.”
The utility will continue to lean on its optional demand response program, which allows CPS Energy to slightly raise the temperature of a ratepayer’s home or office at certain times, helping the utility save energy and the customer to save money. Christen Waggoner, vice president of customer experience operations, said the utility was able to save about 100 megawatts of power from that program last summer.
Board Chairwoman Janie Gonzalez said she wants to see the utility continue to take proactive steps at helping customers keep their monthly bills low this summer following the sticker shock many residents experienced last summer due to the extreme heat and high fuel costs.
The utility’s discussions highlight ongoing dialogue within the Texas Legislature on the state grid’s reliability. Calls for market redesign stem from the devastating winter storm that struck Texas in February 2021, leaving millions without power for days and killing at least 200 people; CPS Energy itself has been involved in lawsuits — both against it and filed by it — related to the costs racked up during that winter storm now being shouldered by the utility’s ratepayers.
As of Monday, several bills favoring the growth of natural gas power plants have advanced through the Legislature that could impact Texans’ energy bills. One, Senate Bill 2627, would offer companies low-interest loans to upgrade or construct natural gas-fueled power plants, while another, Senate Bill 7, would limit how much extra revenue gas-powered electricity generators could make through a proposed financial tool that would pay them in exchange for promises to be available to produce power in tight times. Those payments likely would come from higher rates from Texas energy customers.
Garza told the San Antonio Report that he feels the Legislature is “having the right conversations” as they seek to bolster the state’s grid, but he hopes lawmakers don’t penalize renewables in their final iterations of such bills.
“Don’t make it more difficult, because you need it, right?” he said. “At the end of the day, you’ve got to have everything you can get — the more resources you have the lower costs for customers.”
This article has been updated to correct that the state’s electrical grid, not CPS Energy, saw eight periods of tight demand last summer. CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.