It’s 10:10 a.m. on a sunny morning last week and Lei Ye is staring at charts of energy prices updating every few minutes.
In front of him and several other staff in the same room are banks of half a dozen or more wide-screen computer monitors showing the day’s predicted market and real-time data prices for electricity and natural gas. Looming behind Ye is a large television screen showing live weather conditions across the state that play an important role in each minute’s price of a megawatt-hour of electricity.
It resembles a cross between a trading room floor and NORAD, and here millions of dollars are spent and made per day in attempts to take advantage of the energy market’s fleeting sweet spots as people across the state decide whether to fire up their air conditioning units under a blistering Texas sun.
“It’s comparable to the New York Stock Exchange,” said Austin Energy spokesman Robert Cullick.
But these traders aren’t working for a high-powered investor, they work for Austin Energy. And they aren’t working on a trading floor, they are seated at the utility’s Energy Market Operations center on the second floor of Austin Energy’s office on Barton Springs Road.
They work not to turn a profit for investors, but to help save money for Austin Energy’s customers.
The office is staffed with “people good with software, good with numbers, good with making decisions under pressure,” said Ye, a supervisor of the office. They include five Navy veterans who have tended to thrive in the Energy Market Operations center, he said.
Two “real-time desk” operators sit in the office — rain or shine, every day of the year — keeping an eye on the latest energy prices coming off Texas’ power grid.
All of the power produced by Austin Energy goes onto that grid, and the utility then buys what it needs. Last fiscal year Austin Energy customers used about 13.4 million megawatt-hours of electricity at cost of about $316 million. A typical Austin household uses 1 megawatt-hour a month, according to Austin Energy.
Most of the utility’s 460,000 customers live in Austin’s city limits, though the utility’s coverage area expands into unincorporated parts of Travis County and some of the surrounding cities.
Approximately every five minutes, energy buyers get energy price updates from the quasi-government agency that runs Texas’ power grid. Once the energy is purchased, that price is good for an hour. On this late morning, the price is hovering somewhere around $25 a megawatt-hour — relatively cheap.
During a summer day, Texas can see the price for a megawatt-hour vary by a factor of 100 or more. Ye said he’s seen it as high as $5,000 a megawatt-hour. The Public Utility Commission of Texas has capped the prices at $9,000 per megawatt hour. The Electric Reliability Council of Texas, or ERCOT runs the grid and sets prices.
“The market is very volatile,” Ye said. “Our job is to protect our customers. That is our primary mission.”
That doesn’t just mean buying low and selling high.
Austin Energy has to continually buy energy, even when prices spike. But the utility can take advantage of selling at those high prices by firing up natural gas-powered electricity generators known as gas turbines that resemble the jet engines on a 747. Unlike coal and nuclear plants that operate 24 hours a day, these gas turbines can be turned on and off with relative ease.
Austin has 10 turbines, including six at its Sand Hill Energy Center, a 570-megawatt facility in Del Valle. In total, in a span of about 12 minutes, they can all be fired up and generate about 500 megawatts of power.
Under the most ideal conditions, Austin Energy can generate a maximum capacity of about 3,500 megawatts from sources across the state that include vast wind farms and solar arrays in West Texas, local gas plants, nuclear power in South Texas and a coal power plant in La Grange.
In 2016, 30 percent of Austin’s electricity was purchased from renewable sources, the largest proportion of “clean” energy used by any utility in Texas, Cullick said.
Austin Energy’s generation compared with the city’s given “need” varies hour by hour and season by season. Ye said the utility will generate a larger percentage of the power it needs in the winter compared with the summer. But even on a late afternoon last week at peak usage, the city was generating nearly 3,000 megawatt-hours of power, more than 400 megawatt-hours more than was being used. That allowed Austin Energy to sell the surplus power to the grid for a profit.
The market price that triggers Austin Energy to fire up the jet engines also varies based on natural gas prices, the weather forecast and projected use. Ye said the price of energy must exceed the operations cost, but couldn’t go into specifics, because the utility considers it a trade secret.
But at 4:38 p.m., the utility has all 10 jet turbines are running. Thirty minutes earlier the price had hit $384 a megawatt-hour. Now, it’s at $54.54.
“It’s so volatile,” Ye said. “It’s every five minutes, every five minutes. You never know.”
Correction: This story has been updated to correctly state that the Public Utility Commission of Texas set the market price cap for a megawatt-hour.