Jul. 21—Texas-based energy company Vistra seems to be benefitting in a major way from new ERCOT guidance geared at increasing reliability across the state power grid, according to a recent report update from Morgan Stanley.
First noted by Utility Dive's Robert Walton, the report states that Vistra is "positively exposed" to new dynamics informing the grid's operation, namely regulators' decision to pivot from what Public Utility Commission (PUC) Chairman Peter Lake characterized in June as a "crisis-based business model" to a "reliability-based business model."
Morgan Stanley's report found that Vistra is holding back somewhere between 2 gigawatts and 2.5 gigawatts of unhedged capacity that it can then sell to the market during times when energy usage hits near-maximum capacity. Even with PUC's newly reduced maximum grid offer cap of $5,000 per megawatt hour, Vistra can stand to make $10 million per hour in emergency ERCOT energy purchases during peak demand windows, per Morgan Stanley.
ERCOT has increased its emergency service budget from $50 million to $75 million as it pivots toward a more proactive model of grid stabilization, and according to a Thursday report by The Dallas Morning News' Irene Wright, regulators have tapped into this budget on multiple occasions to buy energy at high premiums this summer. On July 13, ERCOT bought 3.5 hours of power to meet demand, following back-to-back days of record-high energy usage across the state, according to Wright. PUC's Chairman told Wright there have been six days this summer when Texans would've lost power had ERCOT not intervened via emergency energy buys.
During these moments of high demand, companies like Vistra stand to profit immensely, according to Morgan Stanley's report.
"This exposure could quickly add up and depending on the weather and supply conditions, we could see $100 million plus over the next few weeks if similar grid conditions arise," the report noted.
A spokesperson for Vistra characterized the Morgan Stanley report as "speculative," according to Wright. "We report our earnings on August 5th," Vistra spokesperson Meranda Cohn told Wright. "Until then, we can't comment further."
Houston should see highs in the mid-to-upper 90s on Saturday and Sunday and potential afternoon thunderstorms. As of July 17, official temperature recordings at Bush Intercontinental Airport had registered 14 days of 100-plus degree heat thus far in 2022. Not since 1980 has Houston recorded more 100-degree days at this point in the year, according to Space City Weather's Eric Berger.
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