ERCOT Survives Winter Storm Fern — $1,501/MWh Spikes But Grid Holds
Winter Storm Fern brought subfreezing temperatures across Texas in January 2026, pushing ERCOT real-time prices to $1,501/MWh at the North Hub. Unlike Winter Storm Uri in 2021, the grid held stable without systemwide disruption, setting a new winter peak load record. Post-2021 weatherization mandates—covering 2,500 inspected power plants—proved effective. Texas commercial buyers on indexed contracts absorbed significant cost spikes, while those on fixed-rate contracts were fully insulated.
What Happened During Storm Fern
Winter Storm Fern moved through Texas in mid-January 2026, bringing hazardous freezing conditions across the state. The ERCOT grid experienced its highest-ever winter peak demand, as heating loads surged across all major load zones. Despite the severity of the storm, no rolling blackouts were implemented and the system maintained reserves throughout the event.
The Energy Secretary issued a federal emergency order to ensure grid security during the event, authorizing generators to operate above normal environmental limits. This precautionary measure reflected the seriousness of the weather, but the grid did not require emergency load shedding.
Weatherization Mandates Proved Effective
Following the catastrophic failure of Winter Storm Uri in February 2021, the Texas Legislature passed SB 3 and SB 2627, mandating weatherization for power plants and natural gas infrastructure. Key improvements since 2021:
- 2,500 power plants underwent weatherization inspections by the Public Utility Commission of Texas (PUCT)
- Natural gas facilities were designated as critical infrastructure, ensuring fuel supply during freezing events
- ERCOT's extreme weather protocols were overhauled with new conservative operations triggers
- Firm fuel supply provisions were added to generator interconnection requirements
Price Impact by Load Zone
| Load Zone | Pre-Storm Avg | Storm Peak RT | Multiplier |
|---|---|---|---|
| ERCOT North (Dallas) | $28/MWh | $1,501/MWh | 54x |
| Houston | $30/MWh | ~$1,200/MWh | 40x |
| South (San Antonio) | $26/MWh | ~$900/MWh | 35x |
| West (Permian) | $19/MWh | ~$600/MWh | 32x |
Lessons for Commercial Buyers
Storm Fern validated two critical procurement strategies:
- Fixed-rate contracts deliver real protection: Businesses on fixed supply contracts were completely insulated from the $1,501/MWh spikes. With ERCOT's scarcity pricing model (which can reach $5,000/MWh), fixed-rate hedging is essential insurance.
- Demand response has enormous value: Businesses that curtailed load during peak pricing hours avoided tens of thousands in exposure and, if enrolled in DR programs, earned revenue for doing so.
- Indexed contracts carry winter tail risk: Even though ERCOT averaged $27-37/MWh in early 2026, a single storm event can erase months of savings on an indexed contract.
- Data centers amplify risk: The growing data center load in Texas (contributing to the spiking demand) means winter peak events will become increasingly frequent and severe.
2026 ERCOT Outlook
Forward contracts for 2026-2028 are trading above $50/MWh, well above the historical average, reflecting the market's pricing of extreme weather risk. The EIA projects a 45% increase in ERCOT North Hub wholesale prices for 2026, driven by data center load growth and summer scarcity concerns. Commercial rates are projected at 7-9¢/kWh for supply plus delivery charges.
Protect Your Business from ERCOT Volatility
Storm Fern proved that ERCOT price spikes are not hypothetical. Lock in a fixed rate before the next weather event.