Most Texans were asleep by 1 a.m. March 23 when heavy gusts of wind provided nearly 50 percent of the state's electricity. It was the biggest portion provided by wind in the grid's history.

What's touted as good news by environmentalists, though, is causing endless hours of anxiety for power generators that rely on natural gas, coal or nuclear energy.

Texas' national lead in cheap wind power, combined with near historically low natural gas prices, mild weather, an abundant power supply and slower growth in electricity demand, can work to the detriment of power companies.

The combination weighed down wholesale power prices last year to their lowest averages since 2002. And the effects are only becoming more dramatic in 2016, even creating bizarre instances when, in the abstract at least, providers are paying to put electricity on the market.

"It's pretty dire," said Michael Ferguson, associate director at Standard & Poor's covering utilities and infrastructure. "It's a bad situation for gas generators, but for coal generation, it's even worse."

Texas' wholesale power prices averaged $26.77 per megawatt-hour last year, down nearly 35 percent from $40.64 per megawatt-hour in 2014. The cost was more than $70 as recently as 2008.

While now is a good time for consumers to lock in cheaper electricity prices, well more than 25 percent of the state's power plants are operating at a cash loss, especially the older coal-fired plants, power executives and analysts estimated. That's before more stringent federal emissions regulations go into effect in coming years

In the doldrums

Until coal plants start shutting down or the state tweaks regulations to artificially inflate prices, power companies will struggle, executives said. A new Moody's Investors Service report concluded that Texas "power prices are unlikely to climb out of their doldrums."

Already, less than a quarter of Texas' coal fleet is operating early this spring, as more generators simply take their coal plants offline until the summer heat brings more demand, analysts from Tudor, Pickering, Holt & Co. noted.

In March, wind added to the grid more than coal power for the first time ever for a full month. Wind contributed 21.4 percent of the grid's overall power, compared with 12.9 percent from coal, which used to be the dominant source of the state's electricity generation, according to the Electric Reliability Council of Texas, which manages about 90 percent of the state's electricity load.

"Ultimately, something is going to have to give here," said Thad Hill, president and CEO of Calpine Corp., the largest power generator in the Houston region and owner of the nation's largest fleet of natural gas-fired power plants.

The lord of the grid

When it comes to the Texas grid, natural gas is now king.

"The natural gas price is kind of the underlying driver of what the power price is," said Kenan Ögelman, ERCOT vice president of commercial operations.

Gas is the feedstock for many power plants, so it affects the price of the resulting power. Ample shale gas supplies are projected to keep costs low for years to come.

The issue is compounded in Texas in part because the market is deregulated and there are fewer alternative sources of revenues than in grids with so-called capacity markets. Such markets provide financial incentives to generate power when reserves are needed, but prices are low.

Texas already has healthy power reserves, so the additional market would pass on more costs to consumers, Ferguson said. The grid here also operates as an island, so companies can't just send excess power to other states.

Still, many companies see a strong long-term future for gas-fired plants in a self-correcting market.

While Calpine already is all in on gas, Chicago-based Exelon Corp. is building new gas plants near Houston and Dallas. Likewise, Houston-based Dynegy is buying the gas fleet in Texas from France-based Engie.

"We do see growth coming," Exelon CEO Chris Crane said. "The schedule for us to have those units online occurs (in 2018) when we think more load growth will be there."

Fading power source

On the other hand, coal plants are a "dying industry," Ferguson said. Twenty-eight percent of ERCOT's electricity came from coal in 2015, down sharply from 36 percent just one year prior. Gas plants now account for about half of the grid's power.

Natural gas spot prices in the U.S. in 2015 hit their lowest average levels since 1999. The U.S. benchmark for natural gas averaged $2.61 per million British thermal unit for the year, dipping below $1.80 in late March. For comparison's sake, prices spiked as high as $13 in 2008 during the earlier days of the shale boom.

Although Texas' electricity consumption increased by 2.2 percent in 2015, according to ERCOT, Ferguson said he sees growth slowing down as the ripple effects of the ongoing oil bust spread throughout the state's economy.

"There's this temptation just to place blame at low gas prices," Ferguson said. "I really think it's a low-demand story."

That spells trouble for Texas' coal plants and two nuclear plants, he said, with natural gas and oil prices projected to remain low at least through 2018.

A song of wind and coal

The risk factors for coal plants could cause Texas' power market to swing substantially within two or three years if multiple power plants start shuttering.

Texas is home to nearly 20 coal-fired power plants and the near future of at least six of them are considered at risk.

Federal standards

They will require expensive upgrades to meet federal standards, according to a recent ERCOT analysis, and the costs could outweigh the benefits of keeping them open. That's not even counting the effects of the federal Clean Power Plan, which is pending in court.

"Ultimately, we think the market could be a lot tighter than people think, particularly if people start mothballing or retiring units," said Hill, whose Calpine would stand to benefit because it doesn't own any coal plants.

Those at risk

At-risk plants include Luminant's Big Brown, Monticello and Martin Lake coal plants in East Texas, half of Luminant's Sandow plant east of Austin, NRG Energy's Limestone plant east of Waco, and Engie's Coleto Creek plant near Victoria that's being bought by Dynegy.

Dallas-based Luminant, the state's largest power generator, is moving to add more gas-fired plants. In November, Luminant said it's buying two gas-fired plants in East Texas for $1.6 billion from NextEra Energy Resources.

Luminant spokesman Brad Watson said companies have to adjust and become more nimble. Some coal units now operate only in the summer when demand is highest.

That's largely because Texas continues to lead the nation in the growth of wind farms. Wind turbines don't need fuel to operate, so their generation costs are extremely low after they're built.

More than 20 percent of ERCOT's electricity capacity of 80,000 megawatts now comes from wind - and more is on the way. About 5,000 more megawatts of wind power are being built in Texas.

One megawatt is typically enough to power 200 homes during peak demand.

Texas wind generation broke a state record Feb. 18 when the grid absorbed a peak of 14,023 megawatts of wind power at 9:20 p.m. At certain points that evening, wind accounted for more than 45 percent of the grid's total load; the March 23 record is 48.28 percent.

Such high wind percentages overnight increasingly create a unusual phenomenon when the grid sees negative wholesale power prices.

ERCOT reported varying levels of negative pricing on March 23 between 12:30 and 5 a.m.

The wind generators receive federal tax credits, so they can sometimes recoup small profits even when the prices are nil. Power generators don't actually pay to give away the power, because companies settle their profits each day and prices never stay negative that long.

The Houston area has already counted about 85 negative pricing hours through the beginning of April - more than the recent record of 59 hours last year, and a lot more than just five hours in 2013, according to ERCOT.

That trend is leading some retail electricity companies like TXU Energy to offer plans with free electricity overnight, allowing customers to run their laundry and dishwashers for free while they slumber.

Hill cautions against relying too much on wind turbines.

"Texas has too much generation when it's really windy," he said. "When it's not windy, frankly, Texas borderline doesn't have enough."

A game of commissions

On the surface, it looked like big news when the Nuclear Regulatory Commission said in February that NRG Energy and its financial partners could build two massive nuclear reactors at the South Texas Project plant southwest of Houston.

But after years of awaiting approval, NRG and company have no plans to build the reactors anytime soon, if ever.

NRG declined an interview request. But, in a prepared statement, spokesman David Knox said, "Market conditions, currently dominated by low natural gas prices, make the economics of new merchant nuclear challenging."

Without a capacity market, Texas generators aim to capture as much profit as possible when demand is highest because prices can spike so high.

After a record-hot summer of 2011, a lot of new power generation was constructed.

Power projections faulty?

"It sounded like a good price signal but, as we know, it's hard to predict the weather," Ferguson said.

"If everyone gets in at the same time, it gets overbuilt, and it did."

Dallas-based Panda Poweris even suing ERCOT, alleging it built three Texas power plants since 2011 that are now struggling financially based on ERCOT's faulty power demand projections.

The Public Utility Commission of Texas plans to address the depressed power market more aggressively as soon as its next meeting, Thursday.

The commission will consider tweaking the energy market through what is called the operating reserve demand curve, or ORDC. A lot of proposals were submitted, but no one solution chosen.

One option involves increasing the value of wholesale electricity when demand is up and the chances for rotating power outages are greater. The argument is such a change would boost profits for power plants and help further stabilize the grid.

Hill supports such changes, and he argues they would only increase electricity prices for consumers by a little bit. About half of the costs of electricity bills are already fixed through the transmission companies that distribute the power.

Free market argument

The Texas Coalition for Affordable Power will oppose any such changes.

"That's the kind of argument that regulated utilities make: 'I can make a 1 percent increase, and they can still afford the rent,' " said Chris Brewster, an attorney for the coalition.

The power companies argue in favor of the free market when prices are high, he said, but they want government inter-vention when their profits are depressed.

"It seems to me the same should apply," Brewster said.