Market Information System Grid and Market Conditions

News Release

June 06, 2008

Board Approves Market Rule Change to Lessen Price Volatility

The Board of Directors for the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, voted unanimously to approve a market rule change designed to help mitigate recent price volatility in the state’s balancing energy market with implementation scheduled for Monday morning. 

The Public Utility Commission’s (PUC) Independent Market Monitor, Dan Jones of Potomac Economics, believes the protocol change will allow more efficient management of transmission congestion, which has contributed to recent high prices in balancing energy.  The balancing energy market, which represents approximately five percent of the wholesale electric market, is used for procurement of extra generation to maintain a constant balance of generation and consumer demand on the high-voltage transmission grid. 

The revision (Protocol Revision Request 764, Zonal Congestion and CSCs/CREs) changes the definition of zonal congestion, in effect allowing the grid operator to resolve a particular type of transmission congestion with local-congestion management techniques, rather than the zonal-congestion management used currently.  Under local-congestion management, the grid operator is able to deploy “out-of-merit” generation, as opposed to “merit order” which is based on bids stacked from least to most expensive.  The market-clearing-price for energy (MCPE) is produced through use of the bid stack. 

Market participants and stakeholders approved an expedited process for approval of the protocol revision.  It was first approved on Tuesday by a protocol subcommittee, and the Technical Advisory Committee approved it yesterday.  The Public Utility Commission directed the board to call the emergency meeting to review the protocol change if approved by the Technical Advisory Committee today.  

The board asked ERCOT staff to make all efforts to implement the changes by 8 a.m. Monday, June 9.

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to more than 26 million Texas customers -- representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 710+ generation units. It also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for nearly 8 million premises in competitive choice areas.

ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.