NOTICE DATE: January 25, 2026

NOTICE TYPE: M-B012526-01 Operations

SHORT DESCRIPTION: Notice of U.S. Department of Energy Section 202(c) Order Affecting the ERCOT Region

INTENDED AUDIENCE: ERCOT Market Participants

DAYS AFFECTED: January 25-27, 2026

LONG DESCRIPTION: Today, ERCOT requested an emergency order from the U.S. Secretary of Energy (Secretary) pursuant to Section 202(c) of the Federal Power Act (FPA) due to the expected impact of Winter Storm Fern on electric demand, which raises a significant risk of emergency conditions that could jeopardize electric reliability and public safety. 

The Secretary granted ERCOT's request and issued an order finding that an emergency exists within the ERCOT Region of Texas.  The order authorizes certain electric generating units located in the ERCOT Region to operate up to their maximum generation output in certain limited circumstances, notwithstanding federal or state environmental standards and requirements.  The order is effective immediately and will remain effective through 11:59 PM Eastern Standard Time (10:59 PM Central Standard Time) on Tuesday, January 27, 2026.  A copy of the order is attached to this Market Notice.

More specifically, in order to minimize adverse environmental impacts, the order directs ERCOT to dispatch electric generating units only when needed to maintain reliability. ERCOT has determined that the operation of an ERCOT-registered Generation Resource or Settlement Only Generator complies with the terms of the order if the generator meets the conditions described in any one of the following three allowances:

• Allowance 1: For any Generation Resource whose operator notifies ERCOT that the unit is unable, or expected to be unable, to produce at its maximum output due to an emissions limit or other restriction in any federal or state environmental permit or regulation at any point after the issuance of the Secretary's order but before Tuesday, January 27, 2026 at 11:59 PM Eastern Standard Time, the unit is allowed to exceed any such limit and offer all of its capacity for dispatch during this period only if this incremental amount of restricted capacity is offered at a price no lower than $2,000/MWh.  At all other times, the unit is required to operate within its legally required limits.

• Allowance 2: For any Generation Resource whose operator notifies ERCOT that the unit is offline or would need to go offline at any point after the issuance of the Secretary's order but before Tuesday, January 27, 2026 at 11:59 PM Eastern Standard Time due to an emissions limit or other restriction in any federal or state environmental permit or regulation, if ERCOT has declared or expects to declare an Energy Emergency Alert (EEA) Level 2 or Level 3 that is expected to be in effect during all or any part of that period or has otherwise determined that the deployment of the capacity is reasonably required to avoid entering an EEA Level 2 or Level 3 in the future due to concerns regarding preservation of aggregate battery state of charge or other considerations, then ERCOT may issue a Reliability Unit Commitment (RUC) instruction in advance of that period or during that period directing the unit operator to bring the unit online or keep the unit online, and to operate at the minimum level at which the Generation Resource can be sustainably operated.  If ERCOT issues the instruction in advance of such period, then ERCOT will endeavor to commit the unit at a time that allows the unit to reach its Low Sustained Limit (LSL) no earlier than the time at which the unit will be needed to provide the necessary reliability contribution.  An operator subject to a RUC instruction described herein will be allowed to make all of the unit's capacity available to ERCOT for dispatch so long as this capacity is offered at a price no lower than $2,000/MWh.  Once ERCOT terminates the RUC instruction, the unit will be required to return to operation within its legally required limits as expeditiously as possible.

• Allowance 3: For any Settlement Only Generator (SOG) whose operator notifies ERCOT that the unit is unable, or expected to be unable, to produce at its maximum output due to an emissions limit or other restriction in any federal or state environmental permit or regulation at any point after the issuance of the Secretary's order but before Tuesday, January 27, 2026 at 11:59 PM Eastern Standard Time, the unit will be allowed to exceed any such limit only during any period for which ERCOT has declared an EEA Level 2 or Level 3.  Once ERCOT issues a declaration indicating that it is no longer in an EEA Level 2, the affected SOG will be required to return to operation within its legally required limits as expeditiously as possible.  At all other times, the unit is required to operate within its legally required limits.

Any Resource Entity that intends to utilize either Allowance 1, Allowance 2, or Allowance 3 identified above must notify ERCOT in advance of using the allowance.  The QSE for the Resource Entity should immediately notify an ERCOT control room operator.  Written notification should also be sent to Kristi Hobbs, Vice President of System Planning and Weatherization, at kristi.hobbs@ercot.com, and should include the following information for each Generation Resource or SOG designated for the allowance:

• the name and unit code of the Generation Resource or SOG being designated for the allowance,
• the amount of incremental capacity from the generator that is expected to be made available as a result of utilizing the allowance,
• the fuel type of the generator,
• the anticipated category or categories of emissions, effluent, or other limitations under one or more federal environmental permits that results in a limitation on the output of the generator (e.g., SOx, NOx, Hg, wastewater),
• which of the above three allowances is being selected for each such generator, and
• for any Generation Resource designated under Allowance 2, confirmation that the capacity is available for RUC by ERCOT at any time after providing the notification. 

Following ERCOT's receipt of each designation, ERCOT will notify the Department of Energy (DOE) that the generator has been designated for operation pursuant to the order. As provided in the Secretary's order, the generator's authorization to operate in excess of any legally required limit is subject to the approval of the DOE. If the DOE rejects the generator's eligibility to be dispatched pursuant to the order, or at any time determines that the generator is no longer eligible to be dispatched pursuant to the order, the generator will no longer be a qualifying generator under the order. The order indicates that the DOE will maintain on its website an updated list of generators that have requested operation pursuant to the order.

For any Generation Resource that has been designated under Allowance 2, ERCOT will, if necessary, issue one or more RUC instructions committing the designated unit for any part of the period authorized. The timing of any RUC instruction is within ERCOT's sole discretion.  The instruction may be withdrawn if necessary to maintain local reliability, to conform with the DOE's order, or if directed by the DOE.

In accordance with the order, to minimize adverse environmental impacts and ensure that Generation Resources observe federal emissions or other limits at all times outside of the specific time periods and circumstances authorized under Allowances 1, 2, and 3, each Qualified Scheduling Entity (QSE) for a Generation Resource designated under Allowance 1, 2, or 3 above must, at any such time, telemeter a High Sustained Limit (HSL) that reflects the higher of the maximum output level under the legally required limit and the LSL.  The QSE must also ensure that the High Emergency Limit (HEL) value for the Resource reflects only the additional capacity that would be available while utilizing the allowance.  During any period of operation authorized under each Allowance, the QSE must update the telemetered HSL to reflect the maximum output capability of the Resource.  If utilizing Allowance 1 or 2, the QSE must ensure that all of the additional capacity made available under the allowance is offered at a price that is no lower than $2,000/MWh.  The QSE bears full responsibility to ensure its offer complies with this offer floor; ERCOT systems will not automatically apply such a floor.  Once the conditions described in the selected allowance end, or when the end of a period authorized under Allowance, 1, 2, or 3 is reached, whichever occurs first, the QSE must update the HSL telemetry to again reflect the higher of the maximum output level under the federal permit restriction and the Resource's LSL. 

SOGs must observe federal emissions and other limits outside of the specific time periods and circumstances described under Allowance 3. Once an EEA Level 2 or 3 condition is declared during the period identified under Allowance 3, the SOG may increase its output to a level that may result in a permit exceedance.  Once ERCOT declares that it is no longer in an EEA Level 2 condition, or outside of the period specified in Allowance 3, whichever occurs first, the SOG must reduce its output to a level that complies with the federal permit restriction.

Failure of a QSE or Resource Entity to adhere to the conditions established in the Secretary's order may result in liability under federal law for violating the restrictions established in the relevant permits.

Paragraph E of the Secretary's order requires ERCOT to provide such information regarding the environmental impacts of the order and the compliance of Generation Resources with the order as requested by DOE from time to time.  Any QSE that designates a unit for operation under either Allowance 1, 2, or 3 must provide ERCOT any information necessary to facilitate ERCOT's compliance with its reporting responsibilities under the order.

In the event of any conflict between this Market Notice and the Secretary's order, the Secretary's order governs.

CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via email at ClientServices@ercot.com.

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