The Best Little Nodal Market in Texas

Deck: 

Sweating the details for 2009.

Fortnightly Magazine - September 2007
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The Electric Reliability Council of Texas (ERCOT) introduced wholesale market competition in 1996, following the organizational change of ERCOT from a pure reliability council to an independent system operator (ISO) the same year. This makes ERCOT one of the earliest adopters of competitive electric markets. Senate Bill 7 (S.B. 7) brought about the most fundamental change to the market, opening competitive retail markets by January 2002.

The restructured retail markets use a zonal flowgate model to handle congestion. Since 2002, this system has been hotly debated as local congestion (handled through extensive use of out-of-merit order capacity that is uplifted to the entire market) has become very costly for the system. To bring more efficiency into the planning and dispatching of units in ERCOT, the Public Utility Commission of Texas (PUCT) adopted Substantive Rule No. 25.501 as developed under the market redesign rulemaking proceeding (Project 26376), setting forth a nodal wholesale-market design.

Stakeholders and regulators in ERCOT are trying to work out the details of implementing this market, now not expected to begin in December 2008. Table 1 below presents a history of the major events shaping the ERCOT market.

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