The era of polemics about electric competition is nearly over. It’s time to compare the relative performance of competition and traditional regulation as these two established models operate side-...
The Best Little Nodal Market in Texas
Sweating the details for 2009.
nodal market surcharge of $.0663/MWh (assessed to generators based on their generation ratio share) as proposed by ERCOT. This would be added to ERCOT’s existing system administration fee currently set at 42 cents/MWh.
On June 15, 2006, six vendors were selected to perform services related to the implementation of the nodal market design in the areas of: market operations, congestion revenue rights, financial transfer, credit monitoring, outage scheduling, load forecasting, and network model and telemetry. Vendors began their joint requirement development in early July with almost all of the business requirements and most of the conceptual system design documents approved by the TPTF. Further, market participants and ERCOT employees began attending TNM training classes in July.
On Sept. 11, 2006, the TPTF proposed a phased TNM implementation timeline with market elements applied in three phases:
• Release 1, April 2008—Single-entry model: a common information model would be implemented with zonal and nodal markets running simultaneously;
• Release 2, Dec. 1, 2008—Real-time operations: real-time LMPs and CRRs to be introduced replacing zonal market; and
• Release 3, Dec. 8, 2008—Day-ahead market: day-ahead energy and CRR market implemented with full elimination of the zonal market.
According to the TPTP, if ERCOT and its market participants are unable to implement Release 3, the ERCOT market will revert to the zonal market design. This phased-in implementation plan is awaiting approval from the ERCOT board.
Still, some opposition to the transition to nodal markets remains. Opponents include the Committee of Concerned Loads, Constellation Energy, and the city of Garland, Texas, which have expressed concerns to the PUCT about the impact on customers of switching to nodal markets. In response, the PUCT stressed that bilateral markets should remain strong in ERCOT, the market should remain energy-only, and that implementation costs be borne by generators rather than customers.
1. Substantive Rule 25.501 (Project 26376: Rulemaking proceeding on wholesale market design issue in the Electric Reliability Council of Texas).
2. ERCOT Nodal Protocols, Section 7: Nov. 1, 2006.
3. The ERCOT 345 trading hub price is the simple average of the North 345 kV, South 345 kV, Houston 345 kV, and West 345 kV trading hub prices.
4. The ERCOT 345 Bus trading hub price in the day-ahead is the simple average of hourly prices for all buses included in the North 345 kV, South 345 kV, Houston 345 kV, and West 345 kV. In real-time, it represents the simple average of the time weighted 15-minute bus prices.
5. The Electric Reliability Council of Texas, Report on Existing and Potential Electric System Constraints and Needs, October 2005.