NEWS: Energy markets
Wholesale Electricity Prices in the Texas (ERCOT) Market

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February 17, 2014

Texas’s wholesale electricity market has undergone major regulatory changes over the past two decades. E3 Senior Partner Dr. C.K. Woo and co-authors Jay Zarnikau – an adjunct professor at the LBJ School, and Ross Baldick – an electrical engineering professor at the University of Texas at Austin, recently published an article “Did the introduction of a nodal market structure impact wholesale electricity prices in the Texas (ERCOT) market?” in the Journal of Regulatory Economics (http://link.springer.com/content/pdf/10.1007%2Fs11149-013-9240-9.pdf), analyzing how the transition from “zonal” to “nodal” markets in Texas, which became functional in December 2010, has affected prices.

The analysis finds that the change in Texas’s electricity market structure resulted in about a 2% drop in prices controlling for other factors such as natural gas prices, total system load levels, dispatchable generation levels, the treatment of local congestion costs, and the treatment of the revenues received by the market from the auctioning of transmission rights.

filed under: Energy markets


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