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ERCOT Imposes New Price Controls

By Amanda Frazier

The Electric Reliability Council of Texas (ERCOT) reduced its shadow price cap from $5,600 to $5,000/MWh and collared the market-clearing price for energy (MCPE) between a cap of $2,250/MWh and an floor of -$1,000/MWh. These price controls, which took effect on June 18, 2008, are designed to prevent the MCPE from rising above the current offer cap for balancing energy services of $2,250/MWh. This is the second system change implemented in June to address recent price volatility in the ERCOT market. Earlier in June, the ERCOT board adopted a protocol change designed to allow more efficient management of transmission congestion. The new limits on price volatility come in the wake of steep increases in the price for wholesale power in the Houston and South zones of the ERCOT region. The new measures come at the direction of the Public Utility Commission of Texas, which recently ordered two stakeholder committees to review the issue. The stakeholders considered the recommendation of Dan Jones of Potomac Economics (the Independent Market Monitor for ERCOT), along with two other proposals, and unanimously recommended implementation of the Potomac Economics' proposal.

Full post as published by Energy Legal Blog on June 23, 2008 (boomark / email).