Technical aspects of the ERCOT market design

Summary form only given. The Independent System Operator (ISO) of the Electric Reliability Council of Texas (ERCOT) was the first operational ISO in the country and was instituted with the opening of the ERCOT wholesale market to competition in 1995. Senate Bill 7, enacted by the Texas Legislature in 1999, opened the Texas electricity, market to retail competition on January 2002. For these reasons, market participants decided to redesign the electricity market to have a single control area for all of ERCOT and an ancillary services market operated by ERCOT. The distinguishing principle of the proposed ERCOT market structure is that no entity should be allowed to profit solely due to its ability to exercise locational market power due to the absence of competitive solutions in resolving noncommercially significant or "local" constraints. The paper focuses on issues related to the ERCOT market design.