The Fatal Flaw in ERCOT's Market Design
- Mar 2, 2021 10:42 pm GMT
Last week, retail energy providers (“REPs”) pocketed a multi-billion dollar windfall - at the expense of Texas ratepayers.
This article explores two issues:
1) Texas ratepayers, not REPs, should earn the market value of providing demand response during an involuntary outage
2) Load is price sensitive - ERCOT should modify its market so load is curtailed based on a price that each customer makes explicit when signing a contract
Every home that lost power last week should have earned ~$15,000 (that was the approximate value of one home consuming electricity last week). Instead, ERCOT rules allow REPs to keep this money.
Shedding load involuntarily is the same as "demand response" and should be compensated accordingly.
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