ERCOT Wholesale Market Was Competitive Last Year, Monitor Reports
July 1, 2013
The ERCOT wholesale market performed competitively last year, its independent market monitor, Potomac Economics, wrote in its annual state-of-the-market report. Prices were almost cut in half from the highs caused by wild weather in 2011, as the load-weighted average locational marginal pricing was just $28.33/MWh in 2012 – a drop of 47 percent from the prior year. The average price for gas was 31 percent lower in 2012, down to $2.71/MMBTU, as load dropped 2.7 percent. Peak load was down 2.6 percent. Congestion costs dropped 9 percent from a year earlier, to $480 million. The congestion was not as a low as it could have been given the broader market fundamentals, in large part due to the constraints in West Texas that pushed prices in that area above the ERCOT average for the first time, the report said. The West Zone saw prices on average nearly $11/MWh above the rest of ERCOT because of the congestion. But it had more hours than anywhere else with prices below $0/MWH, thanks to wind power’s high output that clogged up transmission lines to cities in the east. Additionally, the day-ahead market tracked the results in real time much more closely in 2012 than a year earlier because of fewer shortages and their associated high prices. The average absolute difference between day-ahead and real-time prices in 2012 was just $9.96/MWh, compared with $24.50/MWh a year earlier.