With the holidays over and a brand new year in front of us, we wanted take some time to review the first full month of the Texas nodal market. December 2010 was a big month for First Choice Power, ERCOT, and Texas electricity customers – so what exactly happened?
As you may remember, the nodal market was designed to improve grid reliability, reduce congestion, and lower energy costs for Texas consumers. While nodal market’s long-term impact is still unknown, we have enough data to assess Real-Time and Day-Ahead prices settlement and other notable trends. We have attached a full statistical analysis of the month, including:
December averages for main trading hubs and load zones - including graphs capturing intra-month volatility.
December Settlement Price Points data - highest, lowest, standard deviation, and number of intervals exceeding $100.
If you’re in the mood for some light reading, you’re always welcome to head straight to the numbers. However, to help save you some time, First Choice Power has assembled some key highlights from the analysis and other ERCOT data.
Load Zone to Trading Hub Basis
For Houston, North, and South Zones in December:
The basis turned out to be much less costly than some industry predictions. Regardless of Day Ahead or Real Time, the monthly averages were less than $0.10/mwh and in some cases less than zero.
The West Zone remained an outlier:
The West Zone saw a Day Ahead Load Zone to Trading Hub basis average of $1.13 and the same Real Time basis averaging at $1.29 around the clock. The zone also experienced volatility in early December, which ERCOT attributes to transmission constraints that will persist until CREZ is fully implemented.
ERCOT has also announced that modeled transmission volumes for West to North flow in the Day-Ahead Market are not matching actual real-time volumes and has promised further investigation.
Ancillary Service prices have remained somewhat comparable to the Nodal pricing.
Responsive Reserve remains the premium service relative to Regulation Services or Non Spin.
RUC capacity shortfall charges for the entire system averaged over $45k per day for the first 20 days of the nodal market.
While RUC remains expensive, the price remains relatively low for a system of ERCOT’s size.
The RUC Uplift charge for the first 20 days was approximately $2k, which means that RUC charges were directly assigned to those market participants short at real time – exactly as ERCOT intended.
Generation Offer Cap
The generation offer cap remains in place at this time, although its release is rapidly approaching. The max price in December was about $1,286, with higher Real Time prices based on LMP solution from SCED. First Choice Power believes that once the offer cap is removed, higher LMP can be expected.
First Choice Power knows that good information is critical to making better decisions about how you buy your electricity. As the nodal market continues to evolve, we will continue to work hard to keep our customers and partners educated and up to date. If have any questions about this information, please contact our nodal hotline at 866-600-4116.