ERCOT to reconsider power purchase rules under new cap

The Electric Reliability Council of Texas, one of the eight electricity transmission and distribution grid operators in the nation, plans to reconsider its credit rules for companies buying power, according to Platts.

The group is facing a major shift in the market after the Public Utility Commission of Texas voted to raise the allowable cap for electricity pricing, from $3,000 per megawatt-hour to $4,500 per megawatt-hour.

Some already worry that the new pricing system could lead to an increase in price volatility, as electricity costs could rise higher during times of peak demand, and the legislature is also considering doubling the cap once again within the next three years.

In response, ERCOT could increase the amount of collateral that companies would be required to post with sellers when electricity is in short supply, or could force market participants to adopt a more predictive model for forecasting demand.

ERCOT has taken a variety of steps recently in an effort to secure Texas' electricity distribution system, including a new effort to expand the state's transmission grid to the south where numerous wind power installations have sprung up, according to Reuters.

Texas' power market is forecast at PennEnergy's Research area.

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