What is ERCOT?

March 25, 2021   By Caitlin Cosper

What is ERCOT?

Anyone who lives in Texas has probably heard of ERCOT before. And anyone who lives outside of the Lone Star State may have heard about ERCOT during the recent power crisis in Texas.

So, what is ERCOT? And what role does it play in the deregulated energy market? SaveOnEnergy® is here to answer this common question for electric consumers.

What does ERCOT stand for?

ERCOT stands for the Electric Reliability Council of Texas. This council is a membership-based nonprofit. It is run by a board of directors and overseen by the Public Utility Commission of Texas and Texas lawmakers.

The ERCOT board recently made headlines following the Texas power crisis when news broke that five board members didn’t live in the state. Those members have since resigned from the ERCOT board. In the aftermath of the power crisis, resigned from the ERCOT board.

What does ERCOT do?

ERCOT manages the Texas power grid and schedules the flow of electricity to more than 26 million households. The ERCOT region covers about 90 percent of the state’s electric load and more than 46,5000 miles of transmission.

Here are ERCOT’s primary responsibilities:

  • Manage the reliability of the Texas power grid
  • Oversee the competitive wholesale market
  • Oversee the competitive retail market
  • Ensure open access to transmission

ERCOT was the nation’s first independent system operator (ISO) – it’s one of nine in North America. In 1965, the U.S. experienced the worst power outages in the country’s history. Afterward, the Federal Energy Regulatory Commission released new requirements aimed at ensuring electric reliability. While this power outage didn’t affect Texas, these new regulations led to the formation of ERCOT in 1970.

How does the Texas power grid work?

Roughly 85 percent of the Texas electricity market is deregulated. This means residents and businesses in deregulated areas of the Lone Star State can choose which energy company supplies their electricity. The theory behind deregulation is that the increased competition between energy companies will lead to low electric rates and better plan options.

In Texas, customers choose their provider but not their utility company. The provider supplies the electricity, but the utility company is responsible for delivering energy to homes and businesses through power lines. This means the utility company – which is determined based on where a resident is located – maintains power lines and restores electricity when there is an outage.

There are five utilities responsible for transmission and distributing electricity, including:

ERCOT real time prices

Electric rates in Texas change frequently based on supply and demand in the wholesale energy market. This can affect variable rate or other plans tied to the wholesale market. For most consumers in deregulated areas of Texas, it makes sense to lock in fixed energy rates even if means switching to different providers or plans.

With so many different options in the Texas market, it can be difficult to sort through the providers, rates, and plans. For those interested in exploring current energy prices in the ERCOT service area, the SaveOnEnergy marketplace is a great place to begin.

To begin checking real time prices in Texas, simply enter your ZIP code here. From there, you can filter for different contract lengths, rate structures, and providers and compare the many choices. Current electric rates in Texas differ depending on where you are, so the best way to check accurate prices in your area is by entering your ZIP code.

Curious about the ins and outs of the Texas energy market? SaveOnEnergy has also tackled these questions:

 

Caitlin Cosper is a writer within the energy and power industry. Born in Georgia, she attended the University of Georgia before earning her master’s in English at the University of North Carolina at Charlotte.

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