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Lessons Learned: The Texas Experience

Lessons Learned: The Texas Experience

Chapter:
(p.182) 4 Lessons Learned: The Texas Experience
Source:
Electricity Deregulation
Author(s):
Ross BaldickHui Niu
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226308586.003.0005

This chapter discusses lessons that can be learned from the experience of the Electric Reliability Council of Texas (ERCOT). It explains that ERCOT is a bilateral market and rather than serving as market maker it takes the more passive role of collecting schedules of bilateral trades and only running a small residual market for balancing supply and demand in real-time. This chapter suggests that the success of ERCOT shows that an electricity market can be run without a centrally dispatched day-ahead market. It also explains that while portfolio scheduling can provide considerable flexibility to market participants it can also result to reduced market efficiency, lack of price discovery and operational problems.

Keywords:   ERCOT, electricity industry, Texas, bilateral market, electricity market, portfolio scheduling, market efficiency, operational problems

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