3 ms·

A few REP’s pay that price each year.... and they go out of business. The price is a reflection of the scarcity of generation and transmission capacity when it

A few REP’s pay that price each year.... and they go out of business. The price is a reflection of the scarcity of generation and transmission capacity when its 101°F at 90% humidity and the entire state has the A/C on full blast. If you were plugged in with ERCOT as a generator (guessing you don’t have the millions to build one), and you were the last to get told to start up, and you were close to the source of the need, you most certainly could earn that much. That’s what “peaker plants” are. You’ve probably heard about how bad they pollute. Oh, and that price might only last for 15 minutes. If you’re generating electricity “behind the meter” (from solar panels) they usually agree to some nominal price but chances are if it’s that hot your system is using your panels to augment your grid usage.

tialaramex 7y ago
This makes more sense, thanks. I do have a further question though. You say you'd get this price if you're last but surely it would make more sense to pay all generators the current winning price otherwise there's an incentive to guess and under-supply to get paid more. I know the UK had to iterate a few times to make a system that wouldn't get gamed by suppliers, ensuring their incentives align with the power network stability and performance goals. I've actually been reading recently about the other side of this, the retail side would like to force consumers to accept 15 minute metering. Current legislation forces consumers to be metered in hour increments, with 15 minutes only at their option but that might mean suppliers eat a spike like this one. Most home users are actually paying a fixed rate or simple on peak/ off peak system, with their off peak supply locally switched off by relays during peak times, but the law already provides for hourly rates. The long term idea is to load shed home users. Power spikes? Stop filling up those EVs and heating swimming pools rather than spin up another gas turbine.
- ryanmarsh 7y ago
  The generators can’t just do whatever they want, otherwise they could easily conspire to set prices. ERCOT, MISO (mid-continent system operator), and CALISO (California) basically run the grid. The generators are all under contract and can be fined for not being able to spin up when asked. This is called an “unplanned outage” and it can really cause problems.

tialaramex 7y ago

This makes more sense, thanks. I do have a further question though. You say you'd get this price if you're last but surely it would make more sense to pay all generators the current winning price otherwise there's an incentive to guess and under-supply to get paid more. I know the UK had to iterate a few times to make a system that wouldn't get gamed by suppliers, ensuring their incentives align with the power network stability and performance goals. I've actually been reading recently about the other side of this, the retail side would like to force consumers to accept 15 minute metering. Current legislation forces consumers to be metered in hour increments, with 15 minutes only at their option but that might mean suppliers eat a spike like this one. Most home users are actually paying a fixed rate or simple on peak/ off peak system, with their off peak supply locally switched off by relays during peak times, but the law already provides for hourly rates. The long term idea is to load shed home users. Power spikes? Stop filling up those EVs and heating swimming pools rather than spin up another gas turbine.

ryanmarsh 7y ago
The generators can’t just do whatever they want, otherwise they could easily conspire to set prices. ERCOT, MISO (mid-continent system operator), and CALISO (California) basically run the grid. The generators are all under contract and can be fined for not being able to spin up when asked. This is called an “unplanned outage” and it can really cause problems.