We live in a world of acronyms, and if you’re finding it tough to keep up with them all, we don’t blame you. But if you live in Texas, here’s one acronym that’s worth learning about: ERCOT.
ERCOT stands for the Electric Reliability Council of Texas, and it’s critically important to the power grid of the Lone Star State. Let’s dig into the Electric Reliability Council of Texas — ERCOT — and see why it’s so important to the Texas electric grid.
What Is the Purpose of ERCOT?
ERCOT is an independent system operator (ISO) that oversees the Texas power grid, called the Texas Interconnection. ERCOT is a nonprofit grid operator and is responsible for making sure that electricity gets from the places where it is generated (power plants) to the places where it is used (consumer households and businesses).
The Texas legislature assigned four primary responsibilities to the Electric Reliability Council of Texas:
- Maintaining reliability of the Texas power grid
- Facilitating a competitive wholesale electric market
- Facilitating a competitive retail electric market
- Ensuring open access to power transmission
What Kind of Company Is ERCOT?
The Electric Reliability Council of Texas is a nonprofit organization, specifically designated as a 501(c)(4) corporation.
ERCOT is overseen by a board of directors, and reports to the Texas legislature as well as the Public Utility Commission of Texas (PUCT).
Is ERCOT an RTO?
RTO stands for Regional Transmission Organization, and these organizations are federally regulated and operate U.S. power grids on a regional level.
The Electric Reliability Council of Texas is considered an ISO — an Independent System Operator — and in most respects, ERCOT performs the functions of an RTO.
However, because ERCOT operates completely within the boundaries of the state of Texas, and therefore doesn’t engage in any interstate commerce, it isn’t subject to federal regulation. So while ERCOT does nearly all of the things an RTO does, it technically is not an RTO.
Enter your ZIP Code and compare electricity rates
When Was ERCOT Formed?
The Electric Reliability Council of Texas was formed in 1970. It assumed the role of Independent System Operator (ISO) in 1996, in which it acts as a broker between buyers and sellers of wholesale power. ERCOT also oversees the transmission of retail electricity on its power grid, as well.
How Big Is ERCOT?
ERCOT is big. True to the Lone Star State’s “big” reputation, ERCOT is a massive electric grid operator.
We can measure ERCOT’s size in a number of different ways. ERCOT serves 90% of Texas (a truly impressive fact when you consider how big Texas is). The Electric Reliability Council of Texas serves 26 million Texas customers, including meeting Houston’s power needs and supplying Austin energy. To put that in perspective, that’s more than the population of 48 U.S. states.
The power grid that ERCOT oversees includes more than 52,000 miles of high-voltage transmission lines and more than 1,000 power generation units.
In planning for peak demand during summer of 2022, ERCOT expects to have more than 92,000 megawatts (MW) of electric capacity.
Where Is ERCOT Headquartered?
ERCOT is headquartered on a campus northeast of Austin, in a town called Taylor. According to ERCOT, most of the board meetings and shareholder meetings held by the Electric Reliability Council of Texas occur in the Austin area.
Is ERCOT a For-Profit Company?
No, the Electric Reliability Council of Texas was founded as a nonprofit corporation, which means that it doesn’t make a net profit by operating the Texas electric grid and helping facilitate the flow of power from generation units (like power plants or renewable energy facilities) to the homes and businesses of Texans.
What Kind of Power Does ERCOT Have?
ERCOT itself doesn’t generate power, nor does it consume it (other than how any other organization would). Think of ERCOT as the intermediary between supply and demand: ERCOT maintains the transmission lines and substations that connect electricity providers and electricity consumers.
That said, the ERCOT does keep track of the different kinds of electric power on its power grid. Here’s how ERCOT’s energy mix broke down in Texas in 2021:
- 42% natural gas
- 24% wind turbines (a renewable energy source)
- 19% coal
- 10% nuclear
- 5% other
Is ERCOT Regulated?
If you’re familiar with the electricity market in Texas, then you probably know that the Lone Star State deregulated its retail power market in 1999. As a result, Texans have the ability to choose their retail electric providers.
However, as a grid operator, ERCOT itself does have regulatory oversight. The Electric Reliability Council of Texas reports to both the Public Utility Commission of Texas (PUCT), the Texas legislature, and the Texas governor. It is also governed by a board of directors that is composed of industry experts, consumer advocates, and independent members.
How Can I Choose My Texas Energy Provider?
ERCOT operates the Texas power grid, which is a big job, considering there are more than 100 retail electric providers (REPs) generating power in the state. If you’re wondering how best to choose one of these REPs, you’ve come to the right place!
The first place you should start your search for a Texas power provider is the website PowertoChoose.org. This is a non-biased website run by the Public Utility Commission of Texas, and it’s the best way to see all of your options.
All you need to do is navigate to the Power to Choose website and enter in your zip code. You’ll then see all the electricity plans, energy rates, and power providers in your service area in an easy-to-compare list.
If you’re looking for tips on how to get the most out of the website, read more in our guide here. And if you’d like further tips about the important questions to ask as you try to decide on a Texas power provider, we have a guide for that too.
Who Owns ERCOT Energy?
The Electric Reliability Council of Texas (ERCOT) is a membership-based nonprofit corporation, and its members include consumers, electric utilities, and retail electric providers, among others.
How Is ERCOT Funded?
ERCOT charges a system administration fee to those that use the ERCOT grid, currently set at 55 cents per megawatt hour. This means that ERCOT is a self-funded organization.
For most consumers, this represents a small fraction of their monthly energy bill, and it directly funds ERCOT’s projects as they work to continue to improve grid reliability.
Is ERCOT Responsible for Power Outages?
One of the primary responsibilities of the Electric Reliability Council of Texas is to ensure the reliability of the Texas power grid — it’s right there in the name.
When things are running smoothly, you’re unlikely to notice ERCOT’s work. You flick a switch, the lights come on, end of story.
On ERCOT’s end, the story is a lot more complicated though. As a grid operator, ERCOT is responsible for ensuring the reliability of the transmission lines that help connect power providers with consumers. ERCOT also needs to constantly balance electric supply with electric demand — two variables that are constantly changing.
Managing the ERCOT market in real time isn’t a simple task, and extreme weather can make it even more difficult. In times of cold snaps or extreme heat, electric demand spikes as Texans crank their thermostats to stay comfortable. This puts a strain on the ERCOT grid and can cause power outages. ERCOT is responsible for making sure that even at times of peak demand, Texans are still served reliable electricity.
Why Was the 2021 Winter Storm So Bad for ERCOT?
At times, grid conditions can go south, fast. The winter storm of 2021 is a great example of forces outside of ERCOT’s control causing blackouts and power outages. This winter storm brought with it an extreme cold snap, in addition to the winter weather, and these factors combined to wreak havoc on the Texas energy grid.
The 2021 Texas winter storm affected both the state’s power supply and demand. On the supply side, power plants struggled to continue to provide their normal amount of electricity as a result of the cold snap and winter weather.
Then, on the demand side, those same factors had Texans turning up their heat, causing long periods of peak demand and putting a tremendous strain on the power grid.
In the wake of Texas’ 2021 winter storm, seven members of ERCOT’s board of directors resigned, and ERCOT’s CEO was fired. In June 2021, Texas governor Greg Abbott signed two bills into law to reform ERCOT and better weatherize the Texas power grid as a way to prevent future winter weather events from causing similar problems going forward.
Enter your ZIP Code and compare electricity rates
Now You Know ERCOT
In our acronym-filled world, you’re now an expert, at least when it comes to the Texas power grid. We’ve learned all about ERCOT, starting with what it stands for (the Electric Reliability Council of Texas).
We’ve also seen just how big ERCOT’s market is. Everything really is bigger in Texas, it seems. ERCOT’s job isn’t just large though; it’s complicated, and we’ve learned how winter weather can throw wrenches in ERCOT’s best-laid plans.
Finally, we’ve seen the ways in which ERCOT is regulated, and observed the ways in which ERCOT can be held to account or even reformed in response to past failures in grid reliability.
If you’d like to learn more about the unique aspects of the Texas power market, or about all topics energy related, bookmark the Energy Savings blog. You’ll find regular blog posts about a variety of energy and electricity topics there.
Brought to you by energysavings.com
All images licensed from Adobe Stock.
Featured image: