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Description: The Electric Reliability Council of Texas, Inc. (ERCOT) operates Texas's electrical grid, the Texas Interconnection, which supplies power to more than 25 million Texas customers and represents 90 percent of the state's electric load. ERCOT is the first independent system operator (ISO) in the United States and one of nine ISOs in North America. ERCOT works with the Texas Reliability Entity (TRE), one of eight regional entities within the North American Electric Reliability Corporation (NERC) that coordinate to improve reliability of the bulk power grid.
As the ISO for the region, ERCOT dispatches power on an electric grid that connects more than 46,500 miles of transmission lines and more than 550 generation units. According to a ERCOT report, the major sources of generating capacity in Texas are natural gas (51%), wind (24.8%), coal (13.4%), nuclear (4.9%), solar (3.8%), and hydroelectric or biomass-fired units (1.9%). ERCOT also performs financial settlements for the competitive wholesale bulk-power market and administers retail switching for 7 million premises in competitive choice areas.
ERCOT is a membership-based 501(c)(4) nonprofit corporation, and its members include consumers, electric cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities (transmission and distribution providers), and municipally owned electric utilities.
Power demand in the ERCOT region is typically highest in summer, primarily due to air conditioning use in homes and businesses. The ERCOT region's all-time record peak hour occurred on July 19, 2018, when consumer demand hit 73,259 MW. A megawatt of electricity can power about 200 Texas homes during periods of peak demand
Its History: At the beginning of World War II, several electric utilities in Texas agreed to operate together as the Texas Interconnected System (TIS) to support the war effort. During the war, the grid was interconnected to other states and excess power generation was sent to industries on the Gulf Coast, providing a more reliable supply of electricity for production of metal and other material needed for the war.
Recognizing the reliability advantages of remaining interconnected, TIS members continued to operate and develop the interconnected grid. TIS members adopted official operating guides for their interconnected power system and established two monitoring centers within the control centers of two utilities, one in North Texas and one in South Texas.
In 1970, ERCOT was formed to comply with NERC requirements. However, the Texas grid is not subject to federal regulation, being an intrastate grid without interstate power flows. On May 4th 1976, Central Southwest Holdings, attempted to force the issue, with an event that was later called the "Midnight Connection", where it connected the grid to Oklahoma for a few hours. This caused lawsuits about whether federal regulation then applied, however the judgement was that this was not sufficient.
The deregulation of the Texas electricity market occurred in two phases: the wholesale generation market in 1995 and the rest of the sector in 1999. The 1999 deregulation was aimed at counteracting a shortage of generation capacity in the state. Since deregulation, retail providers and power generators were unregulated, although regulations on transmitters continued to control the placement of electrical lines. The legislation abolished the former system, in which power was both generated and consumed locally. Instead, under the deregulated regime, retailers could contract with providers across the state, creating a complex market. The 1999 deregulation also dropped limits on rate increases. Prior to deregulation, residential electricity rates were significantly below the national average; after deregulation, residential electricity rates increased, rising 64% between 1999 and 2007.
