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New ERCOT Emergency Pricing Program Approved

ERCOT
Electrical technician monitoring switchboard | Image by pvproductions/Freepik

The Electric Reliability Council of Texas’ new emergency electricity pricing program was recently approved by regulators, allowing for temporary drops in the wholesale price cap during tight grid conditions.

As the energy-taxing winter season commences, many Texans are keeping their eyes on the power grid and their electricity bills. A newly approved tool from ERCOT called the Electricity Pricing Program (EPP) is expected to help with the latter. The Public Utility Commission (PUC) officially green-lit the EPP, voting to implement it immediately during its meeting on November 30.

The program was first proposed as part of SB 3, which was a comprehensive legislative response to the 2021 blackouts seen during Winter Storm Uri. The historic grid failure not only cost many lives and caused significant property damage but also resulted in $16 billion in overcharges. Since ERCOT employs a scarcity-based pricing system, a spike occurred in wholesale electricity prices, costing retail electric providers dearly.

The EPP lowers the cap placed on wholesale electricity prices to $2,000 per MWh for 24 hours if prices surpass the $5,000 per MWh threshold for a duration of 12 hours within a 24-hour rolling period.

ERCOT is required to issue a notice to all market participants when the EPP is activated and when it terminates. This will be within 72 hours of the EPP launching or 24 hours after ERCOT’s emergency operations end.

PUC’s executive director, Thomas Gleeson, applauded the approval of the EPP.

“Implementing the Emergency Pricing Program provides another layer of financial protection for Texas consumers and will ensure their electricity bills remain affordable even when conditions are tight in the ERCOT system,” said Gleeson, according to The Texan. “This is a key part of our ongoing work to ensure electric reliability for Texans at a reasonable cost.”

The performance of the EPP will be subject to a review by the PUC in early 2026, followed by subsequent assessments every five years alongside other cap programs.

As recently reported by The Dallas Express, ERCOT has assured the public that the power grid is braced for the winter season. It anticipates no issue in meeting consumer demand, even in the event of extreme weather.

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