Deregulation of power industry gives rise to a marketplace with competition as well as uncertainty. Understanding market price volatility and its driving factors is a key for market players to be successful in managing risks and making operational decisions in any electricity market. With this purpose, this paper examines 3.5-year historical real-time energy prices (market clearing price) in ERCOT electricity wholesale market and reveals key determinants driving its fluctuation: natural gas price, system load level. Conclusions made in the paper are based on economics and power market theory as well as results from extensive quantitative analysis.

The movement towards restructuring in the electric industry in the United States intensifies the need for a carefully-crafted market design. Currently ERCOT is the only ISO using a zonal commercial model. The zonal model provides market participants with the ability to commit their units based on a submitted portfolio schedule; however, this model introduces several operational challenges, including constraint and deployment oscillation. By providing a useful description of some of the problems encountered within the ERCOT market and the design revisions suggested to resolve the issues, this paper can be a useful resource to policymakers in potential RTOs, especially those who are in the process of determining a market model.

Bid price overlap refers to the phenomenon that down bids are higher than up bids in a market. The ERCOT market is a bilateral market and only about five percent of energy required by the system is purchased through the ERCOT balancing energy market. The ERCOT market deploys both balancing energy up and balancing energy down services, and overlapped balancing bids exist in the market. This study provides a thorough investigation into various types of balancing bid overlap and reveals the crux of the problem. It offers solid conclusions for ERCOT power market administrators to guide market behavior by looking through the superficial phenomena and focusing on the real problem underneath. This study may be the first documentation and analysis on bid price overlap and thus provides interesting conclusions to market players in various fields.

Locational Marginal Pricing (LMP) system is complex but critical to ensure a power market's smooth and health operation. This paper addresses both the current and the future LMP system in the ERCOT market. It starts with introducing the operating process of the current zonal LMP, then examines several major challenges and issues associated with the current LMP operations, and in the end gives an introduction to the proposed nodal LMP system which is anticipated to be put in place by January 1(st) 2009.