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Real Time Settlement Point Prices

For almost nine years, the Market Clearing Price of Energy for ERCOT (MCPE) pricing proved to be a very effective bridge when fixed pricing and heat rate alternatives responded harshly to short term stimuli. With the move to nodal market pricing in December, 2010, MCPE pricing was replaced with Real Time SPP and Day Ahead pricing. New and old market risks still exist, but real time and day ahead pricing does offer an interesting alternative that is hard to ignore. With an adder of $.015 to $.025/kwh layered on to address standard ERCOT charges and another $.002 to cover load specific RUC charges, market clearing real time pricing will continue to be an attractive alternative.


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Market clearing pricing, either as MCPE or SPP, is a double edged sword. For those times when the market is stable, this pricing offers a very competitive alternative to a fixed price contract. When something goes wrong, however, it tends to go wrong in a big way and while ERCOT has proven to be very efficient at correcting system issues, the resulting $.20/kwh pricing for one or two months can be a significant market shock. Early 2008 showed how MCPE pricing could explode and recent unanticipated shortfalls in winter supply brought about $3/kwh pricing for a short duration to the fledgling SPP market. This tool continues to be most attractive as a bridge.

 
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