Market INSIGHT

Why is the price of natural gas so important to the price of electricity in Texas?
Almost 50% of our state’s electricity is fueled by natural gas.  Unlike coal and nuclear stations, these generating stations are relatively flexible to ramp up and down as the demand for electricity changes on the grid.  Natural gas is also a great fuel in Texas because its abundance here in the Lone Star State and is relatively clean burning.  Unfortunately, there are seasonal demands for natural gas that increase the price which also increases the price of electricity.

What sources of fuels are used to generate my electricity?
In 2008 in an average hour the fuel mix of your electricity was as follows: 43% natural gas; 37.1% coal; 13.2% nuclear; 4.9% wind and 1.8% other.

Why can’t I find a wholesale electricity quote for Texas electricity?
The Texas market (ERCOT) is a bilateral marketplace.  This means that the majority of electricity trades are made privately between two or more parties.  There is a spot market that covers miscellaneous energy needs but no liquid “pool” of electricity or trading center to quote prices.  The spot price changes every 15 minutes and can be very volatile.  The spot price is called “Balancing Energy” and is NOT a good indicator of overall market prices.  (Current Balancing Energy Prices can be found at: http://mospublic.ercot.com/ercot/jsp/balancing_services_mcp.jsp).

What are Ancillary Services?
This is the payment you make to be sure your electricity is reliable.  This money pays for generating units to be a various stages of readiness to meet the always changing demand here in Texas.