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Regulating electricity spot markets during extreme events: The 2021 Texas case

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  • Danielian, Armen

Abstract

This paper discusses the economic and legal challenges of price regulation in spot electricity markets during extreme events, taking the 2021 Texas winter storm as an example. The dual role of spot electricity prices (resource allocation and overall system reliability) in ERCOT's energy-only market resulted in allocating system reliability costs to load-shed consumers and spot electricity buyers, implying that complementary tools for covering system reliability costs should be sought. Further nuances are highlighted through a comparative qualitative analysis of value-of-lost-load pricing and anti-gouging legislation in the event context.

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  • Danielian, Armen, 2025. "Regulating electricity spot markets during extreme events: The 2021 Texas case," Utilities Policy, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:juipol:v:93:y:2025:i:c:s0957178725000062
    DOI: 10.1016/j.jup.2025.101891
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    More about this item

    Keywords

    Value of lost load; Anti-gouging laws; Extreme events; ERCOT; Electricity spot market design; Price regulation; System reliability;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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