Journal of Regulatory Economics

, Volume 45, Issue 2, pp 194–208 | Cite as

Did the introduction of a nodal market structure impact wholesale electricity prices in the Texas (ERCOT) market?

  • J. Zarnikau
  • C. K. Woo
  • R. Baldick
Original Article


Regression analysis suggests that zonal averages of locational marginal prices under the nodal market are about 2 % lower than the balancing energy prices that would occur under the previous zonal market structure in ERCOT. The estimates for the nodal market price effects are found after controlling for such factors as natural gas prices, total system load levels, non-dispatchable generation levels, the treatment of local congestion costs, and the treatment of the revenues received by the market from the auctioning of transmission rights. Our finding is limited to periods which are not characterized by price spikes in the wholesale market.


Electricity market restructuring Deregulation Locational marginal pricing ERCOT 

JEL Classification

L51 L11 L94 Q48 



The authors would like to thank Dan Jones of Potomac Economics for discussions during the course of this work. We also wish to thank two anonymous referees and providing exceptionally detailed and valuable comments on earlier drafts.


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Frontier Associates LLCAustinUSA
  2. 2.LBJ School of Public Affairs and Division of StatisticsThe University of Texas at AustinAustinUSA
  3. 3.Department of EconomicsHong Kong Baptist UniversityHong KongHong Kong
  4. 4.Energy and Environmental Economics, Inc.San FranciscoUSA
  5. 5.Department of Electrical and Computer EngineeringThe University of Texas at AustinAustinUSA

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