Claim: Generator Markups In ERCOT Due To Weather Generate $2.1 Billion In Transfers From Consumers
December 03,2018
A working paper published at Energy Institute at Haas (University of California, Berkeley) claims that, in the Texas ERCOT market, a 10% reduction in market size causes firms to more than double markups, and that markups induced by transmission congestion at high temperatures generate $7.1– 21.5 million of deadweight loss annually
The paper states that, "These markups also create large transfers — $2.1 billion per year — from consumers to producers, which raise important equity concerns."
The paper does not discuss ERCOT's energy-only design and the propriety of comparing markups over marginal cost pricing as a reference for competitiveness in light of the need for marginal assets to recover fixed costs