Nodal is a complex/costly reorganization of how the price of electricity is set in the bulk power market. The system assigns the cost of congestion to companies creating it, and is intended to prompt and financially encourage power line congestion relief and reward successful demand reduction with lower pricing. The redesigned grid will consist of more than 4,000 nodes, and will replace the current congestion management zones (CMZs).

The implementation of the nodal market design is expected to deliver the following benefits:

• Improved price signals
• Improved dispatch efficiencies
• Direct assignment of local congestion

The Texas Nodal program is directly governed by the ERCOT Board of Directors. Though the media published mixed reviews of Nodal, a complex and high tech system to manage new generation is necessary. A year’s demand cycle should show how NODAL will impact the Texas market. NODAL just went “live” December 1, 2010.  CoServ Electric is monitoring NODAL and the changes it will render in how bulk power is priced in the ERCOT market. Read up on NODAL on ERCOT’s site.