Matrix Pricing and Congestion

Congestion

Congestion in electricity is like a traffic jam on a highway.

  • Imagine electricity is cars on the road, and the power lines are highways.
  • Sometimes, too many cars try to use the same highway, and it gets crowded. The traffic slows down, and not all cars can pass through easily.

In the same way, too much electricity flowing through power lines causes congestion. When this happens:

  1. Electricity can’t reach some places easily.
  2. Prices go up because it’s harder to deliver power.
  3. Sometimes, power plants must reduce how much they generate, like forcing some cars off the road to ease traffic.

How does this relate to Matrix Pricing?

Price (Fixed with Congestion Pass-Through): This allows the supplier to adjust charges based on actual congestion costs that arise on the grid. If congestion occurs and costs increase, these costs can be passed through to consumers, typically in the form of an additional charge or adjustment to their bill.

Price (Fixed): This is a set price that consumers pay for electricity, regardless of fluctuations in demand or supply. It provides price stability, making it easier for consumers to budget their electricity costs. 

http://matrix.americanwholesaleenergy.com/

Engie price section of contract

Start and End Dates

The end date of a contract is the day before a new month would start based on the start date / flow date.

Example:

Signing date: February 1, 2024

Start Date / Flow Date: March 1, 2024

12-month Flow Period (End Date): February 28, 2025

Maximum Contract Durations and Forward Starts

Two parties make a deal today to lock in the price of energy, but the contract will only take effect later—say, in 6 months or 1 year.

Why wait? The buyer might not need the energy now, but they want to secure a good price in advance to avoid future price spikes. They sign a forward start contract now to lock in today’s price.

​The MAX duration for electricity in Texas is 60 months for Price (Fixed) and 84 months for Price (Fixed with Congestion Pass Through) (this includes the forward start).​

The MAX Forward Start for an electricity contract in Texas is 24 months.  ​

​Example: The forward start is 12 months from the signing date, there would be a maximum of 48 months of flow. 12-month forward start + 48-month flow = 60-month max contract term Price (Fixed).​

​Signing Date: February 1, 2024​

12-month Forward Start (Flow Date): February 1, 2025​

48-month Flow Period (End Date): January 31, 2029