What Are Ancillary Services? ERCOT's Grid Reserves and How They Reach Your Business Bill

Ancillary services are the reserves a power grid holds back to keep supply and demand balanced from one second to the next, so grid frequency stays near 60 hertz. (This article covers the electricity meaning, not the healthcare one.) ERCOT buys five of them. Their cost is charged to retail providers by share of load, then reaches a business either inside a fixed price or as a separate pass-through. The contract decides which.

The term isn't unique to Texas. The U.S. Energy Information Administration defines ancillary services as "services that ensure reliability and support the transmission of electricity from generation sites to customer loads", and every U.S. grid operator buys some version of them. ERCOT, which runs the grid for most of Texas, describes them as "a type of insurance": capacity paid to stand ready for moments that normal dispatch can't follow. For what ERCOT itself does, see our ERCOT market explainer.

Ancillary services cost the market little in 2024 and 2025, but far more in 2023. Whether your budget carries the risk of another year like that is settled in your supply contract, not by ERCOT. This guide covers the five products, what changed in December 2025, what they have cost, and the PUCT rules on billing them separately.

What Ancillary Services Mean on the ERCOT Grid

ERCOT re-dispatches generation every five minutes to match supply to demand. But demand, wind and solar output keep changing inside those five minutes, and generating units sometimes trip offline without warning. Ancillary services cover that gap. They are capacity that generation, load and storage resources hold in reserve, which ERCOT procures on behalf of consumers and calls on when the grid needs it. See ERCOT's Trending Topic on ancillary services (updated December 29, 2025).

Texas rules define the term more broadly. The PUCT's definitions rule, 16 TAC §25.5, defines an ancillary service as "a service necessary to facilitate the transmission of electric energy including load following, standby power, backup power, reactive power, and any other services the commission may determine by rule."

Two services that fit that broad definition are handled differently in practice. Voltage support and black start service exist in ERCOT, but they are settled separately and are not among the market-procured products. ERCOT's Independent Market Monitor (IMM) lists both under uplift in its 2025 State of the Market Report. In the rest of this article, "ancillary services" means the reserve products ERCOT buys in its markets.

The Five ERCOT Ancillary Service Products

ERCOT currently buys five ancillary service products. A sixth, the Dispatchable Reliability Reserve Service, has been approved but isn't live yet. Each one answers a different question about the grid: how fast help is needed, and for how long.

Sources: IMM 2025 State of the Market Report; ERCOT Ancillary Services Study (September 2024); ERCOT's NPRR1282 (durations effective December 5, 2025); ERCOT's DRRS workshop materials.

Regulation Up and Regulation Down

Regulation is the finest-grained reserve. Resources providing it follow ERCOT's Load Frequency Control signals every four seconds to hold frequency near 60 Hz between the five-minute dispatch intervals. ERCOT buys Up and Down separately because the grid's needs in each direction aren't symmetrical. Batteries now do most of this work: the IMM reports that energy storage supplied 94% of Regulation Up and 86% of Regulation Down in 2025. NPRR1282 set a 30-minute duration requirement for Regulation when RTC+B went live.

Responsive Reserve Service (RRS)

Responsive Reserve Service is the grid's first line of defense when a large generating unit trips and frequency starts to fall. It responds automatically within seconds, and it comes in three types, according to ERCOT's ancillary services study:

• Primary Frequency Response, the automatic response that arrests the frequency decline.
• Fast Frequency Response, which must deliver its full response within 250 milliseconds once frequency falls below 59.85 Hz.
• Under-frequency relay load, which trips offline when frequency falls below 59.7 Hz.

ERCOT's 2026 minimum requirements set at least 1,377 MW of the primary frequency response type. Storage supplied 51% of RRS in 2025, per the IMM.

ERCOT Contingency Reserve Service (ECRS)

ECRS launched in June 2023, and ERCOT called it the first new daily-procured ancillary service in more than 20 years. It can respond within 10 minutes to restore frequency after a significant deviation, cover forecast error and load, wind and solar ramps within the hour, and replace reserves that have already been deployed. Both online and offline units can provide it. The IMM notes that storage providing ECRS had to sustain it for two hours before RTC+B. NPRR1282 set a one-hour duration requirement from December 5, 2025.

Non-Spinning Reserve Service (Non-Spin)

Non-Spin must be available within 30 minutes. It covers forecast errors, load, wind and solar ramps, and forced outages, and replaces reserves that have already been deployed until more resources can be committed. Despite the name, it isn't limited to offline generators: online and offline resources, including load and storage, can provide it. Non-Spin carries a four-hour duration requirement. In 2025 it was the most expensive ancillary service on average for the first time, which the IMM attributes to two structural factors: oversized Non-Spin procurement and that four-hour requirement.

Why ERCOT Buys Reserves, and How It Decides How Much

ERCOT doesn't buy an open-ended amount of reserves. It sets minimum quantities for each product, by month and hour, through an annual ancillary services methodology. The 2026 methodology was recommended by ERCOT's Board on September 23, 2025, approved by the PUCT on November 6, 2025, and took effect January 1, 2026. It sizes ECRS and Non-Spin with a probabilistic method. Under RTC+B, some quantities are also adjusted closer to the operating day and in real time. See ERCOT market notice M-A121925-01.

How much is enough is debated. The IMM argues that ERCOT's ancillary service plan is 140% larger than a 1-in-10 load-shed reliability standard would require, which raises costs and suppresses shortage pricing. ERCOT says its more conservative settings follow earlier PUCT policy guidance and help it meet NERC reliability standards. When the 2026 methodology went to ERCOT's Board, the IMM proposed a compromise: a three-hour forecast-error horizon, a one-hour duration for energy storage, and sizing reserves to a 1-in-10 loss-of-load standard rather than to avoiding an operational Watch. Both positions are recorded in the Board item on the 2026 methodology. How much ERCOT buys is a policy choice, and it feeds the cost that load pays.

What RTC+B Changed for Ancillary Services

At midnight on December 4–5, 2025, ERCOT went live with Real-Time Co-optimization plus Batteries (RTC+B). ERCOT CEO Pablo Vegas called it the "most substantial enhancement to the Real-Time Nodal market design since its inception in 2010," according to ERCOT's go-live release. For ancillary services, four things changed:

• Reserves are bought in real time. Before RTC+B, ERCOT procured ancillary services day-ahead as physical obligations. Now the real-time market buys energy and ancillary services together every five minutes, and day-ahead ancillary service awards are financial rather than physical (IMM 2025 State of the Market Report; ERCOT market notice M-F110525-04).
• A new scarcity mechanism. The ORDC price adder was discontinued and replaced by Ancillary Service Demand Curves (ASDCs). How that flows into real-time prices at each location is covered in our guide to ERCOT locational marginal pricing.
• ECRS is deployed by the market. Operators no longer manually deploy ECRS, and the old supplemental ancillary service market process was replaced.
• Batteries are modeled as single devices rather than as separate charging and discharging pieces.

ERCOT projects more than $1 billion a year in wholesale market savings from RTC+B. That figure comes from Keith Collins, ERCOT's vice president of commercial operations, and it is a projection, not a measured result.

Early evidence is positive, with caveats. Reviewing data through February 2026, the IMM found RTC "operating largely as expected without major dysfunctions," but said demand curve formulation and duration constraints, especially for Non-Spin, need fixing. During Winter Storm Fern (January 23–26, 2026), ERCOT reported that the grid remained stable, and that when a large unit outage briefly pushed flows past a South Texas transmission limit, RTC+B systems "redistributed Ancillary Services to relieve the overload." See the ERCOT Monthly report for January 2026.

What Ancillary Services Cost, and Why the Number Moves

The most consistent public measure comes from Potomac Economics, ERCOT's Independent Market Monitor, which reports total ancillary service costs across the market divided by the megawatt-hours of load that paid them. These are market-wide wholesale figures. They are not a retail price and not what any single account pays.

In 2025, the IMM's figure was the lowest since 2020, and roughly 1% of the IMM's all-in wholesale cost measure for the year. The IMM attributes lower ancillary service prices in 2025 partly to continued growth in energy storage and storage's rising share of ancillary service supply.

2023 was also ECRS's first year. ERCOT puts ECRS procurement cost for 2023 at $669 million, and it has called claims that ECRS cost $8 billion to $12 billion "absolutely false" (ERCOT Trending Topic on ECRS cost, updated July 2024).

Some industrial buyers argue the burden is wider. A February 2026 paper by Dean Foreman, chief economist of the Texas Oil & Gas Association, an industry advocacy group, puts total non-energy charges (ancillary services plus scarcity pricing mechanisms, reliability adders, uplift and administrative fees) above $2.1 billion in 2023 and $1.05 billion in 2024, and flags transparency problems. That is a broader cost boundary than the IMM's metric, which is why the numbers differ.

A low annual average doesn't mean every hour is calm. The IMM documents Non-Spin price spikes on the evening of May 20, 2025, when operators added Non-Spin, and on RTC+B's go-live day, when prices normalized within days. For current conditions, ERCOT publishes a live ancillary services dashboard, and the IMM's monthly market reports chart ancillary service cost per MWh of load.

None of these numbers tells you what ancillary services will cost your account. Each REP decides how to treat ancillary costs, and how much to charge for carrying their risk, account by account.

How Ancillary Service Costs Reach a Commercial Electricity Bill

ERCOT never bills your business. The cost moves in three steps:

1. ERCOT charges the market. ERCOT allocates ancillary service costs to the Qualified Scheduling Entities (QSEs) that represent load-serving entities: REPs, municipal utilities and electric co-ops. Each one's obligation is set by its load ratio share and trued up to real-time adjusted metered load. A QSE can self-arrange ancillary services to offset part of its obligation. See the IMM's 2025 report and ERCOT's ancillary services settlement training.
2. RTC+B added a real-time allocation. Since go-live, ERCOT also settles ancillary services in the real-time market, and the net real-time amount for each of the five products is allocated to the QSEs representing load by load ratio share in each 15-minute settlement interval. See ERCOT market notice M-C110525-01.
3. Your REP recovers the cost under your contract. It can build the cost into your price or bill it as a separate charge. REPs label that line in different ways, such as "ERCOT fees," "ancillary" or "ISO charges," and there is no single standard label.

One distinction helps when reading a bill. ERCOT allocates ancillary service costs by each load-serving entity's share of metered load, hour by hour and interval by interval, not by a customer's kW peak demand. At the ERCOT level, they are not a demand charge. If kW and kWh are starting to blur together, our kW vs. kWh guide separates them, and our guide to reading a Texas commercial electricity bill walks through the other line items.

Municipal utilities and co-ops inside ERCOT pay these costs too, but their customers generally can't shop for a REP; Austin and San Antonio have no retail choice. Lubbock Power & Light is the exception, having completed its move to competitive retail in April 2024 (ERCOT completion notice). Our guide to deregulated energy states and Texas cities maps where choice exists.

Ancillary Pass-Through vs. Bundled: The Contract Question

Load pays for ancillary services one way or another. The contract question is whether the cost reaches you inside a price your REP has committed to, or as a separate charge that moves with the market. PUCT rules answer that differently depending on the size of your account.

If Your Business Is Small Commercial (Under 50 kW)

Under PUCT §25.471(d)(11), a small commercial customer is a non-residential customer whose peak demand stays under 50 kW during any 12-month period, unless its load is part of an aggregation that exceeds 50 kW.

For those customers, PUCT §25.475(b)(5) treats the price of a fixed rate product as including all recurring charges and ancillary service charges. That price can't change to reflect changes in ancillary service charges unless the Commission expressly designates a specific type of ancillary service product as incurring charges beyond the REP's control. Otherwise the price can vary only for actual changes in TDU charges, changes in ERCOT or Texas Regional Entity administrative fees, and new laws that impose costs beyond the REP's control. The rule covers residential and small commercial customers only.

That power has been tested. A REP coalition (TEAM and the Alliance for Retail Markets) asked the PUCT to designate ECRS for contracts signed on or before June 9, 2023, and the Commission declined (Docket 55959 declaratory order). For a small business on a fixed rate product, ancillary cost risk sits with the REP by rule.

If Your Business Is Larger Than Small Commercial

Above that line, a fixed product may or may not bundle ancillary services, and a REP can offer products that bill them separately. The safeguard is disclosure. Under PUCT §25.499(d)(2), before enrolling a customer in a product that "contains a separate assessment of ancillary service charges," the customer must sign an Acknowledgement of Risk (AOR). The AOR carries mandated boldface text warning that the bill "may be multiple times higher in a month in which ancillary services charges are high."

The obligation applies to "retail electric providers (REPs), aggregators and brokers," so it binds brokers like us too, with records kept for the contract term plus four years. Wholesale indexed products, which pass real-time settlement point prices directly through, require their own AOR under §25.499(d)(1); our index rate guide covers how those products work.

Don't confuse an AOR with a letter of authorization (LOA), which is a separate document with a different purpose.

What to Check on a Quote

• Is ancillary service cost included in the fixed price, or listed as a pass-through?
• If it's a pass-through, is an Acknowledgement of Risk attached?
• Is the pass-through billed at ERCOT's actual load-allocated cost, or estimated and trued up later?
• How does the change-in-law clause treat a new ancillary product such as DRRS, or a change in who ERCOT charges?
• On an index product, is the ancillary treatment written into the pricing formula?
• Are all the offers you're comparing drawing the same line between what's included and what's passed through?

Change-in-law and pass-through clauses are where a "fixed" price stops being fixed. Our guide to fixed rate electricity plans in Texas covers those clauses in detail.

The Trade-Off

A bundled price moves ancillary cost risk to the REP, which prices that risk into its offer. A pass-through shows a lower headline number but leaves your budget exposed to a year like 2023. Neither is right for every business. The answer depends on how much bill movement your budget can absorb and whether you're comparing offers on the same cost boundary. For the broader decision, see fixed vs. variable rate electricity, fixed rate commercial electricity and our guide to hedging electricity price volatility.

Can a Business Earn Money Providing Ancillary Services?

Ancillary services have a supply side, and load can be part of it. ERCOT lets Load Resources qualify to provide ECRS, Non-Spin, Regulation Up, Regulation Down and RRS, and it values a Load Resource's reduction "equal to that of an increase in generation." Participation runs through a QSE qualified at level 4 for ancillary services. Non-controllable Load Resources providing Responsive Reserve are tripped by under-frequency relays, and Controllable Load Resources that want to follow ERCOT's five-minute dispatch must designate a Decision Making Entity at least 45 days before their requested production date. See ERCOT's Load Resource participation page.

This isn't a niche arrangement. At the end of 2025, 505 non-controllable Load Resources with 10,550 MW were registered, and on average they provided 1,480 MW of RRS, 190 MW of ECRS and 18 MW of Non-Spin, according to the IMM.

Two cautions. We're a broker, not a QSE, so this runs through a QSE or a demand response aggregator, not through Elite. And Senate Bill 6 requires the rules for its new Large Load Demand Management Service to bar large loads that already take part in another reliability or ancillary service (ERCOT legislative status update, May 2026). Emergency programs, load shed and curtailment are covered in our guide to curtailment and load shed for Texas businesses.

What's Changing Next for ERCOT Ancillary Services

DRRS: Approved, Implementation Planned for 2028

DRRS is required by PURA §39.159(d), added by House Bill 1500 in the 88th Legislature. Resources must be able to run at least four hours at their high sustained limit and be online and dispatchable within two hours (DRRS workshop, February 2026). The market rule, NPRR1309, cleared the ERCOT Board on June 2, 2026 and the PUCT on July 9. ERCOT's comments to its Board say "Implementation in 2028," which is ERCOT's plan rather than a fixed rule. A companion change on releasing DRRS for resource adequacy, NPRR1310, is tabled pending ERCOT's 2026 reliability assessment.

A new ancillary product is exactly the kind of change a contract's change-in-law clause may or may not cover. If your term runs into 2028, ask.

Who Pays: A Study, Not Yet a Rule

House Bill 1500 also added PURA §39.1593, which requires the PUCT to report to the Legislature by December 1, 2026 on how ancillary and reliability service costs are allocated. The work runs in PUCT Project 58555 (ERCOT legislative status update, p. 29). The law asks the PUCT to compare today's approach, which allocates these costs to load, with alternatives, including one that would split them among generators and load-serving entities "in proportion to their contribution to unreliability." PUCT staff asked stakeholders how to evaluate that option, as reported by EnergyChoiceMatters. Nothing about who pays has changed yet.

Not an Ancillary Service: Transmission Peak Charges

Transmission charges based on load during ERCOT's summer peaks are a separate cost from ancillary services. Following Senate Bill 6 (89th Legislature), the PUCT on July 9, 2026 approved for publication a proposed rule in Project 58000 that would replace the four-summer-peak (4CP) method with 12 monthly peaks measured in 30-minute intervals, amending PUCT §25.192 and §25.193 and adding §25.252. Comments were due August 11, 2026. The rules must be amended by December 31, 2026, and as of early September 2026 the change is proposed, not adopted. Our article on capacity vs. energy charges explains how transmission peak charges work today.

Frequently Asked Questions

What are ancillary services in electricity?

Ancillary services are reserves a grid operator keeps ready to balance supply and demand between normal dispatch intervals and after sudden events, such as a power plant tripping offline. They hold grid frequency near 60 hertz. In Texas, ERCOT buys five: Regulation Up, Regulation Down, Responsive Reserve Service, ERCOT Contingency Reserve Service and Non-Spinning Reserve Service.

What does ancillary services mean on a business electricity bill or contract?

It refers to ERCOT's reserve costs, which your REP recovers from you. On a bundled fixed price they sit inside the rate. On a pass-through product they appear as a separate charge that moves with market costs. Labels vary by REP, so ask exactly which costs a line such as ERCOT fees or ISO charges includes.

Who pays for ERCOT ancillary services?

Load pays. ERCOT allocates the cost to the scheduling entities that represent REPs, municipal utilities and co-ops by their share of metered load, and REPs recover it from customers under their contracts. ERCOT never bills a business directly. A PUCT study due to the Legislature on December 1, 2026 is examining whether some of the cost should be allocated differently.

Can a REP pass ancillary service charges through on a fixed-rate contract?

For small commercial customers under 50 kW, no. Under PUCT §25.475, a fixed rate product's price includes ancillary service charges and cannot change to reflect them unless the Commission expressly designates that ancillary service as beyond the REP's control, which it declined to do for ECRS. Larger accounts can sign products that bill ancillary costs separately, but only after signing an Acknowledgement of Risk.

What is an Acknowledgement of Risk for ancillary service charges?

It is a signed document PUCT §25.499 requires before a REP, broker or aggregator enrolls a customer above the small commercial class in a product with a separate assessment of ancillary service charges. Its mandated boldface text warns that the bill may be multiple times higher in a month when ancillary charges are high. It is not a letter of authorization.

What changed for ancillary services with RTC+B?

Since December 5, 2025, ERCOT's real-time market buys energy and ancillary services together every five minutes. Day-ahead ancillary service awards became financial rather than physical, ancillary service demand curves replaced the ORDC adder, and operators no longer deploy ECRS manually. ERCOT projects more than $1 billion a year in savings, which is a projection rather than a measured result.

What is DRRS, and when does it start?

The Dispatchable Reliability Reserve Service is a planned sixth ancillary service required by state law. Resources must be online and dispatchable within two hours and able to run for at least four. The PUCT approved the market rule change on July 9, 2026, and ERCOT plans implementation in 2028, so it is not live yet.

The Bottom Line

Ancillary services are how ERCOT pays for readiness. By the market monitor's measure they have cost little for two years, they cost far more in 2023, and the rules are still changing. The useful question for a business isn't what reserves cost the market last year. It's who carries that cost in your contract for the years ahead. For how ancillary costs fit into the rest of the wholesale market, including day-ahead and real-time pricing, see our guide to ERCOT wholesale electricity prices.