ERCOT is a bit different in that it doesn’t use what’s called a forward capacity auction. All RTOs in the country have markets where users pay generators for instantaneous electrical production. RTOs other than ERCOT, however, also have what’s called a forward capacity market. The RTO projects how much peak power will be required three years from now, and conducts auctions to provide the required capacity at the lowest price. Then there are various mechanisms attached to that which ensure that a generator that commits to providing a certain amount of capacity actually does so when the RTO calls it in. ERCOT instead maintains a fixed reserve margin—it tries to ensure that capacity is about 13.5% higher than peak projected demand. That’s different, but it’s still not a free-for-all.

Amusingly, many people called the lack of a capacity market a positive thing. In practice it tends to prop up coal plants, because those can reliably commit to providing a particular generation capacity years in advance, unlike renewables: https://www.greentechmedia.com/articles/read/flexibility-wit....