LMP Market Design

LMP Market Design

Scott Harvey - Local Marginal Pricing Market Power

Ancillary Service Markets and Pricing


In addition to coordinating competitive markets for electricity, U.S. ISOs and RTOs coordinate competitive markets for ancillary services, in particular, reserves and regulation. An important market design element is how the relationship between energy and ancillary services is managed in these markets. Many U.S. electricity markets have evolved to designs based on reserves shortage pricing and simultaneous optimization of energy and ancillary services both in the day-ahead market and in the real-time dispatch. The traditional structure and design of ancillary service requirements and markets is also being impacted by the increasing output of intermittent resources in many control areas. These changes in the resource mix may require that ISO explicitly model and procure ancillary services such as inertia and system strength that were historically supplied in excess of system reliability needs as a by product of energy generation.

Scott Harvey, "Scarcity Pricing Background Discussion, California ISO Market Surveillance Committee Meeting, December 11, 2020.

James Bushnell, Scott Harvey, Benjamin Hobbs, "Opinion on Flexible Ramping Product Enhancements," Market Surveillance Committee of the California ISO, September 9, 2020.

Jason Mann, Scott Harvey and Martina Lindovska, "Essential System Services in the National Energy Market," August 14, 2020, prepared for the Australian Energy Security Board.

Willian Hogan and Susan Pope, "PJM Reserve Markets Operating Reserve Demand Curve Enhancements," March 21, 2019.

Joseph Cavicchi and Scott Harvey, "Ramp Capability Dispatch and Uncertain Intermittent Resource Output," Rutgers Center for Research in Regulated Industries, 31st Annual Western Conference, June 21, 2018.

William Hogan, "Best Electricity Market Design Practices," January 2018.

Scott M. Harvey, Managing Uncertain Intermittent Resource Output in the Unit Commitment and Dispatch," 6-17-13 Rutger's Center for Research in Regulated Industries 26th Annual Western Conference,

Scott M. Harvey, "Order 755: How is Pay for Performance Performing," EUCI Ancillary Services Conference, Dallas Texas, June 12, 2013

William W. Hogan, "Electricity Pricing Through Operating Reserves," April 25, 2013.

William W. Hogan, ERCOT Staff, "Back Cast of Interim Solution B+ to Improve Real-Time Scarcity Pricing," March 21, 2013.

William W. Hogan, "Electricity Pricing Through Operating Reserves: An ERCOT Window of Opportunity," Nov 1, 2012.

James Bushnell, Scott Harvey, Benjamin Hobbs, "Opinion on Pay-for-Performance Regulation," Market Surveillance Committee of the California ISO, March 9, 2012.

Scott M. Harvey, "Adapting Ancillary Service Markets, Products, and Scheduling to Accommodate Intermittent Generation," EUCI Ancillary Services and Markets Conference, June 13-14, 2011.

Scott M. Harvey, "Scarcity Pricing in New York and New England," Prepared for California Independent System Operator, November 1, 2007.

Michael D. Cadwalader, Scott M. Harvey, William W. Hogan and Susan L. Pope, "Reliability, Scheduling Markets and Electricity Pricing," May 1998