LMP Market Design

LMP Market Design

Scott Harvey - Local Marginal Pricing Market Power

Day-Ahead Markets


All U.S. electricity markets based on LMP pricing (other than the Western EIM) have eventually implemented a day-ahead market in addition to real-time energy pricing and as a result utilize a two (or sometimes three) settlement system. The implementation of day-ahead markets in the U.S. has also been accompanied by the introduction of virtual bidding, sometimes in tandem with the implementation of a day-ahead market and sometimes a year or two after implementation of a day-ahead market.

  • New York ISO implementation: November 19, 1999
  • PJM implementation: June 1, 2000
  • ISO New England implementation March 1, 2003
  • MISO implementation: April 1, 2005
  • California ISO implementation: April 1, 2009
  • ERCOT implementation: December 1, 2010.
  • Southwest Power Pool implementation: February 1, 2014

The papers in this section discuss the design and structure of LMP based day-ahead markets and two settlement systems, as well as the role of virtual bidding.

William W. Hogan, "Virtual Bidding and Electricity Market Design," Electricity Journal, June 2016.

William W. Hogan, "Virtual Bidding and Electricity Market Design," May 25, 2016.

Scott M. Harvey, "Virtual Bidding in Forward Power Markets," Western Power Issues Roundtable, Western Power Trading Forum, Washington DC, August 7, 2015.

Scott Harvey, "Two Settlement Systems in PJM and New York," MISO, Carmel IN, August 2, 2001.

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