Day-Ahead Markets

All U.S. electricity markets based on LMP pricing (other than the Western EIM, which is in the process of doing so) have eventually implemented an operationally feasible day-ahead market in addition to a real-time security constrained economic dispatch and real-time settlements based on day-ahead market prices. The Ontario IESO will be implementing an operationally feasible day-ahead market in conjunction with its shift to a LMP based market. The combination of a day-ahead market with financially binding schedules and a real-time dispatch and imbalance settlement creates a two (or sometimes three) settlement system. In a two settlement system, real-time deviations from day-ahead market schedules are settled at real-time prices. U.S. day-ahead markets are operationally feasible in the sense that the schedules take account of transmission limits, and resource characteristics, such as ramp rates, minimum operating points, minimum run-times, minimum down-times, and upper limits. Day-ahead market models in the U.S. have been, or are in the process of being extended, to take account of storage resource state of charge constraints. All U.S. ISOs have implemented virtual bidding designs as part of their day-ahead market, 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.

Scott Harvey, "Virtual Bidding Collateral," June 5, 2023 filed in Docket ER23-1307.

James Bushnell, Scott Harvey, Benjamin Hobbs, "Opinion on Day-Ahead Market Enhancements," Market Surveillance Committee of the California ISO, May 3, 2023.

Scott Harvey, "Zonal and Nodal Delivery Tests for Imbalance Reserves and Flexiramp," California ISO/Western EIM MSC Meeting, March 10,2023.

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.

Michael Cadwalader, Scott Harvey and Susan Pope, "Comments on the Evaluation of an Unconstrained Price Day-Ahead Market Compared to an Enhanced Day-Ahead Committment Process," September 3, 2008.

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.