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2009 State of the Market Report

Market Performance

Figure 18: Day-Ahead Ancillary Services Prices and Price Convergence 2009



Average Price ($/MWh)




DA-RT Price Difference

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J F MA M J J A S O N D Regulation

J F MAM J J A S O N D Spinning Reserve

J F MA M J J A S O N D Supplemental Reserve

Regulation prices were higher in real time in every month of the year due to increased real-time energy price volatility (which increases the opportunity costs of generators providing regulation) and reduced regulation availability due to the Midwest ISO’s regulation commitment process (which selects only subset of regulation-eligible units). In addition, real-time requirements include more stringent ramping constraints that can lead to result in more frequent shortages and higher prices. Overall, spinning reserve and supplemental reserve prices converged well between the day-ahead and the real-time during 2009. However, occasional shortages of supplemental reserves (occurring mostly during Automatic Reserve Sharing (“ARS”) events) resulted in some divergence.


Day-Ahead Load Scheduling and Virtual Trading

Our next analysis addresses day-ahead load scheduling and virtual trading. These aspects of the market play an important role in overall market efficiency by promoting optimal commitments and improved price convergence between day-ahead and real-time markets. Day-ahead load includes price-sensitive load, fixed load, and virtual load. Price-sensitive load is scheduled if the day-ahead price is equal to or less than the load bid. A fixed load schedule does not include a

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