Definition
An alternative name for virtual bidding used primarily by CAISO and some other markets, reflecting the mechanism's stated goal of driving day-ahead prices to converge with real-time prices. When day-ahead prices exceed expected real-time prices, INC traders profit by selling in DA and buying in RT, pushing DA prices down. When real-time prices exceed day-ahead, DEC traders profit by buying in DA and selling in RT, pushing DA prices up. FERC requires convergence bidding in organized markets as a core market design element, though CAISO suspended it temporarily during the 2020 heat emergency.
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Topic Deck
Markets & Pricing
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Source
FERC Pro Forma OATT / LGIP