Definition
A virtual demand bid in the day-ahead market that acts like a load bid: the participant buys power at the day-ahead LMP and must sell it back at the real-time LMP. A DEC is profitable when the real-time price rises above the day-ahead price (RT > DA). DEC traders are said to be 'long' the spread. The profit formula is (RT Price − DA Price) × MW. DECs are used to arbitrage cases where day-ahead prices appear underpriced relative to expected real-time conditions, such as during anticipated heatwaves or generation outages.
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Topic Deck
Markets & Pricing
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Source
FERC Pro Forma OATT / LGIP