Definition
A virtual supply offer in the day-ahead market that acts like a generation bid: the participant sells power at the day-ahead LMP and must buy it back at the real-time LMP. An INC is profitable when the real-time price falls below the day-ahead price (RT < DA). INC traders are said to be 'short' the spread. The profit formula is (DA Price − RT Price) × MW. INCs are used by financial participants to arbitrage cases where day-ahead prices appear inflated relative to expected real-time conditions.
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Topic Deck
Markets & Pricing
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Source
FERC Pro Forma OATT / LGIP