Markets & Pricing

Virtual Bidding

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Definition

The practice of submitting purely financial bids and offers in the day-ahead wholesale electricity market that are automatically reversed in the real-time market, with no physical delivery of power. Virtual bids include Incremental Offers (INCs) and Decremental Bids (DECs). FERC requires virtual bidding in organized RTO/ISO markets because it improves day-ahead/real-time price convergence, adds liquidity, mitigates market power, and allows financial participants to hedge real-time price exposure. Also called convergence bidding.

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Markets & Pricing

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Source

FERC Pro Forma OATT / LGIP

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Related Terms in Markets & Pricing

Congestion

A condition that occurs when the transmission system cannot accommodate all desired...

Convergence Bidding

An alternative name for virtual bidding used primarily by CAISO and some other...

Day-Ahead Market

A forward wholesale electricity market operated by an RTO/ISO that clears 24 hourly...

Day-Ahead Real-Time Spread (DART)

The difference between the day-ahead locational marginal price and the real-time...

Decremental Bid (DEC)

A virtual demand bid in the day-ahead market that acts like a load bid: the...

Energy Imbalance Market (EIM)

A voluntary, real-time wholesale electricity market that allows utilities outside...
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