NEMSEC flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Merit order
- Ranking of generating units by ascending marginal cost; the last unit needed to meet demand sets the marginal price, and cheaper units earn inframarginal rent.
- Locational marginal price
- Price at a node equal to the marginal cost of serving one additional MW there, decomposed into energy, congestion, and loss components.
- Security-constrained economic dispatch
- Optimization that minimizes generation cost subject to network flows, voltage, and contingency limits; binding constraints produce congestion and shadow prices.
- Operating reserve
- Capacity held available to cover forecast error or outages; co-optimized with energy so reserving capacity reflects its opportunity cost in prices.
- Value of lost load
- The economic value customers place on avoiding an interruption; it anchors scarcity pricing and caps the economically efficient energy price.
- Two-settlement system
- Participants settle scheduled quantities at the day-ahead price and deviations at the real-time price, so total cost depends on both markets.
- Uniform-price auction
- All accepted supply is paid the same marginal clearing price; this generally yields lower procurement cost than pay-as-bid under uncertain demand.
- Scarcity pricing
- Administrative or demand-curve mechanism that raises energy prices when operating reserves are short, approximating value-of-lost-load pricing.
- Capacity market
- Procurement mechanism that pays for firm capacity availability, used where energy-only scarcity rents are capped below the cost of new entry.
- Conduct-and-impact test
- Mitigation screen asking whether a supplier is pivotal or has significant market share and whether its conduct raised price above a competitive benchmark.
- Gate closure
- Deadline after which nominations and offers for a given delivery period cannot be changed; later changes settle in the balancing market.
- Market manipulation
- Entering transactions or orders that give false or misleading signals about supply, demand, or price, or that create an artificial price level.
- Inside information
- Non-public information likely to affect wholesale energy prices if disclosed; trading on it before publication is prohibited insider trading.
- Unbundling
- Regulatory separation of transmission operation from competitive generation and supply, preventing cross-subsidy and misuse of network information.
- Record retention
- Obligation to keep trade, order, and communication records for a defined period, commonly five years, available to the regulator on request.
- Physical withholding
- Making available capacity unavailable, or declaring it out for service without a genuine physical cause, to raise prices.
- Economic withholding
- Offering capacity at prices well above marginal cost, typically when pivotal, to move the clearing price upward.
- Wash trade
- A matched buy and sell by the same beneficial owner that creates false volume or price signals without changing economic position.
- Spoofing
- Placing orders with intent to cancel before execution, to mislead other participants about supply or demand and move price.
- Residual supply index
- Ratio of capacity available from other suppliers to the demand served by one supplier; values near or below one indicate pivotal status.
- Imbalance settlement
- Charging or paying participants for the difference between scheduled and metered volumes, usually at the real-time or imbalance price.
- Dual imbalance pricing
- Deviations in the same direction as system imbalance are charged a worse price than deviations that help the system, incentivizing self-balancing.
- Mark-to-market
- Valuing open positions at current market prices to measure exposure; requires independent price curves and documented assumptions for illiquid contracts.
- Volume reconciliation
- Matching trade capture to confirmations, nominations, and metered volumes; breaks above tolerance are escalated before invoicing.
- Value at Risk
- Loss threshold not expected to be exceeded at a given confidence level over a defined horizon, based on price and position exposure.
- Expected shortfall
- Average loss conditional on losses exceeding the Value at Risk threshold; more sensitive to fat-tailed price distributions than VaR.
- Basis risk
- Risk that the hedge index differs from the actual delivery point or period, leaving residual price exposure even when hedged.
- Segregation of duties
- Separating execution, confirmation, settlement, and approval so no single person controls a trade end to end; a core fraud control.
- Position limit
- Maximum net volume a participant may hold in a product or delivery period, capping concentration and market power exposure.
- OT/IT segmentation
- Separating operational technology networks from corporate and trading systems with zones and conduits, limiting lateral movement from a compromise.
- Immutable audit log
- Append-only, tamper-evident record of submissions and trades, time-synchronized and hashed, supporting investigation and regulatory evidence.
- Replay protection
- Mechanism using nonces, timestamps, or sequence numbers to reject re-sent market submissions that could create duplicate or false trades.