NEMSEC key terms

The price of electricity at a specific node, reflecting the cost to serve one additional megawatt of load there, including energy, congestion, and losses.

An optimization that minimizes generation cost while respecting transmission limits and other security constraints, producing dispatch and LMPs.

The process of deciding which generating units to turn on or off over a scheduling horizon, considering startup costs, minimum run times, and forecasted demand.

A forward market where participants submit bids and offers for each hour of the next operating day, and the system operator clears the market to set schedules and prices.

A spot market that balances actual supply and demand in real time, typically cleared every five minutes, using updated forecasts and system conditions.

The surplus collected by the system operator when transmission constraints prevent the lowest-cost generation from serving load, equal to the difference in LMPs across the constraint times the flow.

A financial instrument that entitles its holder to receive congestion rent between two specified nodes, used to hedge transmission congestion price risk.

Services beyond energy that support reliable operation of the grid, such as frequency regulation, spinning reserves, and voltage support, often procured through separate markets.

A market that compensates resources for being available to meet future peak demand, separate from the energy market, to ensure resource adequacy.

The amount of unused available generation capacity expressed as a percentage of peak demand, indicating the system's ability to meet unexpected load or outages.

A ranking of generating units by their marginal cost of production, used to dispatch the cheapest units first to meet demand.

A graph showing the quantity of electricity suppliers are willing to provide at each price level, typically upward sloping due to increasing marginal costs.

Changes in electricity usage by end-use customers in response to price signals or incentive payments, used to balance supply and demand and relieve grid stress.

The process of predicting future electricity demand using historical data, weather forecasts, and economic indicators, essential for scheduling and market operations.

The financial reconciliation process that calculates and invoices charges and payments for energy, ancillary services, and other market transactions based on metered data and market prices.

A market design where financial positions are settled first in the day-ahead market and then reconciled against actual real-time deviations, reducing price volatility for participants.

A financial practice where participants submit bids and offers in the day-ahead market without intending to physically deliver or consume electricity, aiming to profit from price differences between day-ahead and real-time markets.

A type of virtual bidding that aims to make day-ahead and real-time prices converge by arbitraging the difference, improving market efficiency.

The ability of a participant to profitably influence market prices by withholding supply or other strategic behavior, rather than by superior efficiency.

A strategy where a generator deliberately reduces available supply or bids above marginal cost to raise market prices, potentially constituting market manipulation.

Bidding generation above its marginal cost to increase profits, which can be legitimate but may violate market rules if it exploits market power.

A measure of market concentration calculated by summing the squares of market shares of all participants, used to assess potential market power.

The percentage of total market volume or capacity controlled by a single participant, a key indicator of concentration and potential market power.

The ongoing monitoring of market participant behavior and transactions to detect anomalies, rule violations, or manipulative patterns.

An independent entity within a system operator or regulator that analyzes market performance, detects market power abuses, and recommends rule changes.

The use of automated filters and statistical tests to flag potentially problematic market behavior for further investigation.

A statistical measure that estimates the maximum potential loss of a portfolio over a given time horizon at a specified confidence level.

Taking offsetting positions in financial instruments or contracts to reduce exposure to adverse price movements in the energy market.

The process of identifying, assessing, and mitigating financial and operational risks, including setting limits and monitoring exposures.

The risk that a counterparty will fail to meet its financial obligations, such as payment for energy delivered or margin calls.

Assets or guarantees posted by a market participant to secure its financial obligations and cover potential defaults.

Funds or collateral that must be deposited to cover potential future losses on a trading position, often required by clearinghouses or counterparties.

Adherence to laws, regulations, and market rules set by governmental or market authorities, including reporting and record-keeping requirements.

A specific requirement or standard established by a market operator or regulator that governs participant behavior and market operations.

A document filed with and approved by a regulator that sets out the rates, terms, and conditions for wholesale electricity sales and transmission service.

The Federal Energy Regulatory Commission, the U.S. agency that regulates interstate transmission and wholesale electricity sales, including market rules and compliance.

Measures taken to protect energy market systems, data, and infrastructure from digital attacks, unauthorized access, and disruption.

The accuracy, consistency, and reliability of data used in market operations and settlements, ensuring that information has not been altered or corrupted.

Critical Infrastructure Protection standards issued by the North American Electric Reliability Corporation to secure bulk electric system cyber assets.

The measurement of electricity consumption and production using devices that record data for billing, settlement, and operational purposes.