By - Jon Brown

LMP Modeling, Forecasting and Analysis
January 27-28, 2020 | Washington, DC

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This course examines the value of understanding and forecasting electricity prices in the wholesale markets.  The information will benefit anyone who deals with current and future local marginal prices (LMPs) in wholesale electric markets by providing a deeper understanding of what drives them: 1) the complexity of supplying electrical energy around the clock 2) across an imperfect transmission grid, 3) from a variety of suppliers 4) without benefit of large-scale storage or rationing.  It addresses itself to wholesale power market participants who confront these questions:

  1. How should I price ‘market risk’ in my proposed project?
  2. Why is my existing project suffering and what can I do about it?
  3. What makes a credible LMP forecast?

The content will cover guidance about forecasting prices – with or without sophisticated modeling tools – in the face of new policies, an evolving resource mix and changing market rules. Emphasis will be placed on describing U.S. locational marginal pricing (LMP) style markets.  Going beyond the traditional three-bus LMP example, attendees will learn how the market forms prices in the real world.  Attendees will become familiar with how this knowledge supports decision-making, trading and negotiation.  Following a review of LMP formation, real-world situations will be dissected using publicly-available data.  Finally, some solved “what-if” examples will illustrate the impact on LMPs of emerging bulk power developments using a simplified market model.  For those attendees who want to understand what some people call “magic”, an optional related workshop is dedicated to exposing the mathematics that solve for “what-if” examples.

Learning Outcomes

Using real-world situations and illustrative examples, this instructional course will:

  • Examine the fundamental drivers of electricity prices (supply, demand and transmission network)
  • Review the value and use of price forecasts for multiple market conditions and products
  • Illustrate locational marginal price (LMP) formation with examples
  • Assess the LMP dynamics of unit commitment – how the market chooses which suppliers to buy from
  • Explain the LMP dynamics of economic dispatch – how the market decides how much to buy from each supplier
  • Identify how different resources are offered into the markets
  • Review input data for fundamentals-based forecasting (market mimicking)
  • Explain the LMP distinctions between modeling “day ahead” (DA) and “real time” (RT) markets



EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 0.9 CEUs for this course and 0.4 CEUs for the workshop.


Instructional Methods 

This program will use PowerPoint Presentations and group discussions. 

Requirements For A Successful Completion Of Program 

Participants must sign in/out each day and be in attendance for the entirety of the course to be eligible for continuing education credit. 


Monday, January 27, 2020

7:30 – 8:00 a.m. :: Registration and Continental Breakfast

8:00 – 8:15 a.m. :: Overview and Introductions

8:15 – 9:30 a.m. :: Value and Uses of Price Forecasts

  • Impact of market rule changes (loss pricing, extended LMP, subsidies)
  • Evolving resource mix (renewables, storage, coal retirement, etc.)
  • Generation bidding (gas nomination, water release, etc.)
  • ISO transmission plans (Adjusted Production Cost)
  • Elective Transmission Upgrades
  • Generation investment and retirement decisions
  • PPA negotiation (CfD, basis, curtailment, negative LMP risks)
  • Trading (physical, virtual, speculative)
  • Financial Transmission Rights (FTR /TCR / TCC/ CRR)
  • Regulatory & Legislative (Market reform debate)
  • Mark-to-Model

9:30 – 9:45 a.m. :: Electricity Supply, Demand and Transmission Market Basics

  • Day-ahead (DA) markets
  • Real-time (RT) markets
  • Congestion hedging and virtual trading

9:45 – 10:15 a.m. :: Solving Five Problems Leads to Prices

  • Demand forecasting
  • Unit commitment
  • Economic dispatch
  • Operating reserves
  • Power flow

10:15 – 10:30 a.m. :: Morning Break

10:30 a.m. – 12:00 p.m. :: Locational Marginal Prices

  • Marginal energy
  • Marginal loss
  • Marginal congestion
  • Shadow prices
  • Shift factors

12:00 – 1:00 p.m. :: Group Luncheon

1:00 – 2:30 p.m. :: Developing a Realistic Dispatch on a Simple Network

  • Energy and reserves, perfect grid
    • Energy-price hedges
  • Transmission congestion
    • FTRs/CRRs
  • Security constraints (“N-1” on top of “N-0”, “flowgates”)

2:30 – 3:00 p.m. :: Networking Break

3:00 – 4:00 p.m. :: Real World Examples

  • Understanding LMPs through published data
    • California ISO (CAISO)
    • Midcontinent ISO (MISO)
    • Southwest Power Pool (SPP)
    • PJM Interconnection (PJM)
    • New York ISO NYISO)
    • ISO New England (ISO-NE)
    • Electric Reliability Council of Texas (ERCOT)

4:00 – 4:45 p.m. :: Distribution of Homework Assignments

  • Introduction and discussion

4:45 p.m. :: Course Adjoins for Day

Tuesday, January 28, 2020

7:45 – 8:15 a.m. :: Continental Breakfast

8:15 – 9:30 a.m. :: Dispatch Accounting for Losses

  • Loss factors and the marginal loss component

9:30 – 10:00 a.m. :: Worked Examples Using the Simple Network (solutions only)

  • Impact of higher fuel price (e.g., natural gas)
  • Impact of new transmission build (example: public policy transmission)
  • Virtual bids and offers

10:00 – 10:15 a.m. :: Morning Break

10:15 – 10:45 a.m. :: Worked Examples (cont’d)

  • Impact of carbon tax
  • Impact of high renewable energy penetration
  • Price spikes and negative prices
  • Extended LMP
    • Block-loaded resources
    • Fast start resources

10:45 – 11:15 a.m. :: Real-World Case Studies

  • Applications of forecasting LMPs

11:15 – 11:45 a.m. :: Challenges of Forecasting

  • Statistical versus fundamental models
  • What to expect from various assumptions
    • Generation expansion and retirement
    • Fuel prices
    • Transmission constraints
    • Declining demand
    • Incentives
  • Long-term LMP forecasting — fact or fiction?
  • Benchmarking hints
  • Questions to ask consultants!

11:45 a.m. :: Course Adjourns


The Mechanics of Calculating LMPs

Tuesday, January 28, 2020


This workshop is dedicated to exposing the mathematics for solving “what-if” examples, for those attendees who want to understand what some people call “magic”.

Workshop attendees are encouraged to bring a laptop equipped with the Excel Solver add-in.

Learning Outcomes

Using real-world situations and illustrative examples, this workshop will:

  • Examine the fundamental drivers of electricity prices (supply, demand, transmission network)
  • Review the value and use of price forecasts for multiple market conditions and products

Program Agenda

12:30 – 1:00 p.m. :: Workshop Registration

1:00 – 4:45 p.m. :: Workshop (Mechanics of LMP formation)

  • Unit commitment
  • Co-optimization of energy and reserves
  • Approximate solution by Lagrangian Relaxation
  • Solution by linear programming
  • Interactive model in MS Excel

4:45 p.m. :: Workshop Adjourns



Nicholas Pratley has 30 years of experience in power systems engineering and analysis, including 12 years simulating wholesale power markets in the U.S., Canada and Europe. His clients have included transmission owners, municipal utilities, electric co-ops, generation developers and power traders.  He holds bachelor’s and master’s degrees in Electrical Engineering from McGill University and the University of Montreal.


hotel photo

Omni Shoreham Hotel

2500 Calvert St NW

Washington, DC 20008

Reserve your room:

please call 1-800-THE-OMNI (843-6664)

ask for the EUCI group rate

click here to book online

Room Block Reserved For:

Nights of January 26 – 27, 2020

Room rate through EUCI:

$169.00 single or double plus applicable taxes
Make your reservations prior to January 27, 2019.


Event Standard RateAttendees

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