Electricity Market Price Formation and Forecasting Mechanics
Maximizing value under multiple market conditions and for different products
September 27-28, 2017
Denver, CO

Add yourself to our mailing listDownload Brochure


The aim of this course is to explain how electricity is priced at the wholesale level, and give some guidance about forecasting prices – with or without sophisticated modeling tools – as well as consider the implications this price forecasting knowledge can have on market participants’ operational and trading conventions. 

Electrical energy is a unique commodity because it cannot be efficiently stored in large quantities.  Rather, it must be produced and delivered on demand without interruption, it is produced by conversion of energy from various other forms and it is delivered across a network in accordance with the laws of physics.  These four characteristics account for the complexity of supplying electrical energy around the clock.  That complexity is reflected in the volatility of the price (value at each location in a given time interval) and hence the difficulty of forecasting electricity prices.  Consequently, anyone who deals with current and future prices will benefit from a deeper understanding of what drives them.

This course will explain the basics of electric energy supply and demand, the problems to be solved by the System Operator to ensure economic and reliable supply at all times, and how this balancing act translates into the determination of wholesale electricity prices.  Attendees will gain a practical understanding of price formation elements and an introduction to approaches to forecasting electricity prices in the short term (for traders and generation schedulers) and long-term (investors and project developers).  The value and usage of price forecasts will be explored.  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.  A discussion of price forecasting methods will give attendees insight into future prices even without the use of sophisticated modeling tools.  Several approaches to price forecasting will be presented, with concentration on fundamentals-based modeling.  Finally, the course will explore uses of price forecasts for physical and financial trading, daily generation bidding, power purchase agreement (PPA) negotiation, congestion hedging (FTR) and investment in transmission and generation projects.

Learning Outcomes

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

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



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 1.0 CEUs for this event.

Instructional Methods

PowerPoint presentations and test cases will be used to present course information.

Requirements For 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.


Wednesday, September 27, 2017

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

8:30 – 9:15 a.m. :: Electricity Supply, Demand and Transmission Market Basics

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

9:15 a.m. – 10:15 a.m. :: Defining the Problems to be Solved

  • 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
  • Shift factors
  • Shadow prices

12:00 – 1:00 p.m. :: Group Luncheon

1:00 – 2:30 p.m. :: Real World Examples

  • MISO
  • SPP
  • ISO-NE

2:30 – 3:00 p.m. :: Networking Break

3:00 – 4:45 p.m. :: Worked Examples

  • Energy and reserves
  • Dispatch accounting for losses
  • Transmission congestion
  • Security constraints (“N-1” versus “N-0”, “flowgates”)

Thursday, September 28, 2017

8:00 – 8:30 a.m. :: Continental Breakfast

8:30 – 10:15 a.m. :: Worked Examples

  • Price spikes and negative prices
  • Virtual bids and offers
  • Impact of new transmission build (example: public policy transmission)
  • Impact of fuel price (e.g., natural gas)
  • Impact of carbon tax
  • Impact of high renewable energy penetration

10:15 – 10:30 a.m. :: Morning Break

10:30 a.m. – 12:00 p.m. :: Value and Uses of Price Forecasts

  • Generation bidding by resource type (hydro, coal, combined-cycle, peaker, renewable)
  • Trading (physical, virtual, speculative)
  • Financial transmission rights (FTRs)
  • PPA negotiation
  • Long-term investment (generation and transmission projects)
  • Generation retirement

12:00 – 1:00 p.m. :: Group Luncheon

1:00 – 2:00 p.m. :: Statistical and Neural Networks for Short- and Long-term Forecast Models

  • Historical market data
  • Regression
  • ARIMA –type models
  • ANN

2:00 – 2:30 p.m. :: Input Data for Fundamental Modeling

  • Demand
  • Transmission network model
  • Cost curves (heat rate)
  • Fuel prices
  • Transmission constraints

2:30 – 3:30 p.m. :: Real-world Case Studies

3:30 p.m. :: Course 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.


Sheraton Denver Tech Center
7007 S Clinton St
Greenwood Village, CO 80112

To reserve your room, please call 1-303-799-6200 or book online here.
Please indicate that you are with the EUCI group to receive the group rate.

Room Rate:

The room rate is $149.00 single or double plus applicable taxes.

Room Block Dates:

A room block has been reserved for the nights of September 26 – 28, 2017.

Rate Available Until:

Make your reservations prior to September 12, 2017. There are a limited number of rooms available at the conference rate. Please make your reservations early.


EventStandard RateAttendees