Convergence (or virtual) bidding is a mechanism whereby market participants can make financial sales (or purchases) of energy in the day ahead market, with the explicit requirement to buy back (or sell back) that energy in the real time market. Virtual bids pressure day ahead and real time prices to move closer together, thus reducing the incentive for buyers and sellers to forgo bidding physical schedules in the day ahead market in expectation of better prices in the real time market. Under FERC's September 21, 2006 MRTU Order, the California ISO must implement convergence bidding within twelve months after the new ISO market startup. FERC's April 20, 2007 Order specifies that the ISO must file tariff language for the implementation of convergence bidding no later than 60 days prior to the one-year anniversary of the new market startup. Thus the ISO is seeking focused stakeholder input now to help develop the design for convergence bidding so that the necessary software features and business processes can be built to meet a reasonable implementation schedule.
Board of Governors decision: October 29, 2009
FERC Order: October 18, 2010
Implemented: February 1, 2011
Market data demonstrates the realization of convergence bidding project objectives to increase market liquidity and to provide generator participants with a way to hedge the risk of outages that occur in real-time. It will take more time to assess the effectiveness of reducing differences between day-ahead and real-time prices.
Convergence bidding - relevant market notices
June 25, 2010 Amendments to Tariff Re- Convergence Bidding in Docket No. ER10-1559-000, ER10-300-000 and ER11-2128-000
Convergence bidding - implementation
Convergence bidding technical specifications
Convergence bidding implementation working group
Convergence bidding technical status
Convergence bidding deployment plan
Convergence bidding implementation plan
Convergence bidding eligible locations
Convergence bidding external business requirements specification
Convergence bidding stakeholder initiative - history