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Market Processes

The California wholesale market operates as other commodity exchanges do and is composed of interrelated processes. The energy markets (day-ahead, hour-ahead and real-time) use a full network model that models transmission losses and reactive power load and produces prices at every point in the system.

Day-ahead market

The day-ahead market determines hourly market-clearing prices and unit commitments, analyzes unit must-run needs and mitigates bids if necessary, which produces the least cost energy while meeting reliability needs.  The market opens seven days prior to the trade date and closes the day before the trade date.  Results are published at 1:00 p.m. 
The three day-ahead processes are:  market power mitigation determination, integrated forward market and residual unit commitment.  If any bids fail the market power test, they are mitigated, and the system determines the minimal and most efficient schedule of generation to address local reliability.
The integrated forward market simultaneously analyzes the energy and ancillary services market to determine the transmission capacity needed (congestion management) and confirm the reserves required to balance supply and demand based on supply and demand bids.  It ensures generation plus imports equals load plus exports plus transmission losses and that all final schedules are feasible with respect to the constraints enforced in the full network model as well as 100 percent of the ancillary services requirement.
When forecasted load is not met in the integrated forward market, the residual unit commitment process enables the ISO to procure additional capacity by identifying the least cost resources available.

Real-time market

The real-time market is a spot market to procure energy (including reserves) and manage congestion in the real-time after all the other processes have run.  This market produces energy to balance instantaneous demand, reduce supply if demand falls, offer ancillary services as needed and in extreme conditions, curtail demand.  The market opens at 1:00 p.m. prior to the trading day and closes 75 minutes before the start of the trading hour.  The results are published about 45 minutes prior to the start of the trading hour. 
Day-ahead schedules form the foundation of energy used in real-time along with day-ahead bids and newly submitted real-time bids.  The market subjects bids to mitigation tests and the hour-ahead scheduling process, which produces schedules for energy and ancillary services based on submitted bids.  It produces ancillary services awards, and final and financially binding intertie schedules. 
The real-time unit commitment designates fast-  and short-start units in 15-minute intervals and looks ahead 15 minutes.  Short-term unit commitment designates short- and medium- start units every hour and looks ahead three hours beyond the trading hour every 15 minutes.
In real-time, the economic dispatch process dispatches imbalance energy, or the energy that deviates from the schedule, and energy from ancillary services.  It runs automatically and issues dispatches every 5 minutes for a single 5-minute interval.  Under certain contingency conditions, the ISO can dispatch for a single 10-minute interval.