Valentina Norambuena-Guzman, Cong Chen, Lang Tong, Timothy D. Mount
arXiv 1 Sep 2026 · eess.SY
arXiv:2609.00541 · PDF · Extracted main text
In a network with ramp-limited generators and inaccurate net-demand forecasts, practical rolling-window dispatch can drive locational marginal prices (LMPs) below generators' bid-in offers. In such cases, out-of-market (OOM) settlements are used to compensate generators and maintain dispatch-following incentives, but OOM can have negative consequences, including nontransparent real-time price signals, discriminatory compensation, and incentives for untruthful bidding. This paper presents an optimal uniform pricing rule that minimizes demand payments, eliminates OOM make-whole payments, preserves LMP-based congestion charges, and ensures revenue adequacy. We derive the proposed pricing rule in closed form and relate it to existing pricing schemes. Numerical comparisons demonstrate favorable generator profits and reduced price volatility. However, higher generator profits are accompanied by increased demand payments, reflecting the in-market, uniform allocation of ramping costs while preserving the LMP-based congestion charges widely used in real-time market settlements. The numerical results also show that, under LMP with OOM settlement, a price-taking generator has an incentive to inflate its offer, whereas this incentive is absent under the proposed pricing rule within the tested bid range.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | C. Chen, V. Norambuena, and L. Tong, “Ramping procurement and bid-co… (2026) Ramping procurement and bid-cost recovery in real-time market self | 1.000 | 6 | 3 | 100% |
| 2 | C. Chen, Y. Guo, and L. Tong, “Pricing multi-interval dispatch under… (2020) Pricing multi-interval dispatch under uncertainty part II: Generalization and performance self | 0.928 | 4 | 4 | 100% |
| 3 | C. Chen and L. Tong, “Incentivizing ramping with uniform pricing,” in (2025) Incentivizing ramping with uniform pricing self | 0.511 | 2 | 1 | 100% |
| 4 | Y. Guo, C. Chen, and L. Tong, “Pricing multi-interval dispatch under… (2021) Pricing multi-interval dispatch under uncertainty part I: Dispatch-following incentives self | 0.511 | 2 | 1 | 100% |
| 5 | W. W. Hogan, “Electricity market design and efficient pricing: Appli… (2014) Electricity market design and efficient pricing: Applications for New England and beyond | 0.511 | 2 | 1 | 100% |
| 6 | B. Hua, D. A. Schiro, T. Zheng, R. Baldick, and E. Litvinov, “Pricin… (2019) Pricing in multi-interval real-time markets | 0.511 | 2 | 1 | 100% |
| 7 | D. Schiro, “Flexibility procurement and reimbursement: A multi-perio… (2017) Flexibility procurement and reimbursement: A multi-period pricing approach | 0.511 | 2 | 1 | 100% |
| 8 | Y. M. Al-Abdullah, M. Abdi-Khorsand, and K. W. Hedman, “The role of… (1937) The role of out-of-market corrections in day-ahead scheduling | 0.405 | 1 | 1 | 100% |
| 9 | California ISO, “California ISO to Chile: Flexible ramping product,”… (2023) California ISO to Chile: Flexible ramping product | 0.405 | 1 | 1 | 100% |
| 10 | California ISO, “ (2022) 2022 Annual Report on Market Issues and Performance | 0.405 | 1 | 1 | 100% |
Showing the top 10 of 18 scored citations.