Locational Marginal Pricing

Locational Marginal Pricing is a one-day interactive seminar that explains nodal pricing in electric power markets for legal, regulatory, and accounting professionals.

You learn the basics of:

  • marginal clearing prices in an offer-based economic dispatch market
  • transmission constraints
  • hedging of energy and transmission price variation
  • market power

(For a technical overview of Locational Marginal Pricing, read the syllabus for my UT grad course.)

“You made a very complicated subject much easier to analyze and understand. A great course!”

Prerequisites: General knowledge of electricity markets. No math or technical prerequisites.

Format: Seven lecture hours illustrated with 200 slides. Interactive exercises.

Documentation: You receive a three-ring binder of the entire seminar plus a cross-referenced glossary of terms.

Customization: This seminar can be presented on-site at your company.

Instructor: Dr. Ross Baldick, Professor of Electrical and Computer Engineering at The University of Texas at Austin.

Questions? Email Dr. Baldick

“Locational Marginal Pricing” has been presented at:

  • Dynegy
  • Austin Energy
  • Lower Colorado River Authority (LCRA)

One of the best professional educational seminars I have attended. Dr. Baldick builds on concepts from the ground up, in a clear and comprehensible manner. He engages attendees in discussion and responds thoughtfully to all questions.”

Questions? Email Dr. Baldick


1. Offer-based economic dispatch

  • Block prices for energy offers
  • Demand and demand bids
  • Dispatch and pricing
    • Two generator example
    • Three generator example
  • Incentives from pricing rule
  • Variations

2. Hedging energy price risk

  • Financial versus physical bilaterals
  • Contracts for differences to hedge price variation

3. Transmission

  • Transmission constraints
    • One line example
    • Three generator, four line example
  • Locational marginal pricing (LMP)
  • Congestion rental and congestion cost
  • Properties of LMPs
  • Commercial network model
  • Losses

4. Hedging transmission price risk

  • Variation of LMPs
  • Financial Transmission Rights (FTRs)
    • One line example
    • In combination with CfDs
  • Acquiring FTRs
  • Revenue adequacy
  • Flowgate rights
  • Option FTRs

5. Conclusion

  • Virtual bidding
  • Market power
  • Market power mitigation

Questions? Email Dr. Baldick