The CAISO's Physical Validation Settlement Service: A Useful Tool for All LMP-Based Markets

All LMP-based markets face “seller's choice” issues from legacy contracts which permit the seller flexibility in choosing the contract's delivery point. California's ISO recently developed a novel and creative solution to this problem by developing a physical validation settlement service for all trades that CAISO settles between scheduling coordinators at individual nodes. The service also has use in resource adequacy and installed capacity contexts.