About Market Settlement Processing

Market settlement is the process of deriving billing determinants to be used in supplier billing based on the results of a data aggregation processes.

The load settlement process also involves calculating imbalances. An imbalance is the difference between two load shapes representing different estimates of the same period, typically a scheduled load shape and an actual load shape. Imbalances are typically used when money has changed hands based on an estimate that has been improved or finalized by the settlement process. Because the second estimate has more accurate data, the allocations performed by the first process have to be modified.

Imbalance shapes can be further divided by applying bands and TOU components. Bands are error tolerances around zero that allow for differential pricing of the imbalance curve by how well or poorly the scheduled estimate matched the actual usage. Time of Use periods are often defined, allowing a higher penalty for faulty forecasting during higher-priced, on-peak periods. Whether an imbalance calculation is performed and how it is performed varies greatly from market to market.

The following sections provide details regarding some of the specific processing used in settlement processing.