On Market Clearing Prices Higher than the Highest Bid and Other Almost Paranormal Phenomena

In the spot markets, locational marginal prices are important because they convey the short-term value to the system of each resource for efficient and reliable operation of the grid. LMPs do not necessarily send long-term price signals, but can be used in long-term decision-making if the patterns are believed to be representative of the future and care is taken to understand the effect of new investment in any components of the market.