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Independent System Operator

Trading Term

An Independent System Operator, abbreviated ISO, is an entity that coordinates the operation of an electric grid and its wholesale market across a defined region, a role also filled by Regional Transmission Organizations. Among their functions is day-ahead unit commitment, meaning decisions about which generating units to bring online and where to position them, since thermal plants cannot start instantly and siting generation nearer to load reduces transmission congestion. Because these decisions are made a day in advance and hinge on expected temperature, improvements in next-day temperature forecasts have direct operational and financial consequences for grid operators and the parties serving load within them.

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