M&V tutorial · interval-meter baseline

Baseline from interval meter: how a VPP reduction is measured

Every demand response and virtual power plant (VPP) payment rests on a number nobody can meter: what the site would have used. Here is how interval-meter data turns into that number, and how far to trust it.

VPP Economics has no affiliation with, sponsorship from, or endorsement by any utility, aggregator, platform, or device maker named here.

The short answer

  • A baseline is the site’s own history, projected onto event day. Recent interval-meter readings, sometimes with weather, estimate what it would have used. The reduction is the baseline minus the meter (U.S. Department of Energy).
  • It is the default almost everywhere. NAESB calls it Baseline Type I, and PJM, NYISO, ISO-NE, MISO, CAISO, ERCOT and IESO all settle demand response with it (NAESB, NYISO survey).
  • The measurement is only as good as the baseline. The meter is exact; the baseline is a forecast. For one home the best California baselines were off by 20–24% in a typical hour, against 1–3% for the whole program (CPUC).
  • Error is measured on load but paid on the reduction. If a fleet cuts 25% of its load, a 3% error in the baseline is a 12% error in the credited kW.

From meter data to measured reduction

Ten days of meter data become a baseline

A worked example for one home and a 4–7 p.m. event, using CAISO’s standard 10-in-10 rule.

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1 · INTERVAL-METER DATAOne home, 10 recent non-event weekdays, average kW per hourNoon–3 p.m.4–5 p.m.5–6 p.m.6–7 p.m.Weekday 11.62.32.62.5Weekday 21.42.02.32.2Weekday 31.82.62.92.8Weekday 41.52.22.42.4Weekday 51.31.92.22.1Weekday 61.72.52.72.6Weekday 71.62.42.62.5Weekday 81.21.82.02.0Weekday 91.92.73.02.9Weekday 101.52.22.52.4Average1.552.262.522.442 · BASELINECAISO-style 10-in-10 with a same-day adjustment1. Average the 10 days4–7 p.m. averages 2.41 kWEvent-day hours: 2.26, 2.52, 2.44 kW2. Adjust to the event dayNoon–3 p.m. ran 1.80 kW vs. 1.55 usualScale by ×1.16 (CAISO caps it at 0.80–1.20)3. Baseline2.41 × 1.16 = 2.79 kWWhat the home would have used, 4–7 p.m.
Illustrative numbers. CAISO averages the last 10 non-event weekdays within 45 days and caps the same-day adjustment at 20% either way (CAISO demand response manual).

Event day: baseline minus meter

The dashed line is the adjusted baseline; the bars are what the meter recorded. Average reduction: 1.79 kW over three hours.

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0 kW1 kW2 kW3 kW10 a.m.Noon2 p.m.4 p.m.6 p.m.8 p.m.10 p.m.ADJUSTMENT HOURSEVENT2.621.621.02.932.030.92.831.731.1Pre-coolingSnapbackAdjusted baselineMetered load during the eventMeasured reduction, kW (baseline − meter)Other hours
Illustrative numbers. Pre-cooling at 3 p.m. falls outside the adjustment hours here, so it does not inflate the baseline. Snapback after 7 p.m. is not counted against the reduction.

Three steps, every time: pick the baseline days, average them hour by hour, then nudge the result toward the event day’s own conditions. Here the morning ran 16% hotter than usual, so the baseline rose 16%. Without the adjustment, the same home would be credited about 1.41 kW instead of 1.79 kW.

Two ways to build it: averaging days or a model

Day matching

Average recent similar days

“X of Y” rules: the highest 4 of 5, the middle 8 of 10, all 10 of 10. Simple to audit and to settle quickly. Weak on the hottest days, which are exactly when events happen, so most rules add a same-day adjustment.

Regression

Model load against weather and time

Fits each hour’s load to temperature, day type and season, then predicts event day. ERCOT’s default regression needs about 270 days of history. With a good fit it handles heat waves better than averaging, as long as the event day is not far outside the data (ERCOT).

A regression baseline, one event hour

Each dot is a past non-event weekday at 5–6 p.m. The fitted line predicts event-day load from the temperature.

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0 kW1 kW2 kW3 kW70°F76°F82°F88°F94°F100°F106°FAfternoon high temperatureHOTTER THAN ANY BASELINE DAYModel baseline 2.99 kWMetered 0.9 kW2.09 kWreductionFit to 44 non-event weekdays+0.07 kW for every 1°F hotter
Illustrative data. California guidance warns that models projected beyond the temperatures seen in the baseline data may under- or overestimate (LBNL for CPUC).

Which is more accurate depends on the load. In a Lawrence Berkeley National Laboratory (LBNL) study of commercial buildings, a morning adjustment improved every model, and weather models were the only ones that consistently avoided bias (LBNL). A later LBNL test on 453 meters found every method ran low on peak days, by a median of 4.5% to 18.7%, and regression was no better than averaging (LBNL).

Which grid operators use it

How each grid operator builds the baseline

Each square is a recent eligible day; filled squares are the days the rule averages.

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PJMEconomic demand responseHighest 4 of the 5 most recent weekdays (45-day window)Additive adjustment from hours before the event; site must pass a 20% error testNYISOEnergy marketHighest 5 of the last 10 non-event weekdaysSame-day adjustment from a 2-hour window; capped at ±20%ISO-NEDemand response assetsRolling average of recent non-event weekdaysShifted by the gap just before dispatch; no capMISODemand response resources10 most recent non-event weekdays (45-day window)Optional same-day (±20%) or weather adjustmentCAISOProxy demand resourceLast 10 non-event weekdays; homes may use highest 5 of 10Scaled 80%–120% by same-day usageERCOTEmergency Response ServiceMiddle 8 of 10 like days, or regression, or matching day pairScalar adjustment from 2 hours starting 3 hours before; no capIESOC&I hourly demand responseHighest 15 of the last 20 suitable business daysIn-day adjustment capped at 0.8–1.2SPPDemand response resourcesSUBMITTED BY PARTICIPANTParticipant submits an hourly baseline before the committed hourDispatch uses the lower of it and a real-time meter snapshot
Sources: PJM Manual 11; NYISO meter data study; ISO-NE; MISO; CAISO; ERCOT; IESO; SPP Market Protocols. Weekday rules shown; weekend, holiday and product-specific rules differ.

Two patterns stand out. Rules that pick the highest days (PJM, NYISO, IESO) set a higher baseline and credit more for the same behavior than a straight average. ERCOT drops the highest and lowest days. SPP is the outlier: the participant forecasts its own baseline, which SPP checks against a live meter snapshot (SPP).

Accuracy: one site or a whole fleet

Baseline error for one site versus a whole program

Typical hourly error (CVRMSE or RRMSE) as a share of baseline load, plus measured bias on hot days.

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0%10%20%30%40%One home, one eventbest California baselines20%–24%typical errorWhole program, one eventsame study, all homes1%–3%typical errorPJM entry test, one siteto use the standard baseline20%maximum error allowedCommercial sites, hot daysLBNL, 453 meters4.5%–18.7%median bias, baseline too low
Sources: CPUC ELRP baseline evaluation (homes, 2022); PJM Manual 11 (20% relative root mean square error test); LBNL (commercial meters).
±33–40%one home, one event, 90% confidence
±2–5%whole program, one event, 90% confidence
20%PJM’s maximum error to use the standard baseline

Random error shrinks as sites are added; bias does not. That is why the same baseline can be poor for paying one household and fine for crediting a fleet. California’s evaluators found that even unbiased baselines systematically over-credit some homes and under-credit others (CPUC).

Site-level

One baseline per meter

Needed when each customer is paid on their own performance. Fine for steady commercial loads; noisy for homes. PJM requires each site to pass a 20% error test or use an alternative baseline (PJM).

Aggregate

Add the meters, then baseline

Sums every site’s interval data and builds one baseline for the total. Site-level noise averages out, which is why VPP aggregations are settled this way where rules allow (DOE).

Pooled model

One regression across many sites

Estimates the weather response from all sites at once. Individual fits carry more estimation error than a pooled fit, though the pooled model hides how individual sites differ (DOE).

How the VPP Program Designer uses these ranges

Interval-meter accuracy ranges in the designer

Assumed bias and accuracy, as a share of the credited reduction, for homes and for commercial and industrial (C&I) sites.

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Bias (dot) and ± accuracy range (bar) as % of the credited reduction-30%-20%-10%0+10%+20%+30%Weather regressionHomes ±10%C&I ±6%Similar days, with same-day adjustmentHomes -2% ±12%C&I -1% ±7%Similar days, no adjustmentHomes -12% ±20%C&I -6% ±12%
VPP Economics assumptions for a fleet, not a single site: roughly the program-level errors above converted from load to reduction. They are planning estimates, not settlement results.

In the VPP Program Designer, Step 5 applies these ranges to the fleet’s dependable kW. A downward bias lowers the credited MW and the pay that follows. A wider range lowers how much capacity a planner can count on.

Where it goes wrong

Watch for

Gaming the adjustment hours

Running equipment harder in the adjustment hours raises the baseline. That is why rules set those hours well before the event.

Watch for

Heat-wave days

Event days are usually the hottest of the season. Unadjusted averages run low, under-crediting real reductions.

Watch for

Back-to-back events

Event days are excluded from the baseline, so a run of events pushes the rule back to older, cooler days.

Watch for

Batteries already cycling

A battery that discharges every evening already lowers the meter history, so an event shows less “reduction.” Device metering avoids this.

Watch for

Rooftop solar

Net meters mix load and solar. CAISO lets participants baseline gross load and meter the generator separately (CAISO).

Watch for

Variable loads

Sites whose load swings day to day fail accuracy tests and move to custom baselines or maximum base load.

All six ways performance is measured

Method and caveats

A tutorial for program designers, utilities, aggregators and other readers. It is not a substitute for a tariff or settlement manual. Worked examples use illustrative numbers. Operator rules are weekday energy or reliability rules as published by each operator; IESO and MISO summaries come from 2020–2021 stakeholder materials and may have been updated. Checked October 23, 2026.

Ninety-percent confidence ranges are 1.645 times the typical error and assume errors are roughly normal. The load-to-reduction conversion divides the baseline error by the reduction as a share of load.

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