In an increasingly forceful energy environment where reliability and price signals are becoming more dynamic, ISO-NE’s Day-Ahead Ancillary Services Initiative (DASI) represents a pivotal shift in how energy and reliability services are planned, procured, and compensated. Embedding ancillary services into the Day-Ahead Market (DAM) and retiring the Forward Reserve Market (FRM) aims to enhance operational transparency, align forecasted needs with resource availability, and improve market efficiency. For decision-makers at academic campuses, commercial facilities, and industrial operations with sizable energy footprints, understanding DASI’s mechanics, opportunities, and required readiness is essential to stabilize budgets, optimize procurement, and strengthen strategic resilience.
What DASI changes and why it matters
DASI introduces two new day-ahead ancillary service (DA-AS) categories designed to provide visibility and compensation for resources that support contingency reserves and reliability requirements within the DAM. This co-optimization structure allows resources to bid energy and ancillary services together, aligning the operating day’s energy plan with reserve needs more precisely. Generators, demand response resources, and dispatchable asset-related demand can participate by submitting ancillary services offers that specify how much energy and reserve they’re willing to provide and at what minimum price per hour or hour range. The result is a more integrated and transparent signal of the resources required to meet both energy balance and reliability obligations on the next operating day.
A core feature of DASI is the introduction of the Forecast Energy Requirement Price (FERP). The FERP acts as a clearing price component for ancillary services, alongside the existing locational marginal price (LMP) for energy. Under the new framework, a cleared MWh from a physical supply resource is paid LMP plus FERP, reflecting its contribution to both energy and contingency requirements. In contrast, an MWh clearing as an energy-immediate reserve (EIR) contributes to the contingency reserve without impacting the energy balance constraint and is paid the FERP alone. This distinction creates new levers for resource owners to optimize participation and for buyers to ensure reliability without overpaying for redundant capacity.
To prevent overextension and manage workload, DASI also introduces Maximum Daily Award Limits (MDAL) and, where appropriate, Maximum Daily Energy (MDE) offers. These parameters allow resource owners to cap the total energy and ancillary services MWhs they clear across the 24-hour DAM horizon, supporting predictable budgeting and governance. The DAM’s optimization now operates within a revised constraint framework—security-constrained unit commitment and economic dispatch—that enforces the new DA-AS requirements and ensures the day-ahead plan aligns with reliability objectives.
How DASI shapes procurement and operations
For organizations with flexible resources, DASI expands the procurement playbook by offering a formal pathway to bid ancillary services alongside energy. The ability to price DA-AS distinctly and specify hourly commitments enables tighter control over costs and, in some cases, new revenue opportunities for assets such as energy storage or fast-ramping generation. However, success hinges on thorough readiness: updating bid-management processes, aligning data interfaces with updated market specifications, and ensuring accurate hourly offers and MWh limits.
Training and education have become critical components of a smooth transition. ISO-NE has rolled out a suite of training materials, knowledge articles, and webinars to help participants understand the mechanics of DA-AS, settlement implications, and the broader system changes. Engaging with these resources early supports more accurate bid submissions and reduces the risk of mispricing or regulatory misalignment during go-live.
Operational readiness also involves data integrity and system compatibility. The new DA-AS framework relies on updated data exchange specifications and market information systems. Participants should harmonize internal asset data, forecasting accuracy, and market-interface capabilities with the updated processes to ensure clean settlements and transparent performance reporting.
Financial considerations and risk management
DASI’s co-optimization of energy and ancillary services promises a more precise reflection of contingency needs in day-ahead pricing, potentially stabilizing budgets when volatility is high and renewables introduce variability. The separation of LMP for energy and FERP for ancillary services—with MDAL/MDE controls—creates new avenues to quantify and manage risk, while also introducing potential revenue streams for flexible assets. At the same time, the FRM’s retirement shifts some reserve-market dynamics toward the DAM, underscoring the importance of robust DAM participation and accurate forecasting for long-term financial planning.
Given these shifts, a disciplined approach to regulatory updates and market notices remains essential. Market participants should monitor actions from regulators and ISO-NE communications, as these can influence settlement rules and compliance requirements. Building a forward-looking governance framework that reviews performance metrics, market conditions, and regulatory developments will help organizations stay ahead of further enhancements or rule changes.
A practical path
Practical workstreams turn DASI concepts into concrete actions across facilities and finance teams. It begins with identifying which on-site assets can participate in DA-AS and estimating the potential value they can deliver. It then outlines the data and process foundations needed to support precise bidding and settlements. Next, it describes building internal expertise and governance structures, followed by a framework for measuring financial impact. The final portion focuses on delivering board-ready visibility through executive dashboards.
- Asset readiness and capacity assessment. Identify which on-site assets, such as generation, demand response, or dispatchable load, can participate in DA-AS, and estimate potential MWh contributions and hourly price ranges. Prioritize resources with the fastest ramp and most reliable response profiles to maximize DAM value.
- Bid management and data readiness. Establish or upgrade bid-management workflows to handle hourly DA-AS offers, MDAL/MDE parameters, and energy-plus-reserve co-optimization. Align internal data workflows with updated eMarket specifications and MIS reporting to ensure accurate settlement data and performance transparency.
- Education and governance. Leverage ISO-NE training resources to build internal expertise and set up cross-functional governance that includes facilities, operations, and finance. Regular, structured reviews help track cost, performance, and risk metrics against ROI targets.
- Quantitative business case and ROI modeling. Develop a rigorous ROI framework that captures potential DA-AS revenue, avoided penalties, and reliability improvements. Include sensitivity analyses around price signals, forecast inaccuracy, and MDAL/MDE settings to demonstrate a credible 12–18 month payback horizon aligned with client goals.
- Performance dashboards and executive reporting. Create clear dashboards illustrating DA-AS utilization, cost savings, forecast accuracy, and settlement outcomes. Present these metrics in a format suitable for CEOs and board committees, emphasizing operational resilience and financial impact.
Market context and illustrative insights
Analysts and market observers anticipate that DASI will improve market efficiency by pairing energy commitments with reliability services in a forward-looking way. The co-optimized framework is expected to increase visibility and pricing fidelity for resources providing contingency reserves, while enabling more proactive investment in flexible resources such as energy storage. Regulatory discussions and market notices emphasize the importance of ongoing participation and adaptation as the market evolves, underscoring the need for organizations to stay engaged with training and information updates.
Implementation timeline and ongoing considerations
DASI’s implementation involves multiple phases, including participant readiness, updated training, and the rollout of new market interfaces and reporting. Early participation in training modules, testing in sandbox environments, and careful alignment of internal data processes with new market rules can help mitigate settlement risks and maximize the benefits of DA-AS. Post-implementation, continuous monitoring of MIS reports and settlement data remains essential to quantify success and guide future procurement decisions.
New outlook for DASI adoption
ISO-NE’s Day-Ahead Ancillary Services Initiative signals a strategic evolution in how energy and reliability services are planned and paid for the operating day ahead. For academic, commercial, and industrial organizations with substantial energy footprints, DASI offers a pathway to stabilize costs, enhance operational resilience, and demonstrate leadership in proactive energy procurement.
A disciplined, data-driven approach rooted in asset readiness, robust bid-management processes, thorough training, and transparent performance reporting can deliver meaningful ROI and position organizations for sustained financial and operational strength as the energy market continues to evolve.
Contact the Kb3 Advisors team today to get started.
Sources
- Day-Ahead Ancillary Services Initiative (DASI). iso-ne.com. Accessed December 22, 2025.
