Wholesale electricity markets sometimes result in prices below zero. That is, sellers pay buyers to take the power.

This situation arises because certain types of generators, such as nuclear, hydroelectric and wind, cannot or prefer not to reduce output for short periods of time when demand is insufficient to absorb their power.

Sometimes buyers can be induced to take the power when they are paid to do so.

The Energy Information Administration offers a look at how the situation comes about in bilateral markets, focusing on negative bilateral spot prices that occur predominantly in the Pacific Northwest. Later, it will examine how the pricing oddity happens in Regional Transmission Organizations