A U G U S T 5 & 6 , 2 0 1 4 | W E S T B O R O U G H , M A

Andrew GillespieM A R K E T D E V E L O P M E N T

A G I L L E S P I E @ I S O - N E . C O M ( 4 1 3 ) 5 3 5 - 4 0 8 8

Two-settlement capacity market corrections and Administrative clarifications

FCM Administrative Clarifications

Scope – Two ‘Categories’ of Clarifications

• Two-settlement corrections(see ISO’s July 14, 2014 compliance filing in ER14-2419, page 3)– Correct tariff such that NO PER deduction is applied to Demand Response NOT

participating in the energy market (peak and seasonal peak DR, and RTEG)– Correct Actual Capacity Provided such that resources limited by DDP ARE

credited for any reserve designation

• Clarifications for Administering the Tariff– Clarify the price at which the ISO will participate in annual reconfiguration

auctions– Clarify the price applicable to resources, where administrative pricing was

triggered

None of these changes affect the intended design of the markets – the proposed Tariff changes are intended only to conform with the intended design

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Two-Settlement Capacity Market Corrections

In the process of working on the two-settlement capacity market compliance changes, the ISO and stakeholders identified two errors in the ISO’s Tariff revisions. However, these were not within the scope of compliance changes. The ISO stated in the July 14, 2014 filing that both of these errors can be corrected with very minor Tariff revisions and with [hopefully] little controversy, and that it would work with stakeholders to determine how best to do so.

• PER– As the ISO stated in the stakeholder process developing the Pay For Performance design, it

was not the ISO’s intent to change the applicability of the Peak Energy Rent mechanism. However, under the Tariff changes filed the Peak Energy Rent mechanism would inadvertently be applied to three DR resource types that were not intended to be subject to PER.

• Actual Capacity Provided– In the case where a resource is limited, the ACP should reflect its Real-Time Reserve

Designation as well as its Desired Dispatch Point during the interval. However, the ACP provision incorrectly reflected only the Desired Dispatch Point.

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Clarifications for Administering the Tariff

• Clarify the price at which the ISO participates in a annual reconfiguration auctions– The original design set ISO participation at 2xCONE, which was also the FCA

starting price(this was subsequently changed to the FCA starting price)

– For FCA7, there is a difference between the FCA starting price ($15/kW-mo) and 2xCONE ($12.11/kW-mo)

– ISO participation for FCA7/CCP7 should be specified at 2xCONE, however this is not clear in the tariff – the ISO proposes to make this clarification

• Clarify the price applicable to resources where administrative pricing was triggered– FCA7 & FCA8 resulted in two rates, the clearing price and an administrative rate

($6.66 and $7.025/kW-mo. for FCA7 & 8, respectively)– It may not be clear in the tariff how the two rates are to be used in settlement

during the commitment period - the ISO proposes to make this clear in the Tariff

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SCHEDULE

Proposed Schedule

1st Markets Committee meeting August 5-6, 2014

2nd Markets Committee meeting September 3-4, 2014

3rd Markets Committee meeting {vote} October 7-8, 2014

Participants Committee meeting {vote} November 7, 2014

File (60 day requirement) (As early as) November 10, 2014

Effective Date February 1, 2015{prior to conducting FCA9}

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