A Capacity Supply Obligation that is obtained through an FCA (except for an obligation associated with self-supply) can be shed through the following mechanisms:

Annual Reconfiguration Auctions - the Capacity Supply Obligation ("CSO") can be shed through a demand bid in the annual reconfiguration auctions conducted prior to the Commitment Period. Shedding a CSO in an annual reconfiguration auction will result in the obligation being shed for the entire Commitment Period associated with the auction. If the annual reconfiguration auction is not held (no supply offers) or it does not clear (the demand and supply curves do not intersect), the obligation will not be shed. It is important to note that: i) CSOs associated with a resource or a portion of a resource designated as self-supply and CSOs associated with Real-Time Emergency Generation Resources can not be shed through an annual reconfiguration auction.

Monthly Reconfiguration Auctions - the CSO can be shed through a demand bid in any of the twelve monthly reconfiguration auctions conducted during the Commitment Period. Shedding a CSO in a monthly reconfiguration auction will result in the obligation being shed for the entire month associated with the auction. The same restrictions on self-supply, and Real-Time Emergency Generation Resources described above for annual reconfiguration auctions apply to seasonal reconfiguration auctions.

Capacity Supply Obligation Bilaterals - the CSO can be transferred to a qualified resource without an obligation (or portion of the resource without an obligation) through a Capacity Supply Obligation Bilateral prior to, or during, the Commitment Period. These bilaterals must be submitted during specified submittal windows and must have a minimum duration of one month and a maximum duration of one year. A CSO associated with self-supply may not be transferred via a Capacity Supply Obligation Bilateral. In addition, Real-Time Emergency Generation Resources may only transfer CSOs to other Real-Time Emergency Generation Resources.

In the case of the annual, seasonal, and monthly reconfiguration auctions, the ISO will reflect the shedding of the CSO by charging the entity shedding the obligation the applicable reconfiguration auction clearing price and crediting the entity assuming the obligation with this same clearing price. To the extent this price is different from the aggregate price at which the obligation is acquired, an additional payment or charge may be due.

In the case of Capacity Supply Obligation Bilaterals, the ISO is currently assessing the options for determining the price to be applied to the bilateral transaction. Options under consideration include allowing the parties to apply a price to the Capacity Supply Obligation Bilateral in $/kW-month or applying a clearing price from a specified auction.

Please note that the response below is not specific to a combined cycle resource but applies equally to other resources.

Assuming that there are no non-recallable external sales involved, the answer in both scenarios is yes. A de-rate is reflected in the ISO's systems as a reduction in the maximum output, or Economic Maximum Limit, that a resource can provide. Availability is calculated based on a number of inputs, but a 100 MW generating capacity resource with a 95 MW capacity supply obligation that otherwise meets the requirements of market rule section III.13.7.1.1.3 and is on-line with an Economic Maximum Limit of 95 MW is fully available.

The outcome could change where non-recallable sales are involved. Non-recallable sales are curtailed or allowed to flow based on several criteria. To the extent that a non-recallable sale continues to flow and the resource, as a result of a de-rate, is not capable of providing sufficient energy to meet both its FCM Capacity Supply Obligation and the energy requirements of the non-recallable sale, the shortfall will be considered an inability to meet its FCM capacity supply obligation for purposes of the Shortage Event mechanism.

Section III.13.6.1.1.2 of the Tariff states that "Day-Ahead Energy Market and Real-Time Energy Market offers for the listed portion of a resource must reflect the then-known unit-specific operating characteristics." The ISO is in the process of developing a list of offer data parameters that must be based on physical capability and the markets and services that each parameter is associated with. The ISO will consult with stakeholders regarding this information when appropriate.

At this time, the ISO expects that a resource's Manual Response Rate will be among those characteristics that must be based on the resource's physical capability. The Manual Response Rate parameter is a significant input to determination of the resource's Day-Ahead Energy Market schedules and its physical ability to respond to the ISO's commitment and dispatch instructions in Real-Time.

A resource will be able to offer multiple manual response rates applicable to different ranges of its output, but each must be based on the resource's physical capability.

Where the de-listed portion of a resource (that is, the portion of a resource not having a Capacity Supply Obligation in the Forward Capacity Market) elects to participate in the Day-Ahead Energy Market, it is also required pursuant to Section III.13.6.2.1.1.1 to offer based on its physical capability.

"Accepted" in this context means the de-listed capacity clears and receives a schedule at some level in one or more hours resulting from the Day-Ahead Energy Market clearing process.

Pursuant to Part IV.B.4 of the Settlement Agreement and Section III.13.6.2.1.1.2 of the Tariff, de-listed capacity that is not offered in the Day Ahead Energy Market or that is offered in the Day-Ahead Energy Market but not accepted must be self-scheduled in order to participate in the Real-Time Energy Market. This requirement currently applies in the same manner whether the de-listed capacity is associated with a fully or partially de-listed resource. However, the ISO will in the near future propose to stakeholders a change in this treatment with respect to partially de-listed resources.

Specifically, where de-listed capacity from a partially de-listed resource is offered in the Day-Ahead Energy Market but not accepted, the ISO will propose that the day-ahead offer be carried forward into the Real-Time Energy Market, subject to re-offer period modifications and redeclarations. The resource may choose to make additional MW above its offer level available to the ISO for economic dispatch.

Under the proposed revisions, if a partially de-listed resource chooses to offer some or all of its de-listed capacity in the Day-Ahead Energy Market, that offer will be carried forward to the Real-Time Energy Market, obviating the need to self-schedule in order to run in real-time. This arrangement would likely also require the resource to provide a physical reason in order to redeclare the resource down in real time.

Each of the six examples presented describes a resource that has a Capacity Supply Obligation for less than 100 percent of its capability (that is, a resource that is partially de-listed). The response is the same with respect to each of the circumstances described. Under the current rules, the de-listed capacity offered in the Day-Ahead Energy Market but not accepted would be limited to self-scheduling in the Real-Time Energy Market. However, as described above, the ISO will soon be proposing a change to the rules such that the de-listed capacity from a partially de-listed resource that is offered in the Day-Ahead Energy Market but not accepted can be bid into the Real-Time Energy Market in all hours without being limited to self-scheduling. Specifically, in such a case, the Day-Ahead Energy Market Supply Offer will be carried forward into the Real-Time Energy Market, subject to re-offer period modifications and redeclarations.

Under the rules to be proposed by the ISO, a resource with no Capacity Supply Obligation (fully de-listed) that offers and is accepted in the Day-Ahead Energy Market will have the opportunity, via the re-offer and redeclaration processes, to make additional MW above the day-ahead offered level available to the ISO for economic dispatch. A resource with no Capacity Supply Obligation that offers in the Day-Ahead Energy Market but is not accepted and that elects to self-schedule in the Real-Time Energy Market will have the opportunity, via the re-offer and redeclaration processes, to make additional MW above the self-scheduled level available to the ISO for economic dispatch. The same would be true for a resource with a Capacity Supply Obligation less than its full capability (partially de-listed). As described above, the ISO will soon propose rule changes that would require that a partially de-listed resource's Day-Ahead Energy Market supply offer be carried forward to the Real-Time Energy Market, regardless of whether it is accepted in the Day-Ahead Energy Market. Such a resource also would have the opportunity, via the re-offer and redeclaration processes, to make additional MW (above those included in its Day-Ahead Energy Market supply offer) available to the ISO for economic dispatch in real time.

Please note that the NCPC rules are currently undergoing an evaluation to assess whether conforming changes are required. The provisions described above and any identified changes to NCPC rules will be proposed via the stakeholder process.

Section III.13.6.1.1.1 of the ISO New England Transmission, Markets and Services Tariff ("Tariff") requires that, upon commencement of the first Capacity Commitment Period (June 1, 2010), the listed portion of a resource (that is, the portion of a resource having a Capacity Supply Obligation in the Forward Capacity Market) be offered into both the Day-Ahead Energy Market and the Real-Time Energy Market whenever and to the extent it is physically available (e.g., not on a forced or scheduled outage). Such a resource is required to follow the ISO's commitment and dispatch instructions.

Other than the Day-Ahead and Real-Time Energy Market requirements mentioned above, a Capacity Supply Obligation in the Forward Capacity Market does not require a resource to participate in other markets or to provide other services.

For the portion of a resource that does not have a Capacity Supply Obligation, the Forward Capacity Market rules do not require participation in any markets (including the Day-Ahead and Real-Time Energy Markets) or provision of any services. Where a resource is required or elects to participate in any market or to provide any service, all rules applicable to participation in that market or to provision of that service apply equally regardless of whether the participation is required or voluntary.

Section III.13.6.1.1.2 of the Tariff states that "Day-Ahead Energy Market and Real-Time Energy Market offers for the listed portion of a resource must reflect the then-known unit-specific operating characteristics." The ISO is in the process of developing a list of offer data parameters that must be based on physical capability and the markets and services that each parameter is associated with. The ISO will consult with stakeholders regarding this information when appropriate. Please see the response to 3 above for a discussion of one specific parameter.

Resource characteristics themselves do not affect Forward Capacity Market payments. However, to the extent the unit characteristics are such that they allow participation in other markets, there are provisions for the netting of payments received from participation in certain markets that will impact total revenues from all market participation (see ISO New England white papers "Interaction of FCM and VAR Capacity Payments" and Proposed FCM Conforming Changes to the Forward Reserve Market [DOC].

This issue is addressed in the ISO white paper Proposed FCM Conforming Changes to the Forward Reserve Market [DOC].

Yes, this information is in the informational filing made pursuant to Section III.13.8.1 of the FCM rules. 2007 is past, you need a generic answer

No. That information will not be made available to Market Participants.

No. That information will not be made available to Market Participants.

A Dynamic De-List Bid from an existing resource may be rejected for reliability reasons, even though such a resource may not de-list below its Economic Minimum Limit (except where the amount of capacity offered is zero). Pursuant to Section III.13.2.3.2(d), "All Dynamic De-List Bids are subject to a reliability review as described in Section III.13.2.5.2.5..." Section III.13.2.5.2.5, in turn, states that "capacity shall be deemed needed for reliability reasons if the absence of the capacity would result in the violation of any NERC or NPCC (or their successors) criteria, or ISO New England System Rules." Pursuant to NERC and NPCC criteria, and Section 6 of Planning Procedure 10, the ISO can deny a de-list bid due to Local Second Contingency Protection or local voltage support requirements for resources connected to the ISO-NE administered bulk power system.

Please also note that while Section III.13.2.3.2 provides that a resource may not partially de-list below its Economic Minimum Limit, the Economic Minimum Limit of the resource may not provide sufficient capability to meet NERC or NPCC requirements. If that is the case, the de-list bid could be rejected pursuant to Section III.13.2.5.2.5.

Yes, to both s. This information is in the informational filing made pursuant to Section III.13.8.1 of the FCM rules.

As described in Sections III.13.2.3.4 and III.13.4.1, even if imports are treated (pursuant to Section III.13.2.3.3(d)) as a separate export-constrained capacity zone in the Forward Capacity Auction, and even if that zone experiences price separation, that zone will not be carried forward and will not be included in reconfiguration auctions associated with the same Capacity Commitment Period.

Regarding the ability of imports to participate in reconfiguration auctions and bilateral transactions, imports will be able to participate in both reconfiguration auctions and bilateral transactions with different mechanisms for each to grant transmission access. Transmission access will be granted to imports in reconfiguration auctions to the extent that the interface isn't fully subscribed based on price (similar to the FCA). For bilateral transactions, access to the interface will be granted to the extent that the interface is not fully subscribed at the time the bilateral is submitted based on a first-come first-served methodology until the interface is fully subscribed.

Given the frequency of FCM auctions, the tight timelines required to implement them, and the current level of qualified FCM resources participating in the Forward Capacity Market auctions, the ISO anticipates that the provisions in III.13.4.5.2 will be triggered rarely, if ever. The ISO has evaluated this section of the rule and expects that any triggers of this acceleration provision would not be the result of the routine procurement process, but would likely only result from catastrophic and unpredictable events.

The ISO anticipates that its response to such events generally, and the implementation of this rule provision specifically, would require a unique and targeted procurement strategy. The ISO recognizes that significant tradeoffs may exist between an accelerated auction process and the potential negative impact on participation by market participants intending to qualify and participate in a routinely-scheduled FCM auction rather than an accelerated auction. The ISO will provide notice to participants of any changes in qualification and auction schedules as soon as they become available.

Priced bilateral functionality means that the parties submitting the bilateral transaction to the ISO can specify a price at which the transaction should be settled in the ISO's systems, similar to a clearing house. Otherwise, the ISO would have to either price the transaction at $0/KW-month or tie the transaction to an auction clearing price. The example included in the response to 17 illustrates this process. The details associated with these transactions will be defined in Manual 20, after the first FCA. However, given the importance of bilateral transactions to the market, ISO is focusing resources on this issue now, and hopes to provide the Markets Committee with, at least, a high level overview of bilateral transactions in FCM in the first quarter of 2008.

While the design of this functionality has not been finalized, the ISO can provide some preliminary basic design elements. Assuming that the proposed scenario applies to Capacity Supply Obligation Bilaterals only, the Transferring Resource is shedding its Capacity Supply Obligation and the Qualified Capacity Resource is assuming this Capacity Supply Obligation at a specified price. In the ISO's settlement systems, the Transferring Resource selling its Capacity Supply Obligation will be debited with the product of the Capacity Supply Obligation being shed and the specified transaction price and the Qualified Capacity Resource will be paid this same rate. For example, suppose Resource A has a Capacity Supply Obligation of 50MW that it wants to shed to Resource B through a bilateral transaction. Resource A would submit the transaction to the ISO indicating that it wants to shed 50MW of obligation to Resource B at $5/kW-month. When the bilateral transaction is settled as part of the overall market settlement at the end of the month, Resource A (Transferring Resource) will be debited with 50,000kW x $5/kW-month = $250,000 and Resource B (Qualified Capacity Resource) will be credited with 50,000kW x $5/kW-month = $250,000. Assuming Resource B has no other activity in the month other than this bilateral transaction for 50MW, Resource B will receive the $250,000 for its obligation minus PER and any availability adjustments. So the transaction works essentially as described in the - the selling resource receives the fixed transaction price while the acquiring resource receives that price, adjusted for PER and availability. However, if the fixed price at which the transaction is denominated is different from the price at which the obligation was required, that difference will result in an additional credit or charge. Any agreement between the parties to address the responsibility for availability adjustments and PER must be handled outside of the ISO Settlement System.

This issue is addressed in the ISO white paper Proposed FCM Conforming Changes to the Forward Reserve Market [DOC].

The Capacity Zone location of a resource is established before the FCA is conducted. If a resource receives a Capacity Supply Obligation in the FCA, the Capacity Zone location for that resource will not change (with respect to that Capacity Supply Obligation) for duration of the associated Capacity Commitment Period. If for any reason, during a Capacity Commitment Period, a resource's location changes to another Capacity Zone, then for the remainder of that Capacity Commitment Period, the resource would continue to be considered in its original Capacity Zone location for purposes of FCM compensation (so long as it did not transfer that obligation in some manner to another resource). Should the resource be a new resource that has elected to have a multiyear Capacity Supply Obligation, then the same rule would apply. The resource with the multiyear Capacity Supply Obligation would continue to be considered in its original Capacity Zone location for purposes of FCM compensation until the period of its obligation ended (so long as it did not transfer the obligation in some manner to another resource).

If for any reason a resource's location changes to another Capacity Zone, that change will apply only to subsequent FCAs and the associated subsequent Capacity Commitment Periods.

This issue is addressed in the ISO white paper Proposed FCM Conforming Changes to the Forward Reserve Market [DOC].

The FCM / VAR proposal, set forth in the ISO white paper "Interaction of FCM and VAR Capacity Payments" makes no changes to how VAR costs are allocated to load. There will be no double counting of capacity between FCM and VAR. In fact, a primary objective of the ISO's FCM / VAR proposal, as described in the white paper is to ensure there is no double compensation of VAR capability.

These are, for the most part, addressed in the FCM / FRM white paper "Proposed Conforming Changes to the Forward Reserve Market," with two exceptions: First, DARDs thought not explicitly addressed in the white paper, will be able to participate in the FRM after conforming market rule changes have been made. Second, a review of FRM penalty structures will be addressed in a separate communication to the Markets Committee once the ISO has developed a position on the need (or lack thereof) for any changes.

At this time, no changes have been made to the reconfiguration auctions. Recognizing the requirements of the Settlement Agreement, the ISO is considering whether and how to address this issue as the details of the reconfiguration auctions are developed and incorporated into the market rules. A solution being considered is to allow a capacity zone to persist into the reconfiguration auctions where the quantity rule applies to defer the purchase of capacity in that zone. The ISO will consult with stakeholders to obtain input on this or any other possible market rule revisions.

A Project Sponsor can register a Demand Resource asset in a variety of ways: a single Demand Resource asset can represent an individual site, or a group or portfolio of sites. In either case, the asset must meet certain requirements (e.g., the asset must be one Demand Resource type, must have a Demand Reduction Value of at least 100 kW, and must be located within a single load zone. If the Demand Resource asset represents a portfolio of sites, the asset's performance (for purposes of calculating capacity payments and/or penalties) will be evaluated at the portfolio level. It will be the responsibility of the Project Sponsor to collect and maintain data on the individual resources making up the portfolio in a manner consistent with their approved M&V plan.

A Project Sponsor will have the ability to aggregate one or more Demand Resource assets to satisfy a FCM capacity obligation.

With respect to the first the answer is yes, though the overall benefit that will be experienced will depend on whether the Demand Resources are installed on customer facilities with interval meters.

With respect the second the answer is yes, assuming that you are only referring to savings of capacity costs for 2010 and beyond; energy cost savings produced by demand curtailed in 2009 would be realized in 2009. It is important to note that cost allocation is based on the load distribution at the time of the system peak from the prior year Therefore, cost allocation for FCM year 1 (Jun 10 through May 11) will be based on system peak distribution from summer 2009.

Section III.13.3.4 of Market Rule 1 addresses the issue of a New Resource that will not achieve Commercial Operation prior to the start date of a Capacity Commitment Period for which it has a Capacity Supply Obligation. Once the Commercial Operation milestone date in the Critical Path Schedule slips to a date after the start of the Capacity Commitment Period, the project sponsor is required to cover the New Resource's Capacity Supply Obligation via bilateral contract or via the next and any subsequent annual reconfiguration auctions. The option of covering the Capacity Supply Obligation via bilateral contract may be utilized to cover up to a two year delay in the Commercial Operation date of the New Resource. The New Resource is only obligated to enter into the annual reconfiguration auction(s) to the extent that it does not cover its full Capacity Supply Obligation via bilateral contracts.

For a New Resource that is qualified but does not clear in an FCA, there are several steps following the FCA qualification process that must be followed to determine qualification for subsequent bilateral trading of Capacity Supply Obligations or reconfiguration auction participation relating to the Capacity Commitment Period covered by that Forward Capacity Auction:

Participation in Reconfiguration Auctions

Section III.13.3.1.2 provides for a New Resource that does not clear in an FCA to request continuation of monitoring of its Critical Path Schedule. Section III.13.4.2.1.1 deals specifically with the requirements for Capacity qualified in a previous qualification process to participate in a reconfiguration auction and is included verbatim below.

III.13.4.2.1.1 Capacity Qualified in a Previous Qualification Process.

III.13.4.2.1.1.1 Resources that have Achieved Commercial Operation.

1. To submit a supply offer in an annual reconfiguration auction, a resource that has achieved Commercial Operation by the first Business Day in August prior to the reconfiguration auction and that has capacity that: (i) has been qualified through a Forward Capacity Auction qualification process as described in Section III.13.1 or through the qualification process for a previous annual reconfiguration auction as described in this Section III.13.4.2; and (ii) is not already obligated for the Capacity Commitment Period associated with that reconfiguration auction, may offer such capacity by submitting a supply offer by the reconfiguration auction offer and bid deadline, which will be announced by the ISO no later than the February 1 prior to the auction.
2. To submit a supply offer in a seasonal or monthly reconfiguration auction, a resource that has achieved Commercial Operation no later than one week prior to the reconfiguration auction and that has capacity that: (i) has been qualified through a Forward Capacity Auction qualification process as described in Section III.13.1 or through the qualification process for a previous annual reconfiguration auction as described in this Section III.13.4.2; and (ii) is not already obligated for the portion of the Capacity Commitment Period associated with that reconfiguration auction, may offer such capacity by submitting a supply offer by the reconfiguration auction offer and bid deadline, which will be announced by the ISO no later than two weeks prior to the auction.

III.13.4.2.1.1.2 Resources that have Not Achieved Commercial Operation.

1. To submit a supply offer in an annual reconfiguration auction, a resource that has not achieved Commercial Operation by the first Business Day in August prior to the reconfiguration auction and that has capacity that: (i) has been qualified through a Forward Capacity Auction qualification process as described in Section III.13.1 or through the qualification process for a previous annual reconfiguration auction as described in this Section III.13.4.2; and (ii) is not already obligated for the Capacity Commitment Period associated with that reconfiguration auction, may offer such capacity by first indicating, no later than the first Business Day in August prior to the reconfiguration auction, its intent to offer by submitting all of the information required in the New Capacity Show of Interest Form as described in Section III.13.1.1.2.1, and then submitting a supply offer by the reconfiguration auction offer and bid deadline, which will be announced by the ISO no later than the February 1 prior to the auction. To participate in an annual reconfiguration auction, such a resource must be having the ISO monitor its critical path schedule in accordance with Section III.13.3, and the ISO's monitoring must indicate that the resource is expected to achieve Commercial Operation by the start of the Capacity Commitment Period associated with the reconfiguration auction. A resource that has not achieved Commercial Operation and that is not having its critical path schedule monitored by the ISO in accordance with Section III.13.3 may only participate in annual reconfiguration auctions pursuant to Section III.13.4.2.1.2.2.

Participation in Capacity Supply Obligation Bilateral Contracts

Section III.13.1.1.1 deals with the requirements for submittal and with the approval of Capacity Supply Obligation bilaterals and is included verbatim below.

NOTE: The ISO intends to propose additional language Section III.13.5 to clarify the requirements relating to critical path monitoring as it would apply to New Resources wishing to participate in Capacity Supply Obligation bilaterals.

III.13.5.1.1 Process for Approval of Capacity Supply Obligation Bilaterals.

III.13.5.1.1.1 Timing.The Lead Market Participant for either the Capacity Transferring Resource or the Qualified Capacity Resource may submit a Capacity Supply Obligation Bilateral during specified submittal windows, as defined in the ISO New England Manuals and ISO New England Operating Procedures, prior to the Capacity Commitment Period or prior to the Obligation Month during the Capacity Commitment Period.

III.13.5.1.1.2 Application.The Capacity Supply Obligation Bilateral shall include the following: (i) the asset identification number of the Capacity Transferring Resource; (ii) the MW amount of the Capacity Supply Obligation being transferred in MW amounts up to three decimal places with a minimum size of 100kW (the 100kW minimum shall not apply to resources registered with the ISO prior to the earliest date that any portion of this Section III.13.5 becomes effective); (iii) the term of the transaction (in whole month increments up to one year); (iv) the asset identification number of the Qualified Capacity Resource; (v) the Capacity Zone to which the Capacity Supply Obligation Bilateral will apply; and (vi) confirmation of the transaction by both the Lead Market Participant for the Capacity Transferring Resource and the Lead Market Participant or Project Sponsor for the Qualified Capacity Resource. If the Qualified Capacity Resource is supporting the transaction with an Import Capacity Resource, the application must include documentation that such resource has or will have import rights over the interface for the applicable Capacity Commitment Period.

III.13.5.1.1.3 ISO Review and Approval.The ISO shall review the information provided in support of the Capacity Supply Obligation Bilateral, and may reject the Capacity Supply Obligation Bilateral for the following reasons:

1. Identified reliability issues pursuant to the standards set forth in Section III.13.2.5.2.5;
2. Submission of incomplete or inadequate information as required in Section III.13.5.1.1.2;
3. Late submission of the Capacity Supply Obligation Bilateral;
4. The resource proposed to assume the Capacity Supply Obligation is not a Qualified Capacity Resource pursuant to Section III.13.1;
5. The megawatt amount identified in the Capacity Supply Obligation Bilateral is greater than the actual Capacity Supply Obligation associated with the resource seeking to transfer its Capacity Supply Obligation; or
6. Lack of confirmation by the Capacity Transferring Resource or the Qualified Capacity Resource.