When the ISO participates in an ARA, it enters either supply offers or demand bids, which clear the auction in the same manner as any other resource supply offer or demand bid. The supply offers are priced per the method established in Market Rule 1, Section III.13.4.3 (c); the demand bids are priced at 2.0 times CONE in ARA’s for Capacity Commitment Periods 1-7, and priced at the FCA starting price in ARA’s for Capacity Commitment Periods 8 and beyond. The megawatt (MW) amount the ISO submits for either supply offers or demand bids is determined by comparing the most recent Net Installed Capacity Requirement to the total capacity supply obligation prior to the auction.

Generally, when additional supply offers are entered, the auction-cleared MW amount may increase and the auction clearing price may decrease. When additional demand bids are entered, the auction cleared MW amount and auction clearing price may increase.

When the ISO participates in an ARA, the MW amount of participation is determined by comparing the Installed Capacity Requirement (ICR) to the total capacity supply obligation (CSO) prior to the auction.

If the total CSO is greater than the Net ICR in ARA3, the ISO must enter supply offers for the difference between total CSO and the Net ICR. The supply offers are priced per the method established in MR1, Section III.13.4.3 (c). If the ISO supply offers clear against demand bids entered for Resources shedding CSO in the auction, the overall CSO in the FCM will decrease.

If the total CSO is less than the Net ICR for any ARA, the ISO must enter demand bids for the difference between total CSO and Net ICR. The demand bids are priced at 2.0 times CONE in ARA’s for Capacity Commitment Periods 1-7, and priced at the FCA starting price in ARA’s for Capacity Commitment Periods 8 and beyond. If the ISO demand bids clear with resource supply offers, the overall CSO will increase and effectively procure additional capacity in the FCM.