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.