Access documents related to the Forward Capacity Market (FCM) Performance Incentives project, also known as the Two-Settlement Design or Pay-for-Performance project.
This project was part of the ISO’s Strategic Planning Initiative (SPI) to address major challenges to grid reliability. The ISO evaluated and proposed replacing the existing FCM shortage-event penalty structure with a new two-settlement market design intended to create strong financial incentives for all capacity suppliers, without exception, to maximize performance and availability during scarcity conditions (i.e., during operating reserve deficiencies). The objective was to ensure that supply resources face appropriate market-based incentives and have the financial capability to undertake cost-effective investments that improve resource performance and system reliability.
The FCM Performance Incentives project was just one of several key projects at the ISO, which continuously undertakes a variety of short- and long-term projects to enhance the region’s competitive wholesale electricity markets and ensure reliable operation of the power grid.
For details on the SPI, see the ISO’s annual Regional Electricity Outlook.