Pay for performance (PFP) is a design feature of the Forward Capacity Market that provides incentives for resources that perform during capacity-scarcity conditions (CSCs). A CSC occurs when one or more of the three reserve requirements is deficient and the reserve-constraint penalty factor (RCPF) is setting the real-time reserve price. This real-time reserve price is also included in the real-time locational marginal price (LMP). A CSC can occur in one or more five-minute pricing intervals.
The elements of PFP include the following: