Pay-for-Performance (PFP) is a design feature of the Forward Capacity Market that provides incentives for resources that perform during capacity scarcity conditions. A CSC occurs when one or more of the three reserve requirements is deficient and the reserve constraint penalty factor 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:
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