Immediately following the completion of the primary auction for the Forward Capacity Market (FCM), a substitution auction is held. (See FCM Substitution Auction Overview and Timeline.) Existing generators and import capacity resources willing to permanently retire from ISO markets can participate as demand in the substitution auction.
Participating resources must be one of the following:
Participating resources must have reached FCM commercial operation status by the deadline for the auction’s critical-path schedule. (Learn how to access the auction calendars.)
Participating resources may not be a demand capacity resource or designated as self-supply. They also may not participate in a composite offer or have been retained for reliability. (see Market Rule I, Section III.188.8.131.52.5, Reliability Review)
Demand Bid Rules
In the substitution auction, resources participating as demand enter sealed demand bids into the auction system. Demand bid features are as follows:
- They must have at least one and up to five price-quantity pairs in descending-price order, not to exceed the capacity supply obligation (CSO) obtained in the primary auction.
- Bid prices may differ from the primary auction but cannot be greater than the primary auction’s starting price or lower than that starting price multiplied by -1. Demand bid quantities with no price specified will be assigned the primary auction starting price multiplied by -1.
- They are nonrationable and cannot partially clear (some limitations apply when a proxy de-list bid exists in the primary auction).
- The election to participate must be made in March during the demand-election window of the existing resource substitution auction.
- Demand bid prices can be submitted five business days after the composite offer submittal window closes in October.
(Learn how to access the auction calendars.)
How to Submit a Demand Bid
Retirement de-list bids submitted for the primary auction will have a demand bid automatically entered into the substitution auction. All other eligible resources may elect to have a demand bid entered in the substitution auction.
- Use the Forward Capacity Tracking System (FCTS) to elect to participate as demand in the substitution auction.
- For five business days after the composite offer submittal window closes in October, project sponsors can submit demand bid prices via the FCTS. (Learn how to access the auction calendars.) Resources on critical path schedule (CPS) monitoring during this period must meet all CPS milestones within seven days after the ISO issues the qualification determination notification to be qualified as demand in the substitution auction.
- Details regarding the substitution auction can be found in Market Rule 1, Section III.13.2.8, Capacity Substitution Auctions.
- The “FCM Substitution Auction” module available on the Training Materials webpage provides more detailed information on auction mechanics.