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      • Markets and Operations
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      Reconfiguration Auctions

      IN THIS SECTION

      • Overview and Timeline of Reconfiguration Auctions and CSO Bilateral Periods
      • Qualified Capacity for CSO Bilateral Periods and Reconfiguration Auctions
      • CSO Bilateral Periods
      • Reconfiguration Auctions
      • Annual Reconfiguration Transactions
      • Third Annual Reconfiguration Auction: Significant Decrease in Qualified Capacity
      • Acquiring a CSO for an Earlier CCP
      • Capacity Network Resource Capability (CNRC) Outcomes
      • Capacity Network Import Capability (CNIC) Outcomes
      • Back to Table of Contents

      Reconfiguration Auctions and CSO Bilateral PeriodsReconfiguration auctions provide an auction-based mechanism for resources to acquire, increase, or shed all or part of their capacity supply obligations (CSOs) for the entire capacity commitment period (CCP). CSOs may be adjusted through annual reconfiguration auctions (ARAs) or for specific months of the CCP through monthly reconfiguration auctions (MRAs). A resource can adjust its CSO by submitting the following:

      • Demand bids to shed all or part of its CSO
      • Supply offers to increase or acquire a CSO, if its qualified capacity is greater than its current CSO

      Unlike CSO bilaterals, no counterparty is needed to participate in a reconfiguration auction.

      Additionally, ARAs allow the ISO to procure or release capacity on behalf of load by using sloped demand curves in the auction. The ISO does not participate in MRAs, which do not use sloped demand curves.

      Qualification

      Before opening the submission window  for a reconfiguration auction, the ISO publishes the qualified capacity for all resources in the Forward Capacity Tracking System (FCTS).

      See Qualified Capacity for CSO Bilateral Periods and Reconfiguration Auctions.

      Submission Windows

      The specific dates when reconfiguration auction submission windows open and close are available in the FCA calendars.

      • Three annual reconfiguration auctions occur between the Forward Capacity Auction (FCA) and the start of the capacity commitment period. CSO changes in the ARAs apply to the entire CCP. Each ARA submission window is open for 2.5 business days.
      • Twelve monthly reconfiguration auctions occur about two months in advance of the obligation month. CSO changes in each MRA apply to only a single month in the capacity commitment period. Each MRA submission window is open for 1.5 business days.

      FCA calendar

      Reconfiguration Auction Clearing Overview

      The objective of the reconfiguration auction is to clear supply offers and demand bids and maximize social welfare, subject to the constraints modeled in the auction.

      Clearing prices are created for each capacity zone and import interface. All supply offers and demand bids may be cleared in whole or in part:

      • If a resource’s supply offer is priced below the clearing price, it will clear in the auction, and its capacity supply obligation (CSO) will increase by the offered megawatt (MW) amount that cleared (assuming it passes ISO financial assurance and reliability reviews—see below).
      • If a resource’s demand bid is priced higher than the clearing price, it will clear in the auction, and its CSO will decrease by the megawatt amount that cleared (assuming it passes ISO financial assurance and reliability reviews—see below).

      Capacity demand curves will be modeled in each ARA consistent with how the curves were modeled for the FCA in the associated capacity commitment period. Capacity demand curves are not used in the MRAs. For more information about the capacity demand curves, see About the FCM and Its Auctions.

      Reconfiguration Auction Capacity Zones

      The capacity zones modeled in each reconfiguration auction include those that were used in the FCA for that capacity commitment period.

      Limitations

      The ISO will apply the reconfiguration auction limitations criteria described in Market Rule 1, Section III.13.4, Reconfiguration Auctions, to reconfiguration auction bids and offers. Demand bids and supply offers submitted during a reconfiguration auction must respect all modeled limits.

      At clearing quantities less than the import-constrained capacity zone limit (truncation point), no CSO is allowed to move out of the import-constrained zone. Demand bids submitted may only clear against supply offers submitted in the same import-constrained zone. The price in the bound zone (or interface) will be set by the marginal bid or offer within the zone.

      Fixed zonal limits are used in monthly reconfiguration auctions. These fixed zonal limits will correspond to the truncation point of the respective zonal sloped demand curve. The capacity transfer limit (CTL) will remain a fixed limit.

      How to Submit Bids and Offers

      Demand bids and supply offers are submitted in the Forward Capacity Market Reconfiguration Auction User Interface. A digital certificate is required to access the system. You must ask your security administrator for the ISO’s Customer and Asset Management System (CAMS) to provide you with one of the following roles based on your expected activities:

      • External forward capacity maintainer—allows user to add, edit, and delete supply offers and demand bids for a given reconfiguration auction
      • External forward capacity viewer—allows user to view submitted supply offers and demand bids for a given reconfiguration auction

      If you don’t know who your security administrator is, contact Participant Support.

      To access the system, click the Forward Capacity Market Reconfiguration Auction button on the SMD applications home page. See the User Guide for the Forward Capacity Market Reconfiguration Auction for instructions and screenshots.

      Information Required

      To submit a supply offer or demand bid, you must identify the following:

      • The resource
      • The megawatt amount of capacity being offered or bid
      • The price in $/kilowatt-month

      Both supply offers and demand bids can be offered in up to five price-megawatt pairs.

      Financial Implications

      It is important to understand the effects of cleared supply offers and demand bids on FCM payments:

      • A resource that clears a demand bid must pay the reconfiguration auction clearing price multiplied by the megawatt amount of the demand bid that cleared. The resource still receives payment from the FCA for the quantity cleared at the FCA clearing price (if the CSO was acquired in the FCA).
      • A resource that clears a supply offer receives the reconfiguration auction clearing price multiplied by the megawatt amount of the supply offer that cleared. The resource is exposed to performance penalties according to Market Rule 1, which could exceed the auction clearing price.

      Significant Decrease in Capacity

      If a resource that has achieved FCM Commercial Operation has a qualified capacity value for the third annual reconfiguration auction (ARA 3) that is less than its CSO for that capacity commitment period, the resource may be flagged for a significant decrease in capacity. A significant decrease in capacity is calculated using a resource’s smallest shortfall, which is the smallest monthly difference between its CSO and its qualified capacity for the relevant CCP. A significant decrease in a resource’s capacity will be triggered if the smallest shortfall exceeds the following thresholds for the applicable capacity commitment periods:

      • Capacity Commitment Periods 2020–21 through 2022–23: 40 MW, if the smallest shortfall is greater than the lesser of either 20% of the CSO during that month or 2 MW. The calculation is as follows:

        a. Calculate the smallest shortfall of the CSO (CSO minus qualified capacity) across all 12 months.
        b. For the month with the smallest shortfall, calculate the greater of 20% of the CSO or 2 MW.
        c. Take the lesser value of either the result from (b) or 40 MW.
        d. The result is the resource’s significant-decrease threshold.
        e. The resource will be flagged if the smallest shortfall is greater than the significant-decrease threshold.

      • Capacity Commitment Period 2023–24 and onward: 10 MW, if the smallest shortfall is greater than the lesser of either 10% of the CSO during that month or 2 MW. The calculation is as follows:

        a. Calculate the smallest shortfall of the CSO (CSO minus qualified capacity) across all 12 months.
        b. For the month with the smallest shortfall, calculate the greater of 10% of the CSO or 2 MW.
        c. Take the lesser value of either the result from (b) of 10 MW.
        d. The result is the resource’s significant-decrease threshold.
        e. The resource will be flagged if the smallest shortfall is greater than the significant-decrease threshold.

      For details, see Market Rule 1, Section III.13.4.2.1.3, Adjustment for Significant Decreases in Capacity.

      If a significant decrease in capacity is triggered, see Third Annual Reconfiguration Auction Bilateral Period: Qualification and Significant Decreases for details.

      Late Commercial Operation

      Beginning with the tenth capacity commitment period, which started on June 1, 2019, the ISO no longer enters mandatory demand bids into the third annual reconfiguration auction on behalf of participants with a delayed project. Instead, failure-to-cover charges are applied to any CSO for which a participant cannot demonstrate its ability to deliver from noncommercial megawatts.

      For capacity commitment periods beginning before June 1, 2022, the failure-to-cover charge rate for a given capacity zone is the higher of the capacity clearing price and the clearing price in any annual reconfiguration auction for that capacity commitment period.

      For CCPs beginning on or after June 1, 2022, the failure-to-cover charge rate for a given capacity zone will be the price determined by a second clearing of the third annual reconfiguration auction before the start of the relevant CCP. See Market Rule 1, Section III.13.3.4, Covering Capacity Supply Obligations, for full details.

      ISO Reviews of Reconfiguration Auctions

      Financial Assurance

      The submission of a demand bid is reviewed against financial assurance (FA) requirements:

      • The FA on submitted demand bids is based on the demand bid price and megawatt pairs submitted. The FA requirement would be recalculated if the demand bid doesn’t clear, partly clears at the bid price, fully clears at a lower price, or is rejected.
      • If the lead participant does not have adequate FA to cover all FA requirements, including those for demand bids, all demand bids, offers, and annual reconfiguration transactions (ARTs) entered by the participant would be rejected.

      For ARA 3, if the ISO enters a mandatory demand bid on behalf of a resource with a significant decrease in capacity (see sections above), it will be entered at the FCA starting price and will be reflected in the Forward Capacity Tracking System (FCTS) as a noneditable bid. This may have the following FA effects:

      • Since the FCA starting price is high, the resource may see a significant increase in its FA requirement.
      • Customers are at risk of FA suspension if they do not meet this increase. (Unlike customer-submitted demand bids, mandatory demand bids submitted by the ISO are not rejected if a customer has inadequate FA to cover the FA requirement.)
      • The FA requirement is adjusted, as necessary, after the reconfiguration auction is approved to include only those megawatts that cleared the auction and reflect the reconfiguration auction clearing price.

      For more information, refer to the ISO New England Financial Assurance Policy.

      Reliability Review

      The ISO also performs reliability reviews on cleared supply offers and demand bids, as follows:

      Annual Reconfiguration Auctions
      Monthly Reconfiguration Auctions
      Review considers annual period. Review considers monthly period.
      Bids and offers are rejected for the resource.

      Review takes into account transmission and resource outage schedules approved for the month.

      More Information

      • Instructions on the submittal process for bids and offers can be found in the User Guide for the Forward Capacity Market Reconfiguration Auction.
      • For detailed guidance, see the “Forward Capacity Market Reconfiguration Auctions” training available on the Training Materials webpage.

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