Immediately following the completion of the primary annual auction for the Forward Capacity Market (FCM), a substitution auction is held. (See FCM Substitution Auction Overview and Timeline.) Eligible new resources can participate as supply in the substitution auction.
To participate in the substitution auction, a new resource must meet all the following criteria:
- Be a sponsored policy resource (SPR), which is a new capacity resource that meets these specifications:
- Qualifies to receive an out-of-market revenue source supported by a government cost-recovery mechanism
- Qualifies as a renewable, clean, or alternative energy resource under a renewable energy portfolio standard, clean energy standard, alternative energy portfolio standard, renewable energy goal, or clean energy goal enacted either by statute or regulation in the New England state from which the resource receives the out-of-market revenue source—for example, resources qualified under the Massachusetts Clean Energy Request for Proposal would be considered an SPR.
- Qualify to participate in the primary auction as a new generation, demand, or import capacity resource, or be conditionally qualified based on the eligibility and interconnection queue priority criteria described in Market Rule 1, Section III.188.8.131.52.1
- Have available some portion of qualified capacity that did not obtain a capacity supply obligation (CSO) in the primary auction
- Such resources remain eligible even if they are participating in a composite offer as a summer resource.
Supply Offer Rules
Resources participating as supply in the substitution auction enter sealed supply offers with the following parameters:
- Have at least one and up to five price-quantity pairs in ascending price order, not to exceed the capacity supply obligation (CSO) obtained in the primary auction
- Have prices that 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 negative one; supply offer quantities with no price specified will be assigned the primary auction starting price
- Can be rationed and may be partially cleared
- Cannot receive a multiyear rate lock for a CSO acquired in the substitution auction
- Are not subject to Internal Market Monitoring (IMM) review
Here are some key deadlines for supply offers in the substitution auction:
- The election to participate must be made in April during the show of interest submission window and no later than the supply-election deadline for the new resource substitution auction.
- The ISO must receive the sponsored policy resource certification by the new capacity qualification deadline. Supply offer 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 Supply Offer
- Use the Forward Capacity Tracking System (FCTS) to elect to participate as supply in the substitution auction. Note that once this election is made, it is binding for all newly qualified capacity, provided that the resource does not obtain a CSO for its full qualified capacity in the primary auction.
- Certify that the resource meets the definition of a sponsored policy resource as part of the new capacity qualification package submittal in the FCTS. (See package submittal guidance for new generators, new imports, or new demand capacity resources.) The ISO recommends using the certification form available on the FCM webpage. This form contains detailed guidelines on certification criteria.
- Final supply offers can be submitted five business days after the composite offer submittal window closes in October using FCTS.
- Details regarding the substitution auction can be found in Market Rule 1, Section III.13.2.8, Capacity Substitution Auctions.
- The “Forward Capacity Market Substitution Auction for the FCA 13” webinar materials available on the Training Materials webpage provides detailed guidance, including FCTS instructions and screenshots.