What Is Peak Energy Rent?
Peak energy rent (PER) is a value used to calculate an adjustment to the capacity payment, called the PER adjustment, based on high-priced hours in the Real-Time Energy Market. PER is calculated at an hourly and monthly level for each capacity zone in the applicable Forward Capacity Auction (FCA).
Hourly PER is calculated as the maximum of the difference between the locational marginal price (LMP) and a strike price or zero, as adjusted by a load-scaling factor and an availability factor. The locational marginal price (LMP) is the Hub price for the Rest-of-Pool capacity zone. For all other capacity zones, the LMP is the LMP of the load zone associated with the capacity zone(s). The strike price is based on fuel cost (ultra-low-sulfur No. 2 oil measured at New York Harbor or day-ahead gas measured at the Algonquin City Gate) and the heat rate of a proxy unit.
Monthly PER is the sum of all hourly PER values in the month.
The PER provisions will be eliminated from the tariff effective June 1, 2019. PER calculations will not be performed in the settlement for any operating month after May 2019.
PER Calculation Example—Rest-of-Pool Capacity Zone
Here is an example of the calculation.
Hourly PER formula:
- Hourly PER = [ Real-Time LMP – Strike Price] x Load-Scaling Factor x Availability Factor
- Assume that in one day in August, the Hub real-time LMP exceeds the strike price
- RT LMP = $500/MWh for 4 hours, hour ending (HE) 15 through HE 18
- RT LMP < $200/MWh for the other 20 hours of the day
- Strike Price = $200/MWh
- Load-Scaling Factor = 0.80
- Availability Factor = 0.95 (constant, per Market Rule)
- Calculate hourly PER for hours where LMP = $500
Calculate hourly PER for hours where LMP <$200
- Hourly PER = [$500 - $200] x 0.80 x 0.95
- Hourly PER = $300 x 0.80 x 0.95
- Hourly PER = $228/MW
- Hourly PER = $0.228/kW
- When RT LMP < Strike Price, PER = 0
- Hourly PER = 0
- These hourly values are summed together
- (4 x $0.228) + (20 x $0) = $0.912/kW
- All other hours in month: RT LMP < Strike Price, Hourly PER =$0
- Total PER for August: $0.912/kW
- The Forward Capacity Market settlement uses the average of the monthly PER values from the preceding 12 months as the PER rate.
- Sum of the monthly PER values for September to July: $0.565/kW
- August PER = $0.912/kW
The sum of the monthly PER values for September to August:
The average of the monthly PER values for September 2015 to August 2016:
- $0.565 + $0.912 = $1.477/kW
- $1.477/12 = $0.123/kW
- Average PER for September FCM: $0.123/kW
- The PER is multiplied by applicable capacity supply obligation for the month to determine the monthly PER adjustment that will be subtracted from the FCM payment.
- Generator, import, and active demand capacity resource CSOs, exclusive of self-supply, are subject to the PER adjustment.
- The August PER will continue to be included in the rolling average for the PER for 12 months and will be used in the FCM settlement through August of the following year.
In What Document(s) Do I Find Details about Peak Energy Rent?
Primary provisions for the settlement of PER are included in, but not limited to Market Rule 1, Section III.220.127.116.11.
Related Standard Settlements
Related Billing Adjustments
FCM Hourly Peak Energy Rent
WW_FCMHOURLYPER Detailed in the monthly website report issued during the beginning of the applicable settlement obligation month after Real-Time Energy Market settlements are distributed.
FCM Monthly Peak Energy Rent
WW_FCMMONTHLYPER Summarized in the monthly website report issued during the beginning of the applicable settlement obligation month after Real-Time Energy Market settlements are distributed coincident with the distribution of the hourly PER website report.
Related Calculation Summary
FCM Credits and PER Adjustment Calculation Summary