Last Updated: 10/18/2022
Below, affected participants can learn more about the changes to systems or procedures related to the Forward Capacity Market (FCM) Non-Commercial Capacity Trading Financial Assurance project. This project is one of several projects that ISO New England has undertaken, in collaboration with stakeholders, for the continued development of the region’s wholesale electricity markets. Target dates indicated below are subject to change.
Refer to the Participant Readiness Project Outlook for more detail on affected customers and systems for this and other major projects.
Effective June 1, 2022, participants with non-commercial capacity (NCC) that cleared in the thirteenth forward capacity auction or later will be required to post FCM NCC trading financial assurance (FA) in order for ISO New England to effectively:
Currently, the Financial Assurance Policy (FAP) requires participants to provide FA for NCC using the “non-commercial capacity financial assurance amount” calculation. The FA required increases over time until the project achieves commercial status or is withdrawn and the FA is forfeited.
Upon further analysis, ISO New England determined that additional conditions should be considered when calculating NCC FA. After acquiring a CSO in a forward capacity auction, a resource can elect to subsequently “shed” its CSO by submitting demand bids in annual reconfiguration auctions (ARAs), monthly reconfiguration auctions (MRAs), and through monthly CSO bilateral contracts as the transferring resource. Depending on market conditions, a participant can earn a CSO trading profit, even exceeding the current NCC FA at risk. This rule may create an incentive for a participant to stay in the market and trade out of the resource’s CSO rather than notifying ISO New England that a resource with NCC will not achieve commercial operation, and withdrawing the capacity from CPS monitoring.
Considering this, ISO New England proposed changes to the Federal Energy Regulatory Commission (FERC) to add the FCM NCC Trading FA component to the existing FA calculation in the FAP. FERC accepted these FAP modifications effective January 15, 2022, and some additional changes to the FAP regarding NCC Trading FA effective March 22, 2022. Please refer to ER22-863-000 Revisions Related to Non-Commercial Capacity Trading Financial Assurance for details regarding the approved calculation and additional proposed changes.
The NCC Trading FA project will introduce the following changes in the Financial Assurance Management (FAM) user interface (UI):
Resources that have NCC Trading FA obligations (either for the current month or from prior accrued obligations) and terminate their CSO will forfeit their NCC Trading FA upon termination. This is consistent with the existing NCC FA forfeiture process. For NCC terminations that have been processed in the past, the current month’s NCC Trading FA will be forfeited on the first business day of each month for as many months as the resource continues to have NCC Trading FA.
Changes to the Forward Capacity Market CSO Bilateral Contracts and Forward Capacity Market Reconfiguration Auction & ARTs UIs will require participants of the transferring resource engaged in an annual reconfiguration transaction (ART) or a capacity supply obligation bilateral (CSOB) to respond to two questions, regardless of commercial status:
The transaction prices used to calculate the NCC Trading FA will be determined using the answers to the side transactions and affiliates questions according to tables below.
| ARTs | Side transactions exist | No side transactions / Yes affiliate | No side transactions / No affiliate |
|---|---|---|---|
|
Transaction price to use in NCC Trading FA calculation |
Lower of ARA price or ART price |
Lower of FCA clearing price or ART price |
ART price |
| CSOBs | Side transactions exist | No side transactions / Yes affiliate | No side transactions / No affiliate |
|
Transaction price to use in NCC Trading FA calculation |
Lower of MRA price or CSOB price |
Lower of FCA clearing price or CSOB price |
CSOB price |
Affected market participants should be mindful of the following time-bound items, some of which may require customers to take specific steps or adapt to changes in ISO New England’s systems. Please consider subscribing to Participant Readiness, Market Notices, Information Technology (IT) Notices, and MIS Report Issues to receive notices posted to the calendar for future projects.
| TIMING OR DEADLINE | SYSTEM | ACTION OR EVENT |
|---|---|---|
|
March 29, 2022 |
Forward Capacity Market CSO Bilateral (CSOBs) Contracts UI and Forward Capacity Market Reconfiguration Auction & ARTs UI |
The new questions to side transactions and affiliates are available in the UIs and responses are required going forward. |
|
April 1, 2022 |
Forward Capacity Market CSO Bilateral (CSOBs) Contracts UI and Forward Capacity Market Reconfiguration Auction & ARTs UI |
Participants with previously submitted ARTs and CSOBs were requested to provide data to backfill the newly required confirmations regarding side-transactions and affiliates. This data is required for the software to calculate FA regardless of a resource’s commercial status. |
|
May 17, 2022 |
Financial Assurance Management (FAM) |
The FCM NCC Trading FA calculation will be migrated. The Non-Commercial Capacity Trading FA line item will be added with drilldown capability for further details. The Incremental Changes line item for the June 1, 2022 FA requirements will be visible. |
|
June 1, 2022 |
Financial Assurance Management (FAM) |
Additional funds, if applicable, to cover NCC Trading FA for June 1, 2022, are due May 31, 2022. NCC Trading FA for June 2022 is forfeited for FCA 13 NCC terminations that have been processed in the past. |
ISO New England may conduct online or classroom-based training and information sessions and other opportunities for affected customers to learn about changes and ask questions in advance of project implementation. Please consider subscribing to ISO Training to receive notices posted to the calendar for this project.
| DATE | EVENT AND SUPPORTING MATERIALS |
|---|---|
|
May 3, 2022 |
Self-paced training updated with changes to the NCC Trading FA calculation. |
|
June 2, 2022 |
Quarterly Settlements Forum
|
Market participants affected by the project should consult the following documents for specific instructions on completing related tasks or processes and helpful answers to frequently asked questions.
| DOCUMENT | NOTES (if necessary) |
|---|---|
|
User Guide for the FCM CSO Bilateral Contracts User Interface |
This document contains an overview of the Forward Capacity Market's Capacity Supply Obligation Bilateral Contracts submittal process. |
|
User Guide for the Forward Capacity Market Annual Reconfiguration Transactions |
This document contains an overview of the Forward Capacity Market's Annual Reconfiguration Transaction submittal process. |
|
New MIS report “Forward Capacity Market Forfeited Financial Assurance Allocation Report” |
