August 9-10, 2022 | NEPOOL Markets Committee | Doubletree Hotel, Westborough, ma - PowerPoint Presentation

1. August 9-10, 2022 | NEPOOL Markets Committee | Doubletree Hotel, Westborough, ma Mark WingSupervisor, Hourly MarketsForward Capacity Market (FCM)Capacity Transfer Rights (CTR) Calculation Clarification1

2. 2FCM CTR Calculation ClarificationWMPP ID:164Proposed Effective Date: January 2023As part of the recent Accelerate FCM Settlement & Billing project, the ISO proposed Tariff changes to clarify the calculation of specifically allocated CTRs associated with Pool Planned UnitsThe ISO is proposing additional refinements to the Tariff provision for specifically allocated CTRs for Pool-Planned Units to further clarify the settlement calculation and reflect de-listed capacityThis meeting continues discussion on this topic and proposes Tariff language changesThe ISO is also proposing to update several incorrect references in Section III.13.1.1.2.3

3. Specifically Allocated CTRs for Pool-Planned Units3Awarded to municipal participants with entitlements in any of the 8 Pool-Planned Units in the New England control areaParticipants receive credits when:There is price separation in the Forward Capacity Auction (FCA); andThe CTRs are not used for self-supplyCurrent Tariff language is imprecise and does not reflect de-listed capacityAppendix A provides details on the calculation, the proposed revisions, and examples calculating Pool-Planned Unit specifically allocated CTRs as discussed at the July 12-14, 2022 MC meeting

4. 4Summary of Proposed Tariff ChangesSpecifically Allocated CTRsTariff SectionDescription of ChangeReason for ChangeIII.13.7.5.4.5(a)Specifically Allocated CTRs for Pool-Planned UnitsUpdate language to clarify that allocation of CTRs related to Pool-Planned Units are based on the MW cleared in the FCA for the Capacity Commitment Period Current language regarding calculation of CTR allocation could be open to multiple interpretationsIII.13.7.5.4.5(b)Specifically Allocated CTRs for Pool-Planned UnitsUpdate language to clarify formula used for determining CTR creditsIn light of changes to subsection(a), new language is necessary to capture how CTR credits are calculatedIII.13.7.5.4.5 - TableSpecifically Allocated CTRs for Pool-Planned UnitsDelete rows with Nominal Summer and Nominal Winter MW values, and columns with Summer and Winter MW Values are not current and could lead to confusion

5. 5Summary of Proposed Tariff ChangesMinor Tariff CorrectionsTariff SectionDescription of ChangeReason for ChangeIII.13.1.1.2.3Initial Interconnection AnalysisUpdate references as follows: III.13.1.1.1.2, III.13.1.1.1.3, III.13.1.1.1.4 and III.13.1.1.1.6.Incorrect references were uncovered during a compliance audit

6. 6ConclusionThe ISO is proposing to clarify the Tariff language for the settlement calculation for CTRs for Pool-Planned Units to better reflect the calculation and account for de-listed capacityThe ISO is also proposing to correct several references in Section III.13.1.1.2.3The requested effective date is January 2023There is no price separation between Capacity Zones or potential CTR credits until the 2024/25 Capacity Commitment Period

7. Stakeholder Schedule7Stakeholder Committee and DateScheduled Project MilestoneMarkets CommitteeJuly 12-14, 2022MC introduction and initial discussionsMarkets CommitteeAugust 9-10, 2022Tariff language presentation and continued discussionsMarkets CommitteeSeptember 13-14, 2022Continued discussions and voteParticipants CommitteeOctober 6, 2022PC discussion and vote

8. 8Mark Wing(413) 535-4344 | mwing@iso-ne.com

9. 9Acronyms Used in this PresentationCSO = Capacity Supply ObligationCTR = Capacity Transfer RightFCA = Forward Capacity AuctionFCM = Forward Capacity Market

10. Appendix ACalculation and examples of Pool-Planned Unit Specifically Allocated Capacity Transfer Rights10

11. Pool-Planned Unit Capacity Transfer Rights11Each participant’s CTRs are based on the Pool-Planned Unit’s capacity and the participant’s entitlementEntitlements are detailed in table (Section III.13.7.5.4.5)Participants may designate all or some of their CTRs as self-supply for their loadDesignated prior to the Forward Capacity AuctionParticipants receive credits for any CTRs not used for self-supply when there is price separation between zonesCTR Credit = (CTR – designated self-supply) x (Capacity Clearing Price participant’s load’s Capacity Zone – Capacity Clearing Price Pool-Planned Unit’s Capacity Zone)From July 12-14 presentation

12. Background12Example of Pool-Planned Unit CTR CalculationAssume the following:Pool-Planned Unit values:Capacity is 100 MWParticipant’s entitlement is 10%Participant uses 8 MW of their entitlement for self-supplyCapacity Clearing PricesCapacity Zone for the participant’s load is $2,500/MW-monthCapacity Zone for Unit’s is $2,000/MW-monthCTRs allocation = 10 MW= Capacity x entitlement (100 MW x 10%)CTRs eligible for credit = 2 MW = 10 MW CTRs – 8 MW self-supplyCTRs credit = $1,000= CTRs eligible for credit x (Capacity Clearing Price participant’s load’s Capacity Zone – Capacity Clearing Price Pool-Planned Unit’s Capacity Zone )= 2 MW x ($2,500/MW-month - $2,000/MW-month)From July 12-14 presentation

13. 13Current Tariff language is imprecise and should be improvedFrom Tariff Section III.13.7.5.4.5, allocation of Pool-Planned Unit CTRs to a municipal entitlement holder is:“…equal to the seasonal claimed capability of the ownership entitlements in such unit at the time of qualification, adjusted for any designated self-supply quantities…”The use of “seasonal claimed capability … at time of qualification” is broad and can be refinedIn addition, the settlement allocation should reflect de-listed capacityParticipants should not receive CTR credits based on capacity that is not available to the poolFrom July 12-14 presentation

14. 14Example with De-listed CapacityContinuing the prior example, assume:The Pool-Planned Unit de-lists 20 MWCapacity Supply Obligation after FCA is 80 MWCTRs are still the product of the capacity and entitlement, i.e., 10 MW (100 MW x 10%)Includes 2 MW of de-listed capacityFrom July 12-14 presentation