MRTU. CRR Settlements. CRR Educational Class #10

Transcription

1 MRTU CRR Settlements CRR Educational Class #10

2 Contents Why is CRR Settlements process important to understand Definition of LMP and CRR Types of CRRs: Obligation vs Option Point to Point and Multi Point CRRs Inter-SC Trades CRR settlements under different scenarios CRR Balancing Account Monthly Clearing Yearly Clearing M. Shafa 12/6/2005 to 12/8/2005 2

3 CRR Settlements Why is CRR Settlements process important to understand? The Settlements process calculates the CRR revenue to CRR holders and takes into account the cleared CRRs. A CRR balancing account will be created to reduce or eliminate the CRR holders revenue shortfall. M. Shafa 12/6/2005 to 12/8/2005 3

4 LMP and CRR LMP is the cost of supplying the next MW of load at a bus considering marginal cost of generation, congestion and losses. λ i = λ ref + λ cong i + λ loss i Factors that impact LMP are: Demand Available Generation Transmission Constraints Economic Dispatch CRRs provide a hedge against marginal congestion components of LMP (λ cong ) between sink and source in the Day Ahead market. Sink: Load, Export, Trading Hub Source: Generator, Import, Trading Hub CRRs will not hedge against marginal losses. M. Shafa 12/6/2005 to 12/8/2005 4

5 CRR Settlements: Obligation vs Option If the congestion component of LMP (λ cong ) at the sink is greater than at the source, then the CRR owner is entitled to receive a portion of congestion revenues. If the congestion component at sink is less than at the source, then: Obligation type CRR owner will be charged. Option type CRR owner will not be charged. CRR Entitlement (Obligation) = - [CRR (MW) * (DA λ cong sink DA λ cong source)] If DA λ cong sink > DA λ cong source: CRR Entitlement (Option) = - [CRR (MW) * (DA λ cong sink DA λ cong source)] If DA λ cong sink < DA λ cong source: CRR Entitlement (Option) = 0 M. Shafa 12/6/2005 to 12/8/2005 5

6 Point to Point CRR Example A B λ A = $10 (Reference Bus) λ B = (λ ref = $10) + ( λ cong = $5 ) + (λ loss = $1) = $16 Schedule & CRR Consistent & In the Direction of Congestion A SC owns 100 MW of CRRs from A-B and schedules 100 MW from A-B. CRR Revenue Entitlement (Obligation Type) = -100 (5) = CRR Revenue Entitlement (Option Type) = Charge to SC = 100 (16) (10) = 600 Schedule & CRR Consistent & In Opposite Direction of Congestion A SC owns 100 MW of CRRs from B-A and schedules 100 MW from B-A. CRR Revenue Entitlement (Obligation Type) = -100 (0 5) = 500 Charge to SC = 100 (10) (16) = (Payment to SC) M. Shafa 12/6/2005 to 12/8/2005 6

7 Multi-Point CRR Example λ cong A = $10 20 MW Injection at A 60 MW Withdrawal at D λ cong D = $25 λ cong B = $5 10 MW Injection at B 20 MW Withdrawal at E λ cong E= $20 λ cong C = $15 50 MW Injection at C CRR Entitlement = - [ (CRR MW at each Sink * DA corresponding Sink λ cong ) - (CRR MW at each Source) * DA corresponding Source λ cong ) ] CRR Entitlement = - [ (60 * 25) + (20 * 20) ] [ (20 * 10) + (10 * 5) + (50 *15) ] = M. Shafa 12/6/2005 to 12/8/2005 7

8 Generation & Load Aggregation Trading Hubs are used for inter-sc trades and include all the generators within the existing zones NP15, ZP26, SP15 Load Zones will include all the loads within the load aggregation area with exceptions (e.g., ETC load, pump load) Load zone schedules and bids will be distributed to the nodal level by LDFs There are a number of LDFs referred to in Load Zone aggregation: IFM preliminary LDFs based on preferred load schedules, i.e, load not curtailed: Not used in Settlements IFM final LDFs determined from final load schedules Used in IFM Energy Market Settlement CRR Settlements (Release 1) Static LDFs used during the CRR allocation/auction Used in CRR Settlements (Release 2) M. Shafa 12/6/2005 to 12/8/2005 8

9 Load Aggregation Load Aggregated Price = Σ (λ i * LDF i ) LDF = Load schedule at the node / Σ Load schedules within the Load Aggregation Depending on which set of LDFs are used for the load zone, there are 2 options to settle with the CRR holders. Option 1: Settle with the CRR Holders based on the LMP that is derived from LDFs used during the CRR allocation/auction. (Release 2) Option 2: Settle with CRR holders based on the same LMP that is derived from hourly load schedules in the Day Ahead market. (Release 1) M. Shafa 12/6/2005 to 12/8/2005 9

10 DA Inter-SC Energy Trade Example Node A Trading Hub B Load Zone C Inter-SC Trade SC 2 S 2 =100 MW S 1 =100 MW SC 1 Q=100MW G1 G2 G3 Q=100MW L1 L2 Assumptions: SC1 schedules 100 MW generation at node A and trades with SC2 at Trading Hub B. SC2 s load of 100 MW is at standard Load Aggregation C. SC1 has 100 MW CRR from A-B. SC2 has 100 MW CRR from B-C. Trading Hub B consists of G1, G2, G3 nodes. Load Zone C is comprised of nodes L1, L2. No Losses DA Market Solution (IFM): Creates LMP at each node. Model generation with bid at node A. Trading Hubs are not explicitly modeled in DA market run. Used only in scheduling and Settlements. Model load with bid at C using DA LDF to allocate final load schedule to individual nodes within Load Zone. M. Shafa 12/6/2005 to 12/8/

11 DA Inter-SC Energy Trade Example Node A Trading Hub B Load Zone C Inter-SC Trade SC 2 S 2 =100 MW S 1 =100 MW SC 1 Q=100MW G1 G2 G3 Q=100MW L1 L2 For Trading Hub B, same weights are used for settlement of both energy and CRRs. For Load Zone C, 2 sets of LDFs could be used for settling CRRs: 1) same set of LDFs determined in CRR release (Option 1) 2) LDFs based on final hourly load schedule (Option 2) B (Trading Hub) G1 0.4 G2 0.5 G3 0.1 Trading Hub Weights Load Zone C LDFs from CRR release Load Zone C LDF from hourly load sch. Let s explore 2 cases when the IFM LDFs are different from LDFs derived during the CRR release. C (Load Zone) L1 0.3 Case a: 0.4 Case b: 0.2 L M. Shafa 12/6/2005 to 12/8/

12 DA Inter-SC Energy Trade Example S 1 =100 MW SC 1 Node A Trading Hub B Load Zone C Q=100MW Inter-SC Trade G1 Q=100MW S 2 =100 MW λ A =$9 λ B =$12.7 λ C* =$17.4 λ C =$17.2 (case a) or $17.6 (case b) Assuming λ A = $9, λ G1 = $10, λ G2 = $15, λ G3 = $12, λ L1 = $16, λ L2 = $18, the weighted average LMPs are: G2 G3 SC 2 L1 L2 Trading Hub Weights Load Zone C LDFs used in CRR auction Hourly Final Load Zone C LDF λ i B (Trading Hub) G G G C (Load Zone) L1 0.3 Case a: 0.4 Case b: L λ B : Trading Hub B LMP = Σ (λ i * LDF i ) = (0.4 * 10) + (0.5 * 15) + (0.1 * 12) = $ 12.7 λ C* (derived LMP based on LDFs from CRR release) = (0.3 * 16) + (0.7 * 18) = $ 17.4 λ C (derived LMP based on hourly LDFs-published): Case a = (0.4 * 16) + (0.6 * 18) = $ 17.2 Case b = (0.2 * 16) + (0.8 * 18) = $ 17.6 M. Shafa 12/6/2005 to 12/8/

13 DA Inter-SC Energy Trade Example Node A Trading Hub B Load Zone C Inter-SC Trade SC 2 S 2 =100 MW S 1 =100 MW SC 1 Q=100MW G1 G2 G3 Q=100MW L1 L2 λ A =$9 λ B =$12.7 λ C* =$17.4 λ C =$17.2 (case a) or $17.6 (case b) From A-B: Energy Market Settlement Energy Market Settlement for SC1: Source at node A gets paid -100 * (λ A = 9) = - $900 From B-C: Sink at node B gets charged 100 * (λ B = $12.7) = $ 1270 Net Energy Market settlement charges: = $370 Energy Market Settlement for SC2: Source at node B gets paid -100 * (λ B = 12.7) = - $1270 Case a: Sink at C gets charged 100 * (λ C = $17.2) = $ 1720 Net Energy Market settlement charges: = $450 Case b: Sink at C gets charged 100 * (λ C = $17.6) = $ 1760 Net Energy Market settlement charges: = $490 M. Shafa 12/6/2005 to 12/8/

14 DA Inter-SC Energy Trade Example S 1 =100 MW SC 1 Node A Trading Hub B Load Zone C Q=100MW Inter-SC Trade G1 G2 G3 Q=100MW SC 2 S 2 =100 MW λ A =$9 λ B =$12.7 λ C* =$17.4 λ C =$17.2 (case a) or $17.6 (case b) L1 L2 CRR Settlement From A-B: SC1 with 100 MW CRR from A-B gets paid: - (100) * (12.7-9) = -$370 From B-C: There are 2 options to settle with SC2 that has 100 MW CRR from B-C: Option 1: Use λ C* as the sink LMP: CRR Entitlement: * [(λ C* = $17.4) (λ B = $12.7) ] = -$470 Option 2: Use λ C as the sink LMP : Case a: CRR Entitlement from B-C for SC2 : * [(λ C = $17.2) (λ B = $12.7) = -$450 Case b: CRR Entitlement from B-C for SC2 : * [(λ C = $17.6) (λ B = $12.7) = -$490 M. Shafa 12/6/2005 to 12/8/

15 DA Inter-SC Energy Trade Example S 1 =100 MW SC 1 Node A Trading Hub B Load Zone C Q=100MW Inter-SC Trade Q=100MW Results S 2 =100 MW λ A =$9 λ B =$12.7 λ C* =$17.4 λ C =$17.2 (case a) or $17.6 (case b) From A-B: SC1 is charged $370 for Energy Market Settlement and is paid $370 for CRR Settlement From B-C: SC2 gets charged $450 (case a) or $490 (case b) for Energy Market Settlement CRR Settlement: Under Option 1, SC2 gets paid $470. Under Option 2, SC2 gets paid $450 (case a) or $490 (case b) G1 G2 G3 If CRRs are consistent with schedules: Under Option 1, the CRR holder is settled based on a LMP at C which could be different from the LMP used in IFM for energy settlement (could get paid more or less than their energy market settlement). Under Option 2, the CRR holder is settled based on the same LMP that is used in IFM for energy settlement (entitled to get paid the same amount as their energy market settlement). SC 2 L1 L2 M. Shafa 12/6/2005 to 12/8/

16 CRR Settlement Scenarios The following CRR Settlements scenarios are covered: Unconstrained network Constrained network Constrained network with transmission derate M. Shafa 12/6/2005 to 12/8/

17 Assumptions for the Settlement Scenarios GA Bid = $10/MWh 0<= GA <= 200 A B GB Bid = $20/MWh 0<= GB <= 200 C GC Bid = $40/MWh 0<= GC <= 200 Load = 180 MW 3 Bus looped system with equal reactances (XAB = XBC = XAC) There are no losses. Nodes A, B, C each have a generator rated 200 MW. Their bids are $10, $20, $40 respectively. Load is at node C and does not submit a bid. (If C is a load zone, its LDFs are the same under Options 1 and 2). M. Shafa 12/6/2005 to 12/8/

18 Power Transfer Distribution Factors 1 MW 1/3 MW 1/3 MW A B A B 1 MW 2/3 MW 1/3 MW 1/3 MW 2/3 MW C C 1 MW 1 MW M. Shafa 12/6/2005 to 12/8/

19 Scenario 1: Unconstrained Network GA Bid = $10/MWh 0<= GA <= 200 GA = 180 MW λ A = $10 λ B = $10 60 MW A B GB Bid = $20/MWh 0<= GB <= 200 GB = 0 MW 120 MW Line Limit = 200 MW GC Bid = $40/MWh 0<= GC <= 200 GC = 0 MW C λ C = $10 60 MW Load = 180 MW Dispatch: G A = 180 MW G B = 0 MW G C =0 MW Flow on AC = 120 MW λ A = λ B = λ C = $10 M. Shafa 12/6/2005 to 12/8/

20 Scenario 2: Constrained Network GA Bid = $10/MWh 0<= GA <= 200 GA = 120 λ A = $10 λ B = $20 A 20 MW B λ cong B = $10 (Congestion component of LMP) GB Bid = $20/MWh 0<= GB <= 200 GB = 60 Optimal Dispatch: G A = 120 MW G B = 60 MW G C =0 MW λ A = $10 λ B = $20 λ C = -1 (10) + 2(20) = $30 Observations: 100 MW A-C Limit =100 MW GC Bid = $40/MWh 0<= GC <= 200 GC = 0 Load = 180 MW Load has no bid (price taker) and is not curtailed. G C is not dispatched and has no impact on λ C. λ C is greater than G A and G B bids. C Dec GA by 1 $10/MWh λ C = $30 λ cong C = $20 Inc GB by 2 $20/MWh 80 MW M. Shafa 12/6/2005 to 12/8/

21 Scenario 2a: Constrained Network λ A = $10 λ B = $20 GA =120 A 20 MW B λ cong B = $10 GB = 60 A-C Limit =100 MW 100 MW 80 MW GC = 0 Load = 180 MW Assumption: Owner of G A buys 120 MW CRR from A-C and owner of G B purchases 60 MW from B-C: Resource Energy Settlement CRR Entitlement CRR Revenue Allocation GA -120 * 10 = * (20 0) = * (3000 / 3000) = GB -60 * 20 = * (20 10) = * (3000 / 3000) = Load 180 * 30 = 5400 Total $3000 -$3000 -$3000 CRR Revenue Shortfall = CRR Entitlement CRR Revenue Allocation = 0 C λ C = $30 λ cong C = $20 M. Shafa 12/6/2005 to 12/8/

22 Scenario 2b: Constrained Network λ A = $10 λ B = $20 GA =120 A 20 MW B λ cong B = $10 GB = 60 A-C Limit =100 MW 100 MW 80 MW GC = 0 Load = 180 MW Assumption: CRR Holder 1 (owner of G A )buys 120 MW CRR from A-C CRR Holder 2 (owner of G B ) buys 120 MW CRR from B-C: CRR Holder 3 buys 60 MW CRR from C-B: C λ C = $30 λ cong C = $20 Resource Energy Settlement CRR Entitlement CRR Revenue Allocation GA -120 * 10 = CRR1: -120 * (20 0) = * (3000 / 3000) = GB -60 * 20 = CRR2: -120 * (20 10) = * (3000 / 3000) = Load 180 * 30 = 5400 CRR3: 60 * (20 10) = * (3000 / 3000) = 600 Total $3000 -$3000 -$3000 CRR Revenue Shortfall = CRR Entitlement CRR Revenue Allocation = 0 M. Shafa 12/6/2005 to 12/8/

23 Scenario 3: same as Scenario 2a, except G B is out of service GA Bid = $10/MWh 0<= GA <= 200 GA = 150 λ A = $10 λ B = $ MW A-C Limit =100 MW A 50 MW B 50 MW λ cong B = $15 GC Bid = $40/MWh 0<= GC <= 200 GC = 30 C Load = 180 MW λ C = $40 λ cong C = $30 Optimal Dispatch: G A = 150 MW G c = 30 MW λ A = $10 λ B = 0.5 (10) (40) = $25 λ C = $40 Inc GA by 1/2 $10/MWh Inc GC by 1/2 $40/MWh M. Shafa 12/6/2005 to 12/8/

24 Scenario 3: Continued λ A = $10 λ B = $25 GA = 150 A 50 MW B λ cong B = $15 A-C Limit =100 MW 50 MW Assumption: Owner of G A GA buys 120 MW CRR from A-C and owner of G B purchases 60 MW from B-C: Resource Energy Settlement CRR Entitlement CRR Revenue Allocation GA -150 * 10 = * (30 0) = * (4500 / 4500) = GB - 60 * (30 15) = * (4500 / 4500) = GC -30 * 40 = Load 180 * 40 = 7200 Total $ $ $4500 CRR Revenue Shortfall = 0 GC = 30 Load = 180 MW C λ C = $40 λ cong C = $30 M. Shafa 12/6/2005 to 12/8/

25 Scenario 4: Capacity Reduction on Congested Path A B Interface X AC1 X AC2 C Assumptions: X AC = X AB = X BC X AC consists of X AC1, X AC2 and X AC1 = X AC2 Y AC = 1 / X AC = 1 / X AC1 + 1 / X AC2 = 2 / X AC1 X AC = ½ X AC1 If X AC2 is out, flow limit from A-C and shift factors change: X: Reactance Y: Admittance M. Shafa 12/6/2005 to 12/8/

26 Scenario 4: Power Transfer Distribution Factors 1 MW 1/2 MW 1/4 MW A B A B 1 MW 1/2 MW 1/2 MW 1/4 MW 3/4 MW C C 1 MW 1 MW M. Shafa 12/6/2005 to 12/8/

27 Scenario 4: Capacity Reduction on Congested Path λ A = $10 A 0 MW B λ B = $20 λ cong B = $10 GA Bid = $10/MWh 0<= GA <= 200 GA = 60 GB Bid = $20/MWh 0<= GB <= 200 GB = 120 A-C Limit = 60 MW 120 MW GC = 0 C Load = 180 MW λ C = $30 λ cong C = $20 Optimal Dispatch: G A = 60 MW G B = 120 MW G C = 0 λ A = $10, λ B = $20, λ C = 2(20) 1 (10) = $30 Inc GB by 2 $20/MWh Dec GA by 1 $10/MWh M. Shafa 12/6/2005 to 12/8/

28 Scenario 4: Power Flow Distribution 30 MW 60 MW A 30 MW B 120 MW 30 MW 30 MW 30 MW 90 MW C 60 MW 120 MW M. Shafa 12/6/2005 to 12/8/

29 Scenario 4a: Continued λ A 0 MW A = $10 B λ B = $20 λ cong B = $10 GA = 60 GB = 120 A-C Limit = 60 MW 120 MW GC = 0 Load = 180 MW C λ C = $30 λ cong C = $20 Assumption: Owner of G A buys 120 MW CRR from A-C and owner of G B purchases 60 MW from B-C: Resource Energy Settlement CRR Entitlement CRR Revenue Allocation GA -60 * 10 = * (20 0) = * (2400 / 3000) = GB -120 * 20 = * (20 10) = * (2400 / 3000) = Load 180 * 30 = 5400 Total $2400 -$3000 -$2400 CRR Revenue Shortfall = CRR Entitlement CRR Revenue Allocation = $600 G A Revenue Shortfall = = $ 480 Shortfall tracked in CRR Balancing Account G B Revenue Shortfall = = $ 120 M. Shafa 12/6/2005 to 12/8/

30 Scenario 4b: Continued λ A 0 MW λ A = $10 B B = $20 λ cong B = $10 GA = 60 A-C Limit = 60 MW GC = 0 Load = 180 MW Assumption: CRR 1 owns 120 MW CRR from A-C. CRR 2 owns 120 MW CRR from B-C. CRR 3 owns 60 MW counterflow CRR from C-B: Resource Energy Settlement CRR Entitlement CRR Revenue Allocation GA -60 * 10 = * (20 0) = * (2400 / 3000) = GB -120 * 20 = * (20 10) = * (2400 / 3000) = Load 180 * 30 = * (20 10) = * (2400 / 3000) = 480 Total $2400 -$3000 -$2400 CRR Revenue Shortfall = CRR Entitlement CRR Revenue Allocation = $600 CRR 1 Revenue Shortfall = = $ 480 CRR 2 Revenue Shortfall = = $ 240 CRR 3 Undercharge = = $ 120 C 120 MW λ C = $30 λ cong C = $20 GB = 120 Shortfall tracked in CRR Balancing Account M. Shafa 12/6/2005 to 12/8/

31 CRR Balancing Account A single Balancing Account for all PTOs will be established to reduce CRR owners revenue shortfall. Funds in the Balancing Account are derived from the following sources: Hourly DA Congestion Revenues (excluding ETC/TOR/Converted Rights balanced schedules) Hourly DA Congestion Revenues from AS imports on Congested interties CRR Auction Revenues (allocated monthly) M. Shafa 12/6/2005 to 12/8/

32 Congestion Revenues from Interties If there is congestion on an intertie over which AS is imported, a congestion charge will be assessed based on the AS capacity awarded and the transmission shadow price of the intertie. Ex: A 100 MW AS import at COI is awarded to SC1. Assuming the shadow price at COI is $20, SC1 will be charged 100 * $20 = $2000. M. Shafa 12/6/2005 to 12/8/

33 Annual CRR Auctions Once a year the ISO will conduct peak and off peak CRR auctions for each season. ISO will collect the auction revenues for each season and will divide it by the number of months within each season ISO will have auction revenues for each month of the trade year derived from the annual CRR auction. M. Shafa 12/6/2005 to 12/8/

34 Ex:Annual CRR Auction Revenues Season 1: Month 1,2,3 Season 2: Month 4,5 Season 3: Month 6,7,8,9 Season 4: Month 10,11,12 Auction Revenues = $1.2M Auction Revenues = $0.6M Auction Revenues = $1.0M Auction Revenues = $1.8M Month 1,2,3 Auction Revenues = $400,000 Month 4,5 Auction Revenues = $300,000 Month 6,7,8,9 Auction Revenues = $250,000 Month 10,11,12 Auction Revenues = $600,000 M. Shafa 12/6/2005 to 12/8/

35 Total CRR Auction Revenues for each Trade Month ISO will also collect revenues from monthly CRR auctions Month n Total Auction Revenues = (Month n Auction Revenues derived from Annual CRR Auctions + Month n Auction revenues from monthly CRR auctions) Ex: Month 1 s Annual Auction Revenues = $400,000 Month 1 s Monthly Auction Revenues = $100,000 Month 1 s Total Auction Revenues = $400,000 + $100,000= $500,000 The Total Auction Revenue for each trade month is applied to the CRR Balancing Account for the corresponding month. M. Shafa 12/6/2005 to 12/8/

36 CRR Balancing Account Clearing At the end of each month, funds from the Balancing Account will be allocated to CRR owners in proportion to their gross monthly shortfall. At the end of the year, any surplus funds are allocated to CRR owners in proportion to their gross un-recovered yearly shortfall. Any remaining surplus at the end of the year will be paid to PTOs in proportion to their Transmission Revenue Requirement. M. Shafa 12/6/2005 to 12/8/

37 Hourly CRR Settlements EX: Hour 1: Congestion revenues from SCs = $1000 Net payable to CRR Holders = $1200 as follows: CRR 1 Entitlement = $800 CRR 2 Entitlement = $600 CRR 3 Counterflow charges = $200 Prorate both charges and payments for the hour using the following hourly ratio: Net congestion revenues for the hour / Net CRR Entitlement for the hour Hourly ratio = $1000 / $1200 = 83.3% CRR 1 is paid = $800 * 83.3% = -$667 CRR1 Payment shortfall for the hour = $133 CRR 2 is paid = $600 * 83.3% = -$500 CRR2 Payment shortfall for the hour = $100 CRR 3 Counterflow charges = $200 * 83.3% = $167 CRR3 undercharge = $33 Total net payment = $1000 Total net shortfall (net of underpayment and undercharges) = = $200 M. Shafa 12/6/2005 to 12/8/

38 Monthly Clearing of CRR Balancing Account Monthly shortfall is the sum of hourly shortfalls. Add all the payment shortfalls and undercharges for the all the hours in the month: Ex: CRR1 Payment Shortfall for the month = $1000 CRR2 Payment Shortfall for the month = $1500 CRR3 undercharges for the month = $600 The total shortfall in the month is the net of underpayment and undercharges for all the hours within the month = = $1900 If at the end of the month: a) Funds in the CRR balancing account >= Total monthly shortfall Pay CRR Holders payment shortfall in full and charge the counterflow CRR holders in full for the month Ex: Balance in CRR Balancing Account for the trade month = $2000 Total monthly shortfall = $1900 CRR1 Payment Shortfall for the month = $1000. Pay CRR1 $1000 Payment Shortfall = 0 CRR2 Payment Shortfall for the month = $1500. Pay CRR2 $1500 Payment Shortfall = 0 CRR3 undercharges for the month = $600. Charge CRR3 for $600 Undercharge = 0 Keep the additional $100 for yearly clearing. M. Shafa 12/6/2005 to 12/8/

39 Monthly Clearing of Balancing Account b) 0 < Funds in the CRR Balancing Acct. < Total monthly shortfall Pay CRR payment shortfall and charge counterflow CRRs prorata based on the Month s True Up Ratio = Funds in Balancing Acct. for month / Total monthly shortfall Ex: Balance in CRR Balancing Account = $1520 Total monthly shortfall = $1900 True up ratio for the month = $1520/ $1900 = 80% CRR1 Payment Shortfall for the month = $1000. Pay CRR1 80% ($1000) =$800 CRR1 s un-recovered shortfall for the month = $200 CRR2 Payment Shortfall for the month = $1500. Pay CRR2 80% ($1500) =$1200 CRR2 s un-recovered shortfall for the month = =$300 CRR3 undercharges for the month = $600. Charge CRR3 for 80% ($600) = $480 CRR3 adjusted undercharge amount for the month =$120 c) Funds in the CRR balancing account < 0 No adjustments until yearly clearing M. Shafa 12/6/2005 to 12/8/

40 Yearly Clearing of CRR Balancing Account If there is un-recovered revenue shortfall during the year: Month CRR Holder Un-recovered Shortfall ($)/ Undercharge 1 CRR CRR CRR (undercharge) 12 CRR CRR CRR Yearly shortfall is the sum of monthly shortfalls. Add up all the payment shortfalls and undercharges for the all the months in the year: CRR 1 s shortfall for the year = $800 + $300 = $1100 CRR 2 s shortfall for the year = $600 + $400 = $1000 CRR 3 s undercharge for the year = -$200 + $100 = -$100 The total shortfall in the year is the net of underpayment and undercharges for all the months within the year = = $2000 M. Shafa 12/6/2005 to 12/8/

41 Yearly Clearing of Balancing Account If at the end of the year: a) Funds in the CRR balancing account >= Total un-recovered yearly shortfall Pay CRR Holders payment shortfall in full and charge the counterflow CRR holders in full for the year. Pay any surplus to PTOs in proportion to their TRR. Ex: Balance in CRR Balancing Account at year end = $2200 The net yearly shortfall = $2000 CRR1 Payment Shortfall for the year = $1100. Pay CRR1 $1100 CRR1 adjusted Yearly Payment Shortfall = 0 CRR Holders receive full hedge. CRR2 Payment Shortfall for the year = $1000. Pay CRR2 $1000 CRR2 adjusted Yearly Payment Shortfall = 0 CRR Holders receive full hedge. CRR3 undercharges for the year = $100. Charge CRR3 for $100 CRR2 s adjusted undercharge for the year = 0 CRR Holders are fully charged Pay the surplus of $200 to PTOs. M. Shafa 12/6/2005 to 12/8/

42 Yearly Clearing of CRR Balancing Account b) 0 < funds in the CRR balancing account < Total un-recovered yearly shortfall Pay CRR payment shortfall and charge the counterflow CRRs prorata based on the Year s True Up Ratio = Funds in Balancing Acct. at year end / Total yearly shortfall Ex: Balance in CRR Balancing Account at year end = $1400 The net yearly shortfall = $2000 True up ratio for year = $1400/ $2000 = 70% CRR1 Payment Shortfall for the year = $1100. Pay CRR1 70% ($1100) =$770 CRR1 s un-recovered shortfall = $330 CRR Holders receive partial hedge. CRR2 Payment Shortfall for the year = $1000. Pay CRR2 70% ($1000) =$700 CRR2 s un-recovered shortfall= $300 CRR Holders receive partial hedge. CRR3 undercharges for the year = $100. Charge CRR3 for 70% ($100) = $70 CRR3 adjusted undercharge =$30 CRR Holders are partially charged No revenues will be available for PTOs. c) Funds in the CRR balancing account < = 0 No adjustments made CRR owners receive partial hedge. No revenues will be available for PTOs. M. Shafa 12/6/2005 to 12/8/

43 Settlement Flow From Hourly to Monthly For A Given Month Per Time-Of-Use Day-Ahead Congestion Revenues from A/S Import Day-Ahead Congestion Revenues (excluding TOR/ETC/CVR for Perfect Hedge exemption) Total Month s Auction Revenues Balancing Account (BA) CRR Obligation Charges Hourly CRR Settlement Process Hourly Surplus into BA Monthly Accumulated Surplus See previous examples Hourly Net Payable to CRR Holders (Full or Partial) Hourly Shortfall into BA Monthly Accumulated Shortfall Monthly Clearing at the End of the Month M. Shafa 12/6/2005 to 12/8/

44 Settlement Flow Monthly Clearing Of Balancing Account See previous examples There are two possibilities: If BA funds for the trade month Monthly Accumulated Shortfall If BA funds for the trade month < Monthly Accumulated Shortfall Partial true-up (partial payment and partial charge) to CRR Holders Remaining Shortfall tracked for yearly clearing of BA CRR Balancing Account Annual Accumulated Surplus Annual Accumulated Shortfall Full true-up (full payment and full charge) to CRR holders Remaining Surplus tracked for yearly clearing of BA Annual Clearing at the End of the Year M. Shafa 12/6/2005 to 12/8/

45 Settlement Flow Yearly Clearing of Balancing Account See previous examples There are two possibilities: If BA funds for the trade year Trade year Accumulated Shortfall If BA funds for the trade year < Trade Year Accumulated Shortfall Partial true-up (partial payment and partial charge) to CRR Holders Full true-up to CRR holders and full payment from CRR holders Remaining Shortfall is NOT covered by PTO or any other settlements mechanism Remaining Surplus paid to PTOs M. Shafa 12/6/2005 to 12/8/