Capacity Auction: Frequently Asked Questions - Working Document

Capacity Auction: Frequently Asked Questions - Working Document

Purpose of this Document This purpose of this document is to provide answers to any questions we have received during the Mock Capacity Auction. Any queries we receive via email and phone (unless stated as private and confidential) will be added to this document and uploaded to the website on a daily basis. Capacity Market Contact Details If you have any questions in relation to this document please contact us using the details below: Email Correspondence: Phone Correspondence: capacitymarket@sem-o.com 1800 726772 (ROI) or 0800 0726772 (NI) +353 (1) 2370584 (International) 2

Contents 1. Mock Auction... 4 2. Mock Auction Observations... 5 3. 2018/2019 T-1 Capacity Auction... 6 4. Capacity Auction Offers... 10 5. Capacity Market Platform... 14 6. Capacity Market Code Clarifications... 18 3

Section 1. Mock Auction 1.1 When will the Mock Capacity Auction take place? The Mock Capacity Auction will take place per the timetable below: Event 1 Capacity Mock Auction Submission Commencement: the earliest date and time that Participants may submit Capacity Offers in respect of Capacity Market Units Qualified to participate in the Mock Capacity Auction. 2 Capacity Mock Auction Submission End: the last date and time by which Participants may submit Capacity Auction Offers in respect of Capacity Market Units Qualified to participate in the Mock Capacity Auction 3 Capacity Mock Auction Run Start: the day and time that the System Operators initiate the run of the CMP software. 4 Capacity Mock Auction Completion Date: the date by which the System Operators are expected to complete the Capacity Auction Dates & Times Date: Monday 27 th of November 2017 Time: 10.00 am Date: Monday 4th of December 2017 Time: 10.00 am Date: Monday 4 th of December 2017 Time: 11.00 am Date: Monday 4 th of December 2017 1.2 Will the Mock Auction results be published? Individual Parties will be able to view their own mock auction results within the CMP so that they have an idea of how the results will be displayed following the 2018/2019 T-1 Capacity Auction. They will be available the week of the 4 th of December 2017. Some auction parameters, such as the Demand Curve and Locational Capacity Constraints have been altered so please be mindful that the results won t be reflective of the 2018/2019 T- 1 Auction. 1.3 Will the Mock Auction results be legally binding? The mock auction results will not be legally binding. The mock auction is being held to give Parties a feel for the Capacity Market Platform, offer parameter requirements etc. 4

1.4 Will the Capacity Market Results be published from the Mock Auction, i.e. the Unit-level data detailing what PQ pairs cleared and the Capacity Payment Price? There are no plans to publish the results from the Mock Auction. It was a test to run the auction process from end to end in terms of submitting offers, running the auction and publishing reports etc. CMC F.9.5.1 sets out what will be published for the 2018/2019 T-1 Capacity Auction. Section 2. Mock Auction Observations 2.1 Early Offer Submission We would strongly advise submitting offer(s) for the 2018/2019 T-1 Capacity Auction shortly after the Capacity Auction Submission Commencement offer gate opens. The offer gate is due to open at 10am on Monday 11th December 2017. This recommendation has been made to ensure that all auction participants can access the Capacity Market Platform (CMP) and submit their offer(s) without encountering any system access issues. The Participant Interface Testing (PIT) process took place to ensure all participants could access CMP without issue however we did note that some auction participants had digital certificate issues/password issues during the Mock Capacity Auction offer period. 2.2 Amending an Offer Offer(s) can be amended after submission within the CMP but note that any amendment to an offer must take place prior to the Capacity Auction Submission End gate closure at 10am on Friday 15th December 2017. If an offer has been submitted for a CMU with New Capacity and the CMU wishes to withdraw the offer completely, it can be withdrawn by setting the offer quantity MW to zero. At present, CMP is not permitting the submission of a zero price, so the price field will still need to have a value over zero i.e. 0.01. 2.3 Manual Offer Submission Process The System Operator will be able to submit manual offer(s) on behalf of a CMU where access to the CMP cannot be restored prior to Capacity Auction Submission End gate closure. Please refer to the Participant Guide for Completing Manual Offer Submissions and the Manual Offer Template for further guidance. 5

If you do need to use the manual offer process, please do ensure that the System Operator is notified that a Manual Offer Template has been send via email to capacitymarket@sem-o.com. The System Operator can be called on 1800 726772 (ROI) or 0800 0726772 (NI). Please ensure that the Manual Offer Template is provided in a timely manner as all manual offer submissions will be treated with best endeavors by the System Operator. 2.4 Offer Price to reflect price per MW The 2018/2019 T-1 Capacity Auction will award capacity in MW volumes. Please ensure your offer price reflects your intentions per MW of capacity. Section 3. 2018/2019 T-1 Capacity Auction 3.1 When will the initial 2018/2019 T-1 Capacity Auction take place? Please refer to the Initial Auction Information Pack for the 2018/2019 T-1 Capacity Auction Timetable. The Final Auction Information Pack is due to be published on Friday 1 st December 2017. The timetable confirmed within the Final Auction Information Pack will take precedence. 3.2 Can I still apply to qualify a unit for the 2018/2019 T-1 Capacity Auction? The qualification period for the 2018/2019 T-1 Capacity Auction closed on 3 rd August 2017 per the Capacity Auction Timetable. Applications for qualification cannot be considered after the Qualification Application Date has passed. 3.3 Should Firm Offer Requirement and Net Existing De-Rated Capacity Figures be equal? And should the Gross Firm Offer Requirement and the Net Firm Offer Requirement equal each other? Net Firm Offer Requirement equals Gross Firm Offer Requirement less any awarded capacity from previous auctions relating to the same Capacity Period. As this is the first auction for this Capacity Period, Gross Firm Offer Requirement and Net Firm Offer Requirement will be equal to each other. Please refer to CMC E.8.5 for more information on the Firm Offer Requirement. 6

3.4 If the Auction is rejected, can the RAs instruct the System Operator to re-run the Capacity Auction? Would new bids have to be submitted? Would this expose you to a market power issue? In the unlikely event that this occurs, we would be looking at running it as a new auction with new offer submissions. If it was to happen it would possibly expose us to a market power issue, this would be a matter for the RAs. 3.5 Will the Final Auction Information Pack identify how the demand curve has changed from the Capacity Requirement? Yes, it will set out the demand curve and capacity requirement. 3.6 We would like to withdraw one of our units (wind unit, variable) from the capacity market auction due to take place next Friday 15th. Is this possible? Existing capacity must submit an offer in line with their firm offer requirement (unless a Participant is deregistering the unit or if there are amendments to the Form of Authority). New capacity has the option of submitting offers into the 2018/2019 T-1 Capacity Auction. 3.7 Are you going to publish a list of units that will clear in the unconstrained run? Are you going to publish a list of units that will clear in the locational run? CMC F.9.5.1 sets out what will be published for the 2018/2019 T-1 Capacity Auction. Please note: Capacity Auction results refers to the information set out in F.9.1.1. 3.8 Could you explain any credit or collateral requirements that go along with a capacity award? If a CMU with New Capacity has been successfully awarded capacity within the 2018/2019 T-1 Auction, they are required to post performance security (collateral) by 1 st February 2018. We will be issuing further details on this soon. 3.9 Can you please explain the reason for the shift in the demand curve between the initial and final auction information packs? 7

3.10 Does this mean that the forecast demand for 2021/2022 has been reduced or is it reflective of other market dynamics? e.g. less participation than expected from capacity that was not obligated to participate? The demand forecast has not changed; the adjustment is to comply with Paragraph F.3.1.4 of the CMC. It includes an adjustment to account for variable generation which is not participating in the 2018/2019 T-1 Capacity Auction. 3.11 What happens if we win capacity and (for whatever reason) cannot post the performance bond by February 1st? This relates to awarded new capacity. Awarded new Capacity must post a performance security by the 1 st of Feb. This is set out in Chapter J. Under J.3.2.1, if a participant is awarded new capacity they shall post a Performance Security in the participants designated currency with the system operators, failure to do so would be a default under the CMC. This may then result in the termination of awarded new capacity and subsequent termination charges. 3.12 Would that void the won capacity? The TSO, after consulting the RAs, may terminate the Participants Awarded New Capacity. 3.13 Would that incur any extra charges? The participant would be subject to Termination Charges at the level set out in the Initial Auction Information Pack (i.e. 30,000 /MW before the Capacity Year begins and 40,000 /MW from beginning of Capacity Year). There are no penalties associated with the Capacity Market. 3.14 If Awarded New Capacity has not achieved Substantial Financial Completion at isem Go-Live, or for several months thereafter, does it get Capacity Payments during this period? Simple answer would be no. Capacity that is pending and not yet commissioned will not receive a capacity payment. More information on this can be found in Section 8 of The Helicopter Guide for the Capacity Auction here. 8

3.15 The Performance Security shall be maintained until the Substantial Completion milestone has been achieved (J 3.2.6). This achievement required that 90% of the Awarded New Capacity has been delivered (i.e. commissioned). Will the Performance Security bond only be returned if and when 90% of Awarded New Capacity is delivered? New Capacity for a DSU may be commissioned incrementally (e.g. 50 MWs may be commissioned in two lots of 25 MWs). Is the bond still not returned until 90% is commissioned? Performance security relates to the awarded capacity and it needs to be in place at the full level until such time as the full substantial completion is reached, you have to reach 90% of the awarded new capacity. It has to reach 90% to have the performance security returned. It would be different if it was 2 different capacity units but since it s on the same unit, 90% has to be reached. 3.16 If Minimum Completion (i.e. 50% of New Capacity is delivered), does termination charges only apply to the proportion not delivered? Is the remainder of the bond returned? If so, when is it returned? This will be answered in more detail soon. 3.18 When will the Secondary Trading auction take place? Can you share more information about that? Section M7 of the CMC shows all the details regarding interim secondary trading arrangements. These will be in place until such a time as the enduring arrangements are implemented which are set out in chapter H. We hope to outline the timeline in early 2018 for the implementation of the enduring Secondary Trading arrangements, including auctions. Q4 2018 would be the earliest that such arrangements could be implemented. 3.19 Is it possible to have a bilateral agreement to transfer our capacity to another capacity market participant who has won capacity in the auction? It is not possible to provide a short answer to this question. All the relevant information in relation to this question is contained with the CMC, in particular Section B.5, B.21 and Chapter J. 9

3.20 We have pre-qualified new capacity. If we don't put a bid into the auction, we are not participating automatically and no termination fees are due. Is this correct? Participation is optional for units who have qualified New Capacity. The total quantity for all offers for New Capacity can be equal to or less than the Net De-Rated Capacity (New). Offers will not be automatically submitted by the CMP where no offer has been received, therefore the unit will not be awarded capacity and Termination Charges will not apply per the CMC. 10

Section 4. Capacity Auction Offers 4.1 New Capacity Offers Participation is optional for units who have qualified New Capacity. The total quantity for all offers for New Capacity can be equal to or less than the New Net De-Rated Capacity. Offers will not be automatically submitted by the CMP where no offer has been received. 4.2 Existing Capacity Offers For qualified Existing Capacity, the total quantity for all offers can be equal to or less than the Existing Net De-Rated Capacity value but should be at least equal to the minimum of their Firm Offer Requirement and Existing Net De-Rated Capacity. You will be able to find the Existing Net De-Rated Capacity, New Net De-Rated Capacity and Firm Offer Requirement values in the CMP via the Participant Qualification Report screen. Where offers have not been submitted at all for CMUs with qualified Existing Capacity and a non-zero Firm Offer Requirement, the CMP will automatically submit offers on behalf of the CMU with quantity equal the minimum of their Firm Offer Requirement and Existing Net De-Rated Capacity. 4.3 I have a Unit Specific Price Cap, how will I submit an offer? You will be able to submit a price up to your Unit Specific Price Cap (but not exceeding it) within the CMP offer submission form. Please refer to the Capacity Market: Guide for Capacity Market Participant Trading (CMPT) Users guide for offer submission details. 4.4 What is the unit "Duration"? Will the CMP populate the duration value if not submitted by a participant? If not, what value should I use? The Capacity Duration is one year by default for all qualified units. A unit may have had a Maximum Capacity Duration exception approved for New Capacity by the RAs during the auction qualification period. The CMP offer must include the units qualified Capacity Duration. The CMP will not auto populate the offer entry fields. 4.5 How do I know my offer has been submitted? The CMP will display an error message on-screen where an offer has not met the offer requirements. The error message will provide specific details of the reason for the submission rejection. Please note 11

that offers are not fully submitted until you click on the Save Changes button at the top right corner of the Primary Auction Offers screen. For step by step details for offer submissions including screenshots, please refer to the Capacity Market: Guide for Capacity Market Participant Trading (CMPT) Users. If you wish to check if your offers have been saved as you had intended within the CMP, you can navigate back to the Primary Auction Offers screen at any time prior to the Capacity Auction Submission End. The offer steps displayed within the screen will be those that have been saved and submitted. 4.6 If successful in the auction, do you receive your offer price? If successfully awarded capacity via the auction, settlement will be based on the auction clearing price however please do note that there can potentially be two parts to the auction, the unconstrained auction and the constrained auction. The constrained auction ensures that all Local Capacity Constraints have been satisfied. Should an offer be accepted within the constrained auction, you will receive your individual offer price. Please refer to the Capacity Market A Helicopter Guide for the Capacity Auction document for further information to the clearing of offers. Outside of the auction itself, further information relating to Capacity Settlement can be found in the Industry Guide to the I-SEM. 4.7 What does the term Flexible mean in terms of an auction offer? Offers can be either flexible or inflexible. A flexible offer enables the CMP to partially accept a quantity amount during the determination of auction outcome. An inflexible offer means that the CMU wishes for their entire offer to be accepted, or not accepted at all. In terms of the auction calculation following the offer gate closure, inflexible offers will be evaluated first with the flexible offers being taken into consideration last. 4.8 Can a PQ pair be submitted for the Primary Auction Offer or do you need to submit more than one PQ pair to reflect the key points as on the demand curve in the CMP? The system will allow between 1 5 PQ pairs on the Capacity Market Platform. 12

4.9 I have new and existing capacity under the same unit. If I enter a price against a volume which is new capacity, can I enter the same price against a volume which is existing capacity? Do these different volumes require two separate price steps? You are allowed to submit up to five PQ pairs. No two PQ pairs should have the same price. The submitted prices must be strictly monotonically increasing for each offer step (lowest price first). You must submit separate PQ pairs for existing and new capacity, but the total number of PQ pairs cannot exceed five. There is no restriction on the ordering of submission of offer steps relating to existing and new Capacity. Participants are reminded that you are required to comply with your obligations under the Capacity Market Code when submitting offers 4.10 Can you please clarify whether the price offered for the first capacity auction should be per MW on a 12 month period or for the period from 23 may 2018 to the end of September 2019? Offer Prices should be / per MW per year. In terms of settlement, the cleared offer price will be applied across the 16 month Capacity year pro-rata. 4.11 What is the purpose/value of the "duration" parameter of an offer? This is not explained in the CMPT guide. Can you please explain the use of this parameter and what should be entered? A Participant s awarded capacity applies for 1 Capacity Year, unless the Participant has approval from the Regulatory Authorities for a Maximum Capacity Duration of more than 1 Capacity 4.12 How do you view amended offers? The Participant should navigate to Primary Auction Offer screen to view submitted offers. After submission of an offer(s) the Participant will get a pop up to say the offer has been accepted. Any time you amend and submit an offer(s) and navigate back to the Primary Auction Offer screen it will show the updated offer(s) submitted. 13

4.13 The offers that I submitted in the Mock Auction are no longer being accepted, why? The data in the CMP for the Mock Auction was provisional and subject to change. Your final qualification results may have changed for the 2018/2019 T-1 Capacity Auction. If the data looks incorrect please contact the helpdesk. 4.14 How do I know my offer has been submitted? If you need to check your submitted offer(s) at any time, you can do so by navigating back to the Primary Auction Offers screen. The offer steps displayed within the screen will be those that have been saved and submitted. 4.15 Do I need to enter all of my Existing Capacity into the first of these pricequantity pairs, and then all of my New Capacity into the second one? Yes, this is allowed. However, there is no restriction on the ordering of New and Existing Capacity so it would be possible to enter all of your New Capacity into the first step and all of your Existing Capacity into the second step. It would also be possible to split the capacity across multiple steps providing the total number of offer steps does not exceed five. 4.16 If I want to assume a Price-Taker role, I would assume that I would set my price to zero. But if I have to set two separate prices, for two separate pricequantity pairs, then is it the case that the second price has to be higher than the first? The second offer step price would need to be at least 0.01 higher than the first. Please note: There is no concept of a price taker in the CMC. 4.17 The offers that I submitted in the Mock Auction are no longer being accepted, why? The data in the CMP for the Mock Auction was provisional and subject to change. Your final qualification results may have changed for the 2018/2019 T-1 Capacity Auction. If the data looks incorrect please contact the helpdesk. 14

4.18 Can you please clarify whether the price offered for the first capacity auction should be per MW per year? Offer Prices should be / per MW per year. As a simplified purely illustrative example: If a 1 MW Offer was successful in the auction and received a clearing price of 12,000 per MW per year you could expect to be paid approximately 16,000 over the first Capacity Year (I-SEM Market Start - September 2019, which is approximately 16 months). In terms of settlement, the cleared offer price will be applied across the 16 month Capacity year prorata. Capacity payments are done on a monthly basis and are calculated and paid out over 16 months. Section 5. Capacity Market Platform 5.1 Where does the auction take place? All capacity auctions will take place on an internet-based program known as the Capacity Market Platform (CMP). CMP is provided by its vendor, Unicorn Systems. Access is granted to CMP via the registration process. All users will require a user name, password and digital certificate in order to log into the CMP successfully. 5.2 Are there training materials available for the Capacity Market Platform? There are three different user role types within the CMP: Trading, Reporting and Administrative Users. Guides for each user role type can be found via the following links: Capacity Market Participant Trading User Capacity Market Participant Reporting User Capacity Market Participant Administrator User 5.3 How can I create new users within the Capacity Market Platform (CMP)? The Capacity Market Participant Administrator (CMPA) user has the ability to create/terminate Party users as required within the CMP. Further information on this is provided in the Capacity Market Participant - Administrator User Guide. 5.4 How do I request a digital certificate for a new Capacity Market Platform user? 15

Please email capacitymarket@sem-o.com to request a new certificate for the Capacity Market Platform (CMP). You should receive the new certificate in approximately 2 working days. The new user will need to download and install their digital certificate to their workstation. Once this has been completed, the CMPA user can add the certificate details to the new user s profile on the CMP. Please refer to the CMPA User Guide as detailed above for step by step details. 5.5 I am unable to access CMP with my password, what do I do? Please contact your Capacity Market Participant Administrator (CMPA) user. Step by step details for resetting a password can be found in the Capacity Market Participant Administrator User guide (link available above in Section 5. The CMPA User holds responsibility for account creation/termination and maintenance. If your CMPA user is not able to access CMP and no other CMPA users are available, please contact capacitymarket@semo.com 5.6 I cannot access CMP, I have limited time to submit my offer(s), what do I do now? Where a Party has been unable to access the CMP, the System Operator (SO) will accept a manual offer via a manual offer template. Full information on how to submit a manual offer can be found in the Capacity Market: Participant Guide for Completing Manual Offer Submissions. The Party must notify the SO of the submission of the manual offer by calling 1800 726772 (ROI) or 0800 0726772 (NI) and by emailing their manual offer template to capacitymarket@sem-o.com 5.7 Does the system automatically know your jurisdiction in determining whether you bill is in or? Your offer price submission and any subsequent award in the auction will be in your jurisdiction currency. 5.8 What is in the Capacity and Trade Overview Report? It is a list of trades, once the auction results are published and made final this will get populated with all the results that are assigned to your CMUs. There is also a Primary Auction Participant Results Report where you can see your results from a specific auction. The Capacity and Trade Overview Report will show results from all auctions that have taken place over the years. 16

5.9 Will all the reports be published on the SEMO website? Will we see everyone s offers? The reports will be published within the CMP, there is a Participant and a Market Qualification Report and a Participant and a Market Auction Report in CMP. The Participant s reports will not be loaded onto the website. Our intention is to provide a market report publicly but as a Participant you will need to log into CMP to review your results. You will not be able to see other Participant s offers as the data is highly commercially sensitive. 5.10 In the Capacity Market Participant Trading (CMPT) User document, I am confused on the pricing on page 9. Is it Euro per megawatt per year? It is Euro per megawatt per year in a 12 month year. For anyone submitting in Sterling, the values will be converted at the applicable exchange rate. This first auction is for a Capacity Year which is 16 months in duration. The rules in the Trading and Settlement Code for the settlement of capacity take into account that the capacity year is 16 months in duration. It very important that when you re submitting your offer you reflect that it is Euro/Pound per megawatt per year. The numbers (Net Cost of New Entry and the values of the demand curve) will be in tens of thousands (Net Cost of New Entry = 82,130 Euros per megawatt per year). 5.11 We re entering the offers in sterling but there s no confirmation on the screen as to the currency that is accepted. The error message comes back in Euros (if you breach a price cap). Currency is defined by the jurisdiction to which the capacity market unit is registered. If the unit is registered in NI = Sterling, registered in ROI = Euro. [MD We checked the system and there is no reference to the currency on the offer screen. The message is correct though. The currency entered by the user and displayed in messages on this screen will always be in the currency of the jurisdiction in which the Participant is registered.] 5.12 What happens if no data is submitted for my units? Any unit that submits an offer has to submit in the range between the minimum of their firm offer requirement and net de-rated capacity (the upper bound is the net de-rated capacity). If a unit does not submit a valid offer within that range, the CMO will submit an offer on behalf of that Participant. This process takes place at gate closure. A check is done at gate closure to see if a valid offer has been submitted, if not, then one is submitted on the Participant s behalf. The price associated with the offer 17

would be related to the price cap applicable to that unit. Please see CMC section F.7.1.3 for more information. 5.13 Some of our units have not qualified, should they be visible on CMP? There will be units visible on the platform which have not qualified for the Capacity Auction. You should check the Participant Qualification Report for the unit s qualified flag. If you try and submit an offer for the unqualified units, the submissions will not be accepted by the CMP. You do not have to submit any offers for the unqualified units. **Please note: It is recommended that all Participants check their Participant Qualification Report to ensure their data looks correct. Please contact CapacityMarket@sem-o.com if anything looks incorrect. The numbers loaded for the Mock auction are provisional but if they look incorrect please get in touch 5.14 In the event of making a mistake can you withdraw a submitted offer and resubmit another auction offer? Yes, you can delete an offer by setting the Quantity MW to zero (0). Further information on this is available on page 14 of the Guide for Capacity Market Participant Trading (CMPT) Users - here. 5.15 There are three units present in our profile - for which only one has qualified. What is the purpose of listing/giving access to the other two? The CMP has details of units which applied for qualification but that did not qualify for the 2018/2019 T- 1 Capacity Auction. Those units will not be able to submit offers into the auction. Participants will have recently received their Final Qualification Results and it will outline what units have qualified and not qualified. You can also view these results in the Participant Qualification Report on CMP. Further details on accessing this report can be found in the Capacity Market Participant Reporting User. Participants who have not qualified for the Capacity Auction will not be eligible to submit offers into that auction. 5.16 Can we use the certificates we have installed for the Mock Auction for the 2018/2019 T-1 Capacity Auction? Yes, these should be used for the 2018/2019 T-1 Capacity Auction. 18

5.17 When will the Final Qualification data be visible on the platform? The Final Qualification data will be in the system by gate opening on the 11 th December at 10am. Section 6. Capacity Market Code (CMC) Clarifications 6.1 CMC Section J.2.1.1(c)(ii) says that the Substantial Completion Milestone is completed when a Final Compliance Certificate, Operational Certificate, or Final Operational Notification has been issued. Can you tell me what a Final Operational Notification is and how it differs from an Operational Certificate with respect to a Demand Side Unit? The FON is a term that is defined in the Network Code Requirements for Generators and will come into effect in 2018. It is similar to an Operational Certificate (which is specific to Ireland / Northern Ireland) and we are in the process of transitioning to these arrangements. This transition process has not been finalised, which is why we included both the Operational Certificate (current) and Final Operational Notification (future) under the CMC. The definition of Operational Certificate as it applies to the Capacity Market Code is defined to include, a notification, certificate, permit or authorisation having equivalent effect that is issued by the relevant System Operator instead of an operational certificate. This provides for any changes to the current process as we transition to the arrangements under the NC RfG. 6.2 Can you please explain the entries in the table at G 3.1.8: New Capacity not expected to be operating for Capacity Year and One year termination of Awarded Capacity for the first Capacity Year only? These aren t relevant to capacity with a maximum duration of one year. They would apply to capacity with duration of more than one year. **Please note this document will be updated daily with responses to queries received** 19

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