EXHIBIT 99.306
ETC/FTR Settlement
SETTLEMENT APPROACH
It is our understanding that the ISO will track the trading of FTRs in the
secondary market and record the current holders of FTRs. No SC has intended to
do the same. Therefore it is assumed that the ISO will settle directly with FTR
holders the Day-Ahead congestion rent due to FTR holders(1). As a result, the PX
will not need to have any special settlement procedure for schedules using FTRs.
As far as PX Day-Ahead energy market settlement is concerned, schedules using
FTRs are just like schedules using ISO new firm use (NFU) transmission. FTRs are
not applicable in the Hour-Ahead or the Real-Time market.
For settlement concerning PX Day-Ahead or Hour-Ahead energy schedules using
ETCs, it is proposed that the PX firsts apply the zonal market clearing prices
(ZMCPs) to these schedules exactly as to any other NFU schedules and then apply
congestion rent credit or debit, depending on the direction of the ETCs, to
schedules using ETCs. The congestion rent credit or debit will be payable to,
receivable from, the participant who submitted supplies or demands using ETC,
according to the PX payment calendar, at the time when PX Day-Ahead and
Hour-Ahead energy payment is made. This approach was the basis of the settlement
method for schedules using ETC filed in the PX Tariff Amendment 6 and retracted
in the PX Tariff Amendment 9(?).
The congestion rent credit or debit is calculated for valid ETC usage in the
Day-Ahead and Hour-Ahead market. During Day-Ahead and Hour-Ahead scheduling, the
PX submits ETC usage schedules of PX Participants to the ISO. ISO will validate
these schedules according to set rules. Valid ETC usage is a ETC usage schedule
that passes the ISO validation. The PX Scheduling System will store ETC usage
schedules, with a flag indicating whether the usage is accepted by the ISO, in
the database. Congestion rent credit is calculated for each valid ETC usage
schedule, using the following formula:
For Day-Ahead settlement, the congestion rent credit for X(D) MW of ETC usage in
an hour is
CRC(D) = X(D) x (DAZMCP(t) - DAZMCP(f))
Where DAZMCP(t) and DAZMCP(f) are the Day-Ahead ZMCP in the to-zone and the
from-zone, respectively, of the ETC. If CRC(D) is negative, it magnitude
represents a Day-Ahead congestion rent debit.
- --------
(1) Note that if the ISO will settle congestion rent with FTR holders through
the scheduling coordinators, the PX can just pass along the ISO's payment
or charge for the congestion rent.
For Hour-Ahead settlement, the congestion rent credit for X(H) MW of total ETC
usage in an hour is
CRC(H) = (X(H) - X(D)) x (HAZMCP(t) - HAZMCP(f))
Where HAZMCPt and HAZMCPf are the Hour-Ahead ZMCP in the to-zone and the
from-zone, respectively, of the ETC. If CRC(H) is negative, its magnitude
represents an Hour-Ahead congestion rent debit.
Except of the potential need to distribute unaccounted for discrepancies in the
PX and ISO congestion rent calculations, Real-Time market settlement is
indifferent whether resources use ETCs or not in the Day-Ahead and Hour-Ahead
market. Other aspects of settlement concerning ETCs, such as wheeling charge and
GMC, are already set in the current practice.
DATA FLOW DIAGRAM
Figure 1 provides a high-level data flow diagram (DFD) of the PX System for
ETC/FTR scheduling and settlement. In the scheduling system, the final Day-Ahead
and Hour-Ahead ETC usage schedules are stored in the CORE database with
information regarding the PX Participant who submitted the usage schedule, the
usage schedule hourly quantities, the associated source and sink resources and
the from-zone and to-zone of the ETCs. This information will enable settlement
calculation of the congestion rent credits or debits.
EXAMPLE
Figure 2 and Tables 1 through 8 provides an example of the ETC usage schedules
for one dispatch hour and related energy schedules and zonal market clearing
prices.
This example contains a variety of ETC usage schedules. From Table 1, it can be
observed that ETC A usage specifies both the source and the sink, ETC B and D
usage specifies only the sources, whereas ETC C usage specifies only the sinks.
For those usage schedules missing either source or sink, the PX scheduling
module, Contract Usage Schedule Translating Operation Module (CUSTOM), will find
matching sink or source by introducing peudo inter-SC transfers. These transfers
are used for scheduling only and do not impact settlement. Also in this Table 1,
there is one source using two ETCs (P1_PX_1001 using ETCs A and B) and one ETC
used by multiple sinks (ETC C used by P2_D1 and P2_D2). Between Tables 1 and 2,
it can also be observed that there may be cases when only a portion of a
resource's energy schedule uses ETC (P1_PX_1001 is scheduled at 600 MWh IPS and
550 MWh FS, but only 500 MWh of this resource's schedule uses ETCs).
In spite of these apparent complexities, the computation of ETC congestion rent
credit/debit is fairly straightforward. The input to this calculation consists
of ZMCPs and the final contract usage schedules.
For this example, the DA and HA ETC congestion rent credits/debits are shown
after Table 8.
[GRAPH DIAGRAM]
FIGURE 1. DATA FLOW DIAGRAM IN THE ETC/FTR SCHEDULING (ONLY DATA RELATED TO
ETC/FTR SCHEDULING ARE SHOWN)
CONGESTION RENT CREDIT/DEBIT CALCULATION, EXAMPLE 1
[GRAPH]
FIGURE 2. Example of Four ETC Usage Submitted by Three Participants
TABLE 1. DA Initial ETC Usage Schedule
- --------- --------- --------- ------------- ----------- ------------------------------ ----------------------------
ETC From To Participant Cap.
Zone Zone (MW) Source(s) Sink(s)
- --------- --------- --------- ------------- ----------- ------------------------------ ----------------------------
Global_Name Usage (MW) Glabal_Name Usage (MW)
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
A 1 5 P1 200 P1_PX_1001 200 PX_P1_2001 200
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
B 1 4 P1 300 P1_PX_1001 300 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D1 150
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D2 250
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
D 6 2 P3 200 P3_PX_1111 100 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
TABLE 2. DA Resource Schedules
- ---------------------------- ------------- ------------ -------------------------- --------------------------
Global_Name Type Zone DA IPS (MW) DA FS (MW)
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P1_PX_1001 Supply 1 600 550
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P2_D1 Demand 2 150 150
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P2_D2 Demand 2 250 250
- ---------------------------- ------------- ------------ -------------------------- --------------------------
PX_P1_2001 Demand 5 250 200
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P3_PX_1111 Supply 6 300 0
- ---------------------------- ------------- ------------ -------------------------- --------------------------
TABLE 3. DA ZMCP
- ------------------------------------- ----------------------------------
Zone ZMCP ($/MWh)
- ------------------------------------- ----------------------------------
1 15
- ------------------------------------- ----------------------------------
2 35
- ------------------------------------- ----------------------------------
3 35
- ------------------------------------- ----------------------------------
4 40
- ------------------------------------- ----------------------------------
5 50
- ------------------------------------- ----------------------------------
6 10
- ------------------------------------- ----------------------------------
TABLE 4. DA Final ETC Usage Schedule
- --------- --------- --------- ------------- ----------- ------------------------------ ----------------------------
ETC From To Participant Cap. Source(s) Sink(s)
Zone Zone (MW)
- --------- --------- --------- ------------- ----------- ------------------------------ ----------------------------
Global_Name Usage (MW) Glabal_Name Usage (MW)
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
A 1 5 P1 200 P1_PX_1001 200 PX_P1_2001 200
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
B 1 4 P1 300 P1_PX_1001 300 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D1 150
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D2 250
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
D 6 2 P3 0 P2_PX_1111 0 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
TABLE 5. HA Resource Schedules (DA quantity + HA Incremental qantity)
- ---------------------------- ------------- ------------ -------------------------- --------------------------
Global_Name Type Zone HA Gross IPS (MW) HA Gross FS (MW)
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P1_PX_1001 Supply 1 400 400
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P2_D1 Demand 2 300 300
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P2_D2 Demand 2 250 250
- ---------------------------- ------------- ------------ -------------------------- --------------------------
PX_P1_2001 Demand 5 250 200
- ---------------------------- ------------- ------------ -------------------------- --------------------------
P3_PX_1111 Supply 6 300 0
- ---------------------------- ------------- ------------ -------------------------- --------------------------
TABLE 6. HA Initial ETC Usage Schedule
- --------- --------- --------- ------------- ----------- ------------------------------ ----------------------------
ETC From To Participant Cap. Source(s) Sink(s)
Zone Zone (MW)
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
Global_Name Usage (MW) Glabal_Name Usage (MW)
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
A 1 5 P1 100 P1_PX_1001 100 PX_P1_2001 200
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
B 1 4 P1 300 P1_PX_1001 300 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D1 250
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D2 250
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
D 6 2 P3 0 P2_PX_1111 0 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
TABLE 7. HA Final ETC Usage Schedule
- --------- --------- --------- ------------- ----------- ------------------------------ ----------------------------
ETC From To Participant Cap. Source(s) Sink(s)
Zone Zone (MW)
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
Global_Name Usage (MW) Glabal_Name Usage (MW)
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
A 1 5 P1 100 P1_PX_1001 100 PX_P1_2001 100
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
B 1 4 P1 300 P1_PX_1001 300 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D1 250
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
C 2 3 P2 500 [Unidentified] - P2_D2 250
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
D 6 2 P3 0 P2_PX_1111 0 [Unidentified] -
- --------- --------- --------- ------------- ----------- ------------------ ----------- ----------------- ----------
TABLE 8. HA ZMCP
- ------------------------------------- ----------------------------------
Zone ZMCP ($/MWh)
- ------------------------------------- ----------------------------------
1 15
- ------------------------------------- ----------------------------------
2 35
- ------------------------------------- ----------------------------------
3 40
- ------------------------------------- ----------------------------------
4 45
- ------------------------------------- ----------------------------------
5 55
- ------------------------------------- ----------------------------------
6 10
- ------------------------------------- ----------------------------------
TABLE 9. DA ETC Congestion Rent Credits/Debits
- ------------------- ------- ------------ ----------- ----------- ------------------------------------------------
Participant ETC From To ETC DA ETC
Zone Zone Usage Credit/Debit ($)
ZMCP ZMCP (MW)
($/MWh) ($/MWh)
- ------------------- ------- ------------ ----------- ----------- -------------------------------------- ---------
P1 A 15 50 200 200 x (50 - 15) = 7000
- ------------------- ------- ------------ ----------- ----------- -------------------------------------- ---------
P1 B 15 40 300 300 x (40-15) = 7500
- ------------------- ------- ------------ ----------- ----------- -------------------------------------- ---------
P2 C 35 35 150 150 x (35 - 35) = 0
- ------------------- ------- ------------ ----------- ----------- -------------------------------------- ---------
P2 C 35 35 250 250 x (35 - 35) = 0
- ------------------- ------- ------------ ----------- ----------- -------------------------------------- ---------
P3 D 10 35 0 0 x (35 - 10) = 0
- ------------------- ------- ------------ ----------- ----------- -------------------------------------- ---------
TABLE 10. HA ETC Congestion Rent Credits/Debits
- --------------- ------- ------------ ----------- ---------- ---------- ----------------------------------------
Participant ETC From To HA ETC DA ETC DA ETC
Zone Zone Usage Usage Credit/Debit ($)
ZMCP ZMCP (MW) (MW)
($/MWh) ($/MWh)
- --------------- ------- ------------ ----------- ---------- ---------- ------------------------------- --------
P1 A 15 55 100 200 (100 - 200) x (55 - 15) = -4000
- --------------- ------- ------------ ----------- ---------- ---------- ------------------------------- --------
P1 B 15 45 300 300 (300 - 300) x (45-15) = 0
- --------------- ------- ------------ ----------- ---------- ---------- ------------------------------- --------
P2 C 35 40 250 150 (250 - 150) x (40 - 35) = 500
- --------------- ------- ------------ ----------- ---------- ---------- ------------------------------- --------
P2 C 35 40 250 250 (250 - 250) x (40 - 35) = 0
- --------------- ------- ------------ ----------- ---------- ---------- ------------------------------- --------
P3 D 10 35 0 0 (0 - 0) x (35 - 10) = 0
- --------------- ------- ------------ ----------- ---------- ---------- ------------------------------- --------
The participant's total hourly ETC congestion rent credit/debit is the sum of
all its DA hourly ETC congestion rent credits and debits (negative) and all its
HA hourly ETC congestion rent credits and debits (netagive).