Reconfiguration auctions take place before and during a Forward Capacity Auction (FCA) commitment period to allow participants to buy and sell capacity obligations and adjust their positions. These auctions are needed to add capacity to cover for potential increases in the Installed Capacity Requirement (ICR), to release capacity to match potential decreases in the ICR, and to defer capacity requirements associated with existing capacity delist bids.
When the ISO participates in an ARA, it enters either supply offers or demand bids, which clear the auction in the same manner as any other resource supply offer or demand bid. The supply offers are priced according to the method established in Market Rule 1, Section III.13.4.3(c); the demand bids are entered as the FCA starting price for all years. The megawatt (MW) amount the ISO submits for either supply offers or demand bids is determined by comparing the most recent net Installed Capacity Requirement (ICR) to the total capacity supply obligation before the auction.
Generally, when additional supply offers are entered, the auction-cleared megawatt amount may increase and the auction-clearing price may decrease. When additional demand bids are entered, the auction-cleared megawatt amount and auction-clearing price may increase.
When the ISO participates in an ARA, the megawatt amount of participation is determined by comparing the net Installed Capacity Requirement to the total capacity supply obligation before the auction.