The FAQs in this section do not address all issues and requirements of these policies, and participants are urged to consult these documents for additional information. In case of any discrepancy between the answers to these FAQs and the policies, the policies govern.
ISO New England accepts three forms of financial assurance:
The ISO processes new letters of credit and LC amendments, which have met all requirements, as follows:
As explained above, the participant will be required to maintain sufficient financial assurance to keep its credit test percentage at 90% or less. In addition, under the currently effective Financial Assurance Policy, the participant will be charged a $1,000 penalty for each default event subsequent to the issuance of the fifth default notice in a 12-month rolling period.
The ISO’s full Financial Assurance Policy is available on line.
A web-based training is available that explains the calculation of Financial Transmission Rights and the requirements for virtual financial assurance within the ISO New England market. Approximate viewing time is 29 minutes.
Another web-based training is available on FCM financial assurance requirements. Approximate viewing time is 35 minutes.
Section III.B of the ISO New England Financial Assurance Policy and Section 3.7 of the ISO New England Billing Policy describe the suspension process. Section B.3 of the FAP basically states that a suspended market participant cannot participate in the ISO markets. The suspension could result in the following actions:
However, the ISO still would be able to invoice or collect payment for any amounts the suspended participant owed.
Additionally, any load asset registered to a suspended market participant would be terminated, per the conditions detailed in the FAP. Participants suspended from entering into future FTR transactions can retain all FTRs it holds but cannot acquire additional FTRs during the suspension. The policies contain additional details and conditions of these suspensions.
The participant must contact its company’s designated security administrator (SA), who must make the requisite changes in the Customer and Asset Management System. The ISO’s Customer Support, at (413) 540-4220 or email@example.com, can assist a participant in determining its company’s SA and can assist the SA with the process.
The data are contained in the DALMP Congestion Component Report. The report contains a 36-month history of the monthly average congestion component of the day-ahead LMPs, by node, for on-peak and off-peak hours.
The proxies are available the first day of the month proceeding the applicable FTR auction month.
These proxies are contained in the Day-Ahead Virtual Bid Proxy Report. The ISO Credit Department uses virtual proxies to calculate financial assurance requirements for virtual bid transactions. Proxies are derived from historic day-ahead and real-time LMP spreads by node for on-peak and off-peak hours.
The proxies are available on the 22nd of the month preceding the operating month to which the proxies apply.
ISO New England does not segregate financial assurance by any specific market. However, posted financial assurance (cash or letter of credit) is allocated first to the Market Credit Test, then to the FTR Credit Test, and lastly to the Transmission Credit Test. The allocation occurs for up to three rounds, provided excess financial assurance remains after each of the first two rounds. The first round of allocation brings each credit test to 99.99%, the second round brings each credit test to 89.99%, and the last round brings each credit test to at least 79.99%. If excess financial assurance remains after the third round, the ISO allocates the excess to the Market Credit Test, thereby bringing that test below 79.99%.
Participants choosing to use cash as collateral for their financial assurance obligations must open a BlackRock investment account. Account holders may choose investment options from a predetermined list, and ISO New England must be the beneficiary of the account.
At times, a participant may not be able to increase other forms of collateral in a timely manner. A BlackRock account can provide a means of posting collateral relatively quickly.
Balances and interest are available via the following:
Participants must send requests to withdraw or transfer money via e-mail directly to the ISO’s Market and Credit Risk Department at CreditDepartment@iso-ne.com.
The ISO processes BlackRock withdrawal requests it receives in the morning by close of business the same business day and withdrawal requests it receives in the afternoon by noon the next business day.
The FAM is an external-facing user interface that reflects a company’s credit standing with the ISO. FAM credit data are updated five times per day on business days, as follows:
The FAM user interface has a main toolbar across the top of its webpage. Each tab on the tool bar provides access to a company’s vital financial assurance information. Users may select credit information from any update time by using a drop-down date and time selector in the top left-hand corner of the general tab of the user interface.
Participants can view credit data from a point in time other than the last update using the date/time selector and calendar.
The FAM User Guide illustrates additional information in the FAM’s user interface for viewing financial assurance positions.
A participant must contact its company's designated security administrator, who must request ISO Customer Services to grant access. ISO Customer Services, at (413) 540-4220 or firstname.lastname@example.org, can assist a participant in determining its company’s SA.
A participant must contact its company's designated security administrator, who must make the requisite changes in the Customer and Asset Management System. ISO Customer Support, at (413) 540-4220, can assist a participant in determining its company’s SA.