Capacity supply obligation (CSO) bilateral periods allow a resource to arrange bilateral contracts to accomplish the following:
Before opening the submission window for a bilateral period, the ISO publishes the qualified capacity for all resources in the Forward Capacity Tracking System (FCTS).
(See Qualified Capacity for CSO Bilateral Periods and Reconfiguration Auctions.)
The specific dates when CSO bilateral period submission windows open and close can be found in the Forward Capacity Auction (FCA) calendars.
A resource that has a CSO may enter into a bilateral contract to transfer its CSO, in whole or in part, to a resource that has unobligated qualified capacity (i.e., qualified capacity greater than its CSO). The resource shedding the CSO is the capacity-transferring resource, and the resource acquiring the CSO is the capacity-acquiring resource.
If the ISO approves the CSO bilateral, the CSO for the capacity-transferring resource will be reduced and the CSO for the capacity-acquiring resource will be increased by the megawatt amount listed in the bilateral for the term specified.
The ISO will apply the CSO bilateral limitations criteria to each CSO bilateral as described in Market Rule 1, Section III.13.5.1, Capacity Supply Obligation Bilaterals. When trying to arrange a CSO bilateral, it is important to be aware of capacity zone limitations. CSO bilaterals can be submitted to transfer CSOs between any capacity zones or external interfaces. However, the set of CSO bilaterals submitted during a bilateral period must respect all modeled limits.
If the set of submitted CSO bilaterals violates one or more of the fixed zonal limits up to the truncation point of the respective sloped zonal demand curve, or capacity transfer limits, the CSO bilaterals are evaluated in order of confirmation time to remedy the violations. The violating CSO bilateral is denied, as are all CSO bilaterals with later confirmation times that exacerbate the same constraint.
Provisional CSO bilaterals allow market participants to enter and confirm CSO bilateral contracts before the actual CSO bilateral submission window opens. This provides participants with a place where contracts can be held until the submission window opens. When a submission window opens, provisional CSO bilaterals that pass transferring and acquiring limit validations are converted to CSO bilaterals.
CSO bilaterals are managed using the Forward Capacity Market CSO Bilateral Contracts User Interface, which is accessible on the SMD applications home page. A digital certificate is required to use the application. You must ask your security administrator for the ISO’s Customer and Assets Management System (CAMS) to provide you with one of the following roles on the basis of your expected activities:
If you don’t know who your security administrator is, contact Participant Support.
The lead participant for either the capacity-transferring or capacity-acquiring resource can submit the CSO bilateral. However, for the ISO to process it, the counterparty must confirm the CSO bilateral no later than the end of the submission window. If both the capacity-transferring and capacity-acquiring resources belong to the same lead participant, the CSO bilateral will be automatically confirmed once it is submitted.
Either party may initiate the withdrawal of a CSO bilateral while the submission window is still open. Bilaterals cannot be withdrawn after the window closes. To successfully withdraw the bilateral, the counterparty must confirm the withdrawal before the submission window closes. Detailed instructions on the CSO bilateral submittal process can be found in the User Guide for the Forward Capacity Market CSO Bilateral Contracts User Interface.
The resource submitting the CSO bilateral must identify the resources involved, the CSO amount being transferred in megawatts, the term of the transaction, and a price, if desired. The default price is $0 per kilowatt-month. The resource confirming the CSO bilateral must confirm the resources involved, CSO amount in megawatts, term, and price information by the bilateral deadline. Otherwise, the CSO bilateral will not be processed.
Approved CSO bilaterals affect Forward Capacity Market (FCM) payments:
The ISO reviews CSO bilateral submissions for compliance with financial assurance (FA) requirements:
For more information, please refer to the New England Financial Assurance Policy.
The ISO also performs reliability reviews on CSO bilateral submissions, which take into account transmission and resource outage schedules approved for the month. The ISO approves or rejects CSO bilaterals in the order in which they are confirmed. Transactions may only be rejected in whole.