October 8, 2013 | NEPOOL markets committee

1. October 8, 2013 | NEPOOL markets committee ISO New England - market development Walk-Through of Tariff Structure and Summary of Key Concepts NCPC Payments – Tariff Overview Chris Hamlen, Matt Brewster & Jon Lowell

2. NCPC Payments – Structure of the New Tariff • New tariff language for NCPC Credits will completely replace the current MR-1 Appendix F sections III.F.1 and III.F.2 • Section III.F.3 (NCPC Cost Allocation) is untouched • Several new defined terms are added to Section I.2.2 • Commitment Period • Economic Dispatch Point (EDP) • Effective Offer

3. New Section III.F.1 - General • Concepts that apply generally in the determination of NCPC Credits • Effective Offers • Treatment of Self-Schedules • Treatment of Minimum Run Time Changes in a Subsequent Operating Day • Supply Offers Applicable When Min Run Time Carries into Second Operating Day • Supply Offers Applicable When Committed Prior to Day-Ahead Energy Market • Eligibility for NCPC Credits When Performing Audits • Coordinated External Transactions are Not Eligible for NCPC

4. New Section III.F.2.1 - Day-Ahead Energy Market NCPC Credits • III.F.2.1.1 Eligibility • III.F.2.1.2 Settlement Period • III.F.2.1.3 Eligible Quantity • III.F.2.1.4 Hourly Cost • III.F.2.1.5 Hourly Revenue • Calculation of the DA NCPC Credit • III.F.2.1.6 Fast Start Resources – calculated hourly • III.F.2.1.7 Non-Fast Start Resources – calculated for the settlement period

5. New Section III.F.2.2 - Real-Time Energy Market NCPC Credits • III.F.2.2.1 Eligibility • III.F.2.2.2 Real-Time Commitment NCPC Credits • III.F.2.2.2.1 Settlement Period • III.F.2.2.2.2 Eligible Quantity • III.F.2.2.2.3 Hourly Cost • III.F.2.2.3.1 Energy cost • III.F.2.2.3.2 Start-Up fee • III.F.2.2.3.3 No-Load fee • III.F.2.2.2.4 Hourly Revenue • III.F.2.2.2.4.1 exclusion of EcoMin revenue if Self-Scheduled [exclusion of EcoMin energy cost is addressed in F.1(b)]

6. New Section III.F.2.2 - Real-Time Energy Market NCPC Credits • III.F.2.2.2 Real-Time Commitment NCPC Credits • III.F.2.2.2.5 Credit Calc for Non-Fast Start Resources • (a) During Min Run Time period • (b) For Remainder of the settlement period • III.F.2.2.2.6 Credit Calc for Fast Start Resources • Calculated hourly

7. New Section III.F.2.2 - Real-Time Energy Market NCPC Credits • III.F.2.2.3 Real-Time Dispatch NCPC Credits • III.F.2.2.3.1 Settlement Period • III.F.2.2.3.2 Eligible Quantity • III.F.2.2.3.2.1 For hourly costs • III.F.2.2.3.2.1 For hourly revenues • III.F.2.2.3.3 Hourly Cost • III.F.2.2.3.4 Hourly Revenue • III.F.2.2.3.5 Credit Calculation • Calculated hourly

8. New Section III.F.2.3 -Special Case NCPC Credit Calculations • III.F.2.3.1. Day-Ahead External Transaction Import and Increment Offer NCPC Credits • For imports and increments at external nodes cleared out of rate in Day-Ahead • III.F.2.3.2. Day-Ahead External Transaction Export and Decrement Bid NCPC Credits • For exports and decrements at external nodes cleared out of rate in Day-Ahead • III.F.2.3.3. Real-Time External Transaction NCPC Credits (Import and Export) • For import and export transactions cleared out of rate in Real-Time

9. New Section III.F.2.3 -Special Case NCPC Credit Calculations • III.F.2.3.4. Real-Time Posturing NCPC Credits for DARD Resources (pumps only) Postured for Reliability • For cost above bid price when postured to pump out of rate • III.F.2.3.5. Real-Time Synchronous Condensing NCPC Credits • Never previously used, but could be needed during system restoration • III.F.2.3.6. Cancelled Start NCPC Credits • For starts cancelled after Notification Time and before breaker close • III.F.2.3.7. Hourly Shortfall NCPC Credits • For resources with Day-Ahead market schedule subsequently de-committed or not dispatched by ISO during Real-Time

10. New Section III.F.2.3 -Special Case NCPC Credit Calculations • III.F.2.3.8. Real-Time Posturing NCPC Credits for Limited Energy Resources Postured for Reliability • For resources with daily lost opportunity for posturing event • III.F.2.3.9. Real-Time Posturing NCPC Credits (Other Than Limited Energy Resources) Postured for Reliability • For resources with hourly lost opportunity costs for posturing event • III.F.2.4. Apportionment of NCPC Credits • Assigns credits to hours for subsequent use in NCPC cost allocation • III.F.2.5 Credit Designation for Purposes of NCPC Cost Allocation • Associates credits to ISO requirement for NCPC cost allocation