ATTACHMENT J
BILLING BASED ON METERED DEMAND

2.5.20.1	Ancillary Service Obligations.  Each Scheduling Coordinator shall be assigned a share of the total Regulation, Spinning Reserve, Non-Spinning and Replacement Reserve requirements by the ISO.  The share assigned to each Scheduling Coordinator is described in Section 2.5.20 and in Section 2.5.28 as that Scheduling Coordinator’s obligation.  Each Scheduling Coordinator’s Regulation obligation in each Zone shall be pro rata based upon the same proportion as the Scheduling Coordinator's metered hourly Demand (excluding exports) bears to the total metered Demand (excluding exports) served in each hour in that Zone.  Each Scheduling Coordinator’s Operating Reserve obligation in each Zone shall be pro rata based upon the same proportion as the ratio of the product of its percentage obligation based on metered output and the sum of its metered Demand and firm exports bears to the total of such products for all Scheduling Coordinators in the Zone.  The Scheduling Coordinator’s percentage obligation based on metered output shall be calculated as the sum of 5% of its scheduled Demand (except the Demand covered by firm purchases from outside the ISO Control Area) met by Generation from hydroelectric resources plus 7% of its Demand (except the Demand covered by firm purchases from outside the ISO Control Area) met by Generation from non-hydroelectric resources in that Zone, plus 100% of any Interruptible Imports and on-demand obligations which it schedules.  Each Scheduling Coordinator’s Replacement Reserve obligation in each Zone is calculated as described in Section 2.5.28.4. Scheduling Coordinator obligations for each Ancillary Service will be calculated based on the requirement for each Ancillary Service as the ISO determines prior to the adjustment set forth in Section 2.5.3.6.

2.5.20.2	Right to Self Provide.
Each Scheduling Coordinator may choose to self provide all, or a portion, of its Regulation and Reserve obligation in each Zone.  The ISO shall schedule self provided Ancillary Services, Day-Ahead and Hour-Ahead, and Dispatch self provided Ancillary Services in real time.  To the extent that a Scheduling Coordinator self provides, the ISO shall correspondingly reduce the quantity of the Ancillary Services concerned, which it procures as described in Sections 2.5.14 to 2.5.17.  In accordance with Section 2.5.22.11 and Section 2.5.26.2, if a Scheduling Coordinator uses capacity scheduled to self-provide Spinning Reserve, Non-Spinning Reserve, or Replacement Reserve to supply Uninstructed Imbalance Energy to the ISO from a Generating Unit, Curtailable Demand, or System Resource under circumstances that would cause the elimination of payments to the Scheduling Coordinator under Section 2.5.26.2 if the capacity had been bid and was selected by the ISO to supply the Ancillary Service, the Scheduling Coordinator shall pay to the ISO the amount of the payment that would be eliminated under that section.
If a Scheduling Coordinator's Day-Ahead self-provided Ancillary Service schedule is decreased in the Hour-Ahead Market, such decrease shall be deemed to be replaced at the Market Clearing Price in the Hour-Ahead Market, pursuant to Section 2.5.21.

2.5.20.5.2	Hour-Ahead Schedule.   Increases in each Scheduling Coordinator's self-provided Ancillary Service between the Day-Ahead and Hour-Ahead Markets shall be limited to the estimated incremental Ancillary Service requirement associated with the increase between the Day-Ahead and Hour-Ahead Markets in that Scheduling Coordinator's scheduled Zonal Demand.  Notwithstanding this limit on increases in Hour-Ahead self-provision, a Scheduling Coordinator may buy or sell Ancillary Services through Inter-Scheduling Coordinator Ancillary Service Trades in the Hour-Ahead Market.  In the Hour-Ahead scheduling process, Scheduling Coordinators shall be required to submit information on self-provided Ancillary Services within the time frame stated in Section 2.5.10.2.  Failure to submit the required adjusted information within the stated time frame shall lead to the self-provision being declared invalid by the ISO, and under such circumstances the ISO shall purchase the additional Ancillary Services necessary to meet the requirements for that Scheduling Coordinator. 

2.5.21	Scheduling of Units to Provide Ancillary Services.
The ISO shall prepare supplier schedules for Ancillary Services (both self provided and purchased by the ISO) for the Day-Ahead and the Hour-Ahead Markets.  The ISO shall notify each Scheduling Coordinator no later than 1:00 p.m. of the day prior to the Trading Day of their Ancillary Services schedules for the Day-Ahead and no later than one hour prior to the operating hour of their Ancillary Services schedules for the Hour-Ahead.  The ISO Protocols set forth the information, which will be included in these schedules.  Where long-term contracts are involved, the information may be treated as standing information for the duration of the contract.
Once the ISO has given Scheduling Coordinators notice of the Day-Ahead and Hour-Ahead schedules, these schedules represent binding commitments made in the markets between the ISO and the Scheduling Coordinators concerned.  Any minimum energy input and output associated with Regulation and Spinning Reserve services shall be the responsibility of the Scheduling Coordinator, as the ISO's auction does not compensate the Scheduling Coordinator for the minimum energy output of Generating Units bidding to provide these services.  Accordingly the Scheduling Coordinators shall adjust their schedules to accommodate the minimum outputs required by the Generating Units included on the Schedules.
	Notwithstanding the foregoing, a Scheduling Coordinator who has sold or self-provided Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve capacity to the ISO in the Day-Ahead Market shall be required to replace that capacity in whole or in part from the ISO if the scheduled self-provision is decreased between the Day-Ahead and Hour-Ahead Markets, or if the Ancillary Service associated with a Generating Unit, Curtailable Demand, or System Resource successfully bid in a Day-Ahead Ancillary Service Market is reduced in the Hour-Ahead Market, for any reason (other than the negligence or willful misconduct of the ISO).  The price for such replaced Ancillary Service shall be the  Market Clearing Price in the Hour-Ahead Market for the Ancillary Service for the Settlement Period concerned for the Zone in which the Generating Units or other resources are located.  The ISO will purchase the Ancillary Service concerned from another Scheduling Coordinator in the Hour-Ahead Market in accordance with the provisions of the ISO Tariff.

2.5.28	
Settlement for User Charges for Ancillary Services.
The ISO shall determine a separate hourly user rate for Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve for each Settlement Period purchased in the Day-Ahead market, and in the Hour-Ahead Market.  Each rate will be charged to Scheduling Coordinators on a volumetric basis applied to each Scheduling Coordinator’s obligation for the Ancillary Service concerned which it has not self provided. 
Each Scheduling Coordinator’s obligation for Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve for each Zone shall be calculated in accordance with Section 2.5.20.1.
The cost of Voltage Support and Black Start shall be allocated to Scheduling Coordinators as described in Sections 2.5.28.
Quantities and rates for the Hour-Ahead markets shall be calculated by substituting the Hour-Ahead quantities and prices in the relevant formulae (including self provided quantities of the Ancillary Service) except that the user rates for Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve capacity shall be calculated by dividing the net payments made by the ISO for each service by the obligation for each service which has not been self-provided.  The net payments are the total payments for each service net of sums payable by Scheduling Coordinators who have bought back in the Hour-Ahead Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve capacity, as the case may be, which they had sold to the ISO in the Day-Ahead Market. 
	Ancillary Services obligations may be negative, and credits for such negative obligations will be in accordance with the rates calculated in Sections 2.5.28.1, 2.5.28.2, 2.5.28.3 and 2.5.28.4, except that a Scheduling Coordinator's credit shall be reduced by the greater of: a) the amount of any self-provision scheduled from resources which are deemed to meet the ISO's Ancillary Services standards, and which are not subject to the certification and testing requirements of the ISO Tariff; or b) if the ISO has no incremental requirement to be met in the Hour-Ahead Market for an Ancillary Service, the incremental amount of such service scheduled by that Scheduling Coordinator in the Hour-Ahead Market.
	The ISO will allocate the Ancillary Services capacity charges, for both Day-Ahead and Hour-Ahead Markets, on a Zonal basis if the Day-Ahead Ancillary Services Market is procured on a Zonal basis.  The ISO will allocate the Ancillary Services capacity charges, for both the Day-Ahead and Hour-Ahead Markets, on an ISO Control Area wide basis if the Day-Ahead Ancillary Services Market is defined on an ISO Control Area wide basis.
Separate rates shall be calculated for each Service as follows:

ASRP 4.3	SC’s Obligation for Regulation
Each Scheduling Coordinator’s Obligation for Regulation for each Settlement Period of the Day-Ahead Market and for each Hour-Ahead Market in each Zone shall be calculated based upon the ratio of metered Demand (excluding exports) by each Scheduling Coordinator in each identified Zone for that Settlement Period to the total metered Demand (excluding exports) for that Settlement Period in that Zone.

ASRP 5.5.1	Obligation for Spinning and Non-Spinning Reserve
Except for the requirement for Non-Spinning Reserve referred to in paragraph ASRP 5.5.2, each Scheduling Coordinator’s Operating Reserve obligation in each Zone shall be pro rata based upon the same proportion as the product of its percentage obligation based on metered output and the sum of its metered Demand and firm exports bears to the total of such products for all Scheduling Coordinators in the Zone.  The Scheduling Coordinator’s percentage obligation based on metered output shall be calculated as the sum of 5% of its scheduled Demand (except the Demand covered by firm purchases from outside the ISO Control Area) met by Generation from hydroelectric resources plus 7% of its Demand (except the Demand covered by firm purchases from outside the ISO Control Area) met by Generation from non-hydroelectric resources in that Zone.

ASRP 6.3	Scheduling Coordinator’s Obligation for Replacement Reserve
Scheduling Coordinator’s Obligation for Replacement Reserve for each Settlement Period of the Day-Ahead Market and for each Hour-Ahead Market in each zone shall be based upon the ratio of the metered Demand (excluding exports) by each Scheduling Coordinator in each identified Zone for that Settlement Period to the total metered Demand (excluding exports) for that Settlement Period in that Zone.

Schedules and Bids Protocol

SBP 5.3	Buy Back of Ancillary Services

.  A Scheduling Coordinator who has sold or self-provided Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve capacity to the ISO in the Day-Ahead Market shall be required to replace such capacity to the extent scheduled self-provision is decreased between the Day-Ahead and Hour-Ahead Markets, or to the extent the Ancillary Service associated with a Generating Unit, Curtailable Demand, or System Resource successfully bid in a Day-Ahead Ancillary Service Market is reduced in the Hour-Ahead Market, for any reason (other than the negligence or willful misconduct of the ISO).  The price for such replaced Ancillary Service shall be at the Market Clearing Price in the Hour-Ahead Market for the same Settlement Period for the Ancillary Service capacity concerned.

Scheduling Protocol

SP 9.1		Bid Evaluation and Scheduling Principles
The ISO will evaluate Ancillary Services bids based on the following principles:
(a)	the ISO will not differentiate between bidders other than through reserve (Regulation and Operating Reserves) price and capability to provide the reserve service, and the required locational mix of services;

(b)	to minimize the costs to users of the ISO Controlled Grid, the ISO will select the bidders with lowest bids for reserve which meet its technical requirements, including location and operating capability;

(c)	the ISO will (to the extent available) procure sufficient Ancillary Services to meet its technical requirements as defined in the ASRP;

(d)	the ISO will evaluate and price only those Ancillary Services bids received in accordance with the SBP;

(e)	the ISO will require SCs to honor their Day-Ahead Ancillary Services schedules and/or bids when submitting their Hour-Ahead Ancillary Services schedules and/or bids.   A Scheduling Coordinator who has sold or self-provided Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve capacity to the ISO in the Day-Ahead Market shall be required to replace such capacity to the extent scheduled self-provision is decreased between the Day-Ahead and Hour-Ahead Markets, or to the extent the Ancillary Service associated with a Generating Unit, Curtailable Demand, or System Resource successfully bid in a Day-Ahead Ancillary Service Market is reduced in the Hour-Ahead Market, for any reason (other than the negligence or willful misconduct of the ISO).  The price for such replaced Ancillary Service shall be at the Market Clearing Price in the Hour-Ahead Market for the same Settlement Period for the Ancillary Service capacity concerned.  Increases in each Scheduling Coordinator’s self-provided Ancillary Services between the Day-Ahead and Hour-Ahead Markets shall be limited to the estimated incremental Ancillary Service requirement associated with the increase between the Day-Ahead and Hour-Ahead Markets in that Scheduling Coordinator’s scheduled Zonal Load.  Notwithstanding this limit on increases in Hour-Ahead self-provision, a Scheduling Coordinator may buy or sell Ancillary Services through Inter-Scheduling Coordinator Ancillary Service Trades in the Hour-Ahead Market;

(f)	due to the design of the ISO’s scheduling software, the ISO will not take into account Usage Charges in the evaluation of Ancillary Services bids or in price determination and, in the event of Congestion in the Day-Ahead Market or Hour-Ahead Market, Ancillary Services will be procured and priced on a Zonal basis; and

(g)	due to the design of the ISO’s scheduling system, any specific resource can bid to supply a specific Ancillary Service or can self-provide such Ancillary Service but cannot do both in the same Settlement Period.

Scheduling Protocol

SP 9.3		Scheduling Ancillary Services Resources
 (a)	SCs are allowed to self-provide all or a portion of the following Ancillary Services to satisfy their obligations to the ISO:

(i)	Regulation;

(ii)	Spinning Reserve;

(iii)	Non-Spinning Reserve; and

(iv)	Replacement Reserve.

(b)	The ISO will reduce the quantity of Ancillary Services it competitively procures by the corresponding amount of the Ancillary Services that SCs self-provide.

(c)	The ISO shall prepare supplier schedules for Ancillary Services (both self-provided and purchased by the ISO) for the Day-Ahead Market and the Hour-Ahead Market.

(d)	The Ancillary Services schedules shall contain the information set out in the SBP for each Settlement Period of the following Trading Day in the case of the Day-Ahead schedules or for a specific Settlement Period in the case of Hour-Ahead schedules.

(e)	Once the ISO has given SCs notice of the Day-Ahead and Hour-Ahead schedules, these schedules represent binding commitments made in the reserve markets between the ISO and the SCs concerned.  A Scheduling Coordinator who has sold or self-provided Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve capacity to the ISO in the Day-Ahead Market shall be required to replace such capacity to the extent scheduled self-provision is decreased between the Day-Ahead and Hour-Ahead Markets, or to the extent the Ancillary Service associated with a Generating Unit, Curtailable Demand, or System Resource successfully bid in a Day-Ahead Ancillary Service Market is reduced in the Hour-Ahead Market, for any reason (other than the negligence or willful misconduct of the ISO).  The price for such replacement shall be at the Market Clearing Price in the Hour-Ahead Market for the Ancillary Service for the Settlement Period concerned for the Zone in which the Generating Unit or other resources on behalf of which the Scheduling Coordinator buys back the capacity, are located.  The ISO will purchase the Ancillary Service concerned from another Scheduling Coordinator in the Hour-Ahead Market in accordance with the provisions of the ISO Tariff.

(f)	Any minimum Energy output associated with Regulation and Spinning Reserve services shall be the responsibility of the SC, as the ISO’s auction does not compensate the SC for the minimum Energy output of its Generating Units or System Unit, if any, bidding to provide these services.  Accordingly, the SCs shall adjust their Balanced Schedules to accommodate the minimum Energy outputs required by the Generating Units or System Units, if any, included in the Ancillary Services schedules.

(g)	SCs providing one or more of the Ancillary Services cannot change the identification of the Generating Units  System Units or external imports of System Resources, if any, or Curtailable Demands offered in the Day-Ahead Market, in the Hour-Ahead Market, or in the Real Time Market (except with respect to System Units, if any, in which case SCs are required to identify and disclose the resource specific information for all Generating Units and Curtailable Demands constituting the System Unit scheduled or bid into the ISO’s Day-Ahead Market and Hour-Ahead Market as required in SP 3.3.2(e)).

SABP APPENDIX C
ANCILLARY SERVICES CHARGES COMPUTATION
C 1	Purpose of charges
The Ancillary Services Charges reimburse the ISO for the costs of purchasing Ancillary Services in the Day-Ahead and Hour-Ahead Markets.  Each Scheduling Coordinator that does not self provide Ancillary Services must purchase these services from the ISO.  The ISO will in turn purchase these Ancillary Services from Scheduling Coordinators in the markets.  Ancillary Services purchased and resold by the ISO includes Regulation, Spinning Reserve, Non-Spinning Reserve, and Replacement Reserve. 

This Appendix C also addresses the payments by ISO to Scheduling Coordinators for the Dispatch of energy from Dispatched Ancillary Services Units and for the Dispatch of Supplemental Energy in the Real Time Market.  The ISO recovers the costs of Real Time Dispatch of such energy through the Imbalance Energy charges described in Appendix D of this Protocol.

The reference to a Scheduling Coordinator by Zone refers to the Demand of that Scheduling Coordinator which is located in the Zone.  A Generation Unit, Load, or System Resource located in another Control Area is considered to be located in the Zone in which its contract path enters the ISO Controlled Grid.

The ISO will purchase Ancillary Services for each Trading Interval in both the Day-Ahead and Hour-Ahead Markets.  Separate payments will be calculated for each service for each Trading Interval and in each market for each Generating Unit, Load and System Resource.  The ISO will then calculate a total payment for each Scheduling Coordinator for each Trading Interval for each service for each Zone in each market for all the Generating Units, Loads and System Resources that the Scheduling Coordinator represents.  The ISO will charge Scheduling Coordinators for Ancillary Services, other than for energy, which they purchase from the ISO by calculating and applying charges to each Scheduling Coordinator for each Trading Interval for each service in each Zone in each market.

The ISO will allocate the Ancillary Services capacity charges, for both the Day-Ahead Market and the Hour-Ahead Market, on a Zonal basis if the Day-Ahead Ancillary Services Market is procured on a Zonal basis.  The ISO will allocate the Ancillary Services capacity charges, for both the Day-Ahead Market and the Hour-Ahead Market, on an ISO Control Area wide basis if the Day-Ahead Ancillary Services Market is defined on an ISO Control Area wide basis.