ATTACHMENT B

RATIONAL BUYER

2.5.28	Settlement for User Charges for Ancillary Services.
(a) 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, as adjusted by any Inter-Scheduling Coordinator Ancillary Service Trades. 
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, notwithstanding any adjustment to the quantities of each Ancillary Service purchased by the ISO in accordance with Section 2.5.3.6.
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 MW quantity purchased for each service.  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.
(b) If, in any Settlement Period, no quantity of Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve is purchased in the Day-Ahead Market or the Hour-Ahead Market due to the operation of Section 2.5.3.6, then in lieu of the user rate determined in accordance with Section 2.5.28.1, 2.5.28.2, 2.5.28.3, or 2.5.28.4, as applicable, the user rate for the affected Ancillary Service for that Settlement Period shall be determined as follows:
(i)  If the affected market is a Day-Ahead Market, the user rate for the affected Ancillary Service shall be set at the lowest capacity reservation price for an unaccepted qualified capacity bid in the Day-Ahead Market for the same Settlement Period for that Ancillary Service or for another Ancillary Service that meets the requirements for the affected Ancillary Service.  If there are no such unaccepted bids, the user rate for the affected Ancillary Service shall be the lowest Market Clearing Price for the same Settlement Period established in the Day-Ahead Market for another Ancillary Service that meets the requirements for the affected Ancillary Service.
(ii) If the affected market is an Hour-Ahead Market, the user rate for the affected Ancillary Service shall be set at the lowest capacity reservation price for an unaccepted qualified capacity bid in the Hour-Ahead Market for the same Settlement Period for that Ancillary Service or for another Ancillary Service that meets the requirements for the affected Ancillary Service.  If there are no such unaccepted bids, the user rate for the affected Ancillary Service shall be the user rate for the same Ancillary Service in the Day-Ahead Market in the same Settlement Period.  
(c) With respect to each Settlement Period, in addition to the user rates determined in accordance with Sections 2.5.28.1 through 2.5.28.4 or Section 2.5.28(b), as applicable, each Scheduling Coordinator shall be charged an additional amount equal to its proportionate share, based on total purchases by Scheduling Coordinators of Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve of the amount, if any, by which (i) the total payments to Scheduling Coordinators pursuant to Section 2.5.27.1 through 2.5.27.4, for the Day-Ahead Market and Hour-Ahead Market and all Zones, exceed (ii) the total amounts charged to Scheduling Coordinators pursuant to Section 2.5.28.1 through 2.5.28.4, for the Day-Ahead Market and Hour-Ahead Market and all Zones.  If total amounts charged to Scheduling Coordinators exceed the total payments to Scheduling Coordinators, each Scheduling Coordinator will be refunded its proportionate share, based on total purchases by Scheduling Coordinators of Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve.

2.5.28.1	Regulation.  Regulation Up and Regulation Down charges shall be calculated separately.  Quantities and rates for Regulation Down shall be calculated by substituting the Regulation Up quantities and rates in the relevant formulae.  The user rate per unit of purchased Regulation service for each Settlement Period in the Day-Ahead Market for each Zone shall be calculated by dividing the total Regulation capacity payments by the ISO’s total MW purchases of Regulation for that Settlement Period for that Zone which has not been self provided by Scheduling Coordinators.  The ISO will calculate the user rate for Regulation Up in each Zone for each Settlement Period as:
RegRateUpDA ($/MW) = AGCUpPayDA /AGCUpPurchDA
where:
AGCUpPayDA = Total Regulation Up payments for the Settlement Period in the Day-Ahead Market for the Zone.  
AGCUpPurchDA = the total ISO Regulation Up  MW purchases in the Day-Ahead Market for the Settlement Period for the Zone, excluding that which has been self provided by Scheduling Coordinators.
For each Settlement Period, each Scheduling Coordinator shall pay to the ISO a sum calculated as follows for each Zone:
RegUpRateDA * AGCUpOblig
where AGCUpOblig is the Scheduling Coordinator’s obligation for Regulation Up in the Zone in the Settlement Period for which it has not self provided.

2.5.28.2	Spinning Reserve.  The user rate per unit of purchased Spinning Reserve for each Settlement Period in the Day-Ahead Market for each Zone shall be calculated by dividing the total capacity payments for Spinning Reserve by the ISO’s total MW purchases of Spinning Reserve for that Settlement Period for that Zone which has not been self-provided by Scheduling Coordinators.  The ISO will calculate the user rate for Spinning Reserve in each Zone for each Settlement Period as:

where:
SpinPayDA = Total Spinning Reserve payments for the Settlement Period in the Market for the Zone Day-Ahead.  
SpinPurchDA= the total ISO Spinning Reserve MW purchases in the Day-Ahead Market for the Settlement Period for the Zone, excluding that which has been self provided by Scheduling Coordinators.
For each Settlement Period, each Scheduling Coordinator shall pay to the ISO a sum calculated as follows for each Zone:
SPRateDA * SpinOblig
where SpinOblig is the Scheduling Coordinator’s obligation for Spinning Reserve in the Zone in the Settlement Period for which it has not self-provided.

2.5.28.3	Non-Spinning Reserve.  The user rate per unit of purchased Non-Spinning Reserve for each Settlement Period in the Day-Ahead Market for each Zone shall be calculated by dividing the total capacity payments for Non-Spinning Reserve by the ISO’s total MW purchases of Non-Spinning Reserve for that Settlement Period for that Zone which has not been self provided by Scheduling Coordinators.  The ISO will calculate the user rate for Non-Spinning Reserve in each Zone for each Settlement Period as:

where:
NonSpinPayDA = Total Non-Spinning Reserve payments for the Settlement Period in the Day-Ahead Market for the Zone. 
NonSpinPurchDA = the total ISO Non-Spinning Reserve requirement MW purchases for the Settlement Period for the Zone, excluding that which has been self-provided by Scheduling Coordinators.
For each Settlement Period, each Scheduling Coordinator shall pay to the ISO a sum calculated as follows for each Zone:
NonSpRateDA * NonSpinOblig
where NonSpinOblig is the Scheduling Coordinator’s obligation for Non-Spinning Reserve in the Zone in the Settlement Period for which it has not self provided.

Settlement and Billing Protocol

Appendix C

C 2.2.1	Day-Ahead Market
	(a)	Regulation.  The ISO will charge the zonal cost of providing Regulation capacity that is not self provided by Scheduling Coordinators, in the Day-Ahead Market, through the application of a charge to each Scheduling Coordinator for each Trading Interval.  This charge will be computed by multiplying the Regulation user rate for the Trading Interval by the Scheduling Coordinator’s Regulation obligation, for which it has not self provided, for the same period.

		The zonal Regulation user rate for the Day-Ahead Market is calculated by dividing the total cost to ISO of purchasing Regulation Capacity within the Zone, for the Trading Interval, by the total ISO Regulation MW purchases for the Trading Interval within the Zone.  Regulation Up and Regulation Down payments shall be calculated seperately. Quantities and rates for Regulation Down shall be calculated by substituting the Regulation Up quantities and prices in the relevant formulae.  The Day-Ahead Regulation Up user rate in Zone x for Trading Interval t is calculated as follows:

where,

AGCUpPayTotalDAixt =  Total Regulation Up payments for the Settlement Period t in the Day-Ahead market for the Zone x.

The Regulation capacity charge for Scheduling Coordinator j in the Day-Ahead Market in Zone x for Trading Interval t is calculated as follows:

	(b)	Spinning Reserve.  The ISO will charge the zonal cost of providing Spinning Reserve capacity that is not self provided by Scheduling Coordinators, in the Day-Ahead Market, through the application of a charge to each Scheduling Coordinator for each Trading Interval.  This charge will be computed by multiplying the Spinning Reserve capacity user rate for the Trading Interval by the Scheduling Coordinator’s Spinning Reserve obligation, for which it has not self provided, for the same period.

The zonal Spinning Reserve capacity user rate for the Day-Ahead Market is calculated by dividing the total cost to ISO of purchasing Spinning Reserve capacity within the Zone, for the Trading Interval, by the total ISO Spinning Reserve MW purchases for the Trading Interval within the Zone.  The Day-Ahead Spinning Reserve capacity user rate in Zone x for Trading Interval t is calculated as follows:

The Spinning Reserve capacity charge for Scheduling Coordinator j in the Day-Ahead Market in Zone x for Trading Interval t is calculated as follows:

	(c)	Non-Spinning Reserve.  The ISO will charge the zonal cost of providing Non-Spinning Reserve capacity that is not self provided by Scheduling Coordinators, in the Day-Ahead Market, through the application of a charge to each Scheduling Coordinator for each Trading Interval.  This charge will be computed by multiplying the Non-Spinning Reserve capacity user rate for the Trading Interval by the Scheduling Coordinator’s Non-Spinning Reserve obligation, for which it has not self provided, for the same period.

The zonal Non-Spinning Reserve capacity user rate for the Day-Ahead Market is calculated by dividing the total cost to ISO of purchasing Non-Spinning Reserve capacity within the Zone, for the Trading Interval, by the total ISO Non-Spinning Reserve MW purchases for the Trading Interval within the Zone.  The Day-Ahead Non-Spinning Reserve capacity user rate in Zone x for Trading Interval t is calculated as follows:

The Non-Spinning Reserve capacity charge for Scheduling Coordinator j in the Day-Ahead Market in Zone x for Trading Interval t is calculated as follows:

C 2.2.2	Hour-Ahead Market
	(a)	Regulation.  The ISO will charge the zonal net cost of providing Regulation capacity that is not self provided by Scheduling Coordinators, in the Hour-Ahead Market through the application of a charge to each Scheduling Coordinator for the Trading Interval concerned.  This charge will be computed by multiplying the Regulation user rate for the Trading Interval by the Scheduling Coordinator’s Regulation obligation, for which it has not self provided, for the same period.

The zonal Regulation capacity user rate for the Hour-Ahead Market is calculated by dividing the total cost to the ISO of purchasing Regulation capacity within the Zone less any amounts payable to the ISO by Scheduling Coordinators for Regulation bought back from the ISO in the Hour-Ahead Market on behalf of resources located in the Zone, for the Trading Interval, by the total ISO Regulation capacity MW purchases for the Trading Interval within the Zone.  Regulation Up and Down payments shall be calculated separately.  Quantities and rates for Regulation Down shall be calculated by substituting the Regulation Up quantities and prices in the relevant formulae.  The Hour-Ahead Regulation Up capacity user rate in Zone x for Trading Interval t is calculated as follows:

where,

AGCUpPayTotalHajxt= Total Regulation Up payments for the Settlement Period t in the Hour-Ahead Market for Zone x.

The Regulation capacity charge for Scheduling Coordinator j in the Hour-Ahead Market in Zone x for Trading Interval t is calculated as follows:

AGCUpChgHAjxt = (AGCUpObligjxt * AGCUpRateHAxt)

	(b)	Spinning Reserve.  The ISO will charge the zonal net cost of providing Spinning Reserve capacity that is not self provided by Scheduling Coordinators, in the Hour-Ahead Market, through the application of a charge to each Scheduling Coordinator for the Trading Interval.  This charge will be computed by multiplying the Spinning Reserve capacity user rate for the Trading Interval by the Scheduling Coordinator’s Spinning Reserve obligation, for which it has not self provided, for the same period.

The zonal Spinning Reserve capacity user rate for the Hour-Ahead Market is calculated by dividing the total cost to ISO of purchasing Spinning Reserve capacity within the Zone less any amounts payable to the ISO by Scheduling Coordinators for Spinning Reserve bought back from the ISO in the Hour-Ahead Market on behalf of resources located in the Zone, for the Trading Interval, by the total ISO Spinning Reserve MW purchases for the Trading Interval within the Zone.  The Hour-Ahead Spinning Reserve capacity user rate in Zone x for Trading Interval t is calculated as follows:

The Spinning Reserve capacity charge for Scheduling Coordinator j in the Hour-Ahead Market in Zone x for Trading Interval t is calculated as follows:

SpinChgHAjxt = (SpinObligjxt * SpinRateHAxt)

(c)	Non-Spinning Reserve.  The ISO will charge the zonal net cost of providing Non-Spinning Reserve capacity that is not self provided by Scheduling Coordinators, in the Hour-Ahead Market, through the application of a charge to each Scheduling Coordinator for the Trading Interval.  This charge will be computed by multiplying the Non-Spinning Reserve capacity user rate for the concerned Trading Interval by the Scheduling Coordinator’s Non-Spinning Reserve obligation, for which it has not self provided, for the same period.  

The zonal Non-Spinning Reserve capacity user rate for the Hour-Ahead Market is calculated by dividing the total cost to ISO of purchasing Non-Spinning Reserve capacity within the Zone less any amounts payable to the ISO by Scheduling Coordinators for Non-Spinning Reserve bought back from the ISO in the Hour-Ahead Market on behalf of resources in the Zone, for the Trading Interval, by the total ISO Non-Spinning Reserve MW purchases for the Trading Interval within the Zone.  The Hour-Ahead Non-Spinning Reserve capacity user rate in Zone x for Trading Interval t is calculated as follows:

The Non-Spinning Reserve capacity charge for Scheduling Coordinator j in the Hour-Ahead Market in Zone x for Trading Interval t is calculated as follows:

NonSpinChgHAjxt = (NonSpinObligjxt * NonSpinRateHAxt)

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C 2.2.4	Rational Buyer Adjustments
(a)	If, in any Settlement Period, no quantity of Regulation, Spinning Reserve, Non-Spinning Reserve or Replacement Reserve is purchased in the Day-Ahead Market or the Hour-Ahead Market due to the operation of Section 2.5.3.6 of the ISO Tariff, then in lieu of the user rate determined in accordance with Section C 2.2.1, C 2.2.2, or C 2.2.3, as applicable, the user rate for the affected Ancillary Service for that Settlement Period shall be determined as follows:

(i)	If the affected market is a Day-Ahead Market, the user rate for the affected Ancillary Service shall be set at the lowest capacity reservation price for an unaccepted qualified capacity bid in the Day-Ahead Market for that Ancillary Service or for another Ancillary Service that meets the requirements for the affected Ancillary Service.  If there are no such unaccepted bids, the user rate for the affected Ancillary Service shall be the lowest Market Clearing Price for the same Settlement Period established in a Day-Ahead Market for another Ancillary Service that meets the requirements for the affected Ancillary Service.

(ii)	If the affected market is an Hour-Ahead Market, the user rate for the affected Ancillary Service shall be set at the lowest capacity reservation price for an unaccepted qualified capacity bid in the Hour-Ahead Market for the same Settlement Period for that Ancillary Service or for another Ancillary Service that meets the requirements for the affected Ancillary Service.  If there are no such unaccepted bids, the user rate for the affected Ancillary Service shall be the user rate for the same Ancillary Service in the Day-Ahead Market in the same Settlement Period.

(b)	With respect to each Settlement Period, in addition to the user rates determined in accordance with Sections C 2.2.1 through C 2.2.3, or Section C 2.2.4(a), as applicable, each Scheduling Coordinator shall be charged an additional amount equal to its proportionate share, based on total purchases by Scheduling Coordinators of Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve of the amount, if any, by which (i) the total payments to Scheduling Coordinators pursuant to Section C 2.1 for the Day-Ahead Market and Hour-Ahead Market and all Zones, exceed (ii) the total amounts charged to Scheduling Coordinators pursuant to Sections C 2.2.1 through C 2.2.3, for the Day-Ahead Market and Hour-Ahead Market and all Zones.  If total amounts charged to Scheduling Coordinators exceed the total payments to Scheduling Coordinators, each Scheduling Coordinator will be refunded its proportionate share, based on total purchases by Scheduling Coordinators of Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve.

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C 3.66	AGCUpPurchDAxt – MW
The total quantity of Regulation Up capacity provided in the Day-Ahead Market in Zone x for Trading Interval t, not including self-provided quantities.

C 3.67	SpinPurchDAxt – MW
The total quantity of Spinning Reserve capacity provided in the Day-Ahead Market in Zone x for Trading Interval t, not including self-provided quantities. 

C 3.68	NonSpinPurchDAxt – MW
The total quantity of Non-Spinning Reserve capacity provided in the Day-Ahead Market in Zone x for Trading Interval t, not including self-provided quantities.

C 3.69	AGCUpPurchHAxt – MW
The net quantity of Regulation Up capacity provided in the Hour-Ahead Market in Zone x for Trading Interval t, not including self-provided quantities.

C 3.70	SpinPurchHAxt – MW
The net quantity of Spinning Reserve capacity provided in the Hour-Ahead Market in Zone x for Trading Interval t, not including self-provided quantities.

C 3.71	NonSpinPurchDAxt – MW
The net quantity of Non-Spinning Reserve capacity provided in the Hour-Ahead Market in Zone x for Trading Interval t, not including self-provided quantities.