market-based rates, will not be paid above their cost-based bid for the Ancillary Service concerned even if the relevant market clearing price is higher.
2.5.7.4	 Bidding and Self-Provision of Ancillary Services 
The ISO will procure Ancillary Services in accordance with this ISO Tariff, and the applicable ISO Protocols.
2.5.7.4.1	Scheduling Coordinators may bid or self-provide Ancillary Services from resources located within the ISO Control Area.
2.5.7.4.2	Scheduling Coordinators may bid or self-provide external imports of Spinning Reserve, Non-Spinning Reserve or Replacement Reserve from resources located outside the ISO Control Area, where technically feasible and consistent with WSCC criteria; and provided that such Scheduling Coordinators have certified to the ISO their ability to deliver the service to the point of interchange with the ISO Control Area (including with respect to their ability to make changes, or cause such changes to be made, to interchange schedules during any interval of a Settlement Period at the discretion of the ISO).
2.5.7.4.3	Except as provided in section 2.5.7.4.4, Scheduling Coordinators cannot bid or self-provide external imports of Regulation Reserve from resources located outside the ISO Control Area.
2.5.7.4.4	Scheduling Coordinators may utilize transmission service under Existing Contracts to self-provide Regulation (consistent with the applicable ISO Protocols), Spinning Reserve, Non-Spinning Reserve or Replacement Reserve from resources located outside the ISO Control Area, where technically feasible, consistent with WSCC standards.
2.5.7.4.5	Scheduling Coordinators’ bidding or self-provision of Ancillary Services according to this section 2.5.7.4 shall be consistent with the ISO Protocols.
2.5.8	The Bidding Process.
The ISO shall operate a competitive Day-Ahead and Hour-Ahead market to procure Ancillary Services.  It shall purchase Ancillary Services capacity at least cost to End-Use Customers consistent with maintaining system reliability.  Any Scheduling Coordinator representing Generating Units, Loads or external imports of System Resources may bid into the ISO's Ancillary Services market provided that it is in possession of a current certificate for the Generating Units or Loads concerned.
2.5.9	Provision of System Information to Market Participants.
By 6:00 p.m. two days prior to the Trading Day, the ISO shall make available to Scheduling Coordinators general system information including those items of 

to the ISO.  The ISO shall evaluate bids in the markets for Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve sequentially and separately in the following order:  Regulation, Spinning Reserve, Non-Spinning Reserve and Replacement Reserve.  Any capacity accepted by the ISO in one of these markets shall not be passed on to another market, except that capacity accepted in the Regulation market that represents the downward range of movement accepted by the ISO may be passed on to another market; any losing bids in one market may be passed onto another market, if the Scheduling Coordinator so indicates to the ISO.  A Scheduling Coordinator may specify capacity bid into only the markets it desires.  A Scheduling Coordinator shall also have the ability to specify different capacity prices and different Energy prices for the Spinning Reserve, Non-Spinning Reserve, Replacement Reserve and Regulation markets.  The bid information, bid evaluation and price determination rules set forth below shall be used in the Day-Ahead, Hour-Ahead and real time procurement of Regulation, Spinning Reserve, Non- Spinning Reserve, and Replacement Reserve.
A Scheduling Coordinator providing one or more Regulation, Spinning Reserve, Non-Spinning Reserve, and Replacement Reserve services may not change the identification of the Generating Units or Loads offered in the Day-Ahead Market, the Hour-Ahead Market or in real time for such services unless specifically approved by the ISO.
2.5.14	The Regulation Auction.
Bid Information.  Each Scheduling Coordinator j shall submit the following information for each Generating Unit or System Unit i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	resource identification (name and Location Code);
(a)	
(c)	the date for which the bid applies;
(d)	maximum operating level (MW);
(e)	minimum operating level (MW);
(f)	ramp rate (MW/Min) Rampijt;
(g)	the upward and downward range of generating capacity over which Generating Unit or System Unit i from Scheduling Coordinator j is willing to provide Regulation for Settlement Period t (Capijtmax (MW) where Capijtmax   Period minutes * Rampijt and Period minutess is established by the ISO by giving Scheduling Coordinators twenty-four (24) hours advance notice, within a range from a minimum of 10 minutes to a maximum of 30 minutes.)  Bidders shall offer upward and downward range for Regulation service;
(h)	the bid price of the capacity reservation (CapResijt ($/MW));
(i)	the bid price of the Energy output from the reserved capacity (EnBidijt($/MWh));
Bid Evaluation.  Based on the quantity and location of the system requirements, the ISO shall select Generating Units and System Units with the bids, which minimize the sum of the total bids of the Generating Units and System Units selected subject to two constraints:
(a)	the sum of the selected bid capacities must be greater than or equal to the required Regulation capacity; and
(b)	each Generating Unit’s or System Unit’s bid capacity must be less than or equal to that Generating Unit’s or System Units ramp rate times Period  minutes
(a)	
The total bid for each Generating Unit or System Unit is calculated by multiplying the capacity reservation bid price by the bid capacity.
Thus, subject to any locational requirements, the ISO will accept winning Regulation bids in accordance with the following criteria:

Subject to

Where
TotalBidijt = CapResijt  * Capijt
Requirementt = Amount of upward and downward movement capacity required 
Price Determination.  The price payable to Scheduling Coordinators for Regulation capacity made available for upward and downward movement in accordance with the ISO’s Ancillary Services schedules shall, for each Generating Unit and System Unit concerned, be the zonal market clearing price as follows:
PAGCx = MCPxt
Where:
The zonal market clearing (MCPxt) price is the highest priced winning Regulation capacity bid in Zone X based on the capacity reservation bid price i.e.
MCPxt = Max (CapResijt) in zone x for Settlement Period t
The ISO’s auction does not compensate the Scheduling Coordinator for the minimum Energy output of Generating Units or System Units bidding to provide Regulation.  Therefore, disposition of any minimum Energy associated with Regulation selected in the ISO’s Ancillary Services markets is the responsibility of the Scheduling Coordinator selling the Regulation.
2.5.15	The Spinning Reserve Auction.
Bid Information.  If the bid is for the provision of Spinning Reserve from a Generating Unit or System Unit, each Scheduling Coordinator j must submit the following information for each Generating Unit or System Unit i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	resource identification (name and Location Code);
(c)	the date for which the bid applies;
(d)	maximum operating level (MW);
(e)	minimum operating level (MW);
(f)	ramp rate (MW/min);
(g)	MW additional capability synchronized to the system, immediately responsive to system frequency, and available within 10 minutes (Capijtmax) for Generating Unit i, or System Unit I, from Scheduling Coordinator j, for Settlement Period t.
(h)	bid price of capacity reserved (CapResijt ($/MW));
(i)	bid price of Energy output from reserved capacity (EnBidijt ($/MWh)).
	If the bid is for the provision of Spinning Reserve from an external import of a System Resource, each Scheduling Coordinator j must submit the following information for each external import of a System Resource i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	the date for which the bid applies;
(c)	ramp rate if applicable (MW/Min);
(d)	MW additional capability synchronized to the system, immediately responsive to system frequency and available at the point of interchange with the ISO Control Area, within 10 minutes (Capijtmax) of the ISO calling for the external import of System Resource i, from Scheduling Coordinator j, for Settlement Period t;
(e)	bid price of capacity reserved (CapResijt ($/MW));
(f)	bid price of Energy output from reserved capacity (EnBidijt ($/MWh)).

Bid Evaluation.  Based on the quantity and location of the system requirements, the ISO shall select the Generating Units, System Units and external imports of System Resources with the bids which minimize the sum of the total bids of the Generating Units, System Units and external imports of System Resources selected subject to two constraints:
(a)	the sum of the selected bid capacities must be greater than or equal to the required Spinning Reserve capacity; and
(b)	each Generating Unit’s, System Unit’s or external import’s bid capacity must be less than or equal to that Generating Unit’s, System Unit’s or external import’s ramp rate times 10 minutes.
The total bid for each Generating Unit, System Unit or external import of a System Resource is calculated by multiplying the capacity reservation bid price by the bid capacity.
Thus, subject to any locational requirements, the ISO will select the winning Spinning Reserve bids in accordance with the following criteria:

Capijt  Capijtmax
Where
TotalBidijt = Capijt * CapResijt
Requirementt = the amount of Spinning Reserve capacity required
Price Determination.  The price payable to Scheduling Coordinators for Spinning Reserve capacity made available in accordance with the ISO’s Ancillary Services schedules shall, for each Generating Unit or external import of a System Resource concerned be the zonal market clearing price for Spinning Reserve calculated as follows:
Pspxt = MCPxt
Where the zonal market clearing price (MCPxt) for Spinning Reserve is the highest priced winning Spinning Reserve capacity bid in Zone X based on the capacity reservation bid price, i.e.:
MCPxt = Max(CapResijt) in zone x for Settlement Period t
The ISO’s auction does not compensate a Scheduling Coordinator for the minimum Energy output of Generating Units, System Units or System resources bidding to provide Spinning Reserve.  Therefore, any minimum Energy output associated with Spinning Reserve selected in the ISO’s auction is the responsibility of the Scheduling Coordinator selling the Spinning Reserve.

2.5.16	The Non-Spinning Reserve Auction.
Bid information.  If the bid is for the provision of Non-Spinning Reserve from a Generating Unit or System Unit, each Scheduling Coordinator j must submit the following information for each Generating Unit or System Unit i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	Generating Unit or System Unit identification (name and Location Code);
(c)	the date for which the bid applies;
(d)	maximum operating level (MW);
(e)	minimum operating level (MW);
(f)	ramp rate (MW/Min);
(g)	the MW capability available within 10 minutes (Capijtmax);
(h)	the bid price of the capacity reserved (CapResijt($/MW));
(i)	time to synchronization following notification (min);
(j)	the bid price of the Energy output from the reserved capacity (EnBidijt($/MWh)).
If the bid is for the provision of Non-Spinning Reserve from an external import of a System Resource, each Scheduling Coordinator j must submit the following information for each external import of a System Resource i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	the date for which the bid applies;
(c)	ramp rate if applicable (MW/Min);
(d)	the MW capability available at the point of interchange with the ISO Control Area, within 10 minutes (Capijtmax) of the ISO calling for the external import of System Resource I, from Scheduling Coordinator j, for Settlement Period t;
(e)	the bid price of the capacity reserved (CapResijt($/MW)); and
(f)	the bid price of Energy output from reserved capacity (EnBidijt($/MWh)).
	If the bid is for the provision of Non-Spinning Reserve from a Load located within the ISO Control Area, each Scheduling Coordinator j must submit the following information for each Load i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	Load identification name and Location Code;
(c)	the date for which the bid applies;
(d)	the Demand reduction available within 10 minutes (Capijtmax);
(e)	time to interruption following notification (min);
(f)	maximum allowable curtailment duration (hr);
(g)	the bid price of the capacity reserved (CapResijt($/MW));
(h)	the bid price for Demand reduction from the reserved capacity (EnBidijt($/MWh)). 

Bid Evaluation.  Based on the quantity and location of the system requirements, the ISO shall select the Generating Units, System Units, Loads or external imports of System Resources with the bids which minimize the sum of the total bids of the Generating Units, System Units, Loads or external imports of System Resources selected subject to two constraints:
(a)	the sum of the selected bid capacities must be greater than or equal to the required Non-Spinning Reserve capacity; and
(b)	each Generating Unit’s, System Unit’s, Load’s or external import’s bid capacity must be less than or equal to that Generating Unit’s, System Unit’s, Load’s or external import’s ramp rate (or time to interruption in the case of a Load offering Demand reduction) times the difference between 10 minutes and the time to synchronize in the case of a Generating Unit or System Unit or to interruption in the case of a Load.
The total bid for each Generating Unit, System Unit, Load or external import of a System Resource is calculated by multiplying the capacity reservation bid by the bid capacity.
Thus subject to any locational requirements, the ISO will accept the winning Non-Spinning Reserve bids in accordance with the following criteria:

Where
TotalBidijt = Capijt  * CapResijt
Requirementt = the amount of Non-Spinning Reserve capacity required
Price Determination.  The price payable to Scheduling Coordinators for Non-Spinning Reserve capacity made available in accordance with the ISO’s Ancillary Services schedules shall for each Generating Unit, System Unit, Load or external import of a System Resource concerned be the zonal market clearing price for Non-Spinning Reserve calculated as follows:
Pnonspxt = MCPxt
Where the zonal market clearing price (MCPxt) for Non-Spinning Reserve is the highest priced winning Non-Spinning Reserve bid in Zone X based on the capacity reservation bid price, i.e.:
MCPxt = Max(CapResijt) in zone x for Settlement Period t.
2.5.17	The Replacement Reserve Auction.
Bid Information.  If the bid is for the provision of Replacement Reserve from a Generating Unit or System Unit each Scheduling Coordinator j must submit the following information for each Generating Unit or System Unit i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	Generating Unit or System Unit identification (name and Location Code);
(c)	the date for which the bid applies;
(d)	maximum operating level (MW);
(e)	minimum operating level (MW);
(f)	ramp rate (MW/Min);
(g)	the MW capacity available within 60 minutes (Capijtmax);
(h)	the bid price of the capacity reserved (CapResijt ($/MW));
(i)	time to synchronize following notification (min);
(j)	the bid price of the Energy output from the reserved capacity (EnBidijt ($/MWh)).
If the bid is for the provision of Replacement Reserve from an external import of a System Resource, each Scheduling Coordinator j must submit the following information for each external import of a System Resource i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	the date for which the bid applies;
(c)	 ramp rate applicable (MW/Min);
(d)	the MW capability available at the point of interchange with the ISO Control Area, within 60 minutes (Capijtmax) of the ISO calling for the external import of System Resource i, from Scheduling Coordinator j, for Settlement Period t;
(e)	bid price of capacity reserved (CapResijt;($/MW)); and
(f)	bid price of Energy output from reserved capacity (EnBidijt ($/MWh)).
If the bid is for the provision of Replacement Reserve from a Load located within the ISO Control Area, each Scheduling Coordinator j must submit the following information for each Load i for each Settlement Period t of the following Trading Day:
(a)	bidder name/Identification Code;
(b)	Load identification (name and Location Code);
(c)	the date for which the bid applies;
(d)	the Demand reduction available within 60 minutes (Capijt (MW));
(e)	time to interruption following notification (min);
(f)	maximum allowable curtailment duration (hr);
(g)	the bid price of the capacity reserved (CapResijt ($/MW));
(h)	the bid price of the Demand reduction from the reserved capacity (EnBidijt ($/MWh)).
Bid Evaluation.  Based on the quantity and location of the system requirements, the ISO shall select the Generating Units, System Units, Loads or external imports of System Resources with the bids which minimize the sum of the total bids of the Generating Units, System Units, Loads or external imports of System Resources selected subject to two constraints:
(a)	the sum of the selected bid capacities must be greater than or equal to the required Replacement Reserve capacity; and
(b)	each Generating Unit’s, System Unit’s, Load’s or external import’s bid capacity must be less than or equal to that Generating Unit’s, System Unit’s,  Load’s or external import’s ramp rate (or time to interruption in the case of a Load offering Demand reduction) times the difference between 60 minutes and the time to synchronize in the case of Generating Unit or System Unit, or to interruption in the case of Load.
The total bid for each Generating Unit, System Unit, Load or external import of System Resource is calculated by multiplying the capacity reservation bid price by the bid capacity.
Thus, subject to any locational requirements, the ISO will select the winning Replacement Reserve bids in accordance with the following criteria:

Where
TotalBidijt = Capijt * CapResijt)
Requirementt = the amount of Replacement Reserve capacity
Price Determination.  The price payable to Scheduling Coordinators for Replacement Reserve capacity made available in accordance with the ISO’s Ancillary Services
 schedules shall, for each Generating Unit, System Unit, Load or external import of a System Resource, be the zonal market clearing price for Replacement Reserve calculated as follows:
PRepResxt = MCPxt
Where the zonal market clearing price (MCPxt) for Replacement Reserve is the highest priced winning Replacement Reserve bid in Zone X based on the capacity reservation bid price, i.e.:
MCPxt = Max(CapResijt) in zone x for Settlement Period t
2.5.18	Voltage Support.
As of the ISO Operations Date, the ISO will contract for Voltage Support service with the owners of Reliability Must-Run Units.  Payments for public utilities under the FPA shall be capped at the FERC authorized cost based rates unless and until FERC authorizes different pricing.  The ISO shall pay owners of Reliability Must-Run units for long term Voltage Support through their Scheduling Coordinators.
In addition, any Participating Generator who is producing Energy shall, upon the ISO’s specific request, provide reactive energy output outside the Participating Generator’s Voltage Support obligation defined in Section 2.5.3.4.
The ISO shall select Participating Generator’s Generating Units which have been certified for Voltage Support to provide this additional Voltage Support.  Subject to any locational requirements, the ISO shall select the Generating Units from a computerized merit order stack to back down to produce additional Voltage Support in each location where Voltage Support is needed.
The ISO has authority to suspend MSS control and direct, via communications with the MSS operator, the operation of units within the MSS if such control is necessary to maintain ISO Controlled Grid reliability.
If the MSS operator does not conform with Good Utility Practice, the ISO may suspend MSS control until the MSS operator demonstrates the ability and willingness to conform with Good Utility Practice.
2.5.25	Periodic Testing of Units.
The ISO may test Generating Units, Loads and System Resources in the manner described herein.  The frequency of testing shall be within such timeframes as are reasonable under all the circumstances.  Scheduling Coordinators shall manage the resulting Energy output if notification of testing permits the Energy to be scheduled.  If a Generating Unit, Load, or System Resource fails to meet requirements in a test under this section, the ISO shall notify the relevant Participating Generator, owner or operator of Loads or System Resources, or Scheduling Coordinator of such failure as soon as reasonably practicable after the completion of the test.  Failure to meet requirements shall lead to the penalties described in Section 2.5.26.
2.5.25.1	Regulation.  The ISO shall continuously monitor the response of a Generating Unit to the ISO’s Regulation instructions in order to determine compliance with Dispatch instructions.
2.5.25.2	Spinning Reserve.  The ISO shall test the Spinning Reserve capability of a Generating Unit or System Resource by issuing unannounced Dispatch instructions requiring the Generating Unit resource or System Resource to ramp up to its ten minute capability.  The ISO shall measure the response of the Generating Unit or System 
Resource to determine compliance with requirements.  The Scheduling Coordinator for the Generating Unit or System Resource shall be paid the Energy bid or Proxy Energy Bid price of the Generating Unit for the output under the Spinning Reserve test.