2.5.12	Bid Evaluation Rules
Bid evaluation shall be based on the following principles:
(a)	the ISO shall not differentiate between bidders other than through price and capability to provide the service, and the required locational mix of services;
(b)	to minimize the costs to users of the ISO Controlled Grid, the ISO shall select the bidders with lowest bids for capacity which meet its technical requirements, including location and operating capability;
(c)	for the Day-Ahead Market, the Day-Ahead bids shall be evaluated independently for each of the 24 Settlement Periods of the following Trading Day;
(d)	for the Hour-Ahead Market, the ISO shall evaluate bids in the two hours preceding the hour of operation;
(e)	the ISO will procure sufficient Ancillary Services in the Day-Ahead Market to meet its  forecasted requirements, as known at the close of the Day-Ahead Market, except that the ISO may elect to procure a portion of such requirements in the Hour-Ahead Markets if the ISO first provides notice to Scheduling Coordinators of such action, including the approximate hourly megawatt amounts of each Ancillary Service that it intends to procure in the Hour-Ahead Markets.

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.
If, at any time after the issuance of Final Day Ahead Schedules for the Trading Day and before the close of the Hour-Ahead Market for the first Settlement Period of the Trading Day, the ISO determines that it requires Ancillary Services in addition to those included in the Final Day-Ahead Schedule (in the appropriate zone if procuring zonally), the ISO may procure such additional Ancillary Services  by providing Scheduling Coordinators with amended supplier schedules for the Day-Ahead Markets that include Ancillary Services for which previously submitted (but not selected) bids remain available and have not previously been withdrawn. The ISO shall select such Ancillary Services in price merit order (and in the relevant zone if the ISO is procuring Ancillary Services on a zonal basis).  Such amended supplier schedules shall be provided to the Scheduling Coordinators no later than the close of the Hour-Ahead Market for the first Settlement Period of the Trading Day.
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, subject to any amendments issued as described above.  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.

5.2	Procurement of Reliability Must-Run Generation by the ISO

5.2.1	A Reliability Must-Run Contract is a contract entered into by the ISO with a Generator which operates a Generating Unit giving the ISO the right to call on the Generator to generate Energy and, only as provided in this Section 5.2, or as needed for Black Start or Voltage Support required to meet local reliability needs, or to procure Ancillary Services from Potrero or Hunter’s Point power plants to meet operating criteria associated with the San Francisco local reliability area, to provide Ancillary Services from the Generating Units as and when this is required to ensure that the reliability of the ISO Grid is maintained.

5.2.1.1	 If the ISO, pursuant to Section 2.5.12(e), has elected to procure an amount of megawatts of its forecast needs for an Ancillary Service in the Hour-Ahead Markets and there is not an adequate amount of capacity bid into an Hour-Ahead Market  for the ISO to procure such amount of megawatts of that Ancillary Service (excluding bids that exceed price caps imposed by the ISO or FERC), the ISO may call upon Reliability Must-Run Units under Must-Run Contracts to meet the remaining portion of that amount of megawatts for that Ancillary Service but only after accepting all available bids in the Hour-Ahead Market (including any unused bids that can be used to satisfy that particular Ancillary Services requirement under Section 2.5.3.6), except that the ISO shall not be required to accept bids that exceed price caps imposed by the ISO or the FERC.

5.2.1.2	If, at any time after the issuance of Final Day-Ahead Schedules for the Trading Day – 
(1)	the ISO determines that it requires more of an Ancillary Service than it has procured;
(2)	all additional Day-Ahead bids for that Ancillary Service that have not been withdrawn (including any unused bids that can be used to satisfy that particular Ancillary Services requirement under Section 2.5.3.6) have been selected pursuant to Section 2.5.21, except that the ISO shall not be required to accept bids that exceed price caps imposed by the ISO or the FERC; 
(3)	the ISO has notified Scheduling Coordinators of the circumstances existing in paragraphs (1) and (2) of this Section 5.2.1.2; and
(4)	after such notice, the ISO determines that a Bid Insufficiency condition exists in the Hour-Ahead Market for the Settlement Period in which the ISO requires more of an  Ancillary Service;
the ISO may call upon Reliability Must-Run Units under Reliability Must-Run Contracts to meet the additional needs in addition to any amounts that the ISO has called upon under Section 5.2.1.1.  The ISO must provide the notice specified in paragraph (3) of this Section 5.2.1.2 as soon as possible after the ISO determines that additional Ancillary Service are needed for which bids are not available.  The ISO may only determine that a Bid Insufficiency exists in the Hour-Ahead Market after the close of the Hour-Ahead Market, unless an earlier determination is required in order to accommodate the Must Run Unit’s operating constraints. For the purposes of this Section, a Bid Insufficiency exists in an Hour-Ahead Market if, and only if –
(a)	bids in the Hour-Ahead Market for the particular Ancillary Service (including any unused bids that can be used to satisfy that particular Ancillary Services requirement under Section 2.5.3.6) that remain after first procuring the megawatts of the Ancillary Service that the ISO had notified Scheduling Coordinators it would procure in the Hour-Ahead Market pursuant to Section 2.5.12 (“remaining Ancillary Service requirement”) represent, in the aggregate, less than two times such remaining Ancillary Service requirement; or  
(b)	there are less than two unaffiliated bidders to provide such remaining Ancillary Service requirement.
If a Bid Insufficiency condition exists, the ISO may nonetheless accept available market bids if it determines in its sole discretion that the prices bid and the supply curve created by the bids indicate that the bidders were not attempting to exercise market power. 

SP 3.2.6.1	Actions by SCs and the ISO

By 10:00 a.m. on the day ahead of the Trading Day (for example, by 10:00 a.m. on Tuesday for the Wednesday Trading Day) and for each Settlement Period of that Trading Day (see SP 3.2.6.2 for information on the pre-validation performed at ten (10) minutes prior to the 10:00 a.m. deadline):

(a)	SCs will submit, as part of their Preferred Day-Ahead Schedules, their Adjustment Bids, if any, to the ISO in accordance with the SBP;

(b)	SCs will submit their Ancillary Services bids, if any, to the ISO in accordance with the SBP and SP 9;

(c)	SCs will submit their schedules for self-provided Ancillary Services, if any, to the ISO in accordance with the SBP and SP 9;

(d)	SCs will submit their schedules for self-provided Ancillary Services, if any, to the ISO in accordance with the SBP and SP 9;

(e)	the ISO will validate (in accordance with the SBP) all SC submitted Preferred Day-Ahead Schedules for Energy and Adjustment Bids and may assist SCs to resolve mismatches in scheduled quantities or locations for Inter-Scheduling Coordinator Energy Trades in accordance with the procedure described in SP 3.2.6.4;

(f)	the ISO will validate (in accordance with the SBP) all SC submitted schedules for self-provided Ancillary Services, Inter-Scheduling Coordinator Ancillary Service Trades, and Ancillary Services bids which were part of their Preferred Day-Ahead Schedules;

(g)	the ISO will start the first iteration of Inter-Zonal Congestion Management process as described in SP 10;

(h)	the ISO will start the Ancillary Services bid evaluation process as described in SP 9; and 

(i) 	the ISO will notify SCs of any Reliability Must-Run Units which have not been included in Preferred Day-Ahead Schedules but which the ISO requires to run in the Trading Day, except in those instances where a Reliability Must-Run Unit requires more than one day’s notice, in which case the ISO may notify the applicable SC more than one day in advance of the Trading Day and except for those Reliability Must-Run Units that the ISO may subsequently call upon for Ancillary Services capacity pursuant to Section 5.2 of the ISO Tariff.

SP 3.2.11	Between 1:00 p.m.  and 10:00 p.m.

If, at any time after 1:00 p.m. and before 10:00 p.m. of the day prior to the Trading Day, the ISO determines that it requires Ancillary Services in addition to those provided through the Final Day-Ahead Schedules issued under SP 3.2.9, it may procure such additional Ancillary Services by providing to SCs, via WEnet, amended schedules for Ancillary Services that had been bid in the Day-Ahead Market but were not previously selected in the Final Day-Ahead Schedules, and have not been previously withdrawn.  The ISO shall select such Ancillary Services in price merit order (and in the relevant zone if the ISO is procuring Ancillary Services on a zonal basis).  Such amended schedules shall be provided to the SCs no later than 10:00 p.m. of the day prior to the Trading Day.

SP 5.4	Scheduling of Reliability Must Run Ancillary Services

The ISO will notify SCs of any Ancillary Services it requires from Reliability Must-Run Units under their Reliability Must-Run Contracts pursuant to Section 5.2 of the ISO Tariff as soon as practicable after the decision to call upon such units.

DP 9.1.1	Range of ISO Authority

		This ISO has full authority to:

(a)	direct the physical operation of the ISO Controlled Grid, including (without limitation) circuit breakers, switches, voltage control equipment, protective relays, metering and Load Shedding equipment;

(b)	commit Reliability Must-Run Generation, except that the ISO shall only commit Reliability Must-Run Generation for Ancillary Services capacity according to Section 5.2 of the Tariff;

(c)	order a change in operating status of voltage control equipment; 

(d)	take required action to prevent against uncontrolled losses of load or Generation;

(e)	control the output of Generating Units and Interconnection schedules scheduled to provide Ancillary Services or offering Supplemental Energy;

(f)	dispatch Curtailable Demand which has been scheduled to provide Non-Spinning Reserve or Replacement Reserve; and

(g)	require the operation of resources which are at the ISO’s disposal in a System Emergency, as described in DP 10.