152 FERC ¶ 61,218

DEPARTMENT OF ENERGY

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Part 35

[Docket No. RM15-24-000]

Settlement Intervals and Shortage Pricing in Markets Operated by Regional Transmission 

Organizations and Independent System Operators

(Issued September 17, 2015)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Federal Energy Regulatory Commission (Commission) is proposing

to revise its regulations to require that each regional transmission organization (RTO) and 

independent system operator (ISO) settle energy transactions in its real-time markets at 

the same time interval it dispatches energy and settle operating reserves transactions in its 

real-time markets at the same time interval it prices operating reserves. The Commission 

also proposes to revise its regulations to require that each RTO/ISO trigger shortage 

pricing for any dispatch interval during which a shortage of energy or operating reserves 

occurs. Adopting these reforms would align prices with resource dispatch instructions 

and operating needs, providing appropriate incentives for resource performance.

DATES: Comments are due [INSERT DATE 60 days after publication in the 

FEDERAL REGISTER].

ADDRESSES: Comments, identified by docket number, may be filed in the following 

ways: 
Docket No. RM15-24-000 - 2 -

• Electronic Filing through http://www.ferc.gov. Documents created electronically 

using word processing software should be filed in native applications or print-toPDF format and not in a scanned format.

• Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver 

comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE, Washington, DC 20426.

Instructions: For detailed instructions on submitting comments and additional 

information on the rulemaking process, see the Comment Procedures Section of this 

document.

FOR FURTHER INFORMATION CONTACT:

Stanley Wolf (Technical Information)

Office of Energy Policy and Innovation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-6841

stanley.wolf@ferc.gov

Eric Vandenberg (Technical Information)

Office of Energy Market Regulation

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-6283

eric.vandenberg@ferc.gov

Joshua Kirstein (Legal Information)

Office of General Counsel

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

(202) 502-8519

joshua.kirstein@ferc.gov

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Settlement Intervals and Shortage Pricing in Markets

Operated by Regional Transmission Organizations and 

Independent System Operators

Docket No. RM15-24-000

NOTICE OF PROPOSED RULEMAKING

TABLE OF CONTENTS

Paragraph Numbers

I. Background ............................................................................................................................11.

II. Discussion.............................................................................................................................14.

A. Settlement Intervals..........................................................................................................15.

1. Comments on Settlement Intervals ..............................................................................16.

2. Need for Reform of Settlement Intervals .....................................................................26.

3. Commission Proposal ...................................................................................................34.

B. Shortage Pricing Triggers.................................................................................................41.

1. Comments on Shortage Pricing Triggers......................................................................41.

2. Need for Reform of Shortage Pricing Triggers............................................................46.

3. Commission Proposal ...................................................................................................51.

III. Compliance..........................................................................................................................55.

IV. Information Collection Statement .......................................................................................58.

V. Regulatory Flexibility Act Certification...............................................................................63.

VI. Environmental Analysis......................................................................................................65.

VII. Comment Procedures.........................................................................................................66.

VIII. Document Availability .....................................................................................................70.

Regulatory Text

APPENDIX A: List of Short Names/Acronyms of Commenters
152 FERC ¶ 61,218

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Settlement Intervals and Shortage Pricing in Markets

Operated by Regional Transmission Organizations and 

Independent System Operators

Docket No. RM15-24-000

NOTICE OF PROPOSED RULEMAKING

(Issued September 17, 2015)

1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy Regulatory 

Commission (Commission) is proposing to address two existing practices that may fail to 

compensate resources at prices that reflect the value of the service resources provide to 

the system, thereby distorting price signals. In certain instances, this creates a 

disincentive for resources to respond to dispatch signals. The Commission proposes to 

require that each regional transmission organization (RTO) and independent system 

operator (ISO) align settlement and dispatch intervals by settling energy transactions in 

its real-time markets at the same time interval it dispatches energy and settling operating 

reserves transactions in its real-time markets at the same time interval it prices operating 

reserves.

1

 The Commission is also proposing to require that each RTO/ISO trigger 

 1 In this NOPR, the Commission sometimes uses the term “dispatch” as shorthand 

when describing how RTOs/ISOs acquire and price energy and operating reserves. We 

clarify that our proposal with respect to operating reserves refers to the intervals at which 

they are acquired and priced. For instance, the Commission does not use the term 

“dispatch” to refer to the four-to-five second signal sent to resources on Automatic 

Generation Control.
Docket No. RM15-24-000 - 2 -

shortage pricing2 for any dispatch interval during which a shortage of energy or operating 

reserves3 occurs.

2. The Commission requires that rates for jurisdictional electricity service be just and 

reasonable and not unduly discriminatory or preferential. This requirement extends to 

market- and cost-based rates. The Commission has taken action to correct rates that 

become unjust and unreasonable, and has done so not only when the rates do not reflect 

costs but also when the underlying features, rate design, or market design fail to align.

4

 It 

is paramount that resources have appropriate incentives to respond to an energy or 

 2 Shortage pricing is triggered under two general scenarios: when the system 

operator does not have enough resources available to meet energy and operating reserve 

requirements, and when an RTO or ISO establishes a price above which it will choose to 

be deficient of operating reserves rather than procure resources that may be available to 

meet the minimum requirement, but cost more than the established price. Federal Energy 

Regulatory Commission, Price Formation in Organized Wholesale Electricity Markets: 

Staff Analysis of Shortage Pricing, Docket No. AD14-14-000, at 9 (Oct. 2014), available 

at http://www.ferc.gov/legal/staff-reports/2014/AD14-14-pricing-rto-iso-markets.pdf 

(Shortage Pricing Paper).

3 The Commission’s regulations define an operating reserve shortage as “a period 

when the amount of available supply falls short of demand plus the operating reserve 

requirement.” 18 CFR 35.28(b)(6).

4 See, e.g., Frequency Regulation Compensation in the Organized Wholesale 

Power Markets, Order No. 755, FERC Stats. & Regs. ¶ 31,324, at P 3 (2011), order on 

reh’g, Order No. 755-A, 138 FERC ¶ 61,123 (2012) (“requir[ing] RTOs and ISOs to 

compensate frequency regulation resources based on the actual service provided, 

including a capacity payment that includes the marginal unit’s opportunity costs and a 

payment for performance that reflects the quantity of frequency regulation service 

provided by a resource when the resource is accurately following the dispatch signal”).
Docket No. RM15-24-000 - 3 -

operating reserve shortage and that each resource is compensated based on a price that 

reflects the value of the service it provides. 

3. It has become apparent that there are instances in which certain current RTO/ISO 

practices may fail to reflect the value of providing a given service, thereby distorting

price signals and failing to provide appropriate signals for resources to respond to the 

actual operating needs of the market. One such practice that the Commission has

identified and proposes to reform occurs when RTOs/ISOs dispatch resources every 

five minutes but perform settlements based on an hourly integrated price.

5 This 

misalignment between dispatch and settlement intervals may distort the price signals sent 

to resources and fail to reflect the actual value of resources responding to operating needs

because compensation will be based on average output and average prices across an hour 

rather than output and prices during the periods of greatest need within a particular hour. 

4. The Commission also preliminarily finds that a second problem occurs if there is a 

delay between the time when a system experiences a shortage of energy and operating 

reserves and the time when prices reflect the shortage condition. This can be particularly 

problematic when, for example, a shortage is required to last a minimum time period 

before shortage pricing is triggered. In this instance, short-term prices may fail to reflect 

potential reliability costs, as well as the value of both internal and external market 

resources responding to a dispatch signal.

 5 Hourly integrated prices are equal to the average price of all the individual 

dispatch intervals across an hour. 
Docket No. RM15-24-000 - 4 -

5. To address the problems associated with differing dispatch intervals and 

settlement intervals, as well as with shortage pricing triggers, the Commission proposes 

to require that each RTO/ISO (1) settle energy transactions in its real-time markets at the 

same time interval it dispatches energy and settle operating reserves transactions in its 

real-time markets at the same time interval it prices operating reserves, and (2) trigger 

shortage pricing for any dispatch interval during which a shortage of energy or operating 

reserves occurs.6 The settlement interval and shortage pricing reforms proposed herein 

will help ensure that resources have price signals that provide incentives to conform their 

output to dispatch instructions, and that prices reflect operating needs at each dispatch 

interval. 

 6 Operating reserves refer to certain ancillary services procured in the wholesale 

market that have different definitions in each RTO/ISO. Operating reserves typically 

include:

(a) Regulating Reserve, used to account for very short-term 

deviations between supply and demand (e.g. 4 to 6 seconds); 

(b) Spinning, or Synchronous Reserve, which is capacity 

held in reserve and synchronized to the grid and able to 

respond within a relatively short amount of time (e.g., within 

10 minutes), to be used in case of a contingency, such as the 

loss of a generator; and, (c) Non-Spinning Reserve, capacity 

that is not synchronized to the grid and which can take longer 

to respond (e.g., within 10-30 minutes) in case of a 

contingency. 

Federal Energy Regulatory Commission, Price Formation in Organized Wholesale 

Electricity Markets: Staff Analysis of Shortage Pricing, Docket No. AD14-14-000, 

at 3 n.7 (Oct. 2014), available at http://www.ferc.gov/legal/staff-reports/2014/AD14-14-

pricing-rto-iso-markets.pdf (Shortage Pricing Paper).
Docket No. RM15-24-000 - 5 -

6. In Docket No. AD14-14-000, the Commission initiated a proceeding to evaluate 

issues regarding price formation in the energy and ancillary services markets operated by 

RTOs/ISOs (price formation proceeding). The Commission stated that the goals of price 

formation are to (1) maximize market surplus for consumers and suppliers; (2) provide 

correct incentives for market participants to follow commitment and dispatch 

instructions, make efficient investments in facilities and equipment, and maintain 

reliability; (3) provide transparency so that market participants understand how prices 

reflect the actual marginal cost of serving load and the operational constraints of reliably 

operating the system; and (4) ensure that all suppliers have an opportunity to recover their 

costs.7

 

7. The action the Commission takes herein is the first step to advancing the goals of 

the Commission’s price formation proceeding. The Commission expects to undertake 

further action addressing various price formation topics, including offer price caps,

mitigation, uplift transparency, and uplift drivers. The proposed reforms in this NOPR 

advance at least two of the Commission’s goals with respect to price formation. 

Specifically, the proposed reforms will help provide correct incentives for market 

participants to follow commitment and dispatch instructions, to make efficient 

investments in facilities and equipment, and to maintain reliability. The proposed 

reforms will also help provide transparency and certainty so that market participants 

 7 See Notice Inviting Post-Technical Workshop Comments, Docket No. AD14-14-

000, at 2 (Jan. 16, 2015); Notice, Docket No. AD14-14-000 (June 19, 2014). 
Docket No. RM15-24-000 - 6 -

understand how prices reflect the actual marginal cost of serving load and the operational 

constraints of reliably operating the system. Price signals that reflect operating needs and 

system conditions would enhance incentives for resources to respond to dispatch 

instructions.8

 In the long-term, the Commission expects that appropriate price signals 

would produce prices that consistently reflect operating needs and system conditions 

which, in turn, would help to encourage efficient investments in facilities and equipment,

enabling reliable service.

9

 

8. Requiring settlement intervals to match dispatch intervals would make resource 

compensation more transparent by, among other things, increasing the proportion of 

resource payment provided through payments of energy and operating reserves rather 

than uplift.10 Apportioning a greater proportion of a resource’s revenue through 

 8 The Commission notes that the reforms proposed herein would further augment 

existing mechanisms in each RTO/ISO market that provide incentives to follow dispatch 

instructions, such as penalties for excessive or deficient energy and the allocation of 

commitment and dispatch costs to deviations from energy dispatch targets. See, e.g.,

MISO, FERC Electric Tariff, §§ 40.3.3(a) (36.0.0) (allocating Revenue Sufficiency 

Guarantee costs to, inter alia, resources providing excessive or deficient energy), 40.3.4 

(33.0.0) (charges for excessive or deficient energy deployment). 

9 See, e.g., Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps 

Workshop, Docket No. AD14-14-000, Tr. 42:13-19 (Oct. 28, 2014).

10 RTOs and ISOs provide make-whole payments, or uplift payments, to resources 

whose commitment and dispatch resulted in a shortfall between the resource’s offer and 

the revenue earned through market clearing prices. See, e.g., Federal Energy Regulatory 

Commission, Price Formation in Organized Wholesale Electricity Markets: Staff 

Analysis of Uplift in RTO and ISO Markets, Docket No. AD14-14-000, at 2 (Aug. 2014), 

available at http://www.ferc.gov/legal/staff-reports/2014/08-13-14-uplift.pdf (Uplift 

Paper). 
Docket No. RM15-24-000 - 7 -

payments for energy and operating reserves, rather than through uplift payments,

increases transparency to the market by reflecting the costs of meeting system needs in 

settlement prices that are factored into a market price. In contrast, uplift payments bundle 

together a multitude of costs that are not factored into a market price. This increased 

transparency, in turn, better informs decisions to build or maintain resources and 

enhances consumers’ ability to hedge. The benefits summarized above and discussed in 

detail below would ultimately help to ensure just and reasonable rates. 

9. Implementing shortage pricing for any dispatch interval during which a shortage 

of energy or operating reserves occurs would provide an incentive for resources to ensure 

that they are available to respond to high prices, which should help alleviate shortages 

and avoid shortage pricing during subsequent dispatch intervals. This reform would also 

ensure that resources operating during a shortage are compensated for the value of the 

service that they provide, regardless of whether the shortage is short-lived.

10. The Commission seeks comment on these proposed reforms sixty (60) days after 

publication of this NOPR in the Federal Register. 

I. Background

11. The Commission has addressed price formation in organized markets on prior 

occasions. In Order No. 719, the Commission addressed shortage pricing11 and required 

 11 Wholesale Competition in Regions with Organized Electric Markets, Order 

No. 719, FERC Stats. & Regs. ¶ 31,281, at PP 192-194 (2008), order on reh’g, Order 

No. 719-A, FERC Stats. & Regs. ¶ 31,292, order on reh’g, Order No. 719-B, 

129 FERC ¶ 61,252 (2009).
Docket No. RM15-24-000 - 8 -

RTOs/ISOs to develop and implement shortage pricing rules that would apply during 

operating reserve shortages to “ensure that the market price for energy reflects the value 

of energy during an operating reserve shortage.”12 The Commission required such rules 

out of concern that inappropriate price signals during an operating reserve shortage would 

provide an insufficient incentive for market participants to take appropriate actions. 

12. On June 19, 2014, the Commission initiated the price formation proceeding. In 

initiating that proceeding, the Commission stated that there may be opportunities for the 

RTOs/ISOs to improve the energy and ancillary service price formation process. The 

Commission explained that locational marginal prices (LMPs) used in energy and 

ancillary services markets ideally “would reflect the true marginal cost of production, 

taking into account all physical system constraints, and these prices would fully 

compensate all resources for the variable cost of providing service.”13 The Commission

directed staff to conduct outreach and to convene technical workshops on the following 

four general issues: (1) use of uplift payments; (2) offer price mitigation and offer price 

caps; (3) scarcity and shortage pricing; and (4) operator actions that affect prices.14 

During the fall of 2014, staff convened technical workshops and issued reports on these 

 12 Id. P 194.

13 Notice, Docket No. AD14-14-000, at 2 (June 19, 2014).

14 Id. at 1, 3-4.
Docket No. RM15-24-000 - 9 -

topics. In one of those reports, issued in October 2014, staff analyzed shortage pricing 

issues.15 

13. In its January 2015 Notice Inviting Comments, the Commission invited comments 

on specific questions that arose from the price formation technical workshops.16 In 

response, among other price formation issues, commenters addressed settlement intervals 

and shortage pricing, as detailed below.

II. Discussion

14. In the following section, for each of the two proposals, the Commission first 

summarizes the views of commenters in the price formation proceeding on settlement 

intervals and triggers for shortage pricing. The Commission then explains the need for 

the reform set forth in the proposal and describes the proposed reform in detail. To 

remedy the potential unjust and unreasonable rates that are based on the use of hourly 

integrated prices for settlement as well as on restrictions on shortage pricing discussed 

more fully herein, the Commission proposes, pursuant to section 206 of the Federal 

Power Act (FPA),

17 to require that each RTO/ISO (1) settle energy transactions in its 

real-time markets at the same time interval it dispatches energy and settle operating 

 15 See Shortage Pricing Paper.

16 Notice Inviting Post-Technical Workshop Comments, Docket No. AD14-14-000 

(Jan. 16, 2015). A list of commenters and the abbreviated names the Commission will 

use for them in this document appears in Appendix A. 

17 16 U.S.C. 824e.
Docket No. RM15-24-000 - 10 -

reserves transactions in its real-time markets at the same time interval it prices operating 

reserves, and (2) trigger shortage pricing for any dispatch interval during which a 

shortage of energy or operating reserves occurs.

18

A. Settlement Intervals

15. Some RTOs/ISOs do not settle resources at the same intervals at which they 

dispatch resources in their real-time energy markets.

19 Rather, they settle resources based 

on hourly average prices, as shown below.

 18 The Commission is not at this time proposing to change the price paid by any 

RTO/ISO when shortage pricing is triggered.

19 California Independent System Operator Corporation (CAISO), New York 

Independent System Operator, Inc. (NYISO), and Southwest Power Pool, Inc. (SPP) 

currently use a settlement interval that matches the dispatch interval. ISO New England 

Inc. (ISO-NE) and Midcontinent Independent System Operator, Inc. (MISO) are 

considering moving to five-minute settlements. PJM Interconnection, L.L.C. (PJM) has 

stated that PJM settles hourly and does not currently anticipate proposing to move to a 

different interval. See Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps 

Workshop, Docket No. AD14-14-000, Tr. 52:21-53:1, 53:11-54:11, 54:22-55:10 

(Oct. 28, 2014). 
Docket No. RM15-24-000 - 11 -

Table 1: RTO/ISO Dispatch and Settlement Intervals

Real-Time Dispatch20 Real-Time 

Settlement21

CAISO 5 minute 5 minute

ISO-NE 5 minute hourly average

MISO 5 minute hourly average

NYISO 5 minute 5 minute

PJM 5 minute hourly average

SPP 5 minute 5 minute

1. Comments on Settlement Intervals

16. In the price formation proceeding, commenters discussed using shorter settlement 

intervals (i.e., sub-hourly) and provided implementation and transition recommendations.

17. Commenters in support of sub-hourly settlements describe general benefits, as 

well as specific related improvements, from the adoption of sub-hourly settlements. 

Commenters from a broad range of the industry state that sub-hourly settlement intervals 

 20 See CAISO, eTariff, § 34.5 (17.0.0); ISO-NE, Transmission, Markets and 

Services Tariff, Market Rule 1, § III.2.3 (15.0.0); MISO, FERC Electric Tariff, § 40.2 

(34.0.0); NYISO Markets and Services Tariff, § 4.4.2.1 (17.0.0); PJM OATT, 

Attachment K, Appendix, § 2.3 (2.0.0); SPP, OATT, Sixth Revised Volume No. 1, 

Attachment AE, § 6.2.2 (1.0.0).

21 See CAISO, eTariff, §11.5 (2.0.0), Appendix A, Settlement Interval (2.0.0); 

ISO-NE, Transmission, Markets and Services Tariff, Market Rule 1, § III.2.2(b) (15.0.0); 

MISO, FERC Electric Tariff, §§ 40.3 (32.0.0), 40.3.1 (32.0.0), 40.3.3 (36.0.0); NYISO, 

NYISO Tariffs, NYISO Markets and Services Tariff, §§ 4.4.2.1, 4.4.2.8 (17.0.0); PJM, 

Intra-PJM Tariffs, OATT, Attachment K, Appendix, §§ 2.5(e), (4.0.0), 3.2.1(e), (f) 

(28.0.0); SPP, OATT, Sixth Revised Volume No. 1, Attachment AE, §§ 8.6, 8.6.1 (2.1.0).

The above-tariff citations refer to internal transactions. CAISO settles its intertie 

interchange transactions on fifteen-minute intervals. See CAISO, CAISO eTariff, HASP 

Block Intertie Schedule (0.0.0).
Docket No. RM15-24-000 - 12 -

would provide significant benefits to the market by compensating resources fully for their 

flexibility and ability to follow dispatch instructions. According to these commenters, 

sub-hourly settlement intervals would permit resources to be rewarded for their ability to 

perform by earning greater revenues when prices fluctuate, which in the long run should 

induce more flexibility from new and existing resources and eventually lower dispatch 

costs and improve reliability.

22

18. Commenters detail other potential benefits to sub-hourly settlement in the realtime market. PJM Utilities Coalition notes that sub-hourly settlement would address 

price distortions and uneconomic incentives to produce power caused by the use of 

hourly settlements.23 PJM Utilities Coalition also states that sub-hourly settlement would 

 22 See, e.g., ANGA Comments, Docket No. AD14-14-000, at 3-4 (Mar. 6, 2015); 

Brookfield Comments, Docket No. AD14-14-000, at 8 (Mar. 6, 2015); Calpine 

Comments, Docket No. AD14-14-000, at 11-12 (Mar. 6, 2015); Entergy Nuclear Power 

Marketing Comments, Docket No. AD14-14-000, at 12 (Mar. 6, 2015); Exelon 

Comments, Docket No. AD14-14-000, at 19 (Mar. 6, 2015); GDF SUEZ Comments, 

Docket No. AD14-14-000, at 9-10 (Mar. 6, 2015); ISO-NE Comments, Docket No. 

AD14-14-000, at 20-22 (Mar. 6, 2015); MISO Comments, Docket No. AD14-14-000, at 

16-17 (Mar. 6, 2015); New York Transmission Owners Comments, Docket No. AD14-

14-000, at 9 (Mar. 6, 2015); NYISO Comments, Docket No. AD14-14-000, at 12-13 

(Mar. 6, 2015); PJM Comments, Docket No. AD14-14-000, at 11-12 (Mar. 6, 2015); 

Potomac Economics Comments, Docket No. AD14-14-000, at 10 (Mar. 6, 2015); PSEG 

Companies Comments, Docket No. AD14-14-000, at 19-22 (Mar. 6, 2015); Wisconsin

Electric Comments, Docket No. AD14-14-000, at 8 (Mar. 6, 2015); see also Xcel 

Comments at 4-5 (supporting sub-hourly settlement intervals but requesting that the 

Commission not require reporting sub-hourly settlement data in the Electric Quarterly 

Reports and if need be, direct the RTOs/ISOs to report that data).

23 PJM Utilities Coalition Comments, Docket No. AD14-14-000, at 10-11 (Mar. 6, 

2015).
Docket No. RM15-24-000 - 13 -

solve the problem of dispatching resources just before or after the clock hour and the 

resulting implications of averaging output during the clock hour.24 Wartsila states that 

the transition to sub-hourly settlements provides valuable price signals to flexible 

capacity and notes that internal combustion engines in SPP have seen a three-fold 

increase in their capacity factor since SPP adopted sub-hourly real-time settlements, thus 

increasing compensation to those resources and lowering overall system costs.

25

19. PSEG Companies state that the inefficiencies of hourly settlements in PJM’s realtime market are evident when the LMP becomes relatively high during the first few 

dispatch intervals.26 PSEG Companies add that internal resources will ramp up to 

respond to the price signal and other resources and external suppliers will also schedule 

interchange into PJM to capture the higher prices; when demand falls off in the 

subsequent intervals, however, resources will not reduce output in response to the lower 

prices (because they know they will be compensated at the hourly average prices), which 

has led to operational problems.27 EPSA supports sub-hourly real-time market settlement 

in order to better align dispatch with price.

28 

 24 Id.

25 Wartsila Comments, Docket No. AD14-14-000, at 1-2 (Mar. 6, 2015).

26 PSEG Companies Comments, Docket No. AD14-14-000, at 20 (Mar. 6, 2015).

27 Id. at 20-21.

28 EPSA Comments, Docket No. AD14-14-000, Attach. A, Post-Technical 

Conference Questions for Comment: EPSA Responses, at 28 (Mar. 6, 2015).
Docket No. RM15-24-000 - 14 -

20. At the Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps Workshop 

held on October 28, 2014, representatives from RTOs/ISOs discussed the effect of 

settlement intervals on appropriately compensating resources based on actual 

performance, on providing an incentive for resources to follow dispatch signals, and on 

reducing uplift.29 At the Uplift Workshop held on September 8, 2014, the representative 

from Potomac Economics asserted that settling transactions on an hourly price, when 

dispatch instructions change every five or fifteen minutes, has caused flexible units in 

MISO to operate inflexibly in order to obtain a higher hourly price. According to this 

panelist, this disparity between settlement and dispatch intervals has prompted 

development of a class of uplift payments meant to hold inflexible generators harmless 

for following dispatch instructions and to ensure generators’ flexibility. This panelist 

suggested that aligning settlement and dispatch intervals could eliminate such uplift 

payments.

30

21. In its comments, CAISO indicates that it uses both fifteen-minute and five-minute 

settlement intervals in its real-time market and that these intervals provide a dynamic 

price signal to reflect grid conditions. According to CAISO, fifteen-minute intertie 

schedules and prices provide an incentive for variable energy resources to offer economic 

 29 See, e.g., Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps 

Workshop, Docket No. AD14-14-000, Tr. 52:16-55:10 (Oct. 28, 2014). 

30 Uplift Workshop, Docket No. AD14-14-000, Tr. 45:4-23 (Sept. 8, 2014).
Docket No. RM15-24-000 - 15 -

bids into the CAISO market, which can reduce variable energy resources’ exposure to the 

difference between day-ahead and five-minute real-time prices.

31

22. Commenters in the price formation proceeding express caution about 

implementation and costs resulting from RTOs’/ISOs’ adoption of sub-hourly 

settlements—costs both to RTOs/ISOs and market participants. SPP states that its 

sub-hourly settlement rules cost more to implement due to increased data storage and 

validation requirements.32 ISO-NE and GDF SUEZ state that the one impediment to 

implementing sub-hourly real-time settlements in the ISO-NE market is the need for 

five-minute revenue quality metering; ISO-NE states that, according to stakeholders, it 

could take several years to implement and cost up to $20 million to install the necessary 

equipment, software, and data systems.33 PJM similarly states that moving to sub-hourly 

settlements will require it to make software and hardware changes to multiple 

applications and systems at a cost that is anecdotally comparable to a moderately 

complex market integration proposal.34

23. Several commenters stress that, while sub-hourly settlements can bring benefits 

and efficiencies to the real-time market, transitioning to that settlement structure would 

 31 CAISO Comments, Docket No. AD14-14-000, at 18-19 (Mar. 6, 2015).

32 SPP Comments, Docket No. AD14-14-000, at 4 (Mar. 6, 2015).

33 ISO-NE Comments, Docket No. AD14-14-000, at 23 (Mar. 6, 2015); GDF 

SUEZ Comments, Docket No. AD14-14-000, at 10 (Mar. 6, 2015). 

34 PJM Comments, Docket No. AD14-14-000, at 12 (Mar. 6, 2015).
Docket No. RM15-24-000 - 16 -

require significant expenditures. Some RTOs/ISOs assert that there will be significant 

costs to make the necessary upgrades to metering equipment, software, hardware, and 

data systems, and that some of these upgrades could take several years to implement. As 

a result of these expenditures, some commenters note that action to align the settlement 

and dispatch interval may not occur absent a Commission directive.35 Other commenters 

observe that load-serving entities might incur significant costs associated with telemetry 

and related equipment upgrades; increases in RTO/ISO administrative charges; and 

additional costs to meter, transfer, and store the data and to process settlements in 

accordance with RTO/ISO timelines.36 

24. Due to the anticipated costs, several commenters request that the Commission 

require cost-benefit analyses before adoption of sub-hourly settlements, or that the 

Commission leave the decision to adopt sub-hourly settlements to RTO/ISO 

stakeholders.37 Some commenters assert that RTO/ISO stakeholders must vet the 

 35 ISO-NE Comments, Docket No. AD14-14-000, at 23 (Mar. 6, 2015); 

PJM Comments, Docket No. AD14-14-000, at 12 (Mar. 6, 2015). GDF SUEZ echoes 

ISO-NE’s statements about cost and timing to implement sub-hourly settlements in the 

ISO-NE market and requests that the Commission provide direction to overcome the lack 

of incentives facing meter readers to implement sub-hourly settlements. GDF SUEZ 

Comments, Docket No. AD14-14-000, at 10 (Mar. 6, 2015).

36 PJM Utilities Coalition Comments, Docket No. AD14-14-000, at 11 

(Mar. 6, 2015); TAPS Comments, Docket No. AD14-14-000, at 16-17 (Mar. 6, 2015).

37 Direct Energy Comments, Docket No. AD14-14-000, at 8 (Mar. 6, 2015); OMS 

Comments, Docket No. AD14-14-000, at 4 (Mar. 2, 2015); PJM Utilities Coalition 

Comments, Docket No. AD14-14-000, at 11 (Mar. 6, 2015); TAPS Comments, Docket 

No. AD14-14-000, at 16 (Mar. 6, 2015).
Docket No. RM15-24-000 - 17 -

implementation of sub-hourly settlements to ensure that appropriate market power 

mitigation measures are in place.38 Exelon states that, while sub-hourly settlements can 

improve market efficiency, the timing and prioritization of adopting sub-hourly 

settlements should be evaluated when RTOs/ISOs develop work plans to analyze the 

causes of uplift.39

25. Commenters also provide the Commission with recommendations for 

implementation of sub-hourly settlement. PJM Utilities Coalition recommends that any 

move to sub-hourly settlements include at least one year notice of intent to allow for 

system readiness.

40 PJM Utilities Coalition suggests that RTOs/ISOs could first 

transition to fifteen-minute settlement intervals before moving to five-minute settlement 

intervals with stakeholders vetting the costs and benefits.

41 ANGA recommends that, to 

the extent possible, five-minute settlement intervals be made consistent across different 

RTOs/ISOs. According to ANGA, inconsistencies across RTO/ISO boundaries can 

increase market and interchange volatility and result in large price fluctuations that are 

 38 APPA and NRECA Comments, Docket No. AD14-14-000, at 38 (Mar. 6, 2015); 

see also PJM Utilities Coalition Comments, Docket No. AD14-14-000, at 11 (Mar. 6, 

2015).

39 Exelon Comments, Docket No. AD14-14-000, at 19 (Mar. 6, 2015).

40 PJM Utilities Coalition Comments, Docket No. AD14-14-000, at 11 (Mar. 6, 

2015).

41 Id.
Docket No. RM15-24-000 - 18 -

not based upon market fundamentals and which could create an incentive for gaming 

between markets as market participants arbitrage distorted prices.42

2. Need for Reform of Settlement Intervals

26. The Commission preliminarily finds that the use of hourly integrated prices for 

real-time settlement may have the unintended effect of distorting price signals and, in 

certain instances, contributing to markets failing to respond appropriately to operating 

needs. Specifically, hourly integrated prices for real-time settlement may (1) not 

accurately reflect the value a resource provides to the system; (2) discourage resources

from following dispatch instructions; and (3) cause increased uplift payments. Therefore, 

the Commission preliminarily finds that the use of hourly integrated prices for real-time

settlement may result in rates that are unjust and unreasonable.

27. First, because hourly prices are an integrated average of sub-hourly dispatch 

interval prices over an hour, the hourly price does not reflect system needs and costs 

within a dispatch interval; thus, resources are not necessarily paid a price that reflects the 

value of the service they provide to the system during the dispatch interval. For example, 

a resource providing energy during high-priced dispatch intervals, that is then paid based 

on a lower hourly integrated price, is not compensated based on a price that reflects

actual market conditions or the price at which it was economic to dispatch this resource.

 42 ANGA Comments, Docket No. AD14-14-000, at 4 (Mar. 6, 2015).
Docket No. RM15-24-000 - 19 -

28. Real-time settlement using prices that are averaged over an hour cannot capture 

the varying value of the service resources provide over the hour, which decreases the 

efficiency of RTO/ISO operations because RTOs/ISOs require resources to move within 

the hour to address changing operating conditions. Such settlement prices become the 

prices made transparent to the market and, when they are averaged to the point of not 

reflecting operating conditions and resultant supply and demand conditions, they may be 

unjust and unreasonable. In Order No. 719, the Commission found that then-existing 

rules on shortage pricing “that do not allow for prices to rise sufficiently during an 

operating reserve shortage to allow supply to meet demand” may be unjust and 

unreasonable.43 Similarly, the Commission preliminarily finds here that market rules that 

settle real-time transactions at hourly integrated prices may be unjust and unreasonable 

because they result in settlement prices that do not reflect actual operating conditions or 

the value of energy resulting from supply and demand. 

29. Second, the use of hourly integrated prices for settling transactions can provide an 

unwarranted incentive for resources to disregard dispatch instructions. For example, 

PSEG Companies and PJM Utilities Coalition explain that high prices in the beginning of 

an hour can cause internal resources to ramp up and external transactions to schedule into 

PJM to capture higher prices; when demand and prices fall in subsequent intervals, 

 43 Order No. 719, FERC Stats. & Regs. ¶ 31,281 at P 192.
Docket No. RM15-24-000 - 20 -

however, hourly integrated prices create an incentive to continue producing or importing 

energy, regardless of dispatch instructions to reduce output.

44 

30. As PSEG Companies illustrate by example, the use of hourly integrated prices for 

real-time settlement can create incentives that do not necessarily align with the system 

operator’s dispatch instructions.45 Consider a resource with $100/MWh cost, and an 

LMP that is $500/MWh for the first fifteen minutes of the hour (three intervals). Even if 

the LMP dropped to $0/MWh for the remainder of the hour, the hourly integrated price 

($125/MWh) would still exceed the resource’s cost of production. This settlement 

structure would provide an incentive to generate as much energy as possible, not only 

during the first fifteen minutes of very high prices, but during the entire hour, irrespective 

of the five-minute price thereafter. Studies have shown that, due to the incentives created 

by hourly integrated settlements, resources can earn significant additional payments by 

not following dispatch signals.46

 44 PSEG Companies Comments, Docket No. AD14-14-000, at 20 (Mar. 6, 2015); 

PJM Utilities Coalition Comments, Docket No. AD14-14-000, at 10-11 (Mar. 6, 2015). 

45 PSEG Companies Comments, Docket No. AD14-14-000, at 20 & n.25 (Mar. 6, 

2015).

46 An analysis of actual LMP data showed how hourly settlement price signals can 

allow a resource to earn nearly twice the profit compared to if the resource is paid based 

on five-minute LMP price signals. See E. Ela et al., National Renewable Energy 

Laboratory and Argonne National Laboratory, Evolution of Wholesale Electricity Market 

Design with Increasing Levels of Renewable Generation, at 62-66 (Sept. 2014), available 

at http://www.nrel.gov/docs/fy14osti/61765.pdf.
Docket No. RM15-24-000 - 21 -

31. Failing to follow dispatch instructions can impair the ability of the system operator 

to manage dispatch costs. Specifically, failing to follow dispatch instructions can result 

in power imbalances that the system operator must address by taking action, such as 

increasing use of regulating reserves or committing additional resources, which may 

result in increased uplift. These actions result in additional costs that are ultimately 

passed on to consumers. Because hourly integrated prices can impair the ability of the 

system operator to manage dispatch and the costs of dispatch, the Commission finds

preliminarily that hourly integrated prices for real-time settlement can lead to unjust and 

unreasonable rates.47

32. Third, as MISO notes, dispatching resources within the hour based on their offers, 

but then compensating those resources based on a lower hourly integrated price can result 

in uplift costs because additional uplift payments are then necessary to enhance

incentives for resources to follow dispatch instructions.48 A study by Potomac 

 47 In Order No. 764, the Commission similarly found that impairing the ability of 

the system operator to manage costs resulted in unjust and unreasonable rates; it 

determined a need for reform of scheduling practices and data reporting practices where 

“existing practices . . .impair[ed] the ability of public utility transmission providers and 

their customers to manage costs associated with [Variable Energy Resource] integration 

effectively.” Integration of Variable Energy Resources, Order No. 764, FERC Stats. & 

Regs. ¶ 31,331, at PP 21-22, order on reh’g and clarification, Order No. 764-A, 141 

FERC ¶ 61,232 (2012), order on clarification and reh’g, Order No. 764-B, 144 FERC 

¶ 61,222 (2013). It adopted reforms to those practices to “remedy undue discrimination 

and ensure just and reasonable rates through more efficient utilization of transmission and 

generation resources.” Id. P 22. 

48 MISO Comments, Docket No. AD14-14-000, at 17-18 (Mar. 6, 2015). 
Docket No. RM15-24-000 - 22 -

Economics shows that changes to sub-hourly settlement intervals can reduce uplift 

payments. Specifically, Potomac Economics estimates that, if MISO had implemented a 

real-time settlement interval that was equal to its dispatch interval (i.e., five minutes) in 

2014, it would have reduced uplift payments by approximately $6.6 million.49

33. For these reasons, the Commission proposes to require that each RTO/ISO settle 

energy transactions in its real-time markets at the same time interval it dispatches energy 

and settle operating reserves transactions in its real-time markets at the same time interval 

it prices operating reserves. The Commission also seeks comment on two additional 

aspects of the proposal, relating to intertie transactions and to operating reserves.

3. Commission Proposal

34. To remedy any potentially unjust and unreasonable rates caused by the use of 

hourly integrated prices for real-time settlement, the Commission proposes, pursuant to 

section 206 of the FPA,

50 to require that each RTO/ISO settle energy transactions in its 

real-time markets at the same time interval it dispatches energy and settle operating 

 49 Potomac Economics, 2014 State of the Market Report for the MISO Electricity 

Markets at 43-44 & Figure 19 (2015), available at

https://www.misoenergy.org/Library/Repository/Report/IMM/2014%20State%20of%20t

he%20Market%20Report.pdf. 

50 16 U.S.C. 824e.
Docket No. RM15-24-000 - 23 -

reserves transactions in its real-time markets at the same time interval it prices operating 

reserves.

51 

35. As explained further below, in the short term, the settlement interval reform

proposed in this NOPR should improve incentives for resources to respond quickly to 

dispatch instructions, which should in turn lead to operators taking fewer out-of-market 

actions to ensure that supply meets demand. In the long-term, these reforms should

provide more accurate price signals, which should provide, together with other market 

price signals, the appropriate incentives to build or maintain resources that can respond to 

an energy or operating reserve deficiency. In addition, where settlement and dispatch 

intervals are aligned, resources dispatched economically during high-priced periods 

would receive those high prices rather than an hourly average of the dispatch interval

LMPs, thereby reducing the need to make uplift payments. Apportioning a greater 

proportion of a resource’s revenue through payments for energy and operating reserves,

rather than through uplift payments, would increase transparency to the market by 

reflecting the costs of resource dispatch in settlement prices that are factored into a 

market price. In contrast, uplift payments bundle together a multitude of costs that are 

not factored into a market price. This increased transparency, in turn, better informs 

decisions to build or maintain resources and enhances consumers’ ability to hedge. 

 51 All RTOs/ISOs dispatch internal resources using five-minute intervals. See 

supra Table 1. Some RTOs/ISOs, however, such as CAISO, schedule external

transactions, such as intertie transactions, on a different interval.
Docket No. RM15-24-000 - 24 -

36. By improving resources’ response to dispatch instructions, the settlement interval 

reform proposed herein would result in a more efficient use of generation resources to the 

benefit of all consumers. As described above, Wartsila explains that internal combustion 

engines have seen a three-fold increase in their capacity factor since SPP adopted 

sub-hourly real-time settlements, thus increasing compensation to those resources and 

lowering overall system costs.52

37. As the Commission has concluded in the past, more efficient use of generation

resources can ensure that jurisdictional services are provided at rates, terms, and 

conditions of service that are just and reasonable and not unduly discriminatory or 

preferential, in accord with the Commission’s statutory obligations.

53

38. While the Commission expects that the settlement interval reform proposed in this 

NOPR should provide significant benefits, the Commission understands that modifying 

settlement systems can be a complex and costly endeavor.54 Accordingly, the 

 52 Wartsila Comments, Docket No. AD14-14-000, at 1-2 (Mar. 6, 2015).

53 Order No. 764, FERC Stats. & Regs. ¶ 31,331 at P 5 (reforms adopted “allow 

for the more efficient utilization of transmission and generation resources to the benefit 

of all customers. This, in turn, fulfills our statutory obligation to ensure that 

Commission-jurisdictional services are provided at rates, terms, and conditions of service 

that are just and reasonable and not unduly discriminatory or preferential.”). 

54 See, e.g., ISO-NE Comments, Docket No. AD14-14-000, at 23 & nn.28-30 

(Mar. 6, 2015) (citing Meter Reader Working Group, Sub-hourly Time & Cost Estimate, 

at slide 9 (July 10, 2014), available at http://www.iso-ne.com/committees/markets/meterreader) (citing estimates from meter reader entities in New England that implementation 

of five-minute market settlements could cost more than $20 million and take more than 

seven years). 
Docket No. RM15-24-000 - 25 -

Commission proposes to allow twelve months from the date of the compliance filings for 

implementation of reforms to settlement systems to become effective. Further, the 

Commission seeks comment on the potential cost and time necessary to implement the 

reforms proposed in this NOPR. Specifically, the Commission seeks comment on 

required software changes, increased data storage and validation, and required changes to 

market participant metering or other equipment that would result from implementing the 

reforms proposed in this NOPR. The Commission also seeks comment on whether the 

changes necessary to implement the settlement interval reform proposed in this NOPR 

would be necessary in whole or in part to implement other reforms planned by the 

RTOs/ISOs or sought by stakeholders. The Commission further requests comments 

concerning whether such a long implementation period is necessary and how that 

implementation period may be shortened.

39. The Commission also seeks comment on two aspects of the substance of the 

settlement interval proposal relating to external transactions and to operating reserves. 

First, the logic underlying our reforms to settlement of internal transactions appears to 

apply equally to intertie transactions. While the Commission does not propose to extend 

the reforms to intertie transactions, the Commission seeks comment on whether 

settlement reforms are appropriate for intertie transactions that are scheduled on intervals

different from the intervals on which RTOs/ISOs dispatch internal real-time energy.

55 

 55 The Commission clarifies that it is not proposing to modify the scheduling 

requirements adopted in Order No. 764. 
Docket No. RM15-24-000 - 26 -

The Commission also seeks comment on whether it is necessary to align the settlement

interval for intertie transactions with external scheduling intervals, i.e., fifteen minutes. 

40. Second, the Commission recognizes that dispatch and pricing of energy and 

operating reserves are closely linked through co-optimization in the real-time market. 

This co-optimization ensures that resources are compensated for following RTO/ISO 

instructions and are indifferent to providing either energy or operating reserves during 

periods of high energy or operating reserves prices. Despite the close linkage between 

energy and operating reserves, the Commission understands that some of the problems 

associated with the use of hourly integrated prices for settling energy transactions might 

not apply as fully to settling operating reserves transactions. Further, the Commission

recognizes the set of resources that are paid the real-time operating reserve price are 

potentially much smaller than the set of resources that are paid the real-time energy price. 

The Commission understands that certain RTOs/ISOs acquire operating reserves on a 

different interval than these RTOs/ISOs dispatch energy. Accordingly, the Commission 

seeks comment on whether the Commission should require RTOs/ISOs to settle all realtime operating reserves transactions at the same interval as real-time energy dispatch and 

settlement intervals or whether a settlement interval that differs from an RTO’s/ISO’s 

real-time energy dispatch interval would be appropriate for some operating reserves

transactions.
Docket No. RM15-24-000 - 27 -

B. Shortage Pricing Triggers

1. Comments on Shortage Pricing Triggers

41. Panelists at the October 28, 2014 Shortage Pricing/Mitigation Workshop and 

commenters in the price formation proceeding discussed shortage pricing triggers. 

Panelists and commenters were divided on whether all shortage events should trigger 

shortage pricing.56 Some favored such a trigger. These panelists explained that 

triggering shortage pricing for any shortage would allow pricing to reflect fluctuations 

across the hour better and also to offer more granular and accurate compensation.57 In 

contrast, the panelist from PJM was more hesitant in sending a shortage price signal 

when a combined-cycle turbine with a thirty-minute startup time took five additional 

minutes to come online, explaining that a shortage price signal during such an event 

would diverge from an operator’s understanding that the system is not experiencing a 

shortage.

58

42. In its comments, EPSA argues that it is a high priority for all markets to establish 

shortage pricing based on operating reserves demand curves and co-optimized with the 

energy market.59 New York Transmission Owners argue that if the electric system is 

 56 See, e.g., Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps 

Workshop, Docket No. AD14-14-000, Tr. 38:19-51:8 (Oct. 28, 2014).

57 Id. at 46:1-47:17, 50:13-19.

58 Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps Workshop, 

Docket No. AD14-14-000, Tr. 48:13-49:7 (Oct. 28, 2014).

59 EPSA Comments, Docket No. AD14-14-000, at 36 (Mar. 6, 2015).
Docket No. RM15-24-000 - 28 -

short of resources, even for only five or ten minutes, that shortage should trigger shortage 

pricing.60 Similarly, NYISO and Potomac Economics state that pricing each shortage, 

even a “transient shortage,” provides incentives to resources that have the capability to 

respond to brief-duration shortages.61 

43. Several commenters favor triggering shortage pricing without any minimum 

duration for the event.

62 Arguments in favor of triggering shortage pricing for any 

shortage rely on the need to send price signals that provide an incentive for resources to 

offer their full flexibility and for market entry by reflecting actual system conditions in 

real time.

63 EEI states that generators should be able to recover reasonable and 

supportable costs incurred in unexpected circumstances.64 PSEG Companies maintain 

that, while the ISO-NE and NYISO markets’ rules (which price all shortages, no matter 

the duration) enable them to provide accurate price signals, PJM’s market rules (which 

 60 New York Transmission Owners Comments, Docket No. AD14-14-000, at 23 

(Mar. 6, 2015).

61 NYISO Comments, Docket No. AD4-14-000, at 28-29 (Mar. 6, 2015); Potomac 

Economics Comments, Docket No. AD14-14-000, at 26 (Mar. 6, 2015).

62 See, e.g., CAISO Comments, Docket No. AD14-14-000, at 40 (Mar. 6, 2015); 

Calpine Comments, Docket No. AD14-14-000, at 20 (Mar. 6, 2015); GDF SUEZ 

Comments, Docket No. AD14-14-000, at 19 (Mar. 6, 2015); NYISO Comments, 

Docket No. AD14-14-000, at 28 (Mar. 6, 2015); Potomac Economics Comments, Docket 

No. AD14-14-000, at 25 (Feb. 24, 2015).

63 Calpine Comments, Docket No. AD14-14-000, at 20 (Mar. 6, 2015); NYISO 

Comments, Docket No. AD14-14-000, at 28-29 (Mar. 6, 2015); Potomac Economics 

Comments, Docket No. AD14-14-000, at 25-26 (Feb. 24, 2015).

64 EEI Comments, Docket No. AD14-14-000, at 5 (Mar. 6, 2015).
Docket No. RM15-24-000 - 29 -

restrict “transient shortage” events from triggering shortage pricing) can distort its market 

prices.65 

44. In contrast, Wisconsin Electric and PJM prefer that a shortage event last a 

minimum duration before triggering shortage pricing. Wisconsin Electric argues that 

there should be a minimum duration for invoking shortage pricing, and that this duration

should allow flexibility to account for the nature of transmission limits and reserve levels 

in the operating environment, with shorter minimum intervals to invoke shortage pricing 

applicable under extreme load and temperatures.66 PJM states that the minimum duration 

for shortage pricing should be at least as long as (and perhaps longer than) the settlement 

interval and that a minimum interval for triggering shortage pricing is required to 

stimulate investment.67

45. Some commenters argue that a “transient” or relatively brief shortage is not a 

“real” shortage because either the shortage is merely a mathematical artifact of the 

modeling, or the shortage will soon be resolved before generators can respond to shortage 

prices, even though the system is technically short of resources.

68 

 65 PSEG Companies Comments, Docket No. AD14-14-000, at 31 (Mar. 6, 2015).

66 Wisconsin Electric Comments, Docket No. AD14-14-000, at 16 (Mar. 6, 2015).

67 PJM Comments, Docket No. AD14-14-000, at 22 (Mar. 6, 2015).

68 MISO Comments, Docket No. AD14-14-000, at 37 (Mar. 6, 2015); OMS 

Comments, Docket No. AD14-14-000, at 6 (Mar. 2, 2015); PG&E Comments, Docket 

No. AD14-14-000, at 6 (Mar. 6, 2015); PJM Comments, Docket No. AD14-14-000, at 22 

(Mar. 6, 2015); SCE Comments, Docket No. AD14-14-000, at 7 (Mar. 6, 2015); TAPS 

Comments, Docket No. AD14-14-000, at 24 (Mar. 6, 2015).
Docket No. RM15-24-000 - 30 -

2. Need for Reform of Shortage Pricing Triggers

46. Shortage prices send a short-term price signal to provide an incentive for the

performance of existing resources and help to maintain reliability.

69 However, some 

RTOs/ISOs currently restrict the triggering of shortage pricing to shortages due only to 

certain causes, or they require a shortage to exist for a certain time, e.g., thirty minutes, 

before invoking shortage pricing.

70

47. As several commenters during the price formation proceeding noted, not invoking 

shortage pricing when there is a shortage (regardless of the duration or cause of that 

shortage) distorts price signals that are designed to elicit increased supply and to 

compensate resources for the value of the services they provide when the system needs 

energy or operating reserves. Moreover, prices in each dispatch interval should reflect 

the value provided by dispatched resources. In times of shortage, the value of services a 

resource provides increases because operating needs have increased. When shortage 

pricing is not applied when a shortage exists, the resulting price fails to reflect adequately

the value that a resource provides to the system. This failure impairs efficient system 

dispatch and hinders appropriate incentives for resources to address an energy or 

 69 See Shortage Pricing Paper at 4-5.

70 See Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps Workshop, 

Docket No. AD14-14-000, Tr. at 30:15-31:16 and 47:19-49:12 (describing PJM’s 

practice); SPP, OATT, Sixth Revised Volume No. 1, Attachment AE, §§ 5.1.2.1 (1.0.0), 

8.3.4.2 (0.0.0).
Docket No. RM15-24-000 - 31 -

operating reserves shortage. Because of such effects, the Commission finds preliminarily 

that the resulting price is not just and reasonable.

48. In making this preliminary finding, the Commission’s rationale here is similar to 

the rationale the Commission relied on in Order No. 719. In that order, the Commission 

required shortage pricing in RTOs and ISOs. The Commission reasoned that “rules that 

do not allow for prices to rise sufficiently during an operating reserve shortage to allow 

supply to meet demand are unjust, unreasonable, and may be unduly discriminatory.”71 

The Commission added: “In particular, [such rules] may not produce prices that 

accurately reflect the value of energy . . . .”72 For similar reasons, the Commission now 

believes that not invoking shortage pricing during a shortage may result in unjust and 

unreasonable rates because prices do not accurately reflect the value of energy during a 

shortage. Accordingly, the Commission preliminarily finds that restricting shortage 

pricing to shortages lasting longer than one dispatch interval, or not invoking shortage 

pricing during relatively brief shortages, even though a shortage exists, results in rates 

that may be unjust and unreasonable.

49. Commenters that do not support triggering shortage pricing during “transient 

shortages” argue that such shortages can be either merely a mathematical artifact of the 

modeling, or a shortage that will soon be resolved before generators can respond to 

 71 Order No. 719, FERC Stats. & Regs. ¶ 31,281 at P 192.

72 Id.
Docket No. RM15-24-000 - 32 -

shortage prices, even though the system is technically short of resources.

73 The 

Commission, however, believes there are steps an RTO/ISO can take to mitigate 

seemingly artificial shortages, such as using the RTO’s/ISO’s look-ahead capability to 

prevent or minimize the occurrence of shortages that are caused by modeling or other 

operating deficiencies.74 The Commission believes that reflecting the shortage in prices 

is still necessary even when a reserve shortage is so short-lived that resources may be 

unable to respond to the price signal, so that resources operating during the shortage are 

compensated for the value of the service that they provide. The Commission 

acknowledges that an RTO/ISO may need to calibrate administrative shortage prices to 

better reflect the value of the service.75 

 73 MISO Comments, Docket No. AD14-14-000, at 37 (Mar. 6, 2015); OMS 

Comments, Docket No. AD14-14-000, at 6 (Mar. 2, 2015); PG&E Comments, Docket 

No. AD14-14-000, at 6-7 (Mar. 6, 2015); PJM Comments, Docket No. AD14-14-000, 

at 22-23 (Mar. 6, 2015); SCE Comments, Docket No. AD14-14-000, at 7-8 (Mar. 6, 

2015); TAPS Comments, Docket No. AD14-14-000, at 24 (Mar. 6, 2015).

74 One panelist at the Scarcity and Shortage Pricing, Offer Mitigation and Offer 

Caps Workshop stated that a look-ahead process can position resources so that changing 

operating conditions do not lead to reserve shortages. See Scarcity and Shortage Pricing, 

Offer Mitigation and Offer Caps Workshop, Docket No. AD14-14-000, Tr. 43:23-45:3 

(Oct. 28, 2014) (“One of the drivers of putting in our forward-looking dispatch tools, our 

dispatch tools are looking out 60 minutes in a time-link dispatch, so they see upcoming 

system events.”).

75 See, e.g., Scarcity and Shortage Pricing, Offer Mitigation and Offer Caps 

Workshop, Docket No. AD14-14-000, Tr. 40:1-42:12 (Oct. 28, 2014) (“So now in MISO, 

most of those scarce, transient events are really very small shortages against their total 

requirement produces a much smaller pricing impact, but we still think it's important. A 

shortage is a shortage. We should try and make some estimation of what the marginal 

value of that shortage is and include that in pricing.”).
Docket No. RM15-24-000 - 33 -

50. Based upon information gathered during the price formation proceeding and as 

discussed above, the Commission preliminarily determines that prices that result from a 

failure to trigger shortage pricing for any dispatch interval during which a shortage of 

energy or operating reserves occurs may be unjust and unreasonable.

3. Commission Proposal

51. In order to remedy the potentially unjust and unreasonable rates caused by 

restrictions on shortage pricing, the Commission proposes, pursuant to section 206 of the 

FPA,

76 to require that RTOs/ISOs trigger shortage pricing for any dispatch interval

during which a shortage of energy or operating reserves occurs. The Commission seeks 

comments on this proposal.

52. The shortage pricing reform in this NOPR should ensure that a resource is

compensated based on a price that reflects the value of the service the resource provides. 

Implementing the shortage pricing reform proposed in this NOPR would ensure that 

resources have appropriate incentives to address energy or reserve shortages. The 

Commission expects that if shortage pricing is triggered for all shortage events, then 

resources are expected to take actions to ensure that they are available to respond to high 

prices. Resources taking actions to ensure their availability should, in turn, alleviate 

shortages and avoid shortage pricing during subsequent dispatch intervals.

 76 16 U.S.C. 824e.
Docket No. RM15-24-000 - 34 -

53. The shortage pricing reform proposed in this NOPR addresses the trigger for 

invoking shortage pricing, not the shortage price. While the Commission asked 

commenters to address the level of shortage pricing in the price formation proceeding,

77

the Commission is not at this time proposing to change the price paid by any RTO/ISO

when it triggers shortage pricing.

54. The Commission expects that implementation of the shortage pricing reform 

proposed in this NOPR would not be as complex as implementing the proposed 

settlement interval reform. The Commission therefore proposes that the deadline for full 

implementation of the shortage pricing reform be effective within four months from the 

date of the compliance filing in response to a final rule in this proceeding. The 

Commission seeks comment on whether that proposed compliance and implementation 

timeline would provide sufficient time for RTOs/ISOs to develop and implement changes 

to technological systems and business processes in response to a final rule adopting the 

proposed shortage pricing reform.

III. Compliance

55. The Commission proposes to require that each RTO/ISO submit a compliance 

filing within four months of the effective date of the final Rule in this proceeding to 

demonstrate that it meets the proposed requirements set forth in the final Rule. While the 

Commission believes that four months is a reasonable deadline for RTOs/ISOs to submit 

 77 Notice Inviting Post-Technical Workshop Comments, Docket No. AD14-14-

000, at 9 (Jan. 16, 2015).
Docket No. RM15-24-000 - 35 -

compliance filings, the Commission understands that the proposed settlement interval

reform could take more time to implement than the proposed shortage pricing reform due 

to the complexity of settlement systems. As discussed above, the Commission proposes 

(1) to allow twelve months from the date of the compliance filings for implementation of

reforms to settlement systems to become effective and (2) to allow four months from the 

date of the compliance filings for implementation of reforms to shortage pricing to 

become effective.

56. The Commission seeks comment on the proposed deadline for RTOs/ISOs to 

submit the compliance filing four months following the effective date of the final rule in 

this proceeding. Specifically, the Commission seeks comment on whether the proposed 

compliance timeline would allow sufficient time for RTOs/ISOs to develop and 

implement changes to technological systems and business processes in response to a final 

rule. 

57. To the extent that any RTO/ISO believes that it already complies with the 

settlement intervals and shortage pricing reforms proposed in this NOPR, the RTO/ISO 

would be required to demonstrate how it complies in the filing required four months after 

the effective date of the final rule in this proceeding. The proposed implementation 

deadlines would apply only to RTOs/ISOs to the extent they do not already comply with 

the reforms proposed in this NOPR.
Docket No. RM15-24-000 - 36 -

IV. Information Collection Statement

58. The Paperwork Reduction Act (PRA)78 requires each federal agency to seek and 

obtain Office of Management and Budget (OMB) approval before undertaking a 

collection of information directed to ten or more persons or contained in a rule of general 

applicability. OMB’s regulations,79 in turn, require approval of certain information 

collection requirements imposed by agency rules. Upon approval of a collection(s) of 

information, OMB will assign an OMB control number and an expiration date. 

Respondents subject to the filing requirements of a rule will not be penalized for failing 

to respond to these collection(s) of information unless the collection(s) of information 

display a valid OMB control number. 

59. The reforms proposed in this NOPR would amend the Commission’s regulations 

to improve the operation of organized wholesale electric power markets operated by 

RTOs and ISOs. The Commission proposes to require that each RTO/ISO (1) settle 

energy transactions in its real-time markets at the same time interval it dispatches energy 

and settle operating reserves transactions in its real-time markets at the same time interval 

it prices operating reserves and (2) trigger shortage pricing for any dispatch interval 

during which a shortage of energy or operating reserves occurs. The reforms proposed in 

this NOPR would require one-time filings of tariffs with the Commission and potential 

 78 44 U.S.C. 3501-3520.

79 5 CFR 1320.
Docket No. RM15-24-000 - 37 -

software and hardware upgrades to implement the reforms proposed in this NOPR. The 

Commission anticipates the reforms proposed in this NOPR, once implemented, would

not significantly change currently existing burdens on an ongoing basis. With regard to 

those RTOs and ISOs that believe that they already comply with the reforms proposed in 

this NOPR, they could demonstrate their compliance in their compliance in the filing 

required four months after the effective date of the final rule in this proceeding. The 

Commission will submit the proposed reporting requirements to OMB for its review and 

approval under section 3507(d) of the Paperwork Reduction Act.80 

60. While the Commission expects the adoption of the reforms proposed in this NOPR

to provide significant benefits, the Commission understands that implementation and 

modifying settlement systems can be a complex and costly endeavor. The Commission 

solicits comments on the accuracy of provided burden and cost estimates and any 

suggested methods for minimizing the respondents’ burdens, including the use of 

automated information techniques. Specifically, the Commission seeks detailed 

comments on the potential cost and time necessary to implement aspects of the reforms 

proposed in this NOPR, including (1) hardware, software, and business processes 

changes; (2) increased data storage and validation; (3) changes to market participant 

metering or other equipment; and (4) processes for RTOs and ISOs to vet proposed 

changes amongst their stakeholders. 

 80 44 U.S.C. 3507(d).
Docket No. RM15-24-000 - 38 -

61. The Commission also seeks comment on whether changes in settlement systems 

would disrupt existing contractual relationships and, if so, what burdens this might 

impose and how the Commission should address any potential issues resulting from such 

disruption. 

Burden Estimate and Information Collection Costs: The Commission believes that the 

burden estimates below are representative of the average burden on respondents, 

including necessary communications with stakeholders. The estimated burden and cost81 

for the requirements contained in this NOPR follow.82

 81 The estimated hourly cost (salary plus benefits) provided in this section are 

based on the salary figures for May 2014 posted by the Bureau of Labor Statistics for the 

Utilities sector (available at http://www.bls.gov/oes/current/naics2_22.htm#13-0000) and 

scaled to reflect benefits using the relative importance of employer costs in employee 

compensation from March 2015 (available at

http://www.bls.gov/news.release/ecec.nr0.htm). The hourly estimates for salary plus 

benefits are:

• Legal (code 23-0000), $129.87

• Computer and mathematical (code 15-0000), $58.25

• Information systems manager (code 11-3021), $94.55

• IT security analyst (code 15-1122), $63.55

• Auditing and accounting (code 13-2011), $51.11

• Information and record clerk (code 43-4199), $37.50

• Electrical Engineer (code 17-2071), $66.45

• Economist (code 19-3011), $73.04

• Computer and Information Systems Manager (code 11-3021), $94.55

• Management (code 11-0000), $78.04

The average hourly cost (salary plus benefits), weighting all of these skill sets evenly, is 

$74.69. The Commission rounds it to $75 per hour. 

82 The RTOs and ISOs (CAISO, ISO-NE, MISO, NYISO, PJM, and SPP) are 

required to comply with the reforms proposed in this NOPR. Three RTOs/ISOs (CAISO, 

NYISO, and SPP) currently align real-time energy settlement with their dispatch intervals 

(continued...)
Docket No. RM15-24-000 - 39 -

Data Collection

FERC 516 

(modifications in 

NOPR in 

RM15-24-000)

Number of 

Respondents

Annual 

Number of 

Responses 

per 

Respondent

Total 

Number of 

Responses

Average 

Burden 

Hours & 

Cost per 

Response

Annual 

Burden 

Hours & 

Total 

Annual 

Cost

(1) (2) (1)×(2)=(3) (4) (3)×(4)=(5)

Tariff filings onetime in Year 1

For RTOs/ISOs that 

currently align realtime settlement with 

dispatch intervals 3 RTOs or 

ISOs 1 3

80 hrs; 

$6,000

240 hrs;

$18,000

Tariff filings onetime in Year 1

For RTOs/ISOs that 

do not currently align 

real-time settlement 

with dispatch 

intervals 3 RTOs or 

ISOs 1 3

160 hrs; 

$12,000

480 hrs;

$36,000

Related Burden 

Hours for 

Implementation of 

changes each year in 

Years 1 & 2

For RTOs/ISOs that 

currently align realtime settlement with 

dispatch intervals 3 RTOs or 

ISOs 1 3

550 hrs;

$41,250

1,650 hrs; 

$123,750

 

and thus likely would be burdened less by that aspect of the reforms proposed in this 

NOPR. 
Docket No. RM15-24-000 - 40 -

Data Collection

FERC 516 

(modifications in 

NOPR in 

RM15-24-000)

Number of 

Respondents

Annual 

Number of 

Responses 

per 

Respondent

Total 

Number of 

Responses

Average 

Burden 

Hours & 

Cost per 

Response

Annual 

Burden 

Hours & 

Total 

Annual 

Cost

(1) (2) (1)×(2)=(3) (4) (3)×(4)=(5)

Related Burden 

Hours for 

Implementation of 

changes each year in 

Years 1 & 2

For RTOs/ISOs that 

do not currently align 

real-time settlement 

with dispatch 

intervals 3 RTOs or 

ISOs 1 3

1,600 hrs;

$120,000

4,800 hrs; 

$360,000

Cost to Comply: The Commission has projected the total cost of compliance as 

follows:83

• Year 1: $18,000 + $36,000 + $123,750 + $360,000 = $537,750

• Year 2: $123,750 + $360,000 = $483,750

After Year 2, the reforms proposed in this NOPR, once implemented, would not 

significantly change existing burdens on an ongoing basis. 

 83 The costs for year 1 would consist of filing proposed tariff changes to the 

Commission within four months of a Final Rule plus initial implementation. The costs 

for year 2 would consist of any remaining implementation within the twelve months after 

the tariff filing is required.
Docket No. RM15-24-000 - 41 -

The Commission notes that these estimates do not include costs for software and 

hardware. Based on comment from industry, current estimates of overall costs for 

software and hardware could be as high as $20,000,000, for market participants and 

RTOs/ISOs combined, for each RTO/ISO that does not yet comply with the settlement 

interval reform proposed in this NOPR.

84 As stated above, the Commission requests 

comment on the estimated costs for any additional software and hardware needed to 

comply with the reforms proposed in this NOPR.

Title: FERC-516, Electric Rate Schedules and Tariff Filings.

Action: Proposed revisions to an information collection.

OMB Control No. 1902-0096.

Respondents for this Rulemaking: RTOs and ISOs.

Frequency of Information: One-time during years one and two.

Necessity of Information: The Federal Energy Regulatory Commission proposes this 

rule to improve competitive wholesale electric markets in the RTO and ISO regions. 

Internal Review: The Commission has reviewed the proposed changes and has 

determined that such changes are necessary. These requirements conform to the 

Commission’s need for efficient information collection, communication, and 

 84 ISO-NE Comments, Docket No. AD14-14-000, at 23 (Mar. 6, 2015); GDF 

SUEZ Comments, Docket No. AD14-14-000, at 10 (Mar. 6, 2015). 
Docket No. RM15-24-000 - 42 -

management within the energy industry. The Commission has specific, objective support 

for the burden estimates associated with the information collection requirements.

62. Interested persons may obtain information on the reporting requirements by 

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director], 

e-mail: DataClearance@ferc.gov, Phone: (202) 502-8663, fax: (202) 273-0873. 

Comments concerning the collection of information and the associated burden 

estimate(s), may also be sent to the Office of Information and Regulatory Affairs, 

Office of Management and Budget, 725 17th Street, NW, Washington, DC 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission, phone: 

(202) 395-0710, fax (202) 395-7285]. Due to security concerns, comments should be 

sent electronically to the following e-mail address: oira_submission@omb.eop.gov. 

Comments submitted to OMB should include FERC-516 and OMB Control 

No. 1902-0096.

V. Regulatory Flexibility Act Certification

63. The Regulatory Flexibility Act of 1980 (RFA)85 generally requires a description 

and analysis of rules that will have significant economic impact on a substantial number 

of small entities. The RFA does not mandate any particular outcome in a rulemaking. It 

 85 5 U.S.C. 601-12.
Docket No. RM15-24-000 - 43 -

only requires consideration of alternatives that are less burdensome to small entities and 

an agency explanation of why alternatives were rejected.

64. This rule would apply to six RTOs and ISOs (all of which are transmission 

organizations). The average estimated annual cost to each of the RTOs/ISOs is $89,625

in year 1, and $80,625 in Year 2. This one-time cost of filing and implementing these 

changes is significant.86 The RTOs and ISOs, however, are not small entities, as defined 

by the RFA.87 This is because the relevant threshold between small and large entities is

500 employees and the Commission understands that each RTO and ISO has more than 

500 employees. Furthermore, because of their pivotal roles in wholesale electric power 

markets in their regions, none of the RTOs/ISOs meet the last criterion of the two-part 

RFA definition a small entity: “not dominant in its field of operation.” As a result, the 

Commission certifies that the reforms proposed in this NOPR would not have a 

significant economic impact on a substantial number of small entities. The Commission 

does not expect other entities to incur compliance costs as a result of the reforms 

 86 This estimate does not include costs for hardware and software, for which the 

Commission requests comment.

87 The RFA definition of “small entity” refers to the definition provided in the 

Small Business Act, which defines a “small business concern” as a business that is 

independently owned and operated and that is not dominant in its field of operation. The 

Small Business Administrations’ regulations at 13 CFR 121.201 define the threshold for 

a small Electric Bulk Power Transmission and Control entity (NAICS code 221121) to be 

500 employees. See 5 U.S.C. 601(3), citing to Section 3 of the Small Business Act, 

15 U.S.C. 632.
Docket No. RM15-24-000 - 44 -

proposed in this NOPR, but seeks detailed comments on whether other entities, such as 

load-serving entities, would incur costs as a result of the reforms proposed in this NOPR.

VI. Environmental Analysis

65. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.88 The Commission concludes that neither an Environmental 

Assessment nor an Environmental Impact Statement is required for this NOPR under 

section 380.4(a)(15) of the Commission’s regulations, which provides a categorical 

exemption for approval of actions under sections 205 and 206 of the FPA relating to the 

filing of schedules containing all rates and charges for the transmission or sale of electric 

energy subject to the Commission’s jurisdiction, plus the classification, practices, 

contracts and regulations that affect rates, charges, classifications, and services.89

VII. Comment Procedures

66. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [60 days after 

publication in the FEDERAL REGISTER]. Comments must refer to Docket 

 88 Regulations Implementing the National Environmental Policy Act of 1969, 

Order No. 486, 52 FR 47,897 (Dec. 17, 1987), FERC Stats. & Regs., Regulations 

Preambles 1986-1990 ¶ 30,783 (1987).

89 18 CFR 380.4(a)(15). 
Docket No. RM15-24-000 - 45 -

Nos. RM15-24-000, and must include the commenter’s name, the organization they 

represent, if applicable, and their address.

67. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission's web site at http://www.ferc.gov. The Commission accepts 

most standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing.

68. Commenters that are not able to file comments electronically must send an 

original of their comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street NE, Washington, DC 20426.

69. All comments will be placed in the Commission’s public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters.

VIII. Document Availability

70. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

Washington, DC 20426.
Docket No. RM15-24-000 - 46 -

71. From the Commission’s Home Page on the Internet, this information is available 

on eLibrary. The full text of this document is available on eLibrary in PDF and 

Microsoft Word format for viewing, printing, and/or downloading. To access this 

document in eLibrary, type the docket number of this document, excluding the last 

three digits, in the docket number field.

72. User assistance is available for eLibrary and the Commission’s website during 

normal business hours from the Commission’s Online Support at (202) 502-6652 (toll 

free at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference 

Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room 

at public.referenceroom@ferc.gov.

List of subjects in 18 CFR Part 35

Electric power rates

Electric utilities

Non-discriminatory open access transmission tariffs

By direction of the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.
Docket No. RM15-24-000 - 47 -

Regulatory Text

In consideration of the foregoing, the Commission proposes to amend Part 35, 

Chapter I, Title 18, Code of Federal Regulations, as follows:

PART 35 – FILING OF RATE SCHEDULES AND TARIFFS

1. The authority citation for part 35 continues to read as follows:

Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-

7352.

2. Amend § 35.28 as follows:

(a) Paragraph (g)(1)(iv)(A) is revised.

(b) Add a new paragraph (g)(1)(vi).

§ 35.28 Non-discriminatory open access transmission tariff.

* * * * *

(g) Tariffs and operations of Commission-approved independent system 

operators and regional transmission organizations. * * *

(1) Demand response and pricing.* * * *

(iv) Price Formation during periods of operating reserve 

shortage. (A) Each Commission-approved independent system operator and regional 

transmission organization must modify its market rules to allow the market-clearing price 

during periods of operating reserve shortage to reach a level that rebalances supply and 

demand so as to maintain reliability while providing sufficient provisions for mitigating 

market power. Each Commission-approved independent system operator and regional 
Docket No. RM15-24-000 - 48 -

transmission organization must trigger shortage pricing for any dispatch interval during 

which a shortage of energy or operating reserves occurs. * * * *

(vi) Settlement intervals. Each Commission-approved independent 

system operator and regional transmission organization must settle energy transactions in 

its real-time markets at the same time interval it dispatches energy and must settle 

operating reserves transactions in its real-time markets at the same time interval it prices 

operating reserves.
Docket No. RM15-24-000 - 49 -

Note: The following appendix will not be published in the Federal Register.

APPENDIX A: List of Short Names/Acronyms of Commenters

Short Name/Acronym Commenter

APPA and NRECA American Public Power Association 

and National Rural Electric 

Cooperative Association

ANGA America’s Natural Gas Alliance

Brookfield Brookfield Renewable Energy 

Marketing LP

CAISO California Independent System 

Operator Corporation

Calpine Calpine Corporation

Direct Energy Direct Energy Business Marketing, 

LLC, Direct Energy Business, LLC 

and affiliated companies

EEI Edison Electric Institute

EPSA Electric Power Supply Association

Entergy Nuclear Power 

Marketing

Entergy Nuclear Power Marketing, 

LLC

Exelon Exelon Corporation

GDF SUEZ GDF SUEZ North America, Inc.

ISO-NE ISO New England, Inc.

MISO Midcontinent Independent System 

Operator, Inc.
Docket No. RM15-24-000 - 50 -

NYISO New York Independent System 

Operator, Inc.

New York Transmission 

Owners

New York Transmission Owners 

(Central Hudson Gas & Electric 

Corporation, Consolidated Edison 

Company of New York, Inc., Power 

Supply of Long Island, New York 

Power Authority, New York State 

Electric & Gas Corporation, Niagara 

Mohawk Power Corporation d/b/a 

National Grid, Orange and Rockland 

Utilities, Inc., and Rochester Gas and 

Electric Corporation)

OMS Organization of MISO States

PG&E Pacific Gas and Electric Company

PJM PJM Interconnection, L.L.C.

PJM Utilities Coalition PJM Utilities Coalition (American 

Electric Power Service Corporation, 

the Dayton Power and Light 

Company, FirstEnergy Service 

Company, Buckeye Power, Inc., and 

East Kentucky Power Cooperative)

Potomac Economics Potomac Economics, Ltd.

PSEG Companies PSEG Companies (Public Service 

Electric and Gas Company, PSEG 

Power LLC and PSEG Energy 

Resources & Trade LLC)

SCE Southern California Edison Company

SPP Southwest Power Pool, Inc.

TAPS Transmission Access Policy Study 

Group
Docket No. RM15-24-000 - 51 -

Wartsila Wartsila North America, Inc.

Wisconsin Electric Wisconsin Electric Power Company

Xcel Xcel Energy Services Inc.