I understand that there could be a payment adjustment under the (AIC) Capacity Agreement if the ZRCs are not from the compliance zone. Can you provide an example where the adjustment will result in a reduced payment to Seller?

Under the terms of the (AIC) Capacity Agreement, payments to Seller will be reduced if the Compliance Zone ACP is greater than the Source Zone ACP where the Compliance Zone is LRZ4. If the amount of the payment reduction is greater than the unadjusted payment, then Seller (not Buyer) will have to pay Buyer under the (AIC) Capacity Agreement. We provide 2 examples below to illustrate this point.

For purposes of the below example, the “ACP” refers to the Auction Clearing Price from the 2020/2021 MISO Planning Resource Auction and the Compliance Zone is LRZ4.

Example 1: Where the adjustment results in a reduced payment from Buyer to Seller.
No. of ZRCs won by Seller: 25 ZRCs from Zone 3
Average Winning Bid Price under the (AIC) Capacity Agreement: $90/MW-day
Payment to Seller = $90 x 25 ZRCs x 365 days = $821,250
MISO 2020/2021 PRA Results:
LRZ 4 ACP = $100/MW-day
LRZ 3 ACP = $30/MW-day
Adjustment to Payment = – ($100 – $30) x 25 ZRCs x 365 days = – $638,750
Adjusted Payment = $821,250 – $638,750 = $182,500

Example 2: Where the adjustment results in payment from Seller to Buyer.
No. of ZRCs won by Seller: 25 ZRCs from Zone 3
Average Winning Bid Price under the (AIC) Capacity Agreement: $50/MW-day
Payment to Seller = $50 x 25 ZRCs x 365 days = $456,250
MISO 2020/2021 PRA Results:
LRZ 4 ACP = $100/MW-day
LRZ 3 ACP = $30/MW-day
Adjustment to Payment = – ($100 – $30) x 25 ZRCs x 365 days = – $638,750
Adjusted Payment = $456,250 – $638,750 = – $182,500 (i.e., payment from Seller to Buyer)

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BEC-11: I understand that there could be a payment adjustment under the (AIC) Capacity Agreement if the ZRCs are not from the compliance zone. Can you provide an example where the adjustment will result in a reduced payment to Seller?