BPM - CG CC 5024 Invoice Late Payment Penalty

Settlements & Billing

BPM Configuration Guide:Invoice Late Payment Penalty

CC 5024

Version 5.0

Table of Contents

1.Purpose of Document

2.Introduction

2.1Background

2.2Description

3.Charge Code Requirements

3.1Business Rules

3.2Predecessor Charge Codes

3.3Successor Charge Codes

3.4Inputs – External Systems

3.5Inputs - Predecessor Charge Codes or Pre-calculations

3.6CAISO Formula

3.7Outputs

4.Charge Code Effective Date

1.Purpose of Document

The purpose of this document is to capture the requirements and design specification for a Charge Code in one document.

2.Introduction

2.1Background

Prior to the implementation of MRTU, the ISO completed a stakeholder process for several proposed credit policy enhancements. Stakeholders were generally in agreement with these enhancements and saw them as strengthening the ISO’s existing credit policy. However, many stakeholders believed further tightening of credit standards was necessary. In particular, some stakeholders believed that unsecured credit limits and time to post additional collateral should be reduced even further. Additionally, some stakeholders expressed a desire that the ISO implement stricter penalties for late payers and for those who fail to post additional collateral within the prescribed posting period. The ISO conducted a careful analysis of any outstanding proposal and addressed them in a separate process. A final proposal was completed and the ISO believed that the enhancements included in this proposal are reasonable and appropriate strengthening of the last major credit policy changes that were adopted in 2006. Further, the ISO believed these changes represent movement in the right direction and better positions the ISO with other ISO/RTO best credit practices.

The final proposal was presented to and approved by the ISO’s Board of Governors at their December 16-17, 2008 meeting. All but two of these credit policy enhancements have been fully implemented. The two remaining enhancements, which address the stricter penalties on late payments and late posting of financial security as desired by the stakeholders, are being implemented with a proposed effective date of April 7, 2010 subject to FERC’s acceptance of the proposed tariff amendment filed on February 5, 2010.. These are as follows:

• Financial penalties of the greater of 2% of the invoiced amount or $1,000; not to exceed $20,000 per occurrence beginning with the third and subsequent occurrences in a rolling 12 month period.
• Other enforcement actions, including termination, may apply beginning with the fifth occurrence in a rolling twelve month period.
• Financial penalties will fund a penalty reserve account up to $5 million.
• On December 31st of each year, penalties and accrued interest in the penalty reserve account in excess of $5 million will reduce GMC in the following year.

• Other enforcement actions, including termination, may apply beginning with the fifth occurrence in a rolling twelve month period.
• Financial penalties of the greater of 2% of the additional financial security amount or $1,000; not to exceed $20,000 per occurrence beginning with the third and subsequent occurrences in a rolling 12 month period.
• Financial penalties will fund a penalty reserve account up to $5 million.
• On December 31st of each year, penalties and accrued interest in the market reserve account in excess of $5 million will reduce GMC in the following year.

2.2Description

CC5024 –Invoice Late Payment Penalty will be assessed to Market Participants who are late in paying their invoices. This penalty applies to invoices that are governed by the ISO Tariff, except NERC/WECC invoice and invoices issued to bankrupt and inactive entities. This also excludes RMR invoices which are managed under unique contracts. This penalty is calculated as the greater of 2% of the invoiced amount or $1,000; not to exceed $20,000 per occurrence beginning with the third and subsequent occurrences in a rolling 12 month period. Calculation will be performed by the ISO’s Finance Department. The final result will be provided to the ISO’s Settlements department as a Pass-Through Bill (PTB) data to be included in the department’snext available Market settlement, billing and invoicing processes.

3.Charge Code Requirements

3.1Business Rules

• NERC/WECC invoice
• Invoice issued to bankrupt entities
• Invoice issued to inactive entities

3.2Predecessor Charge Codes

3.3Successor Charge Codes

3.4Inputs – External Systems

3.5Inputs - Predecessor Charge Codes or Pre-calculations

3.6CAISO Formula

3.6.1BAInvoiceLatePaymentPenaltySettlementAmountBV’U’Ud =PTBInvoiceLatePaymentPenaltyAmountBJV’U’Ud

3.7Outputs

4.Charge Code Effective Date