Configuration Guide for: Shortfall Allocation / Date: 04/1808/1210/13/11
Settlements & Billing
BPM Configuration Guide: Shortfall Allocation
CC 5910
Version 5.23
CAISO, 2018 / Page 1 of 22Settlements & BillingSaMC / Version: 5.23
Configuration Guide for: Shortfall Allocation / Date: 04/1808/1210/13/11
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 SaMC Charge Code in one document.
2.Introduction
2.1Background
Each Scheduling Coordinator must remit to the CAISO Clearing Account the amount shown on an Invoice as payable by that Scheduling Coordinator no later than 10:00am on the relevant Payment Date for that Invoice. Furthermore, each Scheduling Coordinator is obligated to notify the CAISO as soon as they are aware that a payment will not, or is unlikely to be remitted to the CAISO Bank by 10:00 am on the Payment Date for a given Invoice.
On the Payment Date, the CAISO will determine if all amounts required to be remitted to the CAISO Clearing Account were received. Once all payments are received, the CAISO is obligated to remit to the Settlement Accounts maintained by the CAISO Creditors the amount owed as specified on the Invoice (Payment Advice) by the close of business on the Payment Date. If all payments are not received, and the CAISO has determined there are CAISO Debtors in default, the CAISO will identify the Scheduling Coordinator(s) that has failed to pay, and begin to take the appropriate steps to recover the overdue amount so that payments to CAISO Creditors can be made.
In the event of a default, the CAISO must take the following steps to process the Shortfall and ensure the CAISO Clearing Account clears on the payment date:
- First, use the defaulting Scheduling Coordinator’s Financial Security (if any) to the extent necessary to cover the Default Amount and allow CAISO Creditors to be paid.
- If Financial Security is not available, and there are funds standing to the credit of a reserve account, the ISO shall debit the reserve account for the default amount and apply that amount to the clearing account in order to pay creditors. However, the ISO will exercise all its options to fully collect the defaulted amount from the ISO debtor in order to make the reserve account whole.
If the ISO is unable to collect the defaulted amount, the ISO will allocate, on the next available invoice, the unpaid amount via Charge Code 5912 Default Loss Allocation to all Default-Invoice SCs to which the percentages shares calculated for the current calendar quarter apply, excluding the ISO debtor that has not paid the payment default amount.If Financial Security is not available, and there are funds standing to the credit of the CAISO Reserve Account, the CAISO shall debit the CAISO Reserve Account for the Default Amount and apply that amount to the CAISO Clearing Account in order to pay CAISO Creditors.
- If neither Scheduling Coordinator Financial Security amounts nor CAISO Reserve Account credits are sufficient to cover the Default Amount, the CAISO shall reduce payments to all CAISO Creditors proportionally to the net amounts payment to them on the relevant Payment Date to the extent necessary to clear the CAISO Clearing Account. This amount will be netted with any offsets used to clear a past billing Shortfall. Collections of defaulted receivables (other than Interest) will be distributed pro rata to CAISO Creditors in the bill period(s) of the default.
Defaulting Scheduling Coordinators are subject to Interest charges on overdue amounts for the period from the Payment Date to the date on which the payment is remitted to the CAISO Clearing Account. The interest charges and payments received are settled in accordance with the principles described for Charge Code 3999 Default Invoice Interest Charge and 2999 Default Invoice Interest Allocation.
The first two steps are processes facilitated outside of Settlement calculations. The third step is covered by Settlement calculations associated with Shortfall Allocation and Shortfall Receipt Distribution configurations covered under Charge Codes 5910 and 5900 respectively. In the event that a shortfall gets declared a default, the following steps apply.The first two steps are processes facilitated outside of Settlement calculations following the principles outlined in Section 11.29.9 through 11.29.17 of the Tariff. The third step is covered by Settlement calculations (also prescribed by the Tariff section referenced above) associated with Shortfall Allocation and Shortfall Receipt Distribution configurations covered under Charge Codes 5910 and 5900 respectively.
For payment defaults for a Trading Day on or after April 1, 2009, each payment default amount allocated to CAISO Creditors through a shortfall allocation that remains unpaid by the defaulting Scheduling Coordinator or CRR Holder will be first reversed via Charge Code 5901 Shortfall Allocation Reversal and then allocated via Charge Code 5912 Default Loss Allocation on the next available Invoice to the Default-Invoiced SCIDs to which the percentage shares calculated for the current calendar quarter apply, excluding the CAISO Debtor that has not paid the payment default amount.
2.2Description
Shortfall Allocation processing is facilitated through a coordinated effort between CAISO Finance and CAISO Settlements and will occur against the Invoice (Payment Advice) balance against which the default occurred. This process will result in the issuance of supplemental Payment Advice to CAISO Creditors against all Payment Advices generated in the Invoice Run that are impacted by the default. A Payment Advice in an Invoice Run may contain multiple Bill Periods. These supplemental Payment Advices will be separate from the original Payment Advice (that this, the Payment Advice against which cash was unable to clear) and have its own unique Invoice Reference number. The supplemental Payment Advice will provide a reference to this original Payment Advice (via the Invoice Reference number attribute) and will contain the Shortfall Amount representing the payment amount outstanding to the CAISO Creditor. This is the amount that will be held until the defaulting Scheduling Coordinator remits a payment against the Default Amount. Netting the supplemental Payment Advice against the original Payment Advice will reveal the actual amount that the CAISO Creditor will receive for all Bill Period(s) contained within that Invoice.
When a CAISO Debtor is in default, and until all defaulting amounts have been collected, the CAISO will make the revised Shortfall payments (that is, the net of the supplemental and original Payment Advice) either on the Payment date or as soon as practical within five (5) business days of the collection date for the Payment Advice.
This Charge Code 5910 for Shortfall Allocation determines the unrecoverable settlement amounts for CAISO Creditors in the event of a default, after any offsets prior to the execution of fund transfers through the CAISO Clearing Account.
The positive Shortfall Amount is provided (by the Market Clearing System) as a Pass Through Bill transaction. If market clearing pre-determines the allocation distribution by providing the payment hold amount with a overwrite flag indicator with a value equal to one, then the payment hold amount provided will simply be passed through the Settlement engine and appear directly on the supplemental Payment Advice as the Shortfall Allocation Settlement Amount. If market clearing does not pre-determine the allocation distribution, the overwrite flag indicator will have a zero value and the calculation logic as laid out in this document will be executed and the default amount is allocated to all Creditor Business Associates based on their share of the total outstanding AP Settlement (amounts) Payments are made to Creditors to the extent funds are available after the application of funds to pay CAISO Grid Management Charges (GMC), FERC Fees, and Creditor balances under $5000. These adjustments (if necessary) are performed before CAISO financially clears the market. Supplemental Payment Advices are produced with the resulting Shortfall Allocation amount as describe above to ensure that the dollars paid out by CAISO exactly match receipts. These shortfall amounts will reduce the overall due balance and are itemized on the Payment Advice as Financial Adjustments so that market clearing can process as payment “holds.”
For payment defaults occurring on or after April 1, 2011, each payment default amount allocated to CAISO Creditors through a shortfall allocation that remains unpaid by the defaulting Scheduling Coordinator or CRR Holder will be allocated on the next practicable Invoices to the Default-Invoiced SCIDs to which the percentage shares calculated for the current calendar quarter apply, excluding the CAISO Debtor that has not paid the payment default amount.
Beginning with the second calendar quarter of 2011, the CAISO will provide to each Default-Invoiced SCID on or about the first Business Day of the applicable calendar quarter its own percentage share of any payment default amount that may be allocated in the calendar quarter to which the percentage share applies, subject to adjustment to account for any non-paying CAISO Debtor, based on application of the methodology for allocating payment default amounts to the applicable Default Look-Back Period. In calculating the percentage share for each Default-Invoiced SCID the CAISO will determine the percentage share for each full calendar quarter and will average those quarterly percentage shares.
These provisions will not apply to the allocation of payment default amounts and interest accrued thereon that are associated with Trading Days that occurred prior to April 1, 2009.
3.Charge Code Requirements
3.1Business Rules
Bus Req ID / Business Rule1.0 / The Shortfall Allocation calculation (and associated Invoice Run process) shall be executed within 2 hours of notification and receipt of the PTBShortfallAmount.
2.0 / Each Invoice and Payment Advice is treated as a whole and discrete period for Shortfall Calculations; this period is unique to each Invoice and Payment Advice Run and is referred to as the Invoice Period.
2.1 / Within the Invoice Period, Invoices and Payment Advices may contain Net Settlement Amounts for multiple Bill Periods; currently, a Bill Period corresponds to a Trade Month.
2.1.1 / A Business Associate that does not pay its corresponding balance on an Invoice is in default for the total Net Settlement Amount for the entire Invoice Period, that is, the total for all Bill Periods within that Invoice.
2.1.2 / The PTBShortfallAmount shall include a Bill Period Start and Bill Period End attribute set.
2.2 / Since an Invoice/Payment Advice can contain multiple Bill Periods, but only one Bill Period can be associated with a given input, the specific values provided against the Bill Period Start and Bill Period End dates shall represent the first and last Trading Days of the most Current Bill Period (P’) that was included on the relevant Invoice/Payment Advice impacted by the default.
2.3 / Shortfall Allocations are applied to Creditor entities that have amounts due for the Bill Period Start (U) and Bill Period End (U’)Current Bill Period (P’)being settled.
3.0 / Shortfall Allocation processing and associated calculations should be executed against Accounts Payable balances associated with the Market Invoice type.
3.1 / The Market Invoice type will include settlement obligations for Market charges/payments, GMC charges, CRR Auction charges/payments, Monthly FERC Fee charges, TAC, and other Financial Adjustments.
4.0 / Supplemental Invoices (Payment Advices) with a line item representing the Shortfall Allocation Settlement Amount as well as new balancing bill determinants must be produced.
4.1 / The Shortfall Allocation Amount must be its own line item on the supplemental Invoice (Payment Advice) for Business Associates and CAISO GMC IDs under Financial Adjustments so that Market Clearing can process the outputs as payment “holds.”
5.0 / Accounts Receivable balances (if any) associated with RMR and Annual FERC Fee Invoice types are exempted from Shortfall Allocation processing, that is, Shortfall processing only applies to defaulting AR balances on the Invoice type used to settle CAISO Market and administrative transactions
6.0 / The total amount of Market Defaults is allocated to CAISO Creditors on a proportionate basis such that each Creditor receives the same percentage of their total net amount receivable for the Bill Period Start (U) and Bill Period End (U’)Current Bill Period (P’)against which the default occurred.
6.1 / If Oracle provides multiple PTBShortfallAmount inputs of only positive amounts, the Shortfall Allocation calculation should be executed.
6.2 / Market Clearing will dictate whether or not the Settlements system will execute the Shortfall Allocation calculation logic.
6.2.1 / If Market Clearing pre-determinesthe payment hold amounts, then the payment hold amount as well as the manual overwrite flag will be passed to the Settlement engine with a value equal to 1 and appear directly on the Supplemental Payment Advice as the Shortfall Allocation Settlement Amount. This means CAISO Finance is dictating the allocation rules and the Shortfall Allocation calculation should NOT be executed.
6.2.2 / If Market Clearing does not pre-determine the payment hold amount, then the payment hold amount will not be provided and the manual overwrite flag will be passed to the Settlement engine with a value equal to 0. This means that the calculation logic as laid out in this document will be executed.
6.3 / If an offset is utilized to clear a past shortfall, this amount is applied prior to the shortfall calculation.
6.4 / The pro-ration of amounts occurs according to the following priorities:
- GMC paid first
- Monthly FERC Fees paid second
- Creditor Invoices under $5,000 are paid third.
- All other amounts paid fourth and are equally pro-rated. This includes any amounts collected in Trust, non-Default relatedInterest, CRR settlements, and TAC settlements.
6.4.1 / Business Associates that have a Settlement Amount for Default related Interest payments made in Charge Code 2999 must have that 2999 amount subtracted from their BusinessAssociateTotalSettlementAmountforBillPeriod total to determine the Payment Advice Hold amount that will be used in the Shortfall Allocation calculation.
6.4.1.1 / Default Interest is subtracted from the BusinessAssociateTotalSettlementAmountforBillPeriod because the funds associated with this payout have previously been collected through CC 3999 (on a different Invoice/Payment Advice) and are sitting in an account awaiting distribution, which happens at different time throughCC 2999. If this CC 2999 payout is included on an Invoice Run that is impacted by a Shortfall, it must be excluded as we already have the funds to pay.
6.4.2 / If there was not enough AR funds collected to pay GMC in full, a partial payment is made to GMC, with the remainder shown as outstanding, and other Creditor balances will be shown as outstanding in an amount equal to each Creditor’s total AP.
6.4.3 / If there was enough AR funds collected to pay GMC in full, but not enough to pay FERC, GMC is paid, and a partial payment made to FERC, with the remainder shown as outstanding, and the other Creditor balances will be shown as outstanding in an amount equal to each Creditor’s total AP.
6.4.4 / If there was enough AR funds collected to pay GMC and FERC in full, but not enough to pay Creditors with AP balances under $5000, each Creditor with AP balances under $5000 will receive pro-rated payment amounts based on their AP share to the total AP under $5000, and the remaining balance, as well as the other Creditor balances, will be shown as outstanding in an amount equal to each Creditor’s total AP.
6.4.5 / If there was enough AR funds collected to pay GMC, FERC, and Creditor balances under $5000 in full, but not enough to remaining Creditors (that is, those with AP balances over $5000), each Creditor with AP balances over $5000 will receive pro-rated payment amounts based on their AP share to the total AP over $5000, with their remaining balance shown as outstanding.
6.5 / Not used.
7.0 / Any input value used in the formula specified in Section 3.5 that has a CAISO Business Associate ID (B) must be included in Shortfall calculationsto the extent that the CAISO ID is against a value needed to determine the following inputs:
- BusinessAssociateTotalSettlementAmountforBillPeriod
- CAISOGMCOffsetBalanceAmount
- FERCTrustBalanceAmount
- OtherBalanceAmounts