Configuration Guide for: Late Payment Penalty / Date: 02/11/10
Settlements & Billing
BPM Configuration Guide:Invoice Late Payment Penalty
CC 5024
Version 5.0
CAISO, 2018 / Page 1 of 7Settlements & Billing / Version: 5.0
Configuration Guide for: Late Payment Penalty / Date: 02/11/10
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:
Credit Policy Enhancement / Summary of ChangesImplement a progressive discipline program, including financial penalties, for Market Participants who are late in paying an invoice. /
- 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.
Implement a progressive discipline program, including financial penalties, for Market Participants who fail to post collateral within the prescribed timeframe. /
- 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
Bus Req ID / Business Rule1.0 / Invoice Late Payment Penalty amount is calculated and provided by Market Clearing to Settlements as a PTB.
2.0 / Invoice Late Payment Penalty applies to invoices that are governed by the ISO Tariff, except the following:
- NERC/WECC invoice
- Invoice issued to bankrupt entities
- Invoice issued to inactive entities
2.1 / Invoice Late Payment Penalty also excludes RMR invoices which are managed under unique contracts.
2.2 / Late payment occurrences are determined based on late payments for both Market and Annual FERC invoices combined.
2.3 / For penalty pertaining to Annual FERC invoices, which all have one due date, the invoice number of the December invoice will be assigned as the Invoice Reference Number.
2.4 / The Trade Date of the PTB is the due date of the invoice that is paid late.
2.5 / Business Rules 2.0 to 2.4 are applicable to Market Clearing but are included in this document as reference.
4.0 / The PTB will be included in the next available Market settlement, billing and invoicing processes.
3.2Predecessor Charge Codes
Charge Code/ Pre-calc NameNone
3.3Successor Charge Codes
Charge Code/ Pre-calc NameNone
3.4Inputs – External Systems
Row # / Variable Name / Description1 / PTBInvoiceLatePaymentPenaltyAmountBJV’U’Ud / Amount of penaltyas PTB to be assessed due to late payment of invoicebyBusiness Associate ID (B), PTB ID (J), Invoice Reference Number (V’), Bill Period Start (U’), Bill Period End (U) and by Trading Day (d). Bill Period Start and End represent the Bill Period of the invoice that was paid late.
3.5Inputs - Predecessor Charge Codes or Pre-calculations
Row # / Variable Name / Predecessor Charge Code/Pre-calc Configuration
1 / None
3.6CAISO Formula
3.6.1BAInvoiceLatePaymentPenaltySettlementAmountBV’U’Ud =PTBInvoiceLatePaymentPenaltyAmountBJV’U’Ud
3.7Outputs
Output Req. ID / Name / DescriptionAll external inputs shall be included as outputs.
1 / BAInvoiceLatePaymentPenaltySettlementAmountBV’U’Ud / Amount of penaltydue to late payment of invoicebyBusiness Associate ID (B), Invoice Reference Number (V’), Bill Period Start (U’), Bill Period End (U) and by Trading Day (d).
4.Charge Code Effective Date
Charge Code/Pre-calc Name / Document Version / Effective Start Date / Effective End Date / Version Update Type
Late Payment Penalty(CC 5024) / 5.0 / 04/07/10 / Open / Configuration Impacted
CAISO, 2018 / Page 1 of 7