Refer to BPM-011 Resource Adequacy - 5.4.2 Historical Unit Considerations (HUC) for the current BPM language.
What is a HUC and why should I register it?
A HUC is a Planning Resource Auction (PRA) financial hedge against the Auction Clearing Price (ACP) differentials between a resource in one zone that is serving load in another.
HUCs hold Load Serving Entities (LSEs) harmless from price separation to the extent that excess auction funds are sufficient.
- See Scenario #1 below. If you are serving 100 MWs of load in Zone B, without HUC your losses would be $2,083/Day or approximately $187,470 for the Season (~90 days).
In an upcoming PRA, if I have 2 separate generators in one Resource Zone serving load in another Resource Zone, can I combine the HUC registration into one?
No, you would need to register a HUC for each Generator CP Node/Load CP Node pairing.
Can I register a HUC for one generator serving two separate loads?
No, you would register a HUC for each Generator CP Node/Load CP Node pairing.
I own a share of a generator in one Resource Zone serving a load in another Resource Zone, how do I register my share for a HUC?
You would register a HUC by putting the number of MWs of your share you wish to hedge in the Amount column in the HUC Registration screen in the MECT for
each Generator CP Node/Load CP Node pairing.
Where and when can I register a HUC?
In the MECT tool, under the Fulfillment tab> Hedge Registration screen.
Hedge Registration will be unlocked at the beginning of September and HUC Registrations must be completed by November 1st for the upcoming Planning Year.
Do I need to register every year for HUC?
Yes, HUC Registration is only for the Planning Year in which you register.
Do I register HUC for every Season?
HUC Registration is per Planning Year and is applied to each Season of that Planning Year.
Does HUC fully cover the price separation between zones?
No, the money applied to the HUC comes from all of the cleared loads in the Resource Zones. If that pool of money is not enough to pay HUC, HUC will be prorated to teach HUC until the funds are exhausted.
A HUC can consist of:
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Scenario #1: Resource "From" Zone A "To" Resource Zone B
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In scenario #1 Resource Zone B cleared the PRA at a higher price than Resource Zone A creating a negative $20.83/MW-Day price separation. A HUC financial hedge would apply
$20.83/MW-Day relief.
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Scenario #2: Resource "From" Zone C "To" Resource Zone D
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In scenario #2 Resource Zone D cleared the PRA at a lower price than Resource Zone C creating a positive $4.09/MW-Day price separation. A HUC financial hedge would not be applied since the Resource cleared higher than the load.
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Scenario #3: Resource "From" Zone A "To" Resource Zone C
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In scenario #3 Resource Zone C cleared the PRA at the same price as Resource Zone A creating a $0.00/MW-Day price separation. A HUC financial hedge would not be applied since the Resource Zone cleared at the same price as the load.
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If a Load is in an LRZ with a higher ACP than the LRZ or ERZ where the Resource is located, the MP serving the Load will pay an amount equal to the difference of the ACPs between the LRZ and the LRZ or ERZ where the Resource is located, multiplied by the amount of the unhedged load if a HUC Hedge does not exist. This distribution will be limited by the excess auction revenue collected in a given PRA.
A combination of capacity agreements that require the delivery of capacity throughout the Planning Year will qualify for treatment as HUCs, provided that the agreements otherwise satisfy the criteria.
Facilities under construction on or before July 20, 2011 that subsequently become Planning Resources will be eligible for the HUC Hedge provided that the HUC criteria is satisfied.
Firm resources that meet HUC Hedge criteria may be included as part of a FRAP or offered into the annual auction. Any MWs of ZRCs in a FRAP that are qualified under a HUC will not be subject to a Zonal Deliverability Charge assessment.
What is a HUC and why should I register it?
A HUC is a Planning Resource Auction (PRA) financial hedge against the Auction Clearing Price (ACP) differentials between a resource in one zone that is serving load in another.
HUCs hold Load Serving Entities (LSEs) harmless from price separation to the extent that excess auction funds are sufficient.
- See Scenario #1 below. If you are serving 100 MWs of load in Zone B, without HUC your losses would be $2,083/Day or approximately $187,470 for the Season (~90 days).
In an upcoming PRA, if I have 2 separate generators in one Resource Zone serving load in another Resource Zone, can I combine the HUC registration into one?
No, you would need to register a HUC for each Generator CP Node/Load CP Node pairing.
Can I register a HUC for one generator serving two separate loads?
No, you would register a HUC for each Generator CP Node/Load CP Node pairing.
I own a share of a generator in one Resource Zone serving a load in another Resource Zone, how do I register my share for a HUC?
You would register a HUC by putting the number of MWs of your share you wish to hedge in the Amount column in the HUC Registration screen in the MECT for
each Generator CP Node/Load CP Node pairing.
Where and when can I register a HUC?
In the MECT tool, under the Fulfillment tab> Hedge Registration screen.
Hedge Registration will be unlocked at the beginning of September and HUC Registrations must be completed by November 1st for the upcoming Planning Year.
Do I need to register every year for HUC?
Yes, HUC Registration is only for the Planning Year in which you register.
Do I register HUC for every Season?
HUC Registration is per Planning Year and is applied to each Season of that Planning Year.
Does HUC fully cover the price separation between zones?
No, the money applied to the HUC comes from all of the cleared loads in the Resource Zones. If that pool of money is not enough to pay HUC, HUC will be prorated to teach HUC until the funds are exhausted.
A HUC can consist of:
- One Generator CP Node serving one Load CP Node.
- One Generator CP Node split with one HUC serving one Load CP Node and a separate HUC serving a different Load CP Node.
- One Generator CP Node serving part of a Load CP Node, and another Generator CP Node serving another part of that Load CP Node.
- Approved HUC MWs can’t be used in another HUC.
Scenario #1: Resource "From" Zone A "To" Resource Zone B
In scenario #1 Resource Zone B cleared the PRA at a higher price than Resource Zone A creating a negative $20.83/MW-Day price separation. A HUC financial hedge would apply
$20.83/MW-Day relief.
Scenario #2: Resource "From" Zone C "To" Resource Zone D
In scenario #2 Resource Zone D cleared the PRA at a lower price than Resource Zone C creating a positive $4.09/MW-Day price separation. A HUC financial hedge would not be applied since the Resource cleared higher than the load.
Scenario #3: Resource "From" Zone A "To" Resource Zone C
In scenario #3 Resource Zone C cleared the PRA at the same price as Resource Zone A creating a $0.00/MW-Day price separation. A HUC financial hedge would not be applied since the Resource Zone cleared at the same price as the load.
If a Load is in an LRZ with a higher ACP than the LRZ or ERZ where the Resource is located, the MP serving the Load will pay an amount equal to the difference of the ACPs between the LRZ and the LRZ or ERZ where the Resource is located, multiplied by the amount of the unhedged load if a HUC Hedge does not exist. This distribution will be limited by the excess auction revenue collected in a given PRA.
A combination of capacity agreements that require the delivery of capacity throughout the Planning Year will qualify for treatment as HUCs, provided that the agreements otherwise satisfy the criteria.
Facilities under construction on or before July 20, 2011 that subsequently become Planning Resources will be eligible for the HUC Hedge provided that the HUC criteria is satisfied.
Firm resources that meet HUC Hedge criteria may be included as part of a FRAP or offered into the annual auction. Any MWs of ZRCs in a FRAP that are qualified under a HUC will not be subject to a Zonal Deliverability Charge assessment.