Change Request 2026-CRF-008

The current Deficiency Charge framework combines an annual charge concept with seasonal calculations and revenue distributions. This can create different outcomes depending on whether a Participant’s maximum deficiency occurs in Summer or Winter and how its deficiencies develop across the Forward Showing Year. 

Under the current structure, the maximum Summer deficiency is assessed the higher CONE-based charge following the Summer Showing. If the Participant’s maximum Winter deficiency is higher, only the incremental deficiency above the Summer maximum is assessed the higher charge following the Winter Showing. Revenues from each calculation are then distributed to Participants that were non-deficient in the applicable season. 

This creates two primary concerns: 

1. Revenue allocation can be driven by the sequencing of the seasons. A portion of what is effectively an annual Deficiency Charge is allocated based on Summer sufficiency simply because Summer occurs first. If the Participant establishes its maximum deficiency in Summer, the associated revenues go to Participants without Summer deficiencies. If it establishes a higher maximum in Winter, only the incremental amount is distributed based on Winter sufficiency. This can disproportionately direct annual Deficiency Charge revenues to Participants that are adequate in Summer. 

2. The amount charged can depend on when the deficiency occurs. Because different Summer and Winter CONE Factors may apply, two Participants that ultimately have the same maximum deficiency for the Forward Showing Year can face different total charges depending on how much of that maximum was established in Summer versus Winter. This is difficult to reconcile with the concept that the higher Deficiency Charge is associated with an annual resource adequacy obligation. 

The Transition Period adjustments can further complicate these calculations because the final annual obligation may not be known when the Summer charge is initially calculated and collected. 

The proposed change would more clearly separate the seasonal and annual components of the Deficiency Charge framework. 

1. Assess Lower Monthly Deficiency Charges Seasonally 

Following each Binding Season’s Forward Showing, a Participant would be assessed the lower monthly Deficiency Charge for each month in which it has a deficiency, including the month that ultimately may become the Participant’s annual maximum deficiency. 

The existing monthly charge calculation would continue to apply: 

Monthly Deficiency (MW) × (Annual CONE / 12) × 1,000 × 200% 

These charges would be calculated and settled separately for each season. 

Summer: Revenues from Summer monthly Deficiency Charges would be distributed among Participants that did not have a deficiency during the Summer Binding Season. 

Winter: Revenues from Winter monthly Deficiency Charges would be distributed among Participants that did not have a deficiency during the Winter Binding Season. 

Participants that are adequate during a particular season receive the revenues associated with the monthly deficiencies occurring during that season. 

2. Determine a Single Annual Maximum Deficiency 

After both the Summer and Winter Forward Showings are complete, WPP would identify each Participant’s single highest Monthly Deficiency across the entire Forward Showing Year. 

The annual maximum could therefore occur in either Summer or Winter. There would no longer be a separate Summer maximum charge followed by an incremental Winter maximum charge. 

Although there would be a single annual charge for the maximum Monthly Deficiency (unless both Binding Seasons in the Forward Showing year had equal maximums – in that case it would be split 50%/50%), the Deficiency Charge would still be associated with the Binding Season in which the maximum Monthly Deficiency occurred. This is necessary for tracking in the Deficiency Charge Deferral policy proposal.  

3. Apply the Appropriate CONE-Based Charge to the Annual Maximum 

The Summer Season Annual CONE Factor or Winter Season Annual CONE Factor would apply based on the season in which the Participant’s annual maximum deficiency occurred. 

For example: 

• If the Participant’s highest Monthly Deficiency for the year occurred in July, the Summer CONE Factor would apply to its annual maximum charge. 

• If its highest Monthly Deficiency occurred in January, the Winter CONE Factor would apply. 

The purpose of retaining the seasonal CONE Factors is to recognize that a Participant’s deficiency has greater system implications when it occurs during a Binding Season in which the WRAP footprint as a whole has a greater level of deficiency.  

4. Subtract the Monthly Deficiency Charge already assessed from the Seasonal Review 

Because the Participant would have already paid the lower monthly charge for its maximum month as part of the applicable seasonal settlement, that amount would be accounted for in calculating the final annual maximum charge to avoid charging twice for the same deficiency. 

• WRAP Tariff   

• BPM 107 – Forward Showing Deficiency Charges 

See above. Redlines will be shared at 9/16 PRC meeting.

The proposed changes would simplify the Deficiency Charge structure and better align charges and revenue distributions with when deficiencies actually occur. Waiting until both seasons are complete to determine the annual maximum eliminates the current Summer-first/incremental-Winter calculation, reducing the potential for Summer-adequate Participants to disproportionately receive Deficiency Charge revenues. The approach also ensures Participants with the same annual maximum deficiency are treated more consistently, while retaining seasonal monthly charges and CONE Factors to reflect seasonal performance and system conditions. 

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