Settlement methods

Program Administrators can assign one of three settlement methods to a program, as well as a settlement cap or settlement floor. Settlement methods determine how a curtailment event participant is compensated.

Baseline minus Actual. A method that bases the participant's compensation on the difference between the baseline and the actual usage calculated on an interval-by-interval basis, and aggregated for all intervals. This settlement method is used for both Voluntary and Mandatory programs.

Firm Demand Level minus Actual. A method that bases the participant's compensation on how their actual usage compares to the facility's firm demand level. This method is only used for Mandatory programs.

Baseline minus Firm Demand Level. A method that bases the participant's compensation on the difference between the baseline and the committed firm demand (or firm service) level calculated on an interval-by-interval basis, and aggregated for all intervals. Compensation may be dependent upon the participant's actual usage as compared to the firm demand usage. This method is only used for Mandatory programs.

Two other factors to consider in calculating a participant's compensation are the settlement floor and settlement cap. Either, or both, can be applied to a curtailment program. (For more information about settlement types, see Key concepts).