5.1Introduction

In accordance with the Reliability Assurance Agreement, each Load Serving Entity is obligated to pay a Locational Reliability Charge for each Zone in which it serves load based on the Daily Unforced Capacity Obligation of its loads in such Zone.  An LSE may offset the Locational Reliability charge for a Delivery Year, in whole or in part, by: (a) Self-Supply of Capacity Resources in the Base Residual Auction or an Incremental Auction; (b) offering and clearing Capacity Resources in the Base Residual Auction or an Incremental Auction (but only to the extent of the additional resources committed to meet Unforced Capacity Obligations through such Incremental Auction); (c) receiving payments from Capacity Transfer Rights; or (d) offering and clearing Qualifying Transmission Upgrades in the Base Residual Auction.