If a Balancing Authority does not meet the DCS in a given quarter, what type of reserve must be increased for the next quarter?

The correct answer is that the Balancing Authority must increase the Contingency Reserve for the next quarter if it does not meet the DCS, or Daily Capacity Requirement, in a given quarter. The Contingency Reserve is specifically allocated to address unforeseen events that could disrupt the balance between electricity supply and demand. When a Balancing Authority fails to meet the DCS, it indicates that the amount of reserve capacity available is inadequate in dealing with potential contingencies. Therefore, it is necessary to increase the Contingency Reserve to ensure reliability and maintain operational integrity in the following quarter, addressing any shortfalls identified in the previous period.

The other types of reserves have different functions: Operating Reserves are used for online generation to meet demand, Capacity Reserves refer to the long-term planning to ensure sufficient resources are available in the future, and Regulation Reserves pertain to fine-tuning the generation in response to real-time system frequency deviations. Thus, while they play vital roles in system reliability, they are not specifically mandated to be increased in response to unmet DCS requirements as is the case with Contingency Reserves.