Comments on Working group 5

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) Price Formation Enhancements Working Group Session #5. As described in CalCCA’s comments to working group #4,[1] with respect to balancing authority areas (BAA) -level market power mitigation, this initiative can now focus on how to group BAAs when performing the dynamic competitive path assessments to improve the existing BAA-level market power mitigation approach and developing a BAA-level market power mitigation methodology that includes both the CAISO and other BAAs participating in the Western Energy Imbalance Market (WEIM) or the Extended Day-Ahead Market (EDAM).

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/969b55a3-402f-435b-a97f-270ab94c2beb#org-163889a3-9f08-49f8-8adf-32c5edbd441d.

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

Problem statements should be developed using analysis to support the existence of a problem.

For BAA-level market power, one of the problem statements can be defined as: The CAISO Department of Market Monitoring’s (DMM) annual report consistently shows there are hours when the CAISO market is not structurally competitive,[1] but the CAISO BAA does not have market power mitigation in place at the BAA level during those uncompetitive hours.

Before defining scarcity pricing problem statements, the CAISO should demonstrate with analysis that problems exist. This should include how frequently the problem occurs, under what conditions, and what impacts it has on the market. That is, the CAISO should demonstrate the existing Scarcity Pricing mechanisms are insufficient to send the right price signals during periods of scarcity to incent resource availability. Solutions can then be tailored to the problems identified via this analysis.

[1]             2022 Annual Report on Market Issues and Performance at 55: http://www.caiso.com/Documents/2022-Annual-Report-on-Market-Issues-and-Performance-Jul-11-2023.pdf.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

CalCCA’s comments to working group #4 submitted on September 28, 2023 reflect CalCCA’s current feedback on the topics/themes in the discussion paper and CalCCA’s ranking from most to least important.  

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

CalCCA has no comments on the PFE Working Group Process at this time.  

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

The guiding principles of Efficiency, Simplicity, Feasibility, Transparency, Accuracy, Effectiveness, and Competition are reasonable guiding principles for price formation. Proposed policy solutions should be developed with the goal of maximizing adherence to these principles. CAISO and stakeholders will likely find, however, that most solutions will meet some of the guiding principles but not others (e.g., a proposed policy solution could be simple and feasible but not transparent, another could be transparent and simple but not accurate, etc.). The challenge during the policy development phase will be how to balance all of these guiding principles that may be at times contradictory to one another.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

CalCCA has no comments on the working group process and deliverables at this time. 

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

CalCCA’s comments to working group #4 submitted on September 28, 2023 reflect CalCCA’s current feedback on the topics/themes in the discussion paper. 

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

CalCCA is not interested in presenting at this time.  

9. Please provide any additional feedback.

CalCCA has no additional comments at this time.

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

Cal Advocates has no additional comments or feedback at this time.

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

Cal Advocates has no additional comments or feedback at this time.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the state-appointed independent ratepayer advocate at the California Public Utilities Commission (CPUC).  Our goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.  Our advocacy efforts to protect ratepayers include energy, water, and communications regulation. 

Cal Advocates ranks the themes listed in the discussion paper as follows, with additional consideration and feedback listed below certain ranked items:

1. Review of existing ISO market mechanisms

Cal Advocates supports prioritizing a review of the existing ISO market mechanisms as a level-setting tool for stakeholders to improve their understanding of the issues in the Price Formation Enhancements initiative.  Cal Advocates recommends that the CAISO review existing incentive and penalty tools for performance and availability in the day-ahead market, including the CAISO’s Resource Adequacy Availability Incentive Mechanism (RAAIM).  CAISO suggested that RAAIM will be a topic covered in the recently-started Resource Adequacy Modeling and Program Design initiative; therefore, this may represent an efficient opportunity for CAISO staff to meet stakeholder needs in both initiatives. 

2. Reflecting the value of reliability in prices

Cal Advocates’ ranking of this theme is driven by the need to ensure that ratepayer costs are just and reasonable.  To that end, Cal Advocates suggests that any problem statements need to define what the value of reliability and scarcity pricing mean and what they are intended to achieve.  The California Community Choice Association (CalCCA) states that “[m]odifications to Scarcity Pricing are not needed to send a price signal to build new resources; those price signals already exist. Resource Adequacy (RA) prices are signaling that capacity is scarce.”[1]  Indeed, the Market Price Benchmark for System RA increased by 77% from 2022 to 2023—an unmistakable signal of need.[2]  Generators should not be provided multiple opportunities to extract further rents caused by supply scarcity.  CalCCA goes on to state,

[m]odifications to Scarcity Pricing could be needed if the existing Scarcity Pricing mechanisms do not incentivize existing resources to be available to the market at the right times during times of scarcity.  However, this need has not yet been fully demonstrated. The next phase of this initiative should be for the CAISO to demonstrate with analysis that the existing Scarcity Pricing mechanisms do not do this.[3] 

Cal Advocates supports CalCCA’s clarification that scarcity pricing should be limited to a focus on existing resources.  Focusing on existing resources will allow stakeholders to narrow the scope of this initiative and have realistic expectations surrounding what scarcity pricing could achieve in a reliability emergency.  Finally, Cal Advocates echoes CalCCA’s doubt that existing Scarcity Pricing mechanisms are not sufficiently incenting resources to be available during scarcity events.

3. How and when to enact and end scarcity pricing
4. Scarcity Pricing's competitiveness with bi-lateral transactions that occur during scarce conditions
5. BAA-level MPM
6. Compatibility with pricing and RA in broader West and other markets to appropriately signal (i.e. reflective of performance and delivery) voluntary supply
7. Out of market actions

While Cal Advocates understands that the CAISO generally prefers to minimize out of market actions, problem statements should also acknowledge that out of market actions involve tradeoffs with some positive benefits.  For instance, the California Department of Water Resources’ Electric Supply Strategic Reliability Reserve (ESSRR) is funded by taxpayers via capacity payments.  If the CAISO has a choice between dispatching ESSRR resources or enabling a scarcity pricing mechanism that substantially increases the clearing price of electricity for the entire fleet of generators to hopefully attract an equivalent amount of generation, the CAISO should choose the cheaper option even if it is an out of market action.  Any discussion of out of market actions in this initiative should include the decision-making process to execute such actions against alternatives such as exercising scarcity price tools.

[1] Comments of the California Community Choice Association at #2 (no emphasis added), September 28, 2023, available at: https://stakeholdercenter.caiso.com/Comments/AllComments/969b55a3-402f-435b-a97f-270ab94c2beb#org-163889a3-9f08-49f8-8adf-32c5edbd441d.

[2] California Public Utilities Commission, Calculation of the Market Price Benchmarks for the Power Charge Indifference Adjustment Forecast and True Up, September 30, 2022 and October 2, 2023.  Both available at: https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-power-procurement/power-charge-indifference-adjustment.

[3] Comments of the California Community Choice Association at #2 (no emphasis added), September 28, 2023, available at: https://stakeholdercenter.caiso.com/Comments/AllComments/969b55a3-402f-435b-a97f-270ab94c2beb#org-163889a3-9f08-49f8-8adf-32c5edbd441d.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

Cal Advocates appreciates that the CAISO has created room for expanded stakeholder engagement at earlier stages of the policy development process through the Working Group process.  However, the initial weekly meeting cadence was too fast to support substantial stakeholder engagement and Cal Advocates appreciates that the CAISO slowed the pace down.  Additionally, the open-ended number of working groups at the outset made it challenging for stakeholders to plan their work. 

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

Cal Advocates has no additional comments or feedback at this time.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

Cal Advocates has no additional comments or feedback at this time.

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

Cal Advocates has no additional comments or feedback at this time.

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

Cal Advocates has no additional comments or feedback at this time.

9. Please provide any additional feedback.

Cal Advocates has no additional comments or feedback at this time.

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

9. Please provide any additional feedback.

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

No.  As MRP understands BAA-level market power mitigation as it is performed today, a BAA is tested for competitiveness only when there is price separation with other BAAs due to congestion on the interconnecting transfer path(s).   This approach to BAA-level market power mitigation is reasonable, and MRP does not object to focusing the efforts in this initiative on extending that technique to other BAAs.  MRP would object to the CAISO seeking to apply a mechanism to assess structural competitiveness within the CAISO BAA when import paths into the CAISO are not congested. 

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

MRP offers this proposed problem statement:

1. During times of stressed system operations, including when the CAISO was curtailing demand, CAISO market prices did not reflect the level of reliability stress or resource scarcity. 

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

In MRP s view the CAISO has listed the three “pivotal” topics in the proper order of importance:

1. Scarcity Pricing
2. BAA-Level Market Power Mitigation
3. Fast-Start Pricing. 

MRP also supports the CAISO’s prioritization of topic areas:

1. review of existing ISO mechanisms and policies intended to ensure reliability,
2. reflecting the value of reliability in market prices,
3. defining triggers to enact and end scarcity pricing
4. factoring the impact of out of market actions
5. assessing scarcity pricing’s competitiveness with bi-lateral transactions occurring during scarce conditions
6. ensuring compatibility with pricing and RA designs in the broader West.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

MRP appreciates the CAISO’s working group process approach, especially as it began with an effort to develop principles, formulate problem statements and derive an action plan that will inform the “formal” part of the stakeholder process.   In MRP’s view, beginning a stakeholder process with this kind of working group effort will address market participant concerns that the stakeholder process amounts to “CAISO-proposed solutions in search of problems”. 

And while MRP appreciates the considerable effort the CAISO has undertaken to develop principles and problem statements, MRP believes it is time to finalize this initial stage of the effort and more to the substantive phase of this process. 

Finally, on the September 27 call, the CAISO listed the three proposed new principles (accuracy, effectiveness and competition) and asked participants for comment on these new principles.  MRP did not comment because it did not submit these principles and, frankly, was not sure what the market participant(s) that submitted them intended for each of these new principles.  To MRP’s recollection, the party(ies) that submitted these principles did not respond to the CAISO’s request for comment on the call, which led to that part of the call being rather unproductive.  While MRP appreciates the CAISO’s desire to allow market participants to remain anonymous if they so choose, in MRP’s view the CAISO should have named the party(ies) that submitted those new principles and directly asked them to comment.  MRP understands that sometimes parties that submit comments cannot participate in the subsequent call, but asking market participants to comment on things that they did not submit and do not fully understand can be unproductive.   

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

In MRP’s view, three of the four guiding principles - efficiency, transparency and feasibility – are reasonable, though MRP offers slightly different explanations of two of those principles:

• Efficiency: market prices reflect the appropriate level of concern about reliability
• Transparency: market participants can understand how the prices were produced

With respect to feasibility, while MRP agrees with the CAISO’s concerns about ensuring the market can still solve within prescribed timelines, MRP suggests “feasibility” also includes the CAISO’s ability to implement the proposed solution in its market software with a reasonable period of time.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

As noted above, MRP looks forward to moving from the discussion paper to the action plan and the more traditional type of stakeholder process.   

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

MRP has no additional themes or scope items to suggest.

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

While MRP intends to participate in this effort, it has no interest in presenting at this time. 

9. Please provide any additional feedback.

MRP has no additional feedback. 

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

See attachment.

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

See attachment.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

See attachment.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

See attachment.

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

See attachment.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

See attachment.

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

See attachment.

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

See attachment.

9. Please provide any additional feedback.

See attachment.

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

There are no outstanding questions on BAA-Level Market Power Mitigation (MPM). However, PacifiCorp would like to see some analysis on how often BAA-level MPM is triggered in the WEIM, the impact it has on resources’ bids, and the types of resources that are mitigated most. At this point, it is difficult for PacifiCorp to discuss whether enhancements are needed to BAA-level MPM without knowing how the current measures are performing.

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

 PacifiCorp has the following problem statements for consideration by stakeholders and the CAISO.

• There can be times when day-ahead bilateral prices inside California may not reflect potential market conditions inside California. This can send the wrong price signal to the market, which leads to entities exporting power out of California in the day ahead market and can lead to CAISO curtailing exports in real time.  Day ahead prices inside California at SP and NP need to reflect more accurate market conditions in the state. If day-ahead price signals in CAISO better reflect scarcity, exports from California will be more representative of market conditions.  
• The lack of scarcity pricing mechanisms in the WEIM may be leading to real-time prices that do not reflect instances where WEIM BAAs have limited supply to meet their energy and ancillary service needs.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

PacifiCorp believes the topics and themes presented in the discussion paper accurately reflect discussions that have occurred in the working group meetings thus far. PacifiCorp supports the CAISO’s decision to move the initiative into the problem statement development phase.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

PacifiCorp has appreciated the working group process thus far and believes it is an improvement to the CAISO stakeholder process. PacifiCorp requests that future working group meetings, for all the CAISO initiatives in the working group phase, have a set schedule with a consistent cadence for meetings and comment submission deadlines. Stakeholders are currently participating in four working groups along with other important initiatives on-going in the West, so consistency is helpful for allowing stakeholders to provide meaningful input. As such, PacifiCorp requests that stakeholder meetings and comment submission deadlines move to a three-week cadence with meetings and comment submission deadlines scheduled on a day that is consistent across weeks. This will also remove the need for ‘tentative’ meetings, which are difficult for stakeholders to work around.

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

PacifiCorp generally agrees with the first four proposed guiding principles (efficiency, simplicity, transparency, and feasibility), and agrees with other stakeholders in the working group that ‘effectiveness’, as discussed in the working group meeting, should also be added as a guiding principle. PacifiCorp agrees with the premise of ‘accuracy’ but believes the guiding principles of ‘efficiency’ and ‘effectiveness’ are sufficient for capturing the intentions of adding ‘accuracy’ as a guiding principle. Similarly, PacifiCorp believes the guiding principles of ‘simplicity’ and ‘transparency’ will lead to ‘competition’.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

PacifiCorp supports the working group process and deliverables and believes this initiative is on the right path forward.

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

 See comments from #3.

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

 PacifiCorp does not have any interest in presenting at this time.

9. Please provide any additional feedback.

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

PGP appreciates the background and level-set of the existing Market Power Mitigation (MPM) approach that has been provided for the working group to date. One aspect that remains unclear is the frequency of MPM under the WEIM, how this might change in EDAM, and if/how the grouping approach would impact the frequency of mitigation. Are there periods where there is in fact competitive conditions that are being mitigated for no reason under the current approach? In general, we support the need for further work in this area, and the objective of MPM that supports pricing that mimics that which would be available under competitive conditions, even when such conditions do not exist.

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

A problem statement that we are focused on in this initiative is that there is a recurrent disconnect between the Day-Ahead and Real-Time price within the CAISO footprint, and between the bilateral market and the broader Western Energy Imbalance Market. While it is likely normal to see some efficiency gain in an organized market, which can result in lower prices, these differences are most extreme during times of tight conditions. Focusing only on the CAISO footprint that can side-step more of the transitional issues relating to price formation in the bilateral market, this is a clear sign of price formation challenges that can be linked to scarcity design and appropriate times for administrative pricing. Evidence of successful reform would be a reduction in out of market actions and better price conformance between the DA, HA, and RT prices.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

1. Scarcity Pricing- We appreciate the development of principles and the problem statements focused on scarcity pricing, and generally see regional consensus that this is a priority area that could enhance the market towards better alignment with broad stakeholder interests.

2. Fast-Start Pricing- This has been a regional topic of interest for some time, due to the perception that the lack of fast start pricing results in unjust price suppression that impacts not only fast-start resources, but any resource that is operating at a time that a fast start resource is needed to clear the market. Definitively addressing the need for fast start pricing or some alternative mechanism to recognize variable costs in the market clearing price for energy, and mechanisms to appropriately incentivize flexibility in the system mix while creating accurate price signals is an important topic. The need for a mechanism to incentivize flexible resources is clearly evidenced by the behavior of MO in the use of load conformance. If fast-start pricing is not an adequate solution to this market design challenge, that needs to be clearly documented and understood by regional participants.  PGP looks forward to seeing the results of the first pass of the analysis to support the market design in this area, and appreciate the efforts of CAISO staff to level-set and refresh this conversation with analysis and information. We look forward to participating in the design process in this area and see the novel design proposed last fall as a reasonable starting place.  

3. BAA-Level MPM- While the CAISO has done an excellent job outlining this topic and the need for additional work in this area, the hydro DEBs that has broad regional support can enable appropriate cost recovery and resource management even in a regime of the potential for excessive mitigation. Given this, and the timelines associated with EDAM implementation, the other two topics feel more pressing and impactful and should be prioritized at this time. PGP supports the scope items in this topic area that are captured in the updated discussion paper. 

See PGP prior comments for how we would prioritize and order the themes that fall under the broader category of Scarcity Pricing.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

PGP appreciates that this is a new process and has been moving rather quickly. In order to better prepare for the discussion and contribute in live polling and the discussion in the meetings, it would help to have an agenda and materials for the following meeting a few days in advance, and questions/areas of feedback highlighted. We support the objective of having open dialogue and an exploratory process through the working group structure, but could be more engaged and effective participants if we knew what to expect going into the meetings. If this necessitates spacing out the meetings and slowing the process slightly, we would support this in favor of more productive dialogue and better meeting preparation at the participant level.  

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

We support the guiding principles as drafted and feel they adequately reflect the stakeholder input, and support the inclusion of “accuracy” as an additional principle that easily applies to price formation and the market power mitigation framework and implementation thereof.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

See question 4 above. While we appreciate the documentation and the approach reflected in the working group process and deliverables, if participants had a better understanding of what to expect in each meeting we could contribute more effectively.

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

The discussion paper does a fair and thorough job of representing the discussion and feedback to date and is very helpful documentation to understand the dialogue and direction coming out of this working group process. We appreciate the efforts on the part of the CAISO staff and look forward to continuing to engage in the process.

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

Not at this time.

9. Please provide any additional feedback.

N/A

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

The Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to provide feedback on the Working Group (WG) Session #5 and updated Discussion Paper. In previous communication during the WG, SRP requested additional information concerning the distinctions in pricing impacts between the Western Energy Imbalance Market (WEIM) and the Extended Day Ahead Market (EDAM) with regard to Market Power Mitigation (MPM). SRP remains open to further discussions within a WG or through the development of a reference document.

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

SRP values the CAISO providing draft problem statements for consideration within the WG. SRP concurs that the two examples provided should be explored. Furthermore, SRP would like to submit the following draft problem statement for consideration:

Commitment costs submitted to SIBR are currently automatically mitigated to 125% of the calculated default costs. CAISO has provided a mechanism (Reference Level Adjustment) to adjust the index gas price used for this calculation, but the timing and technical limitations of this process do not always allow participants to bid in at cost when desired. This process should allow participants to bid at cost in a timely and efficient way.

Please note the above problem statement also aligns with the Gas Management WG and the topic “how to reflect the value of reliability in prices during scarce conditions”.       

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

SRP’s prioritization of the topics presented is as follows:

1) How to reflect the value of reliability in prices during scarce conditions.

2) The triggering mechanism and timing (both start and end) of Scarcity Pricing. 

3) Out of Market action’s impact to the CAISO market.  

4) Scarcity Pricing’s competitiveness with bi-lateral markets. 

5) Compatibility with pricing and Resource Adequacy (RA) in the broader West and other markets to signal voluntary supply. 

6)  BAA-Level MPM enhancements

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

SRP suggests the CAISO provide a written summary of historical or new analysis/research conducted related to each of the WG topics prior to the meetings pertaining to those topics.  This summary may allow participants to come prepared with valuable input or feedback.

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

SRP does not have any specific comments on the guiding principles at this time. 

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

SRP appreciates the CAISO providing ongoing updates to the Discussion Paper alongside an Action Plan. SRP recommends including references to prior analysis or related initiatives to enhance participants’ understanding of the design development’s history, concerns at the time, and new findings since the start of WEIM. 

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

SRP does not have any comments at this time. 

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

SRP does not have any comments at this time. 

9. Please provide any additional feedback.

SRP does not have any comments at this time. 

1. Working Group Session - Are there any outstanding questions on BAA-Level Market Power Mitigation as it exists today?

SCE does not have any comments at this time.  

2. Working Group Session - Please share your organization’s feedback on the PFE Working Group’s draft problem statements formulation exercise. Do you have any problem statements or scope items you would like to propose for further discussion in the process.

SCE appreciates CAISO’s efforts in engaging stakeholders with exercises to formulate problem statements; however, SCE believes the foundation to forming an effective working group also includes learning the perspectives and operations of not only the CAISO BAA but other participating BAAs.   Having a broader understanding of the diverse wants/needs of each BAA should help identify those themes to be pursued in this working group.

SCE also advocates for more data sharing with stakeholders regarding price formation issues.  While CAISO has clearly demonstrated the issues experienced in August 2020, it has not demonstrated that these issues still persist.   CAISO released scarcity pricing enhancements as part of the 2021 Summer Readiness initiative and it’s unclear whether the enhancements have proved sufficient for solving pricing issues.

3. Working Group Session – Please share your organization’s feedback on the topics/themes presented in the discussion paper in order of most to least important.

SCE finds it difficult to provide rankings for the topics and themes presented in the discussion paper because many of the themes are interrelated.  Therefore, SCE has listed major themes from most to least important and has included subthemes that SCE believes relate to the major theme.  SCE highlights in bold those themes listed in the discussion paper with additional themes that should be considered.  SCE provides the ranking as follows: 

1. Review existing ISO market mechanisms 

2. How and when to enact and end scarcity pricing 

1. How to reflect the value of reliability in prices during scarce conditions 

• Out of market actions 

• Administratively set pricing 

• Contingency and emergency events 

3. BAA-Level Market Power Mitigation enhancements  

4. Scarcity pricing’s competitiveness with bi-lateral transactions occurring during scarce conditions 

5. Compatibility with pricing and RA in broader West and other markets to appropriately signal with voluntary supply.    

First and foremost, SCE suggests for CAISO to begin with the theme “[r]eview existing ISO market mechanisms.”  This theme should encompass an analysis of those instances where grid conditions were deteriorating without prices reflecting that deterioration.   The theme could also extend to include a review of other scarcity conditions in other markets and participating BAAs.  It’s crucial to comprehend the structure, operations, and resources of each BAA to adequately define “scarcity.”  Once a uniform definition of “scarcity” is agreed upon, subsequent themes that focus on the mechanics and operational details, such as “how to enact and end scarcity pricing,” can be initiated.

4. Working Group Session - Provide your organization’s feedback on the PFE Working Group process and any suggestions you have for improvement.

SCE believes that sufficient alignment on the definition of “scarcity” be achieved prior to CAISO turning its attention to any formulation of themes and problem statements.  Below are some considerations for trying to define scarcity: 

• Analysis should be conducted to identify price formation issues that have occurred in the past. CAISO should provide more examples of these issues beyond the August 2020 events and after scarcity pricing enhancements were implemented as part of the Summer Readiness 2021 enhancements.  Additionally, CAISO should prove through analysis that out-of-market actions during the August 2020 event was not the cause of price divergence. 

• How will scarcity be determined? Will it be measured and what would be the associated metrics? Or should it be triggered only when contingency events occur (e.g., restricted maintenance, initiating spinning/non spinning reserves)? Or should contingency events be recognized as extra-market events subject to administratively determined prices? 

• Is scarcity pricing an initiative to price the market more appropriately to compensate suppliers or is its purpose to help prevent and cure reliability issues? 

• Should scarcity pricing include high penalties or buy-back pricing for non/under-performance?  

5. Discussion Paper - Provide your organization’s feedback on the guiding principles outlines in the PFE Discussion Paper. Please provide any additional PFE guiding principles for further consideration in the Working Group process.

SCE does not have comments at this time.

6. Discussion Paper – Provide your organization’s feedback on the Working Group Process and Deliverables (Discussion goals, process, evolution of the Discussion Paper, Action Plan)?

CAISO should conduct a thorough market review and provide stakeholders with a list of days that clearly demonstrates instances where price formation was a concern. This review should encompass the period beyond the 2021 Summer Readiness enhancements, which included scarcity pricing improvements. SCE is concerned that insufficient data has been shared with stakeholders to support the formulation of scope for this initiative. 

SCE is concerned that the initiative's original goal to accurately reflect scarce supply pricing may be sidetracked by unnecessary requests that don't contribute to an accurate representation of marginal supply costs. Instead, these requests could potentially provide opportunities to artificially raise prices. CAISO should take steps to ensure that the initiative does not lead to unintended consequences. Striking a balance that serves the initiative's purpose while safeguarding market integrity is crucial. 

SCE can only offer suggestions once the CAISO provides substantial proof that there are indeed issues with price formation.  Once the data is made available and it clearly indicates a problem, only then can the objectives and scope of this initiative be determined. 

7. Discussion Paper – Provide your organization’s feedback on the overarching themes/topics presented for problem statement formulation. Are there any additional themes or scope items which should be further explored?

SCE does not have any comments at this time.   

8. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, which topic area or theme will your presentation address or support? Does your presentation introduce a problem statement, help illustrate a problem statement, or provide a scope item for a draft problem statement under discussion?

SCE does not have any comments at this time.   

9. Please provide any additional feedback.

SCE does not have any comments at this time.