Comments on 7/26 RA Working Group Revised Discussion Paper and Final Recommendations

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

The Alliance for Retail Energy Markets (“AReM”) has reviewed the Revised Discussion Paper and Final Recommendation Plan and supports moving forward to the next phase of the initiative. AReM’s positions on the scope remain unchanged from those expressed in comments filed on July 2, 2024. Its top priority is to support greater alignment between the CAISO and California Public Utilities Commission on resource adequacy-related matters. It looks forward to continuing discussions to achieve this objective.

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

The Alliance for Retail Energy Markets (“AReM”) has reviewed the Revised Discussion Paper and Final Recommendation Plan and supports moving forward to the next phase of the initiative. AReM’s positions on the scope remain unchanged from those expressed in comments filed on July 2, 2024. Its top priority is to support greater alignment between the CAISO and California Public Utilities Commission on resource adequacy-related matters. It looks forward to continuing discussions to achieve this objective.

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) RAMPD Revised Discussion Paper and Final Recommendation Plan. CalCCA generally supports the Revised Discussion Paper and Final Recommendation Plan with respect to the three tracks moving forward to policy development and the problem statements for those tracks. Its primary concerns with the CAISO’s updated path forward for tracks 2 and 3 are:

• The CAISO should not shift the resource adequacy (RA) program from monthly showings to annual showings.
  • As described in CalCCA’s May 27, 2024, comments,[1] the CAISO should not shift the RA showing granularity from monthly to yearly because there is less certainty of the availability of certain resources (primarily hydro and imports) in the year-ahead time frame than in the month-ahead time frame.
• The CAISO should not include a planned outage buffer in the PRM.
  • As described in CalCCA’s May 27, 2024, comments,[2] the CAISO should not consider a planned outage buffer as doing so would shift the burden of generator outages from the party that can control outages (the generator) to a party that cannot (the load-serving entity (LSE)). 
• The CAISO should not link the capacity procurement mechanism (CPM) Soft Offer Cap (SOC) to bi-lateral market prices. 
  • As described in CalCCA’s July 2, 2024, comments,[3] the lack of Clean System Power (CSP) offers is not a function of the way the CAISO’s current backstop processes are designed but rather a function of the current lack of capacity that has RA market prices unprecedentedly high. This does not signal a need to change the current CPM SOC. The process for defining the SOC works as intended, covering going-forward fixed costs of the marginal resources on the system and mitigating market power while allowing a generator that can demonstrate higher costs to recover those costs. It is not intended to be competitive with bi-lateral market prices, which currently reflect market scarcity rather than resources’ costs.

CalCCA supports exploring the other elements of the CAISO’s updated path forward for tracks 1, 2, and 3 and looks forward to continuing to engage in the policy development phase of this initiative.

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/a79881e1-374a-4d13-aa17-cbbf7e631b3a#org-6b240e6d-295e-4f19-9bf2-280896d7b4a4.

[2]            Id.

[3] https://stakeholdercenter.caiso.com/Comments/AllComments/10d5fec5-8032-43e4-aa30-067535d504e8#org-52666ab8-09fa-4ee9-8b71-00cbb97ea0b9.

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

The stakeholder process has been a working group guided interaction that started in October 2023 to collaborate on enhancements to the CAISO Resource Adequacy (RA) program amid an evolving generation mix, variable supply conditions, and changes to resource planning frameworks in California and the West. CDWR-SWP appreciates CAISO for the opportunity to express concerns and ideas in every step of the process, and consideration of concerns raised by stakeholders.

It is a reasonable approach to advance the three tracks for policy advancement stage[1], while identifying future RA working group topics for further discussions. The revised discussion paper captures the concerns raised as well as the ideas.

CDWR looks forward to participating in the policy development phases.

[1] Track 1: Modeling, Default PRM, Default Counting, UCAP, and Ambient Derates; Track 2: Outage and Substitution & Availability and Incentive Mechanisms; Track 3: Backstop Reform and Long-Term EDAM RSE Solutions

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

Please see the attached Comments from the Department of Market Monitoring.

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

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 efforts to protect ratepayers include energy, water, and communications regulation advocacy.

The California Independent System Operator (CAISO) released the RAMPD Revised Discussion Paper & Final Recommendation Plan, Version 3, on July 26, 2024 (RAMPD Final Plan).[1]  Cal Advocates appreciates the CAISO’s progress and coordination with stakeholders in this initiative and generally supports the RAMPD Final Plan.  Cal Advocates provides the following recommendations:

• CAISO’s plan to conduct a Loss of Load Expectation (LOLE) assessment must include an early stakeholder review of the assessment methodology, and
• The Capacity Procurement Mechanism (CPM) soft offer cap should not be adjusted to be based on market prices.

The CAISO’s plan to conduct a reliability assessment must include an opportunity for stakeholder feedback on the design of the LOLE model

The RAMPD Final Plan includes an “updated path forward” that describes the CAISO’s plan to conduct a reliability assessment of the CAISO Balancing Authority Area (BAA).[2]  The plan does not include a step to allow the CAISO to describe the LOLE model to stakeholders nor does it include a step to solicit stakeholder feedback on the design of the LOLE model.  However, the CAISO notes that it intends to “work closely with stakeholders to review and update model inputs and discuss the assessment methodology and tools throughout the process.”[3] 

Before the assessment runs, the CAISO should ensure that the process includes a step for stakeholders to review and provide feedback on the methodology to be used in the assessment.  As Cal Advocates has noted,[4] LOLE studies are inherently complex and may use different modeling approaches, inputs, and tools.  Stakeholder participation is necessary to build consensus on an assessment methodology that may be used to assess reliability plans and contract activities of CAISO-participating Local Regulatory Areas (LRA).[5]  A review process would also facilitate transparency in the assessment methodology and process, enabling stakeholders to help identify any design flaws and better understand assessment results that could impact their industry or LRA.[6]

The CPM soft offer cap should not be adjusted to be based on market prices

The CAISO hypothesizes that reduced amounts of offers in the Competitive Solicitation Process (CSP) may be driven in part by sellers having alternative options that can pay well above the CPM soft offer cap.[7]  The CAISO is open to a discussion to link the soft offer cap to bilateral market prices as one solution.[8]

The CAISO should not modify the CPM soft offer cap to base it on market values.  The current soft offer cap design, intended to represent the going-forward fixed costs of a benchmark generator, is an important market power mitigation feature, as acknowledged by the CAISO.[9]  A soft offer cap based on market values[10] would cause CPM designations to compete with the RA market, would remove the soft offer cap’s market power mitigation function, and would likely cause disruption in the RA market.[11]  Cal Advocates recommends that the CAISO continue to use going-forward fixed costs to calculate the CPM soft offer cap.

[1] Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Revised-Discussion-Paper-and-Final-Recommendation-Plan-Resource-Adequacy-Modeling-and-Program-Design-Working-Group-Jul-26-2024.pdf.

[2] RAMPD Final Plan at 13.

[3] RAMPD Final Plan at 13.

[4] Cal Advocates Comments on the March 13, 2024 RAMPD Working Group, March 27, 2024 at Section 8.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/a79881e1-374a-4d13-aa17-cbbf7e631b3a#org-aae696bf-1f5d-4356-b1cd-f864e295bc13.

[5] The Track 1 problem statement intends to assess and communicate the system-wide sufficiency of the CAISO BAA with respect to the contracted RA fleet, and understand LRA contributions to overall system reliability.  RAMPD Final Plan at 8.

[6] The RAMPD Final Plan does not include all potential actions that may be taken with respect to assessment results but intends to facilitate, “Addressing such concerns around CAISO BAA System-wide RA sufficiency in a timely and efficient manner.”  RAMPD Final Plan at 8.

[7] RAMPD Final Plan at 24-25.

[8] RAMPD Final Plan at 28-29.

[9] RAMPD Final Plan at 24-25.

[10] Market prices such as the Resource Adequacy (RA) market or intertie hub prices.

[11] The California Community Choice Association (CalCCA) raised similar points:

RA market prices currently do not appear to be based on cost but rather on whatever buyers will pay. Under these conditions, sellers will search for any available opportunity cost signal and, therefore, what price they can offer. Changes to the CAISO SOC will provide such a signal. Because markets should function competitively, and the SOC is a market power mitigation mechanism, the CAISO should set the CPM SOC to reflect cost, as it does in energy markets with default energy bids. The soft-offer cap already does this and provides an opportunity to get a higher payment if a higher cost can be proven at the FERC.

CalCCA Comments on the April 29-30, 2024 RAMPD Working Groups, May 17, 2024 at Section 1.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/4726dcff-0976-4bbe-a424-6382c3a38012#org-c3024a68-903e-4503-8e9b-d78c3ab0666a.

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

The Public Generating Pool (PGP) is composed of nine publicly owned electric utilities, eight in Washington and one in Oregon, that work together on issues of common interest. Two PGP members (Tacoma Power and Seattle City Light) are members of the Western Energy Imbalance Market, and 5 other members are nested within BPA’s Balancing Authority. We have been monitoring this initiative from the perspective of our interest in creating markets that enable participants to benefit from the diversity of a resource-adequate and reliable footprint.

PGP is impressed with the depth and breadth of topics covered in this working group, and generally sees the proposed policy tracks as supporting our broader interests, while promoting reliability and transparency in the CAISO BAA which will support the CAISO Balancing Authority’s participation in the Extended Day Ahead Market, and the reliability thereof. The issues discussed and scoped have been focused on specific items relevant to participants and stakeholders within the CAISO BAA, and PGP is supportive of these topics moving forward to the policy phase with the guidance of those stakeholders. We are concerned however, that the policy topic related to “continued assessment of interoperability with existing and emerging RA Programs”, now listed in the group of topics for future consideration, has missed an appropriate level of time and attention due to the CAISO-centric orientation of this working group so far. This may be appropriate given the number of issues identified within the working group, but PGP recommends that if this item is going to stay on the list of future working group topics, it should be broken out as a separate working group and framed as such in the Policy Catalog so that it can be discussed with a more EDAM/WEM-oriented framing and a broader set of stakeholders. We recognize that this topic has interdependencies with other items like the Resource Sufficiency Enhancements Phase 3 and the Price Formation Enhancements that both have this broader set of engaged stakeholders, and that it may be appropriate to progress on these topics and the RAMPD initiatives outlined before revisiting the RA interoperability topic in the broader market context, but if that is the path forward it still indicates separating this topic into a separate category in the Policy Roadmap Process so that it can be mapped into the broader stakeholder engagement and policy development plan. For now, this was not included in the catalog because it was considered as within the scope of the RAMPD, which appears to no longer be the case.

Finally, PGP observes that this set of issues is an example of how separating policy topics into CAISO’s BA and MO functions may interest and empower different stakeholders on topics most relevant to them, while also enabling appropriate jurisdiction and decisional authority over discrete topics. The topics included in the proposed Track 1-3 may appropriately be oriented towards the CAISO BA and that specific set of stakeholders, while the topic of RA interoperability and interplay with EDAM/WEM should be focused on the CAISO’s MO role and the broader set of regional stakeholders. PGP urges the CAISO MO or future Regional Organization to pick up the interoperability topic for future consideration, while leaving the CAISO BA and stakeholders to continue to improve on the topics scoped by this working group process.

1. Please provide a summary of your organization's overall comments on the Resource Adequacy Modeling and Program Design (RAMPD) Revised Discussion Paper and Final Recommendation Plan posted on July 26, 2024.

As stated in its July 2 comments, SDG&E is generally supportive of the RAMPD scope and issues and offers several recommendations for consideration. Additionally, SDG&E would like to highlight that several parties flagged areas for CAISO and CPUC coordination, including the CAISO’s proposed LOLE study and PRM update under Track 1. SDG&E agrees that alignment between CAISO and the CPUC would enhance CAISO’s LOLE and PRM development efforts. This is a particularly timely recommendation as Track 2 of the CPUC’s Resource Adequacy proceeding (R.23-10-011) includes, among other things, several proposals for regular updates to the CPUC’s LOLE Study and PRM. The RAMPD Revised Discussion Paper and Final Recommendation Plan notes that:

the future Track 1 stakeholder process around updating the default PRM and counting rules in the ISO tariff will require a detailed review and discussion of the components of the current default PRM and the assumptions that inform the default counting rules. The ISO will seek consensus around how often these default counting rules may need to be revised and updated, and what data and inputs might inform future revisions. (p. 13)

Given the rapidly changing grid, it would make sense for the CAISO and CPUC to coordinate to ensure consistency to the extent feasible. SDG&E recommends that the CAISO work with the CPUC to align its LOLE and PRM updates.