Comments on May 15 stakeholder discussion and straw proposal for track 2

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

ACP-California appreciates the opportunity to provide feedback on California ISO’s Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.  ACP-California opposes the CAISO’s proposal to fundamentally change current policy by applying RAAIM to Variable Energy Resources (“VERs”). While CAISO’s policy goal of ensuring generators have incentives to ensure resource availability is laudable, this goal can be effectively achieved through the Unforced Capacity (“UCAP”) framework. We do not believe the sharpened performance incentives in a RAAIM successor will meaningfully result in different behavior; instead we expect they will simply result in higher penalties and higher risks for generators participating in the RA program, particularly wind and solar generators whose RA revenues are limited.  Wind and solar RA is paid based on net qualifying capacity, thus these resources would face a more severe penalty relative to their RA revenues.  Ultimately, increased risks and costs for generators affect the price these resources must charge to LSEs and their ratepayers. While proper maintenance can reduce outage risk, outages are an inherent risk in plant operations and cannot be fully mitigated, regardless of the level of financial penalty proposed during high-risk periods.

Regarding VERs, this proposal has not provided a clear analysis showing that forced outages from VERs are a material driver of the operational capacity gaps identified by the CAISO.  Before moving forward with a VER RAAIM proposal, CAISO should establish that this is a worthwhile cost adder for the California RPS program. Given the significant analytical and operational challenges of identifying the specific cause of VER unavailability, we ask that CAISO provide specific and concrete justification for removing their existing RAAIM exemptions prior to exposing resource owners to financial risk not currently reflected in their contracts.

More broadly, we encourage the CAISO to analyze its own arguments for the need for increased RAAIM penalties after the implementation of UCAP.  CAISO’s arguments to date rely on outdated analysis which also does not include an explicit assessment of VER forced outages[1]. We ask for a fresh capacity-gap analysis once UCAP goes live to assess whether the UCAP framework successfully reduces the availability issues identified in the 2022 analysis. We also request further investigation into the forced outage rates associated with VERs specifically.

[1] It is not clear whether the analysis performed by the CAISO in 2025, to assess summer 2021-2023 planned and forced outages, includes forced outages for VERs or not, but it did not explicitly break out VER forced outages.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

1. ACP-California Opposes Application of RAAIM to VERs.

The proposal to eliminate categorical RAAIM exemptions for wind and solar resources introduces significant and seemingly unnecessary financial uncertainty and cost to the RPS program.  Weather-dependent projects have long relied on the RAAIM Exemption in structuring PPA commitments, and for good reason – their capacity valuation and RA revenue streams already account for very significant outages through derates to capacity values.  ACP-California questions the need to apply RAAIM to VERs for reliability reasons since the annual resource profiles used by CAISO and the CPUC in reliability modeling already have performance that includes both weather variability and plant outages incorporated. ACP-California is opposed to applying RAAIM or a RAAIM successor to VERs.

2. If CAISO Insists on a VER-RAAIM Proposal, it Should Tailor it to Equipment Failure that Can be Avoided By Proper Maintenance.

If CAISO moves forward with a VER-RAAIM proposal, it should ensure the proposal focuses on matters that are within the control of the resource owner, such as equipment failure that proper maintenance can avoid.  If RAAIM is to be applied to VERs, unavailability determinations must be based strictly on clean outage codes where a generator explicitly acknowledges mechanical trouble. Alternatives that are based simply on accounting of underperformance relative to a day-ahead forecast would be problematic and offer no benefit to the system and would double penalize projects since their NQC value already accounts for weather risk.  CAISO staff has seemed to acknowledge that only mechanical-related outages, particularly equipment failure, would result in RAAIM penalties and suggested deviations from forecast due to weather-related factors or transmission outages would not be penalized.  

3. The Straw proposal Lacks Clarity Regarding Outage Codes.

The CAISO should also clarify how it will evaluate outage codes that may be unique to non-CAISO resources.  Transmission outages should not be subject to RAAIM, and CAISO should ensure both in-CAISO and out-of-CAISO (e.g., pseudo-tie or unique PTOs) should not pay RAAIM for transmission outages.   In some cases, transmission-related outages can be reported by generators (e.g., pseudo-tied resources) and the CAISO should ensure that its proposal excludes these outages from RAAIM. 

We ask that CAISO establish a structured, formal collaboration with stakeholders to ensure workable data protocols and operational guidelines are put in place to reliably isolate qualifying RAAIM outages before any penalties go into effect.

4. Other Operational Considerations

ACP-CA also seeks clarification for how operational complexities of co-located and hybrid solar+BESS resources would be handled under the proposed RAAIM framework. For hybrid units, especially those contractually or physically constrained to charge exclusively from their paired on-site wind or solar resource, bidding and state-of-charge dynamics are driven by market economics. Charging cycles dictate when the VER can deliver to the grid, making the establishment of a static RAAIM expectation impracticable. It is very unclear how RAAIM penalties would apply to a hybrid generator when its output could be driven by collocated battery performance and state of charge.  Greater discussion and explanation is needed for if the individual components of a hybrid facility would face RAAIM charges, especially if they have separate resource IDs.

Looking ahead, the CAISO should ensure that resources that are affected by ambient temperature are not subject to RAAIM on top of UCAP. In the case of air-cooled geothermal resources, their output is linked to ambient temperature.

5. RAAIM Penalty Volumes Should be Tailored to Forecasted Generation Volumes Rather than Capacity Values fixed in the Master File.

ACP-CA’s understands that CAISO intends to use the Local Regulatory Authority (LRA)-determined Qualifying Capacity (QC) as the baseline for calculating hourly RAAIM penalty volumes. This approach becomes unworkable when paired with the proposal to assess RAAIM penalties across all 24 hours of a designated Tier 1 or Tier 2 day. Because solar resources have zero expected output during the majority of those 24 hours, penalizing a mechanically unavailable asset at its peak-hour QC during the middle of the night provides no reliability benefit to the grid. While ACP-CA’s preference is to restrict RAAIM assessments strictly to periods of true system stress, or an established proxy like AAH, even these periods will frequently extend past sunset. Assessing penalties based on a static QC value during dark hours creates a counterproductive and punitive incentive for solar resources. To provide accurate availability incentives that align with grid reality, any VER penalty baseline must be tied to forecasted generation profiles rather than a fixed capacity value.

While ACP-CA supports the move toward more predictable penalty costs over volatile market-proxy surcharges, the proposed fixed Tier 2 penalty of $2,000/MWh is exceptionally high and misaligned with EDAM penalties imposed for failing the RSE. Imposing severe operational penalties of this magnitude without a clear framework to manage risk will inevitably raise risk premiums in future contracts. Clarification is needed regarding the justification for the $2,000/MWh rate itself and departure for penalties imposed due to similar failures in EDAM, as the straw proposal provides no technical or economic basis for selecting this specific dollar value, other than the perhaps coincidental references to ISO-NE’s pay-for-performance rate. Recommendations for aligning the Tier 2 penalty cost with the EDAM penalty cost is outlined in the response to Question 6.  In addition, the frequency of these system-level scarcity events remains uncertain, so we ask CAISO to consider monthly or annual liability limits to minimize generator risk, prevent severe financial exposure, and protect the long-term affordability of clean energy procurement.

The Tier 1 penalty proposal requires quantitative definition and examples before stakeholders can adequately determine its value and gauge risk.  We also believe a more restricted and targeted Tier 1 framework would improve the effectiveness of the proposal by incentivizing proactive maintenance during periods without grid stress. We recommend reducing Tier 1 hours to defined scarcity windows or Availability Assessment Hours (AAH) rather than applying them across all hours of a trade date.  The proposed 24-hour penalty unnecessarily and inappropriately inflates the operational risk profile of participating resources, creating uncompensated exposure during some non-scarcity hours that will ultimately manifest as higher energy procurement costs for consumers. We oppose the Tier 1 "persistence rule," which forces a RAAIM declaration to remain active even if grid conditions improve significantly between the 8-day look-ahead study and the trade date. Recognizing the current operational unpredictability of Tier 1 periods, this rule would force operators to delay critical, proactive maintenance during periods that turn out to have no grid risk.

6. The Revenue Allocation Proposal Is Not Equitable.

Finally, we question the equity of the revenue allocation proposal; since CAISO proposes allocating collected charges to load and available resources on a per-event basis, RAAIM penalties will be a net cost for generators. ACP-California advocates that 100% of RAAIM revenues should go directly to the performing generators that take on the financial risk of maintaining availability. Allocating penalty revenues to performing assets helps balance out the high financial risks of higher RAAIM penalties, which should in turn help keep contract prices stable for load-serving entities. Similarly, while ACP-CA acknowledges the potential need for a performance incentive within the proposed RAAIM framework, we argue that any performance incentive should be symmetrical, reallocating any penalties to resources that perform reliably during scarcity events. 

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

For standalone storage resources, we support linking the must-offer obligation to shown RA capacity.  This would correctly align daily operational obligations with the resource's commercial contract. We also support accounting for battery physical limitations via the nonlinearity modeled solution within the Storage Design and Modeling initiative.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

ACP-CA reiterates its support for allowing conditional outages without mandatory capacity substitution during low-risk periods.  We have also supported CAISO’s efforts to create more market transparency among available substitute resources.  We caution against requiring strict substitution at all times because that can create artificial tightness in the bilateral market and lead to unnecessary delays in completing maintenance work.

We are also concerned that CAISO appears to be moving ahead with the proposed peer-to-peer "shopping cart" bulletin board despite the lack of stakeholder confidence that it will actually resolve the underlying issues that currently impact outage substitution. We urge CAISO to continue to develop tools that directly address structural market inefficiencies.

ACP-CA supports allowing for greater substitution granularity within the procurement pool. Allowing scheduling coordinators to trade and submit substitute capacity in shorter, flexible blocks – such as weekly or daily strips – will improve the ability for generators to cover short-duration maintenance outages.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

ACP-CA seeks clarity on the purpose of the proposed “Urgent Outage” classification under the proposed RAAIM framework. If the purpose of the urgent outage is to allow operators to proactively manage known equipment risks, interactions with RAAIM may undermine that goal. Specifically, because urgent outages carry RAAIM exposure equivalent to forced outages, generators may be disincentivized to take an urgent outage in certain situations, which could increase the risk of abrupt, real-time forced outages during periods of high system stress. To ensure that the urgent outage incentivizes proactive maintenance and improves visibility to CAISO, ACP-CA requests that CAISO explore the following questions in a future workshop:

1. Does the Tier 1 “persistence rule” create perverse incentives that discourages urgent outages?
2. When the rolling 8-day look-ahead study determines that a previously flagged Tier 1 event no longer meets the trigger criteria, then we would expect the trade date to no longer be a period of system stress. Will assessing penalties on resources trying to take a proactive urgent outage under these non-scarce conditions incentivize generators to defer repairs, thereby increasing forced outage risks during subsequent periods?
3. Would the system benefit if generators were incentivized to take urgent outages during non-critical hours of Tier 1 days? Under the current straw proposal, all hours of a Tier 1 day carry RAAIM penalties.
4. Would eliminating RAAIM exposure during off-peak or non-critical hours better incentivize operators to safely step off-line for proactive maintenance, thereby enabling the reliability benefits the urgent outage category was intended to achieve?
5. What distinct operational or financial benefits differentiate urgent outages from forced outages for generators?

We appreciate CAISO’s consideration of these questions and attempts to balance outage protocols with RAAIM.   While urgent outages provide advance visibility to CAISO and encourage proactive maintenance, RAAIM penalties and UCAP derates stemming from urgent outages could discourage their use.

6. Please provide any additional feedback not already captured.

ACP-California urges CAISO to more fully integrate the regional value of the Western Energy Imbalance Market (WEIM) and the Extended Day-Ahead Market (EDAM) into its resource adequacy and availability constructs. The current proposal does not account for the regional pooling benefits of EDAM and WEIM. The CAISO should not just evaluate reliability risks and triggering penalties based solely on isolated CAISO BA performance, while ignoring the real-time support provided through Assistance Energy Transfers and day-ahead regional sharing.

ACP-California recommends alignment of the Tier 2 RAAIM penalty structure with the RSE penalty structure in EDAM.  If a neighboring BA can successfully cure a capacity insufficiency through the regional footprint, individual generators within the CAISO footprint should not be subjected to Tier 2 penalties. Under the approved EDAM design, a BAA that fails the RSE faces administrative surcharges but remains pooled if the market can resolve the shortfall. When the regional market is able to cure a CAISO deficiency, RAAIM penalties may significantly exceed real system cost. At a minimum, the individual generator's Tier 2 penalty should be capped at the lower of $2,000/MWh and the tiered administrative penalty price of the EDAM RSE failure surcharge. As CAISO expands its market footprint and highlights the value of regional markets in supporting reliability, the RAAIM program should incorporate the same approach and not consider the CAISO BA as a reliability island.

As noted above, ACP-California generally opposes continued application of RAAIM as we believe the key goals of the RAAIM framework will be achieved with the implementation of UCAP. At a minimum, we hope the CAISO will clarify the outage codes subject to RAAIM as noted above and be open to reevaluating the need for stringent RAAIM rules and penalties based on further experience with EDAM’s shared reliability benefits.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

The Alliance for Retail Energy Markets (AReM)[1] thanks CAISO for its continuing efforts in Track 2 of this initiative. At this stage, AReM does not endorse nor oppose CAISO’s straw proposal. It offers some high-level feedback and plans to provide more feedback after the California Public Utilities Commission (CPUC) issues a final Track 1 decision in the resource adequacy (RA) proceeding, scheduled for July 2. 

[1] AReM represents three of the largest electric service providers (ESP) in California. ESPs are LSEs under the jurisdiction of the CPUC and serve customers through California’s Direct Access program.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

AReM offers the following comments on ways the straw proposal for Resource Adequacy Availability Incentive Mechanism (RAAIM) reform can be improved for increased transparency and clarity:

• The straw proposal states that “RA resources” may be charged penalties under RAAIM. AReM recommends for full clarity that CAISO state definitively that these penalties are assessed on generators and not load scheduling coordinators.
• CAISO should add a plan for tracking relevant metrics to assess RAAIM performance and provide the results of this tracking to stakeholders for potential follow-up. Metrics to assess RAAIM performance should include forced outage rates and use of substitution for forced outages.
• CAISO should include relevant reporting within the proposal sufficient for load-serving entities (LSEs) to understand the performance of contracted RA resources, including availability, outages, and any penalties assessed. Such information should be provided in a timeframe that allows LSEs to effectively manage compliance and contractual obligations.
• CAISO should provide a more detailed description of how money raised through RAAIM penalty charges will be allocated to load and resources for each event.
• Further details are needed regarding how Variable Energy Resources (VER) will fall under RAAIM and for what purpose. Is CAISO proposing to expand the must-offer obligation (MOO) for such resources? Is the intent to reduce forced outages of these facilities or to ensure bidding in line with the MOO or both?

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

This discussion will be timelier after July 2, 2026, when the CPUC has issued its final Track 1 decision in the RA Rulemaking. In the proposed decision, released after the straw proposal, the CPUC “endorses the use of one set of [qualifying capacity (QC)] and [planning reserve margin (PRM)] metrics to be used by the Commission and CAISO”[1] and encourages “CAISO to submit a proposal in Track 2 of this proceeding as to what changes CAISO would make to its tariff to accommodate redefining the existing QC to [unforced capacity (UCAP)],”[2] including MOO provisions. Thus, there is more work to do.

The straw proposal aligns with the CPUC’s preferred approach, namely that it would accommodate CAISO RA showings using UCAP values, but that the “MOO for system RA resources should be set to reflect operational capacity.”[3] It then proposes a ratio approach to accommodate partial capacity showings.

AReM supports the general concept that the CPUC only use one set of QC and PRM metrics to maintain consistency between the CPUC and CAISO. AReM supports continued efforts toward this end, including continued discussion of a ratio approach for the MOO and a separate “performance benchmark,” which may or may not be used for RAAIM, as this has prompted significant stakeholder discussion. This discussion should be prioritized such that any CAISO tariff updates are made in time to support the CPUC’s planned implementation of UCAP in 2028.

The CPUC’s Track 1 RA proposed decision is also planning continued discussion of a UCAP methodology for hybrid storage resources in Track 2. Whatever changes to the CAISO’s tariff also need to be applicable to hybrid resources. This will involve close coordination between the CPUC and CAISO.

AReM also notes that Table 10 of the straw proposal refers to “LRA RA Counting” using UCAP, but does not discuss backstop RA counting if the CPUC sets the UCAP value as the CAISO QC. CAISO has designated Track 3B of this initiative for backstop procurement discussions. As stated in previous comments, AReM recommends CAISO begin this Track as soon as possible to facilitate coordination with Track 2.

[1] R.25-10-003, Proposed Decision Adopting Local Capacity Obligations For 2027-2029, Flexible Capacity Obligations For 2027, And Program Refinements, June 1, 2026, p. 81.

[2] Ibid. pp. 81-82.

[3] CAISO, Resource Adequacy Modeling and Program Design Track 2 Straw Proposal, p. 28.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

AReM has no comments on outage substitution at this time. 

5. Please submit your organization’s comments on the Outage Definitions Proposal.

AReM has no comments on the outage definition at this time. 

6. Please provide any additional feedback not already captured.

AReM has no further comment at this time. 

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the Resource Adequacy (RA) Modeling and Program Design (RAMPD) working group meeting on RA Availability Incentive Mechanism (RAAIM) reform options, bidding requirements, and outage substitution enhancements. These elements of the RA program are critically important for ensuring RA capacity is available when and where needed for reliability. In summary, CalCCA recommends that the California Independent System Operator (CAISO):

• Provide additional specificity for the Tier 1 assessment period to allow stakeholders to better assess the merits of the proposal;
• Work to ensure that the modeled solution, or interim outage management solution, for reflecting nonlinearity does not carry unforced capacity (UCAP) implications; and
• Clarify must-offer obligations (MOO) to ensure resources are required to bid their true daily operational capability rather than statistical availability across the year.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

CalCCA supports reforming RAAIM to better target operational periods of elevated reliability risk. As recently observed,[1] when the RA market is tight and RA prices are high, RAAIM may be an insufficient incentive for capacity to bid into the market consistent with their MOOs or take forward actions to increase their reliability during stressed grid conditions. The CAISO proposes RAAIM be reformed using a tiered approach. The first tier would trigger availability incentives based upon the day-ahead locational marginal price (LMP) when a rolling eight-day look ahead of system conditions predicts elevated reliability risk. The second tier would trigger availability incentives at the $2,000 per megawatt hours bid cap when the CAISO BAA fails the Extended Day-Ahead Market (EDAM) Resource Sufficiency Evaluation (RSE).

The CAISO’s proposal to focus RAAIM on times of “elevated reliability risk” and “critical capacity insufficiency conditions,” rather than a subset of hours every weekday, would enable RAAIM to supplement UCAP or other availability measures by providing a two-stage penalty that addresses two different needs depending upon the severity of system conditions during the outage. First, UCAP counting would provide an incentive for resources to conduct planned maintenance such that they are reliably available when needed. Second, reforming RAAIM as the CAISO suggests would provide an incentive for resources to be available specifically during the most stressed grid conditions and provide an immediate financial incentive during those times. Conceptually, the CAISO’s proposal would enhance RAAIM and interact well with UCAP.

The CAISO should provide additional specificity around when Tier 1 assessments would be triggered to allow stakeholders to better assess the merits of the proposal. The CAISO proposes to trigger Tier 1 assessments when a rolling look-ahead daily assessment identifies a significant risk of resource inadequacy. The CAISO should better define “significant risk of resource inadequacy” and provide historical data demonstrating how often and typical days/hours when the assessment would have been triggered based on the CAISO’s proposed definition. While the CAISO states that its assessment of reliability risk could include forced and urgent outage levels, load forecasts versus shown/operational RA, and an uncertainty buffer, the proposed uncertainty buffer could have significant impacts on when and how often the trigger would be reached.

CalCCA supports the development of a modeled solution to reflect nonlinearity for storage resources, as discussed in the Storage Design and Modeling initiative,[2] and agrees that the modeled solution should not carry RAAIM implications. The CAISO and California Public Utilities Commission (CPUC) should also work to ensure that the modeled solution, or interim outage management solution, does not carry UCAP implications. Specifically, the CAISO should allow a resource to show up to its Pmax provided the sum of the energy in each hour shown does not exceed the capability of the resource when foldback occurs. Given that the CPUC has moved to an hourly RA structure, and a storage resource can provide up to its Pmax in the four hours of its discharge, the CAISO should allow the resource to show its full capacity subject to its energy limitation. If this requires a change in the CAISO tariff, the CAISO should proceed with a tariff filing at the Federal Energy Regulatory Commission (FERC) to effectuate necessary changes that properly reflect the reliability contributions of storage while recognizing energy limitations. In addition, the CPUC and CAISO should ensure that if foldback is accounted for in the qualifying capacity value, it is not also counted against a resources UCAP value, and vice versa.

[1]            The RA market recently experienced significant, sudden, and costly capacity scarcity, leading to RA prices exceeding $100 per kilowatt-month. When RA costs exceed the RAAIM penalty price, it is logical to assume sellers would rather sell substitute capacity as RA than use it to avoid RAAIM charges. CalCCA’s analysis of RA prices are sourced from FERC electronic quarterly reports (EQR) from https://eqrreportviewer.ferc.gov/, and cleaned by CalCCA. Included transactions have California load-serving entities (LSE) as the buyers for delivery in September 2025 with a trade date between November 1, 2024, and July 31, 2025.

[2]            CalCCA Comments on Storage Design and Modeling (Feb. 17, 2026), https://stakeholdercenter.caiso.com/Comments/AllComments/993ea86d-cfeb-4dd2-b233-3776cb7c2cf3#org-8346fc1b-b5b8-44e9-9716-fb4302d53bcf.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

CalCCA supports clarifying MOOs to ensure resources bid their true operational capability and retaining the “effective status quo” of requiring RA resources to “offer all available capacity contracted and shown as RA to the ISO.”[1] The CAISO’s proposal, which bases the MOO on daily operating limits rather than statistical availability across the year will ensure these requirements are retained under UCAP or alternative counting methodologies.

[1]            Straw Proposal, at 28.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

CalCCA directionally supports the CAISOs Straw Proposal to develop a voluntary outage and substitution pool. The CAISO proposes initially implementing a decentralized, scheduling coordinator (SC) run outage substitution procurement pool, and recommends revisiting the ability to implement an optimized, CAISO-administered approach at a later date. A well-utilized pool will: (1) remove friction for an SC seeking substitute capacity; (2) minimize the need to hold back RA capacity for substitution; and (3) retain the responsibility of providing substitution on the entity in control of the outage. 

If the pool is not well-utilized, because of excess capacity being held for substitution, RA supply constraints, or other reasons, the problems SCs face with finding substitution may persist. Suppliers should be able to perform short-term maintenance without having to substitute capacity during non-stressed periods. This would allow for more opportunities to perform planned maintenance necessary to support reliable grid operation, enable a more liquid pool, and minimize potential maintenance delays and forced outages. CalCCA supports the CAISO continuing to allow off-peak opportunity outages that do not require substitute capacity. Because off-peak opportunity outages are only allowed during certain hours of the day and cannot extend multiple days, the CAISO should monitor the use of the pool and, if necessary, consider whether there are other opportunities in the future for SCs to schedule short-term maintenance without requiring substitute capacity.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

CalCCA supports the proposed definitions that align the outage types with their operational characteristics and timing of submittal. The proposed definitions of forced, urgent, and planned outages provide clear differentiations between outage types.

6. Please provide any additional feedback not already captured.

CalCCA has no additional comments at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

CDWR values the straw proposal's targeted approach to addressing the problem statements identified by the working group.

As explained in prior comments, the current RAAIM exemptions were established for good reasons that continue to exist today. CDWR believes these exemptions should continue. To the extent CAISO does not maintain the current exemptions for Resource Adequacy Availability and Incentive Mechanism (RAAIM), CAISO should address the need for exemption resource type by resource type. As discussed below in response to question 2, the exemption for Participating Load (PL) should continue.

 As part of RAAIM reform, as proposed, the monthly availability standard (with deadbands) will be eliminated, and resource performance will be based on per event (hour) basis. The CAISO 2025 Annual RAAIM report indicates the monthly actual availability of non-RAAIM exempt RA fleet is very close to the monthly standard of 96.5% and in some months higher. The actual availability suggests that the current counting rules are effective due to the fact that the designated RA capacity (up to NQC value) performed to the expected level, if not 100%. CDWR believes that RAAIM actual monthly availability serves as a performance metric for the associated resource counting rules.

If CAISO makes the proposed reforms, CAISO should determine whether current monthly actual availability is truly inadequate – the 2025 Annual RAAIM Report indicates that it is not. Further, if RAAIM is assessed on critical hours, which may be a subset of current RAAIM availability assessment hours (AAH), the availability could likely result in even higher level of availability due to shorter period of assessment and high energy prices during critical hours.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

1. On slide #11, CAISO should include RA substitution for planned and forced outages and the resulting outage % in the chart to accurately reflect RA outages. The updated chart should be presented to stakeholders for feedback.

2. Energy offers criterion as a design element: The reform proposal under the criterion considers assessment of availability by comparing a resource’s shown RA to its day-ahead (and in some cases, real-time) energy offers and outage status. But a participating load (PL) can’t offer energy drop in the day ahead market (DAM) because the extended non-participating load model it uses for scheduling allows only the offering of non-spin as a supply resource in the DAM for RA and load drop energy bid in real time market (RTM) for the DAM AS award. Below is the table, excerpted from the CAISO business practice manual (BPM) for Market Operation, representing an aggregated PL using extended non-participating load model for load scheduling and supply offers (in DAM and RTM):

The criterion in the proposal includes energy in DAM for a supply resource but a PL cannot offer energy drop in DAM as a supply resource (see treatment in DAM and RTM in the table above). The model allows only demand bids to pump and non-spin as a supply in DAM. To the extent CAISO eliminates the RAAIM exemption for a PL (which it should not), then (1) the DAM criterion should be non-spin bids for a PL (instead of energy) and (2) the RTM criterion should be energy bid for load drop equivalent to DAM non-spin award, in alignment with: i) the model function as shown in the table above, ii) the participating load agreement (PLA) terms where RA is provided with non-spin bids in the DAM and energy bid for load drop in the RTM equivalent to DAM non-spin award[1], iii) CAISO tariff[2] (section 40.6.4.3) & Reliability Requirements BPM with provision reflected in the PLA. In addition, as stated in CDWR’s prior comments[3] on Track 2, non-spin offers in the DAM are subject to the underlying pump load. As stated in the previous round of comments, the underlying demand schedule factor needs to be considered in evaluating availability for a PL.

c) Potential RAAIM assessment method for a PL: it must consider (see footnotes above), i) non-spin offer (instead of energy) in the DAM as the must offer obligation subject to underlying demand schedule; if demand schedule is zero for an hour, no non-spin in DAM for that hour; ii) non-spin offer should be capped at RA capacity; iii) consider that DAM non-spin award may be less than RA capacity which flows to RTM MOO, iv) DAM non-spin award MW should be offered as load drop energy bid in the RTM subject to contingency flag. In addition, a PL can be dispatched by CAISO proactively under the operating procedure (4420-system emergency) for grid reliability prior to the critical hours or a PL may shift load to negative LMP hours outside of critical hours for grid stability. Discrete dispatch (a pump unit either on or off) also adds to the complexity. The following illustrative examples could be helpful in designing a mechanism to track availability (with a significant complexity) of a PL if RAAIM exemption is not maintained:

i) Use a nature of work (NOW) outage card for submitting inability to drop load (as an outage) if a PL has RA capacity obligation and an underlying load (in the DAM) greater than or equal to RA capacity obligation.

ii) Steps for assessment of availability in DAM and RTM

Step A: Is DA pump load schedule > zero? (Yes / No)

Step B: If yes, measure DA non-spin bid RA MOO equal to Minimum (RA capacity, pump’s DA demand bid/self-schedule); Cap submitted DA non-spin bid to RA MOO; Capped submitted DA non-spin bid=min(Submitted total DA non-spin bid, DA non-non-spin bid RA MOO); Measure the DA non-spin award for RA equal to Minimum (DA total non-spin award, DA non-non-spin bid RA MOO); Calculate Day ahead availability equal to the ratio (Capped DA submitted non-spin bid/ Measured DA non-spin bid RA MOO) & Go to step C. If DA pump load schedule is zero, exclude the hour from availability calculation.

Step C: Is RTM pump load schedule >Zero? (Yes / No)

Step D: If yes, Measure the RTM load drop bid (with contingency flag) for RA equal to Minimum (RTM load schedule, Measured DA non-spin award for RA). Calculate RTM availability=min {submitted RTM load drop bid with contingency flag/ max (Measured DA non-spin bid RA MOO, Measured RTM load drop bid for RA)}.  If RTM pump load schedule is zero, exclude the hour from RTM availability measurement.

Example:

Case 1 (pump demand and non-spin bids above and beyond RA capacity): NQC of a PL = 127 MW, RA capacity = 50 MW, Underlying DA pump load schedule for critical hour (e.g., HE19) = 200 MW; DA PL non-spin bid= 90 MW; DA non-spin award= 60 MW; RTM Load drop energy bid submitted for the PL with contingency flag= 60 MW; RTM load drop energy award = 0; RTM Pump Load schedule= 200 MW (no award to drop).

Case 1 RAAIM availability assessment:

DA Availability:

Step A: Yes;

Step B: Measured DA non-spin bid RA MOO = Minimum (RA capacity, pump’s DA demand bid/self-schedule) =min(50,200)= 50, Capped submitted DA non-spin bid=min(Submitted total DA non-spin bid, DA non-non-spin bid RA MOO) = min(90, 50)= 50; Measured DA non-spin award for RA= Minimum (DA total non-spin award, DA non-non-spin bid RA MOO)=min(60,50)=50; Day ahead availability = (Capped DA submitted non-spin bid/ Measured DA non-spin bid RA MOO)= 50/50)=100% available. 

RTM Availability:

Step C: Yes;

Step D: Measured RTM load drop bid (with contingency flag) for RA equal to (RTM load schedule, Measured DA non-spin award for RA) = Minimum (200, 50) =50;

RTM Availability = (submitted RTM load drop bid with contingency flag/ Measured RTM load drop bid for RA) = 60/50 ≥ 100%

RTM Availability=100% available.

Case 2 (Underlying load does not exists while supporting grid reliability and stability): NQC of a PL = 127 MW, RA capacity = 50 MW, Underlying DA pump load schedule for critical hour (e.g., HE19) = 0 MW because of Operating procedure 4420 or load shift to negative price hours; DA PL non-spin bid= 0 MW; DA non-spin award= 0 MW; RTM Load drop energy bid submitted for the PL with contingency flag= 0 MW; RTM load drop energy award = 0; RTM Pump Load schedule= 0 MW (no award to drop).

Case 2 RAAIM assessment:

DA Availability:

Step A: No;

Step B: Exclude the hour from DA availability calculation; by excluding hours with zero load, a PL is not penalized for supporting grid reliability and stability.

RTM Availability:

Step C: No;

Step D: Exclude the hour from RTM availability measurement; by excluding hours with zero load, a PL is not penalized for supporting grid reliability and stability.

Case 3 (a PL needs to pump and deny dispatch for recovery of water delivery): NQC of a PL = 127 MW, RA capacity = 50 MW, Underlying DA pump load schedule for critical hour (e.g., HE19) = 200 MW; DA PL non-spin bid= 0 MW-pump needed to deliver water at full capacity with no non-spin bid and load curtailment; DA non-spin award= 0 MW; RTM Load drop energy bid submitted for the PL with contingency flag= 0 MW; RTM load drop energy award = 0; RTM Pump Load schedule= 200 MW (no award to drop).

Case 3 RAAIM assessment:

DA Availability:

Step A: Yes;

Step B: Measured DA non-spin bid RA MOO = Minimum (RA capacity, pump’s DA demand bid/self-schedule) =min(50,200)= 50, Capped submitted DA non-spin bid=min(Submitted total DA non-spin bid, DA non-non-spin bid RA MOO) = min(0, 50)= 0; Measured DA non-spin award for RA= Minimum (DA total non-spin award, DA non-non-spin bid RA MOO)=min(0,50)=0; Day ahead availability = (Capped DA submitted non-spin bid/ Measured DA non-spin bid RA MOO)= 0/50)=0% available.

RTM Availability:

Step C-Yes;

Step D: Measured RTM load drop bid (with contingency flag) for RA equal to min (RTM load schedule, Measured DA non-spin award for RA) = Minimum (200, 0) =0;

RTM Availability = min {submitted RTM load drop bid with contingency flag/ max (Measured DA non-spin bid RA MOO, Measured RTM load drop bid for RA)} = min {0/max (50,0)} =0/50=0

RTM Availability=0% available.

To avoid RAAIM penalty under Case 3, A PL may use nature of work (NOW) outage cards to submit a forced outage or a planned outage depending on the outage time frame and submit a RA substitution. In both cases “Ambient due to fuel insufficiency” may be used for RA substitution to avoid RAAIM penalties.

[1] Participating Load Agreement, 5^th amendment: https://www.caiso.com/documents/aug25-2023-amdtno5-pla660withcdwr-er23-2711.pdf; “Section 4.6.3: Resource Adequacy Capacity. DWR shall submit a Supply Plan and a Resource Adequacy Plan that meets the requirements of DWR’s Local Regulatory Authority to the extent permitted by the CAISO Tariff. When a Participating Load is a Resource Adequacy Resource used to meet a Resource Adequacy obligation provided in DWR’s monthly Resource Adequacy Plan, DWR must follow that plan for its Resource Adequacy Resources and may submit a Bid or Submission to Self-Provide an Ancillary Service in the Day-Ahead Market for such purpose.”

[2] CAISO tariff: https://www.caiso.com/documents/section-40-resource-adequacy-demonstration-for-scheduling-coordinators-in-the-caiso-balancing-authority-area-as-of-nov-19-2025.pdf; “40.6.4.3 Ancillary Services Bids from Participating Loads that is Pumping Load: The must-offer obligation for Participating Load that is Pumping Load is limited to submitting, for hours where underlying Load permits, Non-Spin Ancillary Services Bids and/or a Submission to Self -Provide Non-Spin Ancillary Services in the Day-Ahead Market for its Resource Adequacy Capacity that is certified to provide Non-Spinning Reserve Ancillary Service, and Economic Bids for Energy in the Real-Time Market for its Non-Spinning Reserve Capacity that receives an Ancillary Service Award in the Day-Ahead Market.”

[3] CDWR’s comments : https://stakeholdercenter.caiso.com/Comments/AllComments/4aeac74b-0625-44c2-aeb9-163d024e9176#org-a04cdd9a-dac9-4a45-8edc-ffbde8eefad9; [1] https://www.caiso.com/documents/stakeholdercommentsmatrix-reliabilityservices-strawproposal-availabilityincentivemechanism.pdf; Page 6: ISO Response: The ISO agrees with CDWR’s assessment and will create a rule that says pumping load will only be evaluated for availability in real-time in the circumstance where the demand schedule is greater than zero;  https://www.caiso.com/documents/draftfinalproposaladdendum-reliabilityservices.pdf; Page 53: Section 6.14.5. Participating Load that is also pumping load

will be exempt from the availability incentive mechanism due to their unique must-offer requirement that requires real-time energy offers only if the resource receives a DA AS schedule. This cannot be accommodated in the availability incentive mechanism framework.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

CDWR supports the goal of retaining the effective status quo regarding MOO/bidding requirements for dispatchable RA capacity resources, regardless of QC methodology. For a PL resource in particular, the status quo should be maintained for the reasons discussed above in CDWR’s comments on question 2.

On slide#25, partially shown (Plant 3) should not be subject to must offer obligation (MOO) of more than shown RA. It is unfair to require showing more RA than the resource is designated for RA, and such a requirement would have contract implications. In addition, at times an aggregated resource can have multiple units on outage while a few units can offer the shown RA. That resource should not be required to offer more than it can. The Straw Proposal on this topic would also adversely impact capacity available for RA substitution using a partially shown RA resource. Similarly, UCAP resource is required to offer more than its shown RA. Is RAAIM exemption the reason for a UCAP resource to have more MOO than shown RA?

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

CDWR supports moving forward with developing enhanced substitution procurement tools.

Outage substitutions at daily granularity help enhance system reliability by enabling more resources to be available for daily substitutions.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

CDWR supports maintaining off-peak opportunity outages (subset of planned) as an outage type as it preserves flexibility for maintenance during low-risk hours.

It appears a forced outage would have no RA substitution required and planned outages would have required substitution. Does this mean the current RA substitution process and nature of work cards will be changed? The nature of work cards currently in use for planned and forced outages require, in most cases, substitution while in some cases RA substitution is not required.

CDWR also observes a need for clear interpretation of outage type and cards that would be applied to a participating load resource which is not a traditional generator.

6. Please provide any additional feedback not already captured.

No comments.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

California Energy Storage Alliance (CESA) appreciates CAISO’s straw proposal for RAAIM reform and thanks CAISO for the opportunity to comment.

Assessment of proposal overall

CAISO’s discussion of the history and purpose of the RAAIM mechanism brings needed focus and clarity to the proceedings. RAAIM was originally developed to address reliability risks associated with forced outages by encouraging scheduling coordinators to provide substitute capacity when resource availability changes unexpectedly. As CAISO notes, however, the mechanism has not consistently produced the intended incentives. Excessive exemptions, limited use of substitute capacity, and incentive and penalty structures that are not well aligned with actual reliability needs have reduced RAAIM's effectiveness, but CAISO has yet to consider how its Scarcity Pricing market design has contributed to resource bid availability.

Overall, CESA is skeptical that additional penalties are appropriate or needed once capacity accreditation advances to an Unforced Capacity (UCAP) framework. In our view, the most effective reforms will be those that strengthen incentives when the grid is stressed while reducing administrative complexity and avoiding penalties that arise from modeling limitations or circumstances outside resource operators' control. The comments below are intended to support that objective and offer CAISO targeted considerations if it iterates its current proposal further.

• Consistent with this RAAIM reform policy, until CAISO’s nonlinearity solution has been implemented in the market model, CAISO must clarify that nonlinearity outages should be classified under the Nature of Work code “Technical Limitation not in the Market Model.”
• Tier 1 designations should not be maintained if conditions improve leading into the assessment day.
• Regarding the penalty pricing, the RAAIM penalties on forced outages add a third penalty on resource owners/operators, resulting in a resource owner/operator being penalized three times for the same forced outage.
• The purpose of the RA must offer obligation is to ensure that resources contracted to provide RA capacity offer such capacity to the CAISO balancing authority area to the extent that it is physically capable of providing that capacity, rather than offering that capacity to other balancing authority areas.
• Under CAISO’s proposal where RAAIM assessments will take place during critical grid conditions and at much higher penalty prices, it is imperative that CAISO design a centralized approach to outage substitution, or else it risks not achieving its objective to secure substitute capacity when it is needed most.
• CESA urges CAISO to incorporate the retirement of flexible RA as part of this RAAIM reform initiative. CAISO’s day-ahead market now often procures 4,000 to 6,000 MW of upward capacity above and beyond the normally scheduled hourly energy ramps, which all come with an obligation to economically bid in the real-time market.
• CAISO’s scarcity pricing initiative is the more appropriate initiative to address dispatch performance concerns if CAISO finds evidence this is a pervasive and on-going issue.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Storage non-linearity

CESA is pleased to see that CAISO acknowledges that storage resources’ nonlinearity limits are a technical limitation that it plans to include in its market model, and therefore nonlinearity is a limit that will not be penalized under RAAIM. However, CAISO has not yet implemented the Storage Design and Modeling initiative proposal that incorporates foldback limitations into storage dispatch. Consistent with this RAAIM reform policy, until CAISO’s nonlinearity solution been implemented in the market model, CAISO must clarify that nonlinearity limitations should be classified under the Nature of Work code “Technical Limitation not in the Market Model.”

Maintaining a status quo in which foldback limitations are classified under Plant Trouble provides a disincentive to offering foldback capacity into the market, an outcome entirely at odds with the intended function of RAAIM. Until implementation of the proposal (expected in spring 2027), storage operators will be unable to offer capacity within the foldback region and receive revenues during tight system conditions without triggering RAAIM penalties. Under the current guidance to use the Plant Trouble field, foldback energy is effectively valued below the true scarcity value of energy that other resources enjoy. This also creates reliability risk, since CAISO is unable to access that capacity during tight system conditions.

Tier designations, penalty prices, and allocations

CESA looks forward to further discussion around the proposed Tier 1 and Tier 2 designations for RAAIM evaluation periods. The criteria for Tier 1 designation should be defined, transparent, and calculable, allowing suppliers and LSEs the ability to assess the likelihood of Tier 1 conditions prior to the assessment period beginning eight days before the market day. This is important so that suppliers can begin taking action to prepare for potential events even prior to CAISO’s designation period. In keeping with the principle that assessments should be directly linked to real market need, CAISO should consider circumstances in which it makes sense to pull back the Tier 1 designation, in cases in which market tightness is cured prior to the last Tier 1 assessment day. This would result in more effective targeting of true scarcity hours.

Tier 2 designation is based on CAISO failing the EDAM RSE evaluation, which makes it both difficult to predict and impossible to cure. Because Tier 2 conditions are triggered by an outcome that market participants cannot directly observe or influence in advance, CAISO should identify any earlier indicators of potential RSE failure and incorporate those signals into the Tier 1 framework. Providing advance warning would improve the ability of resources and LSEs to take actions that support reliability before Tier 2 conditions materialize.

Regarding the penalty pricing, the RAAIM penalties on forced outages add a third penalty on resource owners/operators, resulting in a resource owner/operator being penalized three times for the same forced outage. CAISO should instead focus on making its must-offer obligation evaluation as accurate as possible and allow the UCAP framework to incentivize appropriate resource maintenance and bidding performance. First, resource owners/operators that do not appropriately maintain their resources are penalized through lost profits during scarcity events given their inability to operate to capture market revenues. Second, resources suffering from equipment failures this year will have their qualified capacity values reduced in the following compliance year under the CPUC’s Unforced Capacity (UCAP) accreditation. Third, resources will be penalized at the RAAIM Tier 1 or Tier 2 penalty price. CAISO should reconsider whether a bidding performance penalty mechanism that goes above and beyond a resource’s Must-Offer Obligation is required, especially in the case where resources will be accredited based on their UCAP value. CAISO should recognize that if it moves forward with extreme penalty pricing, those potential costs will likely be borne by Load-Serving Entities through increased Resource Adequacy prices.

Regarding penalty/incentive allocations, CAISO must provide more detailed information for stakeholders to assess whether the RAAIM design would be compatible with CAISO’s objectives.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

Must-offer obligations

CAISO’s straw proposal included a formula for determining the must-offer obligation of a resource providing RA to more than one LSE based on its NQC or the UCAP value that could result in CAISO expecting resource bids above the resource’s deliverable capacity. CAISO should postpone developing this policy until CPUC provides a final ruling on its pending UCAP proceeding. At that juncture, CAISO will be better positioned to establish a must-offer rule proportional to a single capacity metric to reduce confusion. At a minimum, CAISO’s equation must be refined to ensure that UCAP resources are not expected to provide more bids than CAISO found to be deliverable. This would occur if a resource’s UCAP value is less than its Deliverable Capacity. CESA recommends the following refinement:

CESA reiterates that the purpose of the RA must offer obligation is to ensure that resources contracted to provide RA capacity offer such capacity to the CAISO balancing authority area to the extent that it is physically capable of providing that capacity,[1] rather than offering that capacity to other balancing authority areas. The CAISO should consider how it might verify this fundamental obligation. Once the must-offer MW value is known, CAISO should consider comparing SIBR-submitted bids (not the market-used bids that are clipped due to outages) to the must-offer quantity.[2]  It is important for a resource to submit their full must-offer quantities into SIBR so that if it were to come back from outage early, the market could automatically begin dispatching the resource. The CAISO should also review its rules related to accepting priority exports from partial RA resources to ensure that it would not under any circumstances allow capacity that is committed to CAISO (must-offer capacity) to support a priority export out of CAISO.

[1] CAISO Tariff Sections 40.6.1(1) and 40.6.1 .1(b) currently align with this purpose by recognizing that RA resources must offer bids for all RA Capacity for all hours of the month the resource is physically capable of operating.

[2] This type of assessment would be separate and distinct from the RAAIM assessment.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Outage substitution capacity marketplace

Under CAISO’s proposal where RAAIM assessments will take place during critical grid conditions and at much higher penalty prices,[1] it is imperative that CAISO design a centralized approach to outage substitution, or else it risks not achieving its objective to secure substitute capacity when it is needed most.  In past comments, CESA and others have discussed the key drivers of failure to provide substitution capacity: transaction costs and tight timelines. These issues are exacerbated under the proposed RAAIM design where the prospect of higher penalty prices on tighter timelines during time periods where the system is extremely tight will result in less bi-lateral activity than CAISO observes today.

CAISO's straw proposal emphasizes the importance of outage substitution and expresses concern regarding low levels of substitute-capacity procurement. However, market participants have repeatedly identified structural barriers to sub-monthly substitution transactions as a primary reason for limited procurement. Addressing only the incentive and penalty framework without resolving those underlying barriers is unlikely to materially improve outcomes.

The proposed peer-to-peer marketplace does not appear to resolve those structural concerns. Market participants have already explained why the proposal offers limited improvement over existing processes and have suggested alternative approaches that may better facilitate efficient substitution transactions.

We urge CAISO not to implement a suboptimal solution it already plans to revisit. This problem must be fully addressed if CAISO is to move forward with the proposed RAAIM reforms.

[1] At just 8 hours of critical grid conditions in a month, the proposed penalties can reach $8-$16/kW-month.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

No comment at this time.

6. Please provide any additional feedback not already captured.

Flexible RA

CESA urges CAISO to incorporate the retirement of flexible RA as part of this RAAIM reform initiative. Flexible RA obligations were developed to address CAISO’s 3-hour ramping operational need. However, the purpose of RAAIM is to incent availability during scarcity conditions rather than procurement of operational flexibility. With EDAM reforms, imbalance reserves and reliability capacity products procure and value operational flexibility, making flexible RA redundant. CAISO is now often procuring 4,000 to 6,000 MW of upward capacity per hour[1] through its day-ahead market, which all come with an obligation to economically bid in the real-time market. This capacity goes above and beyond the normally scheduled hourly energy ramps and is directly compensated through CAISO’s spot market prices.

 The Market Surveillance Committee (MSC) noted in its April 2014 Opinion on Flexible Resource Adequacy Criteria and Must-Offer Obligation that flexible ramping resources would be best valued and procured in competitive spot markets. The market itself has borne out this observation, as the current RA price premium for flexible RA is at or near zero.

In addition to imbalance reserves and reliability capacity, other market products and changes now largely meet the need that flexible RA was designed to address, and do so in a more targeted and efficient manner. The CAISO procures Flexible Ramping Product (FRP), compensates real-time ramping capacity according to the forecasted uncertainty, and allocates its costs between load, solar, and wind based on forecast-derived contribution metrics. Also, variable energy resources are now mostly economically participating in the market allowing CAISO to curtail production in response to market conditions.

These market dynamics (in addition to imbalance reserves and reliability capacity)cover CAISO’s flexibility needs above and beyond flexibility needs determined through the static annual Flexible Needs Assessment CAISO performs to set Flexible RA requirements and are much more targeted to the actual needs on individual days. As a result, the flexible RA product consumes precious CAISO resources and adds complexity to the RA marketplace, but provides limited (if any) incremental reliability value. The current RAAIM reform process should streamline the RA framework by eliminating this resource adequacy category.

Given CAISO’s day-ahead and real-time products and market incentives, CAISO will have all of the economic bids that it needs to solve the multi-hour ramps that the Flexible RA product is currently meant to provide. Most energy storage resources will continue to bid economically rather than self-schedule to avoid extreme losses and maximize market profits, as it would be impossible to predict intra-hour price spikes two hours ahead of time when offers and self-schedules are due. Furthermore, the lack of Flexible RA product premiums indicates that CAISO’s market is already incentivizing economic bidding and compensating economic bidders for their flexibility. Although some resources may choose to self-schedule on occasion, the market structure in the CAISO balancing authority area does not incentivize self-scheduling. Finally, with the launch of the Imbalance Reserve product, CAISO will now be able to additionally rely on resources awarded Imbalance Reserves to provide the real-time market with economic bids to solve uncertainties, as they are required to provide economic bids in the real-time market when they are most operationally useful.

Performance evaluation metrics

CAISO’s scarcity pricing initiative is a better initiative to address resource dispatch performance concerns if CAISO finds evidence this is a pervasive and on-going issue. RAAIM is not the appropriate mechanism for managing dispatch-based resource performance obligations. The straw proposal discusses the potential mechanisms for evaluating RAAIM performance, including bidding behavior and evaluating resources for their metered performance relative to the market’s dispatch. CESA supports a bid-availability methodology, as CAISO proposes. But as for dispatch-based performance issues, following market dispatch is a market-wide obligation and should not be evaluated only through the lens of RA resource performance.

[1] See CAISO Daily EDAM Reports

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Comments on Resource Adequacy Modeling and Program Design

Track 2 – Straw Proposal

Department of Market Monitoring

June 4, 2026

Overview

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal and May 15, 2026 stakeholder presentation.[1]^,[2] In these comments, DMM adds to our previous comments dated March 23, 2026, and includes additional comments on the following seven issues:[3]

• RAAIM assessment timing. DMM recommends resource adequacy availability incentive mechanism (RAAIM) assessments occur with enough frequency to enforce the must-offer obligation and maintain system reliability. The selection of the buffer when calculating the tier 1 framework should be clearly detailed.
• Penalty incentive prices. Penalty prices should be calibrated with interrelated policies. Availability penalties should create a penalty price that is commensurate with bilateral resource adequacy (RA) prices. The proposed penalty price structure does not empirically create a strong enough financial penalty to disincentivize selling RA capacity in the bilateral markets that may be unavailable.
• Must-offer obligations and categorical exemptions. The must-offer obligation (MOO) should continue to ensure the resource’s shown RA is fully available to the market, and maintain alignment with availability and performance assessments to ensure consistent benchmarking. The MOO should ensure full market availability of expected capacity determined under unforced capacity (UCAP) and non-UCAP methodologies. DMM supports the removal of the categorical RAAIM exemptions.
• Storage availability and discharge feasibility. The ISO should assess RAAIM under the proposed modeled solution for resource nonlinearity. Incentives should incorporate state-of-charge (SOC) by assessing either current SOC sufficiency or the feasibility of charging to meet discharge obligations during assessment periods.
• Outage substitution. DMM recommends the ISO more thoroughly explain how the “shopping cart” solution will increase outage substitution, given that it will take time and resources to develop.
• Performance incentive mechanism design. DMM continues to recommend the ISO develop a performance incentive to complement the availability incentive.

Comments

DMM supports the tiered RAAIM assessment framework, and recommends the ISO ensure there is sufficient frequency of RAAIM assessment periods to ensure system reliability

DMM supports a RAAIM assessment approach that increases the frequency of assessment periods beyond the previously proposed approach of assessing only during tight grid conditions, such as Energy Emergency Alerts (EEAs) and EDAM resource sufficiency evaluation (RSE) failures. DMM’s prior comments show that tight system conditions are relatively infrequent, and note that the current must-offer obligation and RAAIM structure may endogenously improve system reliability. As a result, increasing the frequency of RAAIM assessment periods may be necessary to ensure system reliability.[4]

As a design principle, the availability mechanism should ensure capacity is operationally capable throughout the market, with incentive timing and price aligned with system needs, and commensurate with RA requirements and prices. Any RAAIM assessment design should approximate a financial incentive mechanism tied to the must-offer obligation (MOO) to ensure that RA capacity is made available to the market.

Under the ISO’s latest proposal, RAAIM would be trigged on a two-tiered assessment framework. The first tier would be activated during periods of elevated reliability risk, and the second tier during critical capacity insufficiencies. The first tier remains undefined but is proposed to estimate elevated reliability risk from load forecasts, shown RA, outage rates, and uncertainty buffers. DMM provides comments on this aspect of the proposal below. The second tier is specified as periods when the CAISO balancing authority area (BAA) fails the EDAM RSE.

DMM supports the clarity of the tier 2 trigger, but requests the ISO define the method in which this information will be communicated to the market. EDAM RSE failures are not known until approximately 9 a.m. on the prior day, providing limited time for generators to adjust forward operating decisions to increase availability. This limitation is further compounded by the fact that the tier 2 trigger provides less advance notice than the tier 1 proposal, while being associated with higher penalties.

The tier 1 assessment period is proposed as a daily framework to identify significant levels of resource inadequacy risk several days in advance of expected scarcity. The operational assessment would occur daily from T-8 days through the operating day, and once triggered, the tier 1 condition would remain in effect.

DMM recommends the ISO clearly define the tier 1 trigger framework to ensure the RAAIM framework produces the desired incentive for availability

DMM supports the general structure and advance-notice approach of the tier 1 RAAIM assessment period. DMM continues to emphasize that the availability mechanism should ensure capacity is operationally capable throughout the market, with incentive timing and price aligned with system needs and commensurate with RA requirements and prices. Accordingly, DMM recommends the ISO design a method to ensure RAAIM is assessed with sufficient frequency to approximate a commensurate RA price signal.

Under the current proposal, the ISO specifies the energy-based prices to be applied during RAAIM assessment periods. Therefore, the resulting incentive strength will depend primarily on the design and calibration of the assessment trigger timing because prices are independent of the assessment trigger itself. Because the incentive strength is a function of price and frequency of RAAIM assessment, and the tier 1 formulation treats price as exogenous, the availability incentive effectiveness will be reliant on the frequency of the tier 1 trigger.

To determine the days on which RAAIM would be assessed, the ISO must define the input variables that trigger an elevated reliability risk under the tier 1 framework. Based on the proposed inputs—load, supplied RA, and outages—available resources on the CAISO system were sufficient to meet system requirements in 2025 and would not have triggered a RAAIM assessment period. Therefore, activation of the assessment trigger in 2025 would depend on the inclusion and calibration of an uncertainty buffer.

Figure 1 examines how different buffer levels affect the frequency with which the RAAIM trigger would be met. For this analysis, each day’s load and ancillary service requirements are referred to as the “market requirement”. This market requirement is then compared to RA capacity offered to the market, accounting for outages and demonstration of unavailability reflected in bids. To evaluate potential trigger frequencies, results are shown after applying a range of different multipliers to the market requirement, increasing up to 50 percent to represent varying the uncertainty buffer level. Results of these different scenarios are shown in Figure 1.

Figure 1 indicates that relatively low multipliers—values from zero to 20 percent—would have resulted in few RAAIM assessment days in 2025.[5] A 10 percent buffer would have one RAAIM assessment day, while a 20 percent buffer would have resulted in five days over the year. In contrast, higher buffer levels increase the frequency materially, with a 30 percent buffer leading to 46 days, and 40 and 50 percent buffers yielding 180 and 274 days, respectively.

Figure 1. Insufficient RA bid into the real-time market to meet market requirements under different potential buffer percentages

Figure 1 also shows a seasonal pattern in the risk of insufficient RA being bid into the real-time market to meet requirements. The local regulatory authorities (LRAs) and ISO focus much of their reliability planning for the summer months and bring surplus supply to meet potentially large system demand in these months as a result of high loads and the planning reserve margin. This results in greater RA supply and the capability of the system to meet higher values of the buffer, resulting in the RAAIM assessment being triggered less often during these periods. DMM does not recommend adopting the specific framework used in Figure 1 to determine the appropriate buffer, but highlights the magnitude of the buffer required to trigger RAAIM assessment days, as well as the seasonality in trigger frequency.

Given that summer months typically are the most constrained, DMM recommends that the ISO consider seasonal adjustments for the trigger. Further, DMM recommends the ISO maintain the ability to update the buffer on an annual basis. Because the buffer will play a central role in determining RAAIM assessment frequency, the ISO could leverage existing processes, such as the Summer Loads and Resources Assessment, to inform calibration of the elevated reliability risk buffer level.[6]

Lastly, because RAAIM functions as a financial incentive mechanism for MOO compliance, and the MOO applies across all hours of the day, DMM finds it reasonable that the RAAIM assessment period apply over the full day. With evolving load shapes and system needs, tight grid conditions may not be limited to the evening hours, as assumed in the current RAAIM design. Therefore, when a RAAIM assessment day is triggered, the associated penalty framework should apply across all hours of the day.

RAAIM incentive prices should lead to penalties for unavailable RA that are commensurate with RA prices

RAAIM incentive prices should be designed to ensure that resources do not have an incentive to sell RA capacity in excess of what they can reasonably expect to make available. RAAIM penalty pricing should be tied to market conditions such that expected penalties for non-availability exceed any potential gains from selling RA capacity that cannot reliably perform. This would help align RA supply with expected operational capabilities.

Under the proposed two-tiered RAAIM assessment framework, the ISO has proposed penalties be tied to day-ahead locational marginal price (LMP) for tier 1 and the hard bid cap of $2,000/MWh for tier 2. To contextualize these values relative to current RA prices, consider an illustrative price of $1,000/MWh. If a resource is one MW short for one hour, that translates to a RAAIM penalty of $1/kW-month.[7] Based on the 2023 California Public Utilities Commission Resource Adequacy Report, system RA capacity prices for 2025 averaged at $14.60/kW-month, with the 85^th percentile at $25.00/kW-month.[8] Under these assumptions, a resource providing unavailable RA capacity would need to be assessed penalties for approximately 15 to 25 hours for the total penalty to be commensurate with the RA payment received at this price level.[9]

Figure 2 presents DMM’s estimate of the average day-ahead system marginal energy cost (SMEC) in 2025 during intervals when the hypothetical RAAIM assessment trigger identified in Figure 1 would be met. DMM identifies these intervals as those in which available RA capacity is insufficient to meet the market requirement, inclusive of the applied uncertainty buffer at different potential levels. For these intervals, DMM calculates the average day-ahead SMEC to approximate the expected cost of RAAIM penalties under the proposal. This analysis shows that average prices varied from $31/MWh to $80/MWh, with a mean and median of approximately $51/MWh.

With the tier 1 penalties currently proposed by the ISO, a resource supplying unavailable RA capacity would need to be assessed RAAIM for approximately 300 to 500 hours within that month, at the average day-ahead SMEC, for the total penalties to be commensurate with the RA prices cited above. This estimate excludes the potential impact of tier 2 penalties. However as noted previously, the CAISO BAA rarely fails the WEIM RSE, and thus there is a low expectation of the CAISO BAA failing the EDAM BAA and triggering the tier 2 penalties.[10]

Figure 2. Average day-ahead prices for intervals available RA is insufficient to meet the market requirement

Based on this analysis of 2025 conditions, DMM recommends the ISO work with stakeholders to refine the appropriate timing and magnitude of the RAAIM assessment to ensure it provides incentives for resources to be available during tight grid conditions and maintain a reliable system. As proposed, it does not appear that the tier 1 penalties would exceed the potential bilateral RA cost in some cases, and therefore may not be sufficient disincentive to selling RA capacity that an entity expects may be unavailable. DMM has long recommended RAAIM reform because if RAAIM penalties become insignificant compared to potential resource adequacy payments, suppliers may be willing to sell resource adequacy capacity that is more likely to be unavailable, or to incur forced outages for a significant portion of the month.[11]

DMM continues to recommend the use of RA price benchmarks for the availability mechanism. RA price benchmarks reflect the value of bilateral RA transactions and therefore provide a penalty signal that is directly comparable to the market that the policy is designed to influence.[12] Real-time energy prices, by contrast, reflect short-term energy market conditions and do not provide an accurate estimate of capacity value. As a result, they would not provide a stable or meaningful incentive for long-term RA availability. Although RA benchmark data may be available only with a lag, this issue can be addressed through stakeholder discussions to determine acceptable estimation procedures. When appropriately calibrated, both mechanisms will enhance RA market efficiency and support reliable system operations.

DMM requests the ISO further detail the interactions of RAAIM payments to load and the interplay with the EDAM RSE

In the straw proposal, the ISO has proposed that some of the excess revenues from RAAIM penalties may be returned to load, or load serving entities (LSEs). DMM requests the ISO further detail this design element as it plays an important role in incentive compatibility.

The proposal maintains the revenue-neutrality of RAAIM, and returns non-availability charges to resources or scheduling coordinators (SCs) that are eligible for incentive payments, as well as load. However, the proposal has minimal detail, and the proposed design interacts closely with the EDAM RSE. Under the tier 2 design, RAAIM penalties are triggered by EDAM RSE failures, and the EDAM RSE framework allocates failure costs to SCs and LSEs. Specifically, EDAM RSE penalties are first allocated to any SC or LSE deficient in their RA supply, and remaining costs are allocated pro rata to metered demand and exports.

Due to the cost allocation and incentive payment interplay, DMM recommends the ISO more clearly specify how RAAIM revenues will be distributed across SCs, LSEs, and resources to ensure transparent and consistent incentives. Here are a few categories worth considering, but not an exhaustive list:[13]

1. No RA deficiencies but an EDAM RSE failure with costs allocated to LSEs. If costs are allocated broadly to LSEs, DMM recommends clarifying whether RAAIM revenues would be returned to those same LSEs responsible for an EDAM RSE failure, and whether such returns would be pro rata or targeted based on contribution to reliability.
2. RA-deficient LSE that had unavailable RA in the EDAM RSE causing the deficiency. If an LSE contributes to both an RA deficiency and an EDAM RSE failure, DMM recommends clarifying whether that entity would remain eligible for RAAIM-related payments under a pro rata allocation. The design should ensure that entities are not effectively insulated from the consequences of non-performance through offsetting payments.
3. RA-deficient LSEs and the CAISO BAA passes the EDAM RSE (tier 1 RAAIM assessment). If the CAISO BAA passes the EDAM RSE despite the LSEs being RA-deficient, DMM recommends clarifying whether RAAIM revenues would prioritize those entities that met their obligations, rather than being broadly distributed.

DMM recommends these interactions be explicitly addressed for both tier 1 and 2 RAAIM frameworks, with particular attention paid to the tier 2 framework. Considering the differences between SCs and LSEs, DMM recommends the ISO carefully consider the incentives shared across these entities to ensure the interplay between the EDAM RSE and RAAIM are incentive compatible.

Finally, DMM recommends the ISO consider how the payment allocations interact with the fact that the resources have received RA payments. Ensuring that RAAIM revenue does not dilute or offset the intended incentive structure will be important to maintaining appropriate availability incentives.

DMM supports the must-offer obligation approach and the removal of the categorical exemptions

In the straw proposal, the ISO proposes the MOO for system RA resources should be set to reflect the operational capacity of the resource. DMM supports the proposal as it will ensure the MOO and performance benchmark are aligned with the incentives built into related policies. Local regulatory authorities (LRAs) already define net qualifying capacity accounting frameworks (e.g., UCAP), and the ISO operationalizes RA obligations through the MOO and RAAIM.

The UCAP framework will establish RA capacity based on a statistical average of the availability of a resource after accounting for its forced outage rate. However, some resources under the jurisdiction of different LRAs will continue to have RA capacity determined using an installed capacity framework. Aligning the MOO with the operational capability of the resource, accounting for any UCAP deration, would be compatible with both approaches because it will ensure the full expected value of RA capacity is available to the market regardless of the accounting framework used to determine capacity value.

The ISO further extends the proposal to cover cases in which resources are partially shown and have partial capacity deliverability status (PCDS). The proposal defines the MOO for these resources as shown RA scaled by the ratio of the Pmax (or full operational capability) to the net-qualifying capacity of the resource. This is consistent with DMM’s prior recommendations, and ensures the MOO reflects the full expected value of RA capacity. Aligning the MOO in this manner helps prevent resources from selling RA of the resource beyond their expected operational capability, while maintaining consistency with the resource’s expected reliability contribution.

In reassessing the MOO, DMM agrees with the proposal to remove the RAAIM exemption for small resources and instead allow management of RAAIM exposure with exempt outage natures of work cards in the Outage Management System. Further, DMM agrees with the reduction in categorical RAAIM exemptions to full resource categories, such as variable energy resources (VERs). The proposal will assess RAAIM to VERs when there are outages, but allow an exemption when the resource is limited due to the variable nature of the resource generating technology.

DMM recommends the ISO further develop an availability incentive structure for battery storage beyond the modeled solution for nonlinearity

The ISO proposes that storage resources remain subject to RAAIM based on their MW of supplied RA, while indicating that a forthcoming modeled solution from the Storage Design and Modeling initiative will address resource nonlinearity (i.e., foldback). The ISO states that this modeled solution will allow storage resources to submit their full MOO, with the market ensuring bid feasibility despite nonlinearity. Under this approach, the ISO does not expect interactions with RAAIM, as resources would be able to meet their MOO without submitting outage cards.

DMM continues to recommend the ISO subject resources to RAAIM with the modeled nonlinearity solution.[14] Storage resources experiencing foldback have a reduced power output in the extremes of the resource’s state-of-charge (SOC), and should be subject to RAAIM for those power output limitations. Excluding such limitations will create the incentive to optimize resource configurations to minimal energy-to-power ratios. Furthermore, storage degradation over time can further reduce effective SOC and available output capability. Without appropriate performance incentives, resources may face diminished incentives to maintain operational capability consistent with their RA obligations.

Finally, DMM continues to recommend that the ISO subject battery storage resources to RAAIM in a manner that reflects the state-of-charge (SOC) of the resource.[15]^,[16] DMM has observed instances where storage resources indicate availability to the market through discharge bids but lack sufficient stored energy or charging capability to provide the offered capacity. DMM recommends that the ISO develop an availability mechanism that considers SOC to ensure storage resources can feasibly meet their discharging obligations through either having sufficient SOC or the charging ability to obtain the SOC necessary to meet its discharging obligation.

DMM requests the ISO demonstrate the need for the “shopping cart” outage substitution solution

DMM continues to recommend developing an outage substitution solution that will reduce search and coordination frictions, reduce market power concerns, and be designed to disincentivize strategic interactions between market participants.[17] DMM’s recommendation is for a reverse second price auction, however the ISO has indicated the design of the auction would be exceedingly complicated and proposed an alternative design for a “shopping cart” approach.

DMM requests the ISO further detail their recommended approach, and given it will take time and resources to develop, how it will be a useful improvement on the current bilateral outage substitution procedures. DMM believes increasing RAAIM penalties to be commensurate with RA costs will further incentivize resources to procure outage substitution. DMM recommends the ISO carefully consider costs and benefits of the shopping cart, taking into account that the primary benefit would be if the shopping cart directly addresses some of the stated reasons entities don’t procure replacement capacity today.

DMM recommends the ISO work with stakeholders to develop a performance-based incentive structure

DMM continues to recommend the introduction of a performance incentive, as pairing an availability incentive with a performance incentive will better align incentives with system needs during stressed grid conditions.[18] Availability incentives motivate offers into the market, while performance incentives motivate delivery to meet schedules. This combination is more likely to achieve the policy objective of ensuring RA is available, and performs when and where needed.

DMM understands the ISO has decided to delay the development of a performance-based incentive mechanism. However, DMM recommends the ISO work with stakeholders to develop an appropriate performance mechanism.

[1]  Resource Adequacy Modeling and Program Design – RAAIM and Outage Substitution (Track 2) – Straw Proposal, California ISO, May 11, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Straw-Proposal-Resource-Adequacy-Modeling-and-Program-Design-Track-2-May-12-2026.pdf

[2]  Resource Adequacy Modeling & Program Design Track 2: RAAIM & Outage Substitution Straw Proposal, California ISO, May 15, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Track-2-May-15-2026.pdf

[3]  Comments on Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Presentation, Department of Market Monitoring, March 23, 2026: https://www.caiso.com/documents/dmm-comments-on-rampd-track-2-raaim-reform-mar-02-2026-input-session-ahead-of-straw-proposal-mar-23-2026.pdf

[4]  Ibid.

[5]  DMM acknowledges 2025 was a mild year, and loads were lower than other potential comparison years such as 2020 or 2022. This is an illustrative exercise to demonstrate how a potential formulation of the buffer maps onto potentially triggering RAAIM assessment days.

[6]  2026 Summer Loads and Resources Assessment, California ISO, May 4, 2026: https://www.caiso.com/documents/2026-summer-loads-and-resources-assessment.pdf

[7]  This value was calculated as: $1,000MWh×1MWh1,000kWh×1hourmonth=$1kW-month

[8]  2023 Resource Adequacy Report, California Public Utilities Commission, August 2025, p 25: https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/resource-adequacy-homepage/2023-resource-adequacy-reportv2.pdf

[9]  These values are calculated taking the average prices from the report, and dividing them by the $1/kW-month calculation to result in the number of hours per month a resource would need to be assessed a RAAIM payment.

[10]  Comments on Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Presentation, Department of Market Monitoring, March 23, 2026: https://www.caiso.com/documents/dmm-comments-on-rampd-track-2-raaim-reform-mar-02-2026-input-session-ahead-of-straw-proposal-mar-23-2026.pdf

[11]  2024 Annual Report on Market Performance & Issues, Department of Market Monitoring, August 7, 2025, p 35: https://www.caiso.com/documents/2024-annual-report-on-market-issues-and-performance-aug-07-2025.pdf

[12]  Comments on Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Presentation, Department of Market Monitoring, March 23, 2026: https://www.caiso.com/documents/dmm-comments-on-rampd-track-2-raaim-reform-mar-02-2026-input-session-ahead-of-straw-proposal-mar-23-2026.pdf

[13] This is a 2-by-2 matrix of LSEs that are RA sufficient and deficient, and passing and not-passing the EDAM RSE. There are additional cases to consider, however these are salient cases to ensure that the incentive compatibility is aligned. The case of there being RA sufficiency and passing the EDAM RSE is not contemplated.

[14] Comments on Storage Design and Modeling Working Group Presentation on January 22, 2026, Department of Market Monitoring, February 17, 2026: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-jan-22-2026-working-group-presentation-feb-17-2026.pdf

[15] Comments on Resource Adequacy Modeling and Program Design Revised Discussion Paper and Final Recommendation Plan, Department of Market Monitoring, August 12, 2024: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-revised-discussion-paper-and-final-recommendation-plan-aug-12-2024.pdf

[16]  Comments on Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Presentation, Department of Market Monitoring, March 23, 2026: https://www.caiso.com/documents/dmm-comments-on-rampd-track-2-raaim-reform-mar-02-2026-input-session-ahead-of-straw-proposal-mar-23-2026.pdf

[17]  Comments on Resource Adequacy Modeling and Program Design Track 2: Outage and Substitution Straw Proposal, Department of Market Monitoring, September 19, 2026: https://www.caiso.com/documents/comments-on-resource-adequacy-modeling-and-program-design-track-2-outage-and-substitution-straw-proposal-sep-19-2025.pdf

[18]  Comments on Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Presentation, Department of Market Monitoring, March 23, 2026: https://www.caiso.com/documents/dmm-comments-on-rampd-track-2-raaim-reform-mar-02-2026-input-session-ahead-of-straw-proposal-mar-23-2026.pdf

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

6. Please provide any additional feedback not already captured.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Energy Division staff (ED staff or staff) of the California Public Utilities Commission (CPUC) develops and administers energy policy and programs to serve the public interest, advises the CPUC, and ensures compliance with CPUC decisions and statutory mandates. ED staff provides objective and expert analysis that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California.??? 

At the May 15, 2026, RAMPD Track 2 initiative meeting, CAISO staff presented the following proposals:

1. Resource Adequacy Availability Incentive Mechanism (RAAIM) reform. The evaluation period would not use the current availability assessment hours (AHH).  Instead, a Tier 1 trigger is based upon forecasted system conditions and Tier 2 trigger is a violation of the resource sufficiency evaluation in the day-ahead market.  The penalty for Tier 1 is the day-ahead locational market price and Tier 2 is $2000/MWh.  The revenues collected would be allocated to better performing resources; which is the existing treatment.
2. The Must-Offer Obligation (MOO) would be determined using a formula based on installed capacity, rather than the shown Resource Adequacy (RA) value.
3. Enhancements to outage substitution. CAISO would post a substitution pool of capacity resources available in a shopping cart approach, and there would be no CAISO settlement or price formation.
4. Replacing Short-Notice Opportunity Outage with Urgent Outage definition.

ED staff appreciates CAISO’s recognition that if the CPUC (or Commission) adopt unforced capacity (UCAP) as the basis to measure RA capacity then there would need to be modification to the CAISO’s RAAIM program and the MOO.  The proposals seek to address these issues.

ED staff is generally supportive of the proposals, but has some concerns regarding the allocation of penalty revenues in the RAAIM proposal, the calculation of MOO, and the equity of the RAAIM proposal among local regulatory authorities (LRAs) that utilize UCAP and those that do not. These concerns are explained in more detail below. 

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

CAISO’s RAAIM reform proposal would change the hours that are examined to determine whether a resource failed to meet availability requirements and would be subject to an availability penalty.  This proposal is driven by concerns that RAAIM is not providing adequate incentives for availability.  In parallel, the CPUC is currently considering a UCAP framework which would incorporate thermal and storage resource availability into their RA qualifying capacity values.  The framework would account for outages occurring during the RA Measurement Hours which are based upon the CAISO Availability Assessment Hours (AAH).

The slide below was presented at the May 15, 2026, meeting which compares the current RAAIM program to the reform proposal.

Criterion

The proposal would maintain the current approach of comparing a resource’s shown RA value to its availability in the CAISO day-ahead and real-time markets.  The proposal states the CAISO believes “the shown RA value is sufficient to provide a strong and meaningful incentive for resource availability during reliability-critical periods while maintaining a transparent and implementable framework across resource types.”[1] The proposal acknowledges that not all LRAs will have the same definition of qualifying capacity (QC) for shown RA.  While the CPUC is planning to transition to a UCAP-based accreditation framework, the details of that framework and its implementation remain subject to a future Commission decision.[2]  ED staff is concerned that if other LRAs do not revise their QC accreditation frameworks to be UCAP-based, and instead continue using an ICAP-based framework, asymmetric treatment could arise in the application of the reformed RAAIM mechanism, which is intended to complement a UCAP-based framework.

Assessment Period

The UCAP framework, under Commission consideration, would calculate a forced outage rate and associated UCAP RA value based on a unit’s availability during the CPUC RA Measurement Hours, which are derived from CAISO’s availability assessment hours (AAH). This framework provides a strong incentive for a unit to be available every day during the RA Measurement Hours because it incorporates a resource’s forced outage rate into its capacity accreditation. However, it is recognized that not every hour in the AAH is an hour when the system is constrained.  Moving RAAIM to a more targeted set of triggers when there are possible capacity shortfalls is compatible with the UCAP framework because it would provide a strong financial incentive to be available during those stressed system conditions.  In summary, UCAP would provide an incentive to be available during a broad set of five hours every day of the year, while the proposed RAAIM would be targeted to constrained conditions which may or may not occur.

CAISO’s proposal would define a Tier 1 Elevated Reliability Risk Condition trigger using a rolling forward assessment of RA in the CAISO balancing authority area (BAA) starting at T minus eight (T-8) days through T-2 days.  CAISO did not provide the exact basis for an inadequacy that would result in a trigger, but suggested comparisons of forecasted load vs shown RA vs outages. Once a Tier 1 trigger is identified, it cannot be “un-triggered” if conditions improve at a later time. 

ED staff supports the concept of the Tier 1 proposal to provide an incentive targeting days with elevated reliability risk.  However, the proposal to not remove a Tier 1 trigger if conditions improve between T-8 and T-2 appears inconsistent with the goal of only targeting days when elevated risk occurs.  This would also increase compliance risk, and therefore cost, to resources of incurring a penalty on days when there was not an elevated risk.  ED staff is concerned that Tier 1 violations under a UCAP-based RA framework could be triggered in situations where actual system availability is sufficient.  Because UCAP derates resources based on forced rates, the total shown RA may appear lower than real-time available capacity. That is because not all units will be on a forced outage and actual availability could be closer to ICAP. 

CAISO would define a Tier 2 Critical Capacity Insufficiency Condition trigger when the CAISO BAA failed the Day Ahead Resource Sufficiency Evaluation (RSE).  In combination with a higher penalty, this would provide a strong incentive to submit offers into the market. CAISO proposes that a Tier 2 would supersede a Tier 1 trigger and, as a result, there would be no double for Tier 1 and Tier 2 violations.

Penalty Price & Allocation

CAISO proposes to base the Tier 1 penalty on the day-ahead locational market price and the Tier 2 penalty at the hard bid cap of $2000/MWh.  For both tiers, CAISO proposes to retain the existing allocation of penalty revenues to resources that demonstrate reasonable level of performance.

ED staff is supportive of using the day-ahead locational market price for Tier 1 violations and currently takes no position on Tier 2 penalty of $2000/MWh. 

ED staff does not support CAISO’s proposed allocation of the penalty revenues.  Rather, ED staff recommends that all penalty revenues be allocated to load as compensation for the financial impact of the high prices and RSE penalty assessments resulting from failure of RA resources to bid into the market during stressed system conditions.  

In addition, ED staff has some concerns that inequity between LRAs that continue to use the existing ICAP-based accreditation framework for shown RA and LRAs that use a UCAP-based framework could arise. Penalties and the allocation of revenues to load serving entities within different LRA areas should not differ based on whether UCAP or ICAP is used for shown RA.  These concerns should be addressed in the next revision.

Assessment Frequency

The proposal is to impose penalties per Tier 1 and Tier 2 events.  ED staff supports this element of the proposal.

Exemptions

CAISO proposes to eliminate the RAAIM exemption that currently exists for resources with less than 1 MW.  In addition, instead of exempting certain resource types, the exemption would be based upon use of certain exempt nature of work codes.

ED staff supports removing the RAAIM exemption for resources less than 1 MW.  This would remove any incentive to sub-divide a resource into smaller blocks to avoid RAAIM.  Resources less than 1 MW are included in reliability planning and therefore should be included in any availability incentive mechanism.

CAISO proposes removing the current exemption for variable energy resources (VERs), such as wind and solar, stating that “For wind and solar resources, availability would be determined based on applicable availability factors and the resource’s demonstrated operating characteristics.”[3] 

The generation fleet of variable energy resources is growing, and it makes sense to have some type of incentive mechanism to be available to produce energy when the sun and wind are available.  However, it would be unfair to penalize these resources if the unavailability is due to lack of wind or sun.  ED staff recommend that CAISO include more defined criteria for determining availability and when these resources would be subject to RAAIM, with specific examples of when a resource would and would not be subject to a RAAIM penalty. 

[1] CAISO proposal at 17.

[2] On June 1, 2006, a proposed decision in R.25-10-003 was issued that discusses the UCAP calculation but implementation and coordination issues with the CAISO remain outstanding. The proposed decision is on the agenda for the Commission meeting on July 2, 2026.

[3] CAISO proposal at 16.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

ED staff appreciate that CAISO recognizes that an accurate must offer obligation (MOO) is required when the Qualifying Capacity (QC) for an RA resource is based upon UCAP. Per the CAISO tariff, the local regulatory authority (LRA) provides the QC for both RA resources and the MOO, and ED staff support maintaining that policy. 

CAISO proposes that the MOO be calculated as follows:

Must-Offer Obligation (MW) = Shown RA (MW) × (Pmax (MW) / NQC (MW))

Where:

Shown RA (MW) is based upon UCAP

Net QC (NQC) is based upon UCAP

Pmax is based upon installed capacity

The purpose of this calculation is to translate the shown RA based upon UCAP to an MOO based upon ICAP via the Pmax.  If the Commission adopts UCAP, ED staff will continue to calculate ICAP values for resources under its jurisdiction and would also calculate forced outage rates to determine UCAP.  Having CAISO perform this calculation could potentially create errors resulting in different MOO values between the CPUC and CAISO. 

ED staff recommend that LRAs provide values for both shown RA and the MOO which is consistent with CAISO’s tariff.  In the RA proposed decision, the Commission recognized that the determination of the MOO is an outstanding item for review and adoption.[1]

[1] CPUC (June 1, 2026) Proposed Decision in R.25-10-003 at 82:

The Commission notes that the current CAISO tariff provides deference to the local regulatory authority (LRA) establishing the QC values upon which the MOO tariff provisions rely,142 and the Commission supports maintaining this deference in any future tariff modifications. Once the appropriate CAISO tariff revisions are developed, the Commission can determine whether Pmax or another metric should serve as the appropriate basis for the MOO.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

CAISO proposes to move forward with posting a substitution pool of available capacity resources, which is referred to as a “shopping cart” approach, with no CAISO settlement or price formation.  Parties would then engage in bilateral transactions for capacity.

ED staff supports this approach, as it is compatible with the existing bilateral resource adequacy market.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

No comments at this time.

6. Please provide any additional feedback not already captured.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the independent ratepayer advocate at the California Public Utilities Commission.  Our goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.  Cal Advocates appreciates the opportunity to comment on the Resource Adequacy (RA) Modeling and Program Design (RAMPD) Track 2 meeting’s discussions and the RAMPD Resource Adequacy Availability Mechanism (RAAIM) and Outage Substitution Straw Proposal (Straw Proposal).[1]  However, there are significant flaws in the proposal for when and how the CAISO assesses RAAIM that will harm the mechanism’s overall effectiveness.

The CAISO should:

• Retain the expectation that RA resources meet their must-offer obligation throughout the year, not only in stressed periods.
• Continue developing the two-tier reform approach but use the assessment period of the current RAAIM design for tier 1.
• Develop tier 1 and tier 2 penalty levels after other design elements.
• Rely on local regulatory authorities (LRAs) to provide the must-offer obligation (MOO) values that correspond to RA showings within that LRA.
• Use those MOO values, rather than shown RA values, as the starting point for RAAIM penalty calculation.
• Identify potential design flaws in the existing substitution RA procurement bulletin board and inform the replacement design to avoid those flaws.
• Provide additional details on why resources may fall short of performing up to their market-awarded schedules.

[1] CAISO, RAMPD RAAIM and Outage Substitution (Track 2) Straw Proposal, May 11, 2026.  Available as “Straw Proposal – Resource Adequacy Modeling and Program Design – Track 2 – May 12, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Resource-adequacy-modeling-and-program-design.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

In its Straw Proposal, the CAISO states that accreditation and availability incentives should incent RA resources to: 1) reduce forced outage rates “particularly during stressed grid conditions_[,_]” 2) align shown RA values with resource bids and performance, and 3) offer energy to the market, “day in, day out in accordance with their must-offer obligations; particularly during critical hours.”[1] 

Cal Advocates generally agrees with these objectives but opposes transitioning to an incentive program that focuses only on critical hours.[2]  RA resources are obligated to be made available to the CAISO for reliability purposes and, other than when owned by a utility, are paid for through contractual arrangements by a load-serving entity (LSE) to meet those MOOs.  The RAAIM is currently the only mechanism that penalizes RA resources that fail to bid in accordance with their MOO,[3] and currently is applied during the availability assessment hours (AAH).[4]  The MOO is a critical part of the RA program to ensure that sufficient capacity is available for CAISO dispatch at all hours of the day to address foreseeable reliability issues like peak load as well as unexpected issues like a midday transmission outage.  A reduction of binding hours for an incentive system fails to recognize that a reliability emergency can happen at any time and would not be appropriate given that contracted RA resources are paid by LSEs to be available during MOO hours.  Reiterating our March comments, “If CAISO finds that the current definition of the must-offer obligation is insufficient, it should plan a tariff revision to address the issue . . . .  Obligations should not be vacuous.”[5]

Below, Cal Advocates recommends that the CAISO (1) apply a reformed RAAIM on the same assessment periods as the current RAAIM design, and (2) design a tiered system for all hours of the year, with tier 1 to cover a substantial number of hours of the year and tier 2 to focus on the most critical hours.

Tier 1 assessment period

The CAISO proposes to reform RAAIM to: assess and price it on two tiers, adopt a “per event” assessment frequency, and adjust existing exemptions.[6]  In tier 1, the CAISO would asses RAAIM during “periods with any significant level of risk of resource inadequacy . . . .”[7]  The CAISO states that those periods of time could be triggered by high forced outage levels, a load forecast above shown RA levels, and/or a buffer of expected supply related to forecasted load.[8]  The CAISO would use a 2-8 day outlook to observe conditions and would trigger RAAIM tier 1 within that timeframe.[9]  The proposal does not provide detail about whether the CAISO would use the whole day or a subset of hours on a triggered day to assess RAAIM penalties/incentives.

The CAISO should alter some of the tier 1 criteria to include portions of the existing RAAIM design.  Doing so would allow a reformed design to carry over some elements that stakeholders are familiar with and that have already been approved by the Federal Energy Regulatory Commission.  While the CAISO correctly indicates that the existing RAAIM design is insufficient to incentivize RA availability, retaining desirable elements of RAAIM and supplementing others may prove to be more effective than replacing RAAIM completely.

The CAISO’s proposed tier 1 assessment focuses on supply inadequacy risks and, depending on trigger variables, would likely trigger less often than the current RAAIM design.  Additionally, the CAISO states that the 2-8 day-out designation design could provide a stronger incentive for generators to procure substitute capacity for short duration scarcity periods.[10]  However, if the RAAIM only provides an incentive for generators to procure substitution RA when conditions are extreme, the mechanism would fail to align RAAIM and MOO policy and would not ensure that sufficient reliability is available outside of anticipated critical supply conditions.

Instead, the CAISO should use the existing RAAIM design for the tier 1 assessment days. System RA resources would be assessed during the AAH on non-holiday weekdays and flex RA resources assessed respective to their flex RA category.[11]  This would continue to incentivize RA availability during peak load conditions on most days, thereby benefiting reliability and providing consistency with the MOO.  The CAISO should retain its proposed design of Tier 2 assessments[12] to meet the CAISO’s objective of incentivizing availability especially on critical hours.  Tier 1 would complement tier 2 by incentivizing RA availability in general, consistent with the MOO.

Tier 1 and tier 2 penalty prices

The CAISO proposes that the tier 1 penalty price be equal to the day-ahead hourly locational marginal price for the trade date on a per-event basis.[13]  Cal Advocates supports a transition to a per-event basis to calculate penalty charges and incentive payments.  However, RAAIM penalty rates would be better designed after other elements of RAAIM are developed and stakeholders can better predict how often a RAAIM penalty may occur.  Generally, the CAISO should have a low penalty rate for tier 1 since it would trigger relatively more often than tier 2, and a high penalty rate for tier 2 which triggers rarely but is assessed only during critical reliability conditions. 

[1] Straw Proposal at 7.

[2] The CAISO proposes a two-tier replacement for RAAIM which would only be assessed under certain reliability conditions.  Straw Proposal at 7 and 15-16.

[3] Scheduling Coordinators are expected to make their RA capacity available to the CAISO but the CAISO Tariff does not consider any specific penalty price for not doing so, other than a basic sanction related to a failure to report an outage.  CAISO Tariff 37.2.4 and 37.4.1.

[4] The AAH are a range of hours that represent where the peak load hour is most likely to occur and are currently the binding assessment hours for RAAIM.  System RA resources are subject to a five-hour range, while flex RA resources are subject up to a range of 16 hours.  The AAH applies to all days except weekends and holidays, except for Category 1 and 2 flex RA which are assessed on all days.  CAISO, Availability Assessment Hours, May 11, 2026 (2027 AAH Assessment) at 7.  Available as “Final – 2027 Availability Assessment Hours” at: https://stakeholdercenter.caiso.com/RecurringStakeholderProcesses/Flexible-capacity-needs-assessment-2027.

See also CAISO, 2^nd Draft Final Proposal: Standard Resource Adequacy Capacity Product, February 27, 2009 at 12.  Available at: https://www.caiso.com/documents/seconddraftfinalproposal-standardresourceadequacycapacityproduct.pdf.

[5] Cal Advocates, Comments on 3/2/2026 RAMPD Track 2 RAAIM Reform Options - Stakeholder Meeting, March 23, 2026 at response 3.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/4aeac74b-0625-44c2-aeb9-163d024e9176#org-0555a053-da73-4849-87eb-6d0470426001.

[6] Straw Proposal at 15-16.

[7] Straw Proposal at 19.

[8] Straw Proposal at 19.

[9] Straw Proposal at 19-20.

[10] Straw Proposal at 20.

[11] 2027 AAH Assessment at 7.

[12] The CAISO proposes that tier 2 assessments would trigger when the CAISO balancing authority area (BAA) fails to meet the Extended Day-Ahead Market (EDAM) resource sufficiency evaluation.  Straw Proposal at 20-21.

[13] Currently, the RAAIM price is $4.40/kilowatt-month, which is 60% of the capacity procurement mechanism’s soft offer cap.  Straw Proposal at 15 and 21.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

The CAISO indicates that RA resources are currently required to offer only their shown RA into the market, and that RAAIM uses the shown RA of a resource to assess exposure to RAAIM penalties or incentive payments.[1]  The CAISO proposes to remove the existing availability threshold, to assess penalties based on shown RA, and base any incentive payments on whether a resource met its MOO.[2]  The CAISO must also reconcile RAAIM reform with potential adoption of the unforced capacity accreditation method (UCAP).[3]  As the CAISO indicates, it would be inappropriate to set an RA resource’s MOO at the shown UCAP value, rather than what the resource is capable of generating when not on outage.[4]

To determine a generator’s potential shortfall and exposure to RAAIM penalties, the CAISO should begin with MOO quantities supplied by LRAs.  The CAISO should not base RAAIM on the shown RA value of a resource since that value may not represent a resource’s actual generation capability.  Instead, the CAISO should base RAAIM on the MOO because (1) the MOO represents a resource’s contribution to reliability and RAAIM is designed to penalize deviations from that contribution, and (2) obligations should not be empty.

The CAISO should follow the suggestion from CPUC Energy Division: each LRA has the option of providing the MOO quantities for the resources subject to that LRA’s accreditation.[5]  This can be optional; the CAISO can set the MOO to the shown RA value for LRAs that do not provide MOO values.  These MOO values must be no lower than the shown value.  Using LRA-provided MOO values would allow the CAISO to accurately evaluate MOOs, without having to recreate each LRA’s accreditation process.  When a resource operator subdivides a single resource’s RA capacity to multiple LSEs, the CAISO would sum the MOO values to reach a total MOO value the resource is expected to meet.  For more complicated cases, where a resource is shown by multiple LSEs under multiple LRAs or where a resource is partially deliverable, summing the MOO values is still important; see below. 

During the May 15, 2026 stakeholder workshop,[6] one stakeholder objected that the CAISO’s use of a MOO above the shown value would require a resource to provide uncompensated capacity.  This interpretation of UCAP is incorrect.  The capacity has been contracted and compensated for a higher capacity than the UCAP value – it is just shown at a lower value because of accreditation.

Here, it is important to consider the risk of double counting of capacity (whether intentional or inadvertent).  The following detailed example considers how the CAISO can accommodate different accreditation systems, and how the CAISO can guard against having the same underlying capacity shown twice.

Consider an example where a 100 megawatt (MW) nameplate dispatchable, deliverable resource has a UCAP-adjusted value of 80 MW.  A CPUC-jurisdictional LSE shows 60 MW of the resource’s RA to the CPUC and the CAISO.  The CPUC provides a MOO quantity, based on the expectation that this resource will be available to produce at its nameplate capacity, inflating the shown MW by the inverse of the UCAP adjustment.[7]  The CPUC calculates a MOO of 75 MW (= 60 * 100 / 80) for the LSE’s 60 MW of RA.[8]

Another LSE at a different LRA procures 40 MW of the resource’s capacity to be shown as RA.  That LRA does not use UCAP, so the shown RA quantity is the MOO quantity.  When this other LSE procures and shows 40 MW of capacity from the resource, the total shown RA capacity will be 100 MW, but the MOO for that combined showing will be 115 MW (= 75 + 40).  The resource cannot actually provide the reliability contribution of this combined showing; its capacity has been double-counted.  Allowing LRAs the opportunity to provide the MOO in this way provides an important guard against this sort of double counting.

[1] The current RAAIM availability standard is 96.5% of a resource’s shown RA, with a 2% deadband.  The CAISO also notes:

Under current ISO rules, RAAIM non-availability penalties are assessed based on a resource’s must-offer obligation, which is set based on RA capacity, also known as shown RA. 

Straw Proposal at 26; and see also Straw Proposal at 21 and 28.

[2] Straw Proposal at 19 and 21.

[3] UCAP is a resource accreditation method that derates a resource’s value (its qualifying capacity) by historical outage rates.  Straw Proposal at 26.

[4] CAISO, Resource Adequacy Modeling & Program Design Track 2: RAAIM & Outage Substitution Straw Proposal, May 15, 2026 at 22.  Available as “Presentation – Resource Adequacy Modeling and Program Design – Track 2 – May 15, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Resource-adequacy-modeling-and-program-design.

[5] The MOO value in this case is the resource’s existing, pre-UCAP, qualifying capacity value.  CPUC, Comments on 3/2/2026 RAMPD Track 2 RAAIM Reform Options, April 1, 2026 at Section 3.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/4aeac74b-0625-44c2-aeb9-163d024e9176#org-37c6f7c4-75e9-47e1-8caf-bfa014d9e9a0.

[6] The recording of the May 15, 2026 stakeholder workshop is available online, with the objection raised at 2:24:45.  Available at: https://www.youtube.com/watch?v=xQZUNVuXX7E.

[7] The characteristics of this hypothetical resource are deliberately simple, to allow the example to focus on the showing issues.

[8] This calculation, converting from UCAP-denominated MW to a MOO requirement follows the Straw Proposal at 28-29, but proposes that the MOO value is provided by the LRA, rather than the CAISO.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

The CAISO proposes to move forward with an outage substitution procurement pool instead of relatively more complex concepts to facilitate more efficient procurement of substitution RA.[1]  The CAISO acknowledges that a more optimized approach could be revisited later but that the procurement pool concept “will add some value” for scheduling coordinators.[2]  As Cal Advocates previously noted,[3] this procurement pool approach is similar to the CAISO’s existing Power Contracts Bulletin Board that the CAISO states, “goes largely unused for substitute capacity procurement purposes.”[4]  CAISO has not described why the bulletin board is largely unused or what lessons could be learned from its disuse that could be avoided in a replacement system like the CAISO’s outage substitution procurement pool.[5]  Cal Advocates’ request remains valid; if there is no major difference or improvement between the existing and proposed systems, then the CAISO should expect the proposed system to similarly face disuse.  The implementation of such a system is simpler than alternatives but will still require time and effort for the CAISO to construct and for scheduling coordinators to become acquainted with.  The CAISO should identify why the existing bullet board is disused and design its replacement in a manner that avoids those issues.

[1] Straw Proposal at 32.

[2] Straw Proposal at 32.

[3] Cal Advocates, Comments on RAMPD 8/28 Meeting and Track 2, September 12, 2025 (Cal Advocates September Comments) at Section 2.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/6bed1de3-ac3c-4e23-ab09-4e2efb4c108e#org-25889ce8-1b76-4242-9e3c-67686f8d4434.

[4] Straw Proposal at 31.

[5] Cal Advocates September Comments at Section 2.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Cal Advocates has no comment on this issue at this time.

6. Please provide any additional feedback not already captured.

The Straw Proposal requests stakeholder feedback on performance assessments.[1]  Cal Advocates shares the CAISO’s concerns that resources’ actual metered performance is falling short of their market awards by hundreds or thousands of MWs during critical periods.[2]

The discussion to address these shortfalls will be more fruitful if the CAISO provides more detail on what part of the market operations timeline is seeing gaps, and what penalties and consequences currently exist for resource underperformance.  More specifically, Cal Advocates can imagine a “funnel” of RA resources that may or may not receive awards and may or may not meet their obligations.  The widest part of the funnel is the entire set of contracted RA resources.  As the funnel narrows, some resources do not meet their day-ahead and real-time offer obligations.  Other resources that meet their obligations do not deliver on their awards.  The narrowest part of the funnel is the set of RA MWs that actually deliver on their schedules.  It would be helpful if the CAISO provides data on each step in the funnel, detailing the MWs that fail to meet obligations at each step, and what the current fiscal or other consequences are for this failure to perform.  The Department of Market Monitoring 2024 Annual Report on Market Issues & Performance provides a starting point for this analysis.[3]

[1] Straw Proposal at 25.

[2] Straw Proposal text and Figure 5 at 11.

[3] Department of Market Monitoring, 2024 Annual Report on Market Issues & Performance, August 7, 2025, Table 15.6 at 300.  Available as “2024 Annual Report on Market Issues and Performance” at: https://www.caiso.com/market-operations/market-monitoring/market-issues-and-performance-reports.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

CalWEA joins the Large-scale Solar Association (LSA) in calling on CAISO to rethink the vague and unjustified proposed application of RAAIM to variable energy resources (VERs) and generally endorses LSA’s comments.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

As LSA explains in its comments, VERs were originally exempted from RAAIM because most wind and solar project PPAs provide for a single, volumetric payment on a bundled basis for energy, capacity, and renewable energy credits. This structure incentivizes maximum availability and production, which will not improve under RAAIM capacity-based incentives. This PPA structure remains the standard for new projects.  Once projects’ initial PPAs expire, some VERs may use unbundled contract structures, including bilateral RA contracts. However, these projects remain price-taking, non-dispatchable resources.  VERs are not subject to the same Day-Ahead Must-Offer Obligation framework as dispatchable RA resources; their RA availability is tied to available capacity and forecasted generation rather than dispatchable Day-Ahead bids. CAISO has not explained how a RAAIM construct focused on Day-Ahead bidding and dispatchable-resource obligations would apply to VERs.

Given these contract structures and VERs’ non-dispatchability, CAISO has provided no evidence that subjecting VERs to RAAIM would provide any reliability benefits, nor has it thought through the details of how RAAIM would apply to VERs, as the presentation focused on dispatchable resources.  Any penalties on VERs that do not (and cannot) improve performance would unfairly disadvantage these renewable resources relative to dispatchable resources. 

Further, many legacy wind projects were built before today’s CAISO dispatch and RAAIM framework and were not designed for frequent automated curtailment or dispatch-following operation. Some older fixed-pitch turbines rely on mechanical braking that can cause significant wear and tear, and older SCADA/control systems may not support modern dispatch-following functionality. These are not resources that can be treated like a gas plant, a battery, or a modern, fully dispatchable resource. Should CAISO demonstrate that exposing VERs to RAAIM would provide significant reliability benefits, which CalWEA believes is unlikely, CAISO should, at a minimum, preserve an exemption or develop tailored treatment for legacy wind projects that were not designed or equipped for frequent automated curtailment or dispatch-following operation.

If CAISO proceeds with this proposal, it should first provide evidence that RAAIM would improve VERs' operating behavior, explain how RAAIM would apply to VERs given their unique Must-Offer Obligations, and provide an opportunity for stakeholder discussion on this information.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

CalWEA emphasizes that CAISO must provide a VER-specific explanation of applicable Must-Offer Obligations before proposing to apply RAAIM to VERs. Many VERs, including legacy wind resources, are price-taking, non-dispatchable resources and do not have a Day-Ahead Must-Offer Obligation. Their real-time availability is tied to available capacity and forecasted generation, not economic bidding or NQC-based dispatchable obligations. CAISO should not assume that wind or solar resources can respond to RAAIM incentives in the same manner as gas, storage, or other dispatchable resources.

This is especially important for legacy wind resources that lack modern SCADA/control systems, turbine-level dispatch-following capability, and staffing models designed to follow ADS Dispatch Operating Targets. The fact that a legacy wind resource may sell RA separately does not make it dispatchable or capable of responding to RAAIM incentives in the same manner as resources designed for dispatch-following operation.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

CalWEA has no comments at this time, except to emphasize that outage substitution enhancements should not be used as a substitute for VER-specific analysis of whether RAAIM should apply to VERs at all. CAISO should first demonstrate that applying RAAIM to VERs would produce incremental reliability benefits before assuming that outage substitution rules can resolve the operational differences between VERs and dispatchable resources.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

CalWEA has no comments at this time on the specific outage definition changes, except that changes to outage definitions should not be conflated with elimination of the existing VER resource-type exemption from RAAIM. Resource-type exemptions and outage-type exemptions are separate issues. Reforming outage definitions does not establish that VERs should be newly exposed to RAAIM.

6. Please provide any additional feedback not already captured.

CalWEA reiterates that CAISO should not eliminate the existing VER exemption unless and until it provides VER-specific data and analysis demonstrating that RAAIM would improve reliability for VERs. The current proposal appears to rely heavily on concepts applicable to dispatchable resources, without explaining how the mechanism would apply to price-taking, forecast-based, non-dispatchable wind and solar resources. CalWEA therefore urges CAISO to remove the proposed expansion of RAAIM to VERs from this initiative or, at a minimum, defer any such change until CAISO develops a detailed VER-specific proposal and provides stakeholders a meaningful opportunity to review and comment on it.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Calpine appreciates CAISO’s continued efforts to refine the RA program and better align incentives with reliability outcomes. Calpine supports robust availability incentives during periods of system stress and encourages CAISO to consider pending CPUC UCAP design elements and rules, as well as ongoing market design refinements, before finalizing any proposal. 

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Calpine generally supports robust availability incentives focused on periods of system stress. 

CAISO’s proposal for Tier 2 penalties may attain this objective, but Calpine has concerns about whether RSE failures actually reflect system stress.  For example, do they necessarily correspond to actual reliability events, such as reserve shortages or system emergencies. Calpine recommends CAISO evaluate whether Tier 2 penalties should instead be tied to actual reliability events.

In addition, while the CAISO’s proposed penalty rate of $2,000/MWh is consistent with penalties in other markets with similar schemes, including PJM’s Capacity Performance and New England’s Pay-for-Performance, Calpine notes that the introduction of such penalties would expose suppliers to significant risk that is not priced in current RA contracts.  Consequently, to the extent that CAISO implements its proposed Tier 2 penalties, Calpine recommends a gradual phase in or exempting current contracts.  In lieu of robust availability incentives, CAISO might also consider providing similar incentives through better scarcity pricing in the energy market.

Calpine does not believe that CAISO’s proposed Tier 1 penalties are well-supported or necessary.  It is not clear that they are tied to availability during periods of actual system stress, partly because they would be assessed during periods of forecast system stress even if that stress did not materialize.  If CAISO retains the Tier 1 penalties, Calpine recommends that they be assessed only in periods in which system stress actually manifests ex post. In addition, Calpine does not believe that day-ahead LMP energy prices are an appropriate penalty for capacity availability because it reflects the value of energy not capacity/availability.  If CAISO maintains the proposed general approach for Tier 1 penalties, it should consider tying penalties to a short-term capacity price such as the Reliability Capacity Up (RCU) price. 

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

As indicated in previous comments, Calpine generally agrees with CAISO’s proposed approach to bidding requirements, i.e., a resource should offer the installed capacity corresponding to the accredited capacity shown from the resource. This approach appropriately aligns operational capability with accredited capacity and should be maintained as other RA program elements evolve.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

As indicated in previous comments, while Calpine does not believe that an outage substitution pool would be harmful, it is unlikely to be useful relative to existing bilateral options.  In lieu of or in addition to creating an outage substitution pool, CAISO might consider relaxing substitution requirements (or suppliers may choose to ignore them if the consequence is exposure to penalties in relatively few hours under CAISO’s new availability incentive proposal). 

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Calpine continues to express significant concerns with CAISO’s proposal to eliminate the Short Notice Opportunity (SNOO) outage category.

Historically, SNOO outages have provided a practical pathway for Scheduling Coordinators to request outages without substitution when system conditions indicate low reliability risk. These requests are reviewed by CAISO Operations Engineering, allowing real-time system judgment and avoiding unnecessary RA penalties when sufficient alternative capacity is expected to be available.Under the proposal, these outages would be shifted into the new “Urgent” category, which carries full UCAP and RAAIM exposure. This would assign forced-outage-level penalty risk to situations where operators may not expect a material reliability impact.

Calpine has significant concerns that the latest CAISO proposal does not distinguish between outages that affect reliability and those that do not, overstates reliability harm, and introduces unnecessary penalty exposure that would ultimately increase RA costs for ratepayers.

Calpine believe that CAISO’s justification for removing SNOO does not adequately address stakeholder concerns that these outages have historically been permitted specifically because they do not impact reliability.

Accordingly, Calpine recommends that CAISO revise its future outage definitions proposal to:

• Retain a pathway for low reliability impact outages without forced outage penalties;
• Maintain the SNOO option alongside the new proposed Urgent category; and
• Ensure outage classifications and associated penalties remain aligned with actual system risk.

A balanced framework should distinguish between outages that materially affect reliability and those that do not.

6. Please provide any additional feedback not already captured.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

None.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Clearway encourages the CAISO to consider the incentives that the RAAIM reform proposal will create in a market environment with low Resource Adequacy prices, not just the incentives that would be created in the context of scarcity and high prices. An asset owner considering making a major capital investment to improve availability is examining the ability for the resource to recoup the investment through sufficient market revenues. Real-time penalties alone will not provide that market signal, especially in years with low RA prices. Instead, this RAAIM proposal may cause resources with higher forced outage risk to retire or avoid selling RA capacity in the summer to avoid the risk of high penalties. 

With respect to the goal of incentivizing plants to return from outages more quickly, Clearway notes that this may not be feasible depending on the cause of an outage. Many plants are under long-term contracts with their original equipment manufacturers (OEMs), and if an outage requires a replacement part, the timeline for returning from the outage depends on the OEM’s supply chain for that part.  

Clearway strongly opposes the CAISO proposal to apply RAAIM to Variable Energy Resources. VERs were initially excluded from RAAIM applicability because VERs sell energy through PPAs which are volumetric and base payment on performance. If the resource is not available, the offtaker does not pay for energy not produced. Applying a penalty structure on top of the existing volumetric contracts will not increase VERs’ availability. Accordingly, Clearway recommends that CAISO remove the proposal to expand RAAIM applicability to VERs.  

Clearway also requests clarification on the proposal to apply RAAIM to VERs. While the proposal indicates that Shown RA value would be adjusted by applicable availability factors and demonstrated operating characteristics, it is not clear how CAISO will ensure that RAAIM penalties are not applied to variability due to weather. A cloud passing over a solar resource, or hourly fluctuations in wind speed at a wind facility, should not result in a RAAIM penalty being applied. CAISO’s adjustment for availability factors does not ensure that it will be granular enough to ensure that VERs are not punished for variability due to weather. Clarification is necessary to determine how CAISO will distinguish real-time underperformance caused by weather-induced deviations from a day-ahead forecast from mechanical plant trouble. The added complexity required to ensure that precise weather availability is properly accounted for at all VERs across CAISO would likely outweigh any potential benefit. If CAISO chooses to retain this aspect of the proposal, it is imperative that the proposal is narrowly tailored to address matters that are within the control of the resource owner, like mechanical plant trouble.  

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

None.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

None.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Clearway opposes the elimination of the Short-Notice Opportunity Outages?category. Clearway has used this type of outage to ensure that our plants are ready to be available for the summer. In the past, we have used these outages to install replacement parts that could not be delivered during the annual spring maintenance window, or to perform minor maintenance that was identified during the annual maintenance window. In those cases, the outage needed may be short in duration (a few hours rather than days) and possible to schedule with minimal impact on the RA market. For plants that conduct annual maintenance in the spring, Short-Notice Opportunity Outages?are helpful to ensure all needed work is done before the summer season. 

When long lead time parts become available or when maintenance needs arise, the Short-Notice Opportunity outage type serves a critical function in incentivizing asset owners to request maintenance outage approvals before taking outages to support sufficient RA capacity in the market. The windows of opportunity for a Short-Notice Opportunity outage support contractor and company availability, the duration of certain work activities, and provides for safe maintenance activities. Off-Peak Opportunity Outages are not always a viable alternative, as they provide limited flexibility for certain maintenance – often overnight or on the weekends – which are generally not viable times as many contractors will not work in those timeframes.  

If the Short-Notice Opportunity Outage category is eliminated, an asset owner will have no incentive to consider whether the timing of the outage would have a negative impact on the RA market. Retaining the Short-Notice Opportunity Outage is in the best interest of the broader CAISO system and encourages asset owners to maximize their availability for the summer. ?

6. Please provide any additional feedback not already captured.

None.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Leap is a distributed energy resource (DER) aggregator and registered Demand Response Provider participating in CAISO wholesale markets. Overall, Leap is supportive of the 2026 RAMPD Track 2 Straw Proposal, and submits additional comments in response to the questions below for consideration.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Leap is generally supportive of the proposed RAAIM enhancements and the removal of the sub-1 MW resource ID exemption, both of which move toward a fairer and more balanced market with clearer incentives. The current exemptions based on program and dispatch limitations should continue to apply to demand response resources, but Leap urges the CPUC to standardize these exemptions so that third-party DR and IOU-administered DR programs are held to the same standards. Under the current framework, IOU-administered programs such as the Capacity Bidding Program are not shown on supply plans and are therefore exempt from RAAIM penalty exposure, while third-party DR RA programs are shown on supply plans and subject to RAAIM assessment. This asymmetry should be addressed.

Leap also notes that the proposal discusses potential changes to resource accreditation at the CPUC level, and that an “incentive-based QC” proposal for DR resources remains under consideration at CAISO, most recently in R.23-10-011 (see attached). That proposal would apply an ex post penalty to DR resources that do not perform in accordance with their shown RA, effectively duplicating the penalty incentive that RAAIM provides. If a version of the incentive-based QC proposal is ultimately implemented, the CPUC and CAISO should work together to ensure that DR resources are not subject to a duplicative penalty structure that penalizes the same delivery failure through two separate mechanisms.

Finally, Leap recommends that updates to the RAAIM penalty mechanism be accompanied by updated outage guidance for demand response. As Leap understands the current structure, DR providers can only call an outage if fatigue or dispatch limits have been reached, but there is no guidance on what to do — or how to submit an outage — when customers churn from the program or enrollment falls short of supply plan values between submission and the delivery date. Because DR capacity is composed of many independent end-use customers making their own decisions, this is a distinct operational possibility, and there is currently no clear way for DR providers to represent it to the market. Leap urges CAISO to provide clear guidance to DR market participants on this issue. 

One approach that would help reduce the underlying forecast risk is to define PDR resource IDs at the TAC area level for system RA, rather than at the sub-LAP level. Showing DR at the sub-LAP level increases forecast risk because enrollment must be projected at a finer geographic granularity than data often supports, whereas forecasting at the TAC level produces less geographic specificity and more accurate capacity estimates. Defining PDRs at the TAC level would also likely result in fewer total resource IDs, as resources would not need to be subdivided into sub-LAP buckets.

Overall, Leap emphasizes the importance of creating clear and transparent rules that promote accountability by all resources participating in CAISO’s wholesale market, including demand response. This is especially true in California’s wholesale market where multiple different regulatory agencies — including CAISO, CPUC, and FERC — can review market activity of supply-side resources in California. Avoiding ambiguity in compliance requirements avoids misunderstandings between agencies and reduces regulatory uncertainty for market participants. Transparent, robust enforcement rules such as the CPUC’s proposed incentive-based QC methodology are valuable in this respect and could replace RAAIM as an efficient penalty mechanism if/when it is implemented. 

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

Leap has no comments at this time.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Leap has no comments at this time.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Leap has no comments at this time.

6. Please provide any additional feedback not already captured.

Leap has no comments at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

LSA’s comments focus on the CAISO’s proposal to expand RAAIM applicability to Variable Energy Resources (VERs) – solar and wind projects.  As explained further below, the CAISO has not demonstrated that revocation of the current VER exemption from RAAIM is justified.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

LSA strongly opposes the CAISO’s proposal to expand RAAIM applicability to VERs.  This proposal is made rather casually in the Straw Proposal (Proposal), without justification, or explanation of how it would apply given unique VER Must-Offer Obligations (MOOs).  LSA asks that the CAISO remove this proposal element from this initiative, for both policy and data.

Policy argument

When RAAIM was introduced, the CAISO exempted VERs from applicability because Power Purchase Agreements (PPAs) for such resources were exclusively volumetric.  Specifically, contracts for these resources have no capacity payments (e.g., based on NQC or Resource Adequacy value), even if they are providing RA, and that strong, continuing “pay for performance” signal (no availability/generation, no payment) removed the need for an additional, external mechanism to incent continued availability and performance.

In this respect, nothing has changed.  PPAs for VERs continue, many years later, to be exclusively volumetric.  LSA and its many members, which together account for a significant portion of the utility-scale solar capacity in the CAISO area, are not aware of any PPAs that include capacity payments or other elements that could blunt that strong and continuing incentive for high availability and production.

In addition to the volumetric payments, most PPAs include other significant performance incentives.  These additional provisions include minimum annual production levels and prohibitions against taking planned outages in the critical summer months.  Projects violating these conditions risk performance penalties and potential cancellation, meaning that their economic viability depends on continued compliance.

There is nothing wrong with “broad exemptions” when they reflect market realities, and additional availability is unlikely to result when there are already strong availability and production incentives. 

The Proposal contains no factual assessment about RAAIM imposition on VERs.  The few statements about VERs reveal a striking lack of knowledge or consideration of how VERs operate in the market or are compensated for doing so, demonstrating that this proposal has not received more than minimal examination.  There is no substantive discussion of VERs in the entire Proposal document, examination of the need for or impact on them of applying RAAIM, or data supporting any need for RAAIM application. 

Instead, the Proposal focuses mainly on dispatchable resources (which are widely considered to exclude VERs), on the Day Ahead timeframe (when VERs have no Must-Offer Obligations (MOOs) in the DA market), and on NQC vs “shown” RA (when VER MOOs have nothing to do with their NQC value). 

For just one example, consider this statement on p.18, under the “Potential Enhanced RAIIM Assessment” with respect to VERs (p.18):    

Satisfied through bidding or scheduling obligations consistent with DA commitments; RAAIM applied only if on forced outage based on ELCC or exceedance methodology used by the LRA.

This statement reflects a fundamental misunderstanding and/or misstatement about the nature of VER MOOs.  VERs do not have DA MOOs at all, and their HA/RT MOOs do not depend on the “ELCC or exceedance methodology” but are based on available capacity and forecasted generation. 

Data issues

LSA agrees with the concerns of other stakeholders, expressed at the workshop, that much of the data presented do not reflect reliability tools that CAISO already has in place.  For example, they generally mix forced and planned outages, when the latter require substitute capacity except in rare circumstances when the CAISO itself does not deem it necessary, and thus do not present any reliability risk.  The data also do not reflect Restricted Maintenance Outage declarations, which likely reduce outage risks.

However, LSA is most concerned that literally all of the data presented in the Proposal or the various workshops either exclude VERs completely or fail to break out VER performance specifically.  Certainly, any decision about whether RAAIM should be imposed on VERs should consider the current outage performance of VER resources.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

As noted above, LSA strongly objects RAAIM imposition on VERs. 

The entire discussion of bidding and MOOs in the Proposal and workshop materials focuses on dispatchable resources, NQC-based MOOs, and the DA market, which are irrelevant to VERs, so there is simply not enough information about applicability to VERs for LSA to comment on.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

LSA has no comments at this time. 

5. Please submit your organization’s comments on the Outage Definitions Proposal.

LSA has no comments at this time. 

6. Please provide any additional feedback not already captured.

The Proposed RAIIM Reform table (p.15) says that the Proposal would “Alter categorical exemptions of several resource type and outage type exemptions, and instead allow management of RAAIM exposure via exempt outage natures of work to ensure resources meeting their MOO are not subject to RAAIM. Eliminate exemption for resources smaller than 1 MW.

Of course, “alter” means “eliminate” here.  The euphemisms are not helpful.

This CAISO statement conflates resource-type and outage-type exemptions, when they are actually two separate elements.  Reform of the outage-type exemptions in no way makes it justifiable or necessary to revoke VER resource-type RAAIM exemptions.

In addition, elimination of exemptions for resources smaller than 1MW has simply not been addressed anywhere else in the proposal.  They were exempted originally because the administrative complexity would be unduly onerous and likely yield little benefit.  The Proposal presents no evidence to the contrary.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Middle River Power LLC (MRP) does not support the Track 2 Straw Proposal because it lacks a clear problem statement for RAAIM, attempts to provide solutions that do not enhance the substitute capacity procurement process, and provides insufficient detail regarding the proposed outage definition changes.

MRP requests that CAISO clarify its Track 2 goals for RAAIM and explain in future iterations how each element will help to achieve CAISO’s desired outcomes. CAISO seems to be seeking fewer forced outages, the current rate of which has exceeded prior planning assumptions, as well as more substitute capacity to replace resources on forced outages. To achieve this, CAISO has proposed different measurement intervals and higher penalties for RAAIM, a bilateral market platform for substitute capacity that offers less flexibility than the existing bilateral market, and new or clarified definitions and processes for outages. Unfortunately, no part of CAISO’s Straw Proposal addresses the complexity of procuring substitute capacity. Without a viable solution for enhancing the substitute capacity procurement process, the effectiveness of CAISO’s proposals will likely be limited. Under the current Straw Proposal, MRP is concerned that resources will continue to have similar forced outage rates while being subject to higher penalties.

Increasing RAAIM penalties and creating targeted RAAIM intervals may help to incentivize certain substitute behavior but the ability of resources to act consistently with this incentive depends on their ability to procure substitute capacity, the administrative burden of which remains a significant challenge. MRP strongly believes that solving the administrative burden of finding and transacting daily substitute RA would significantly increase the amount of substitute capacity procured, thereby shifting forced outages into the planned outage timeframe and/or simply providing substitute capacity for forced outages. MRP recommends that CAISO solicit market participant feedback on the difficulties of procuring substitute capacity, which impedes submission of outages as planned rather than forced, so that this information can be used to inform CAISO’s proposals.

MRP is also concerned that the data used by CAISO in its analysis to support the Straw Proposal is both outdated and incomplete. In the Straw Proposal, data from 2022 and 2023 are provided to show that planned and forced outages are higher than the assumed 7.5% rate in CAISO’s summer assessments or LOLE studies. This data is well out-of-date. Additionally, during 2022 and 2023 there were significant supply shortages, making it difficult for LSEs to procure capacity let alone generators seeking substitute capacity. The data also focuses on summer months rather than all months of the year. More recent annual data would provide helpful context, as would the volume of outages that were substituted. MRP submits that capacity prices for 2026 and beyond have significantly declined when compared to prices in 2022 and 2023. Therefore, some of the items identified during the referenced 2024 workshop process may no longer be applicable. For the next workshop, MRP requests that CAISO walk through updated data with additional information to provide a more detailed look at the forced outage and substitution issues. The data should include 2024 and 2025 outages for all months of the year broken out by planned and forced outages, and by outage nature of work, including the amount of substitute capacity provided.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

As background and justification for its proposal, CAISO points to the analysis in its 2024 RAMPD Issue Paper regarding RA availability during 2022 and 2023. CAISO notes that the 2024 Summer Loads and Resources Assessment assumed a 7.5% forced outage rate, but “[i]n light of higher outage rates, this number has since been updated in both the 2025 and 2026 Summer Assessments and is now assumed to be higher than 7.5%.”[1] MRP finds this statement to be incomplete. In the 2023 Summer Loads and Resources Assessment, CAISO noted that “the overall forced outage rate of the existing fleet”[2] is about 7.5 percent. Then, in the 2024 Summer Loads and Resources Assessment, CAISO repeated its forced outage rate assumption of 7.5% to highlight the makeup of the reserve margin requirement that was used in the assessment. In the 2025 Summer Loads and Resources Assessment, CAISO noted that it “implemented several key enhancements to improve its summer assessment modeling in PLEXOS 11 simulation software.”[3] This included an update to use resource-specific planned and forced outage rates based on CAISO’s OMS data from 2022 to 2024. However, the 2025 report does not state that such enhancements were made in light of higher values. MRP believes that the enhancements helped provide a better model to assess summer readiness. The forced outage rate was updated again for the 2026 Summer Loads and Resources Assessment using November 2022 to October 2025 OMS data.[4] The tables below are the capacity weighted average forced outage rates by technology type presented in CAISO’s summer assessments. It is unclear what the overall combined forced outage rate is and how it compares to 7.5%. MRP believes CAISO should attempt to calculate a weighted average value for the fleet to be able to compare to the prior 7.5% annual forced outage assumption.

2025

2026

In the Straw Proposal, CAISO highlights “an even higher outage rate for RA resources during the first half of September 2022, a time when the ISO grid experienced extreme conditions from a late-summer heat wave.”[5] In looking back at 2022 data, MRP notes that on September 6, CAISO experienced nearly 52 GW of peak load at HE 17 and the total curtailed GW (GW on outage) based on data published by CAISO was about 6 GW. Several days later, on September 10, the maximum curtailment of nearly 9.2 GW occurred at HE 18 when the load was only about 34 GW. Note that the data below in Table 1 includes Ambient due to Temperature nature of work whereas the CAISO’s capacity weighted average forced outage rate does not.

Table 1

The breakdown of these outages in 2022 for planned versus forced by month are in Table 2 below.

Table 2

Another way to look at this data for comparison is in the chart below which also includes the total monthly NQC values from the NQC list without accounting for imports. Note that in September 2022, total NQC values were not able to meet the actual peak load which CAISO experienced on September 6, but peak load is not to be confused with the 1-in-2 load forecast plus the planning reserve margin which sets the RA requirement of the system.

Unlike CAISO, which states that “evidence indicates potential concerns where the price and timing of incentives might not align well with reliability needs during the hours and days that matter the most for the grid,”[6] MRP performed a review of the outage data from 2022 to 2025 and cannot draw any meaningful conclusions regarding RAAIM’s effectiveness. Nowhere in the Straw Proposal does CAISO present any evidence that RAAIM prices and bilateral market prices are correlated to incentivize resources on forced outage to procure or not procure substitute capacity. While MRP recognizes it’s easy to assume that market participants would pay the lowest price, either penalty or market, that fails to consider the full picture. Simply looking at economics does not capture the complexity of the outage substitution process. MRP suggests the CAISO show the amount of substitute capacity provided in other non-summer months to see whether a significant portion of forced outages procured substitute capacity given that the price of non-summer capacity is generally lower than the RAAIM penalty.

MRP submits, as it has done so several times throughout the RAMPD initiative, that the primary limitation to providing substitute capacity for resources going on outage is the ability to procure through the fragmented bilateral market. If substitute capacity cannot be procured in the market, then that outage will likely be submitted as forced and no amount of RAAIM penalty can change this fact. Increasing penalties without taking action to alleviate the challenges of procuring substitute capacity would be a punitive, one-sided solution.

MRP has the following clarifying questions and comments for CAISO’s RAAIM reform proposal for discussion at the next workshop:

1. CAISO notes that for certain resources, the RAAIM penalty is assessed based on a resource’s shown RA value. In the Straw Proposal example, a 100 MW resource with an 80 MW UCAP QC value would still result in a 100 MW must offer obligation. If there is a 20 MW forced outage, how would the RAAIM penalty be calculated? Similarly, how many MW would the scheduling coordinator need to provide in substitute capacity for a 25 MW planned outage?
2. Would a resource ever receive a payment for not being 100% available, for example, if the DA LMP is negative for the RAAIM hours?
3. How would different accreditation methods across multiple LRAs impact a resource’s RAAIM penalty calculation? Specifically, how would settlements work for a resource sold to different LSEs under different LRAs?
4. For the Tier 1 RAAIM calculation, MRP believes the trigger should be when: Shown RA minus Forced Outages<Min(Hourly Load+operating reserves, RA Requirement)

This formula does not account for planned outages because most planned outages require replacement capacity. It uses the minimum of Hourly Load plus operating reserves or the RA requirement because to the extent load is lower than the RA requirement for an hour, that is the volume of demand that must be served, not the higher RA requirement. The total RAAIM penalty should be the LMP multiplied by the total MW below this threshold, and that total penalty should be spread amongst all of the RA resources that incurred forced outages in that month on a prorated basis.[7]

5. For Tier 1, CAISO proposes the rolling 8-day assessment to give market participants a forecast of whether each day yields pass or fail. It’s unclear why the study window is for T-2 through T-8 days only. For the days of T₀ and T-1, such information would be locked at T-2. To that extent, if T-1 were to pass the test, then it could incentivize generators to wait until then to submit their outages and not be assessed RAAIM.[8] Is this the intent of the proposal?
6. While the rolling 8-day study is helpful in determining which days are critical, if one day initially fails and then passes on a subsequent day, that day should not have RAAIM penalties assessed. While MRP understands the possibility of the pass/fail trigger whipsawing back and forth, penalties should not be assessed if there is no real issue.
7. MRP believes the Tier 2 RAAIM penalty is unreasonable and warrants further discussion. The CAISO Resource Sufficiency Evaluation includes all bids from RA and non-RA capacity. To the extent the CAISO BAA fails the RSE, the RA fleet may not be the only or even primary cause. While the shown RA fleet certainly contributes towards meeting the RSE, the total amount is largely controlled by the LRAs and their RA programs. If an LRA elects to reduce its RA requirements and not meet a 0.1 LOLE, then the reliance on out-of-market non-RA resources increases. Such resources do not have a contractual obligation to participate in the CAISO markets and could certainly jeopardize reliability. Yet, to place the blame and financial penalty only on RA resources on outage is unreasonable, regardless of the penalty price. While CAISO attempts to benchmark this proposal to other ISO and RTO designs, it fails to recognize that those programs are not similar in design. For example, PJM’s energy market design includes both incentives and penalties by incorporating scarcity pricing, which allows generators to earn actual incentives, rather than simply being subject to penalties for nonperformance.
8. The proposal does not mention how RAAIM will impact Flex RA values and whether Local RA values will be impacted by UCAP. Further discussion is necessary to help market participants understand how CAISO views these changes.
9. MRP supports elimination of RAAIM exemptions for most resources but believes that exemptions are reasonable in limited circumstances to ensure that the ultimate RAAIM penalty is not applied in cases where the outage is outside of management control. For example, resources with environmental restrictions should still receive exemptions because those are outside of management control. Similar to transmission induced outages, thermal resources do not control how gas pipeline companies maintain their systems or address active or potential issues. Therefore, MRP proposes that CAISO exempt outages related to gas pipelines that are outside of management control from RAAIM. Further discussion on this topic is warranted.

[1] RAMPD Track 2 Straw Proposal at pg 8-9

[2] 2023 Summer Loads and Resources Assessment at pg 22

[3] 2025 Summer Loads and Resources Assessment at pg 6

[4] 2026 Summer Loads and Resources Assessment Technical Appendix at pg 18

[5] Straw Proposal at pg 9

[6] Straw Proposal at pg 13

[7] Outages that are outside of management control should be exempt from this cost allocation

[8] MRP recognizes the fact that for these forced outages during T₀ and T-1, it would still be taken into consideration for certain QC accreditation depending on the LRA.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

MRP generally agrees with CAISO’s view on bidding and must offer obligations. However, as noted above, it would be helpful for CAISO to provide a detailed scenario in which an RA resource sells to multiple LSEs, each subject to a different LRA’s jurisdiction. Including export non-RA and CAISO CPM scenarios would be equally helpful. MRP would like to understand how CAISO plans to capture these differences.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

MRP does not believe that CAISO’s proposed enhanced shopping cart would materially improve substitute capacity procurement relative to the current bilateral process. The primary problem is transaction efficiency. CAISO already operates organized markets that allow participants to transact energy quickly and repeatedly in both the day-ahead and real-time timeframes. This is an effective approach given the near-term nature of the CAISO market. Similarly, substitute capacity needs can also arise within a compressed timeframe. By contrast, however, the proposed shopping cart concept for RA substitution does not appear to offer anything close to the level of speed, liquidity, standardization, or price transparency offered by CAISO’s organized markets. As a result, MRP does not believe the proposal would meaningfully resolve the administrative and transactional barriers that currently limit substitute capacity procurement.

In MRP’s view, a workable solution would require a true procurement mechanism for substitute capacity, rather than a new process that still leaves market participants dependent on fragmented bilateral negotiations. The outages least likely to obtain substitute capacity are those that arise on short notice, where the time required to identify available capacity, negotiate terms, and execute a transaction can prevent substitution from occurring at all. That problem is not solved merely by adding a shopping cart feature that still requires parties to negotiate contract terms and execute contracts. The complexities associated with substitute capacity procurement would be better addressed through a market construct that can match buyers and sellers with substantially greater speed and standardization than the bilateral framework allows.

MRP acknowledges CAISO’s suggestion that granularity presents a difficult design challenge for any substitute capacity mechanism. That may be true, but market participants already must manage that same granularity challenge today. The difference is that they are currently forced to do so through a fragmented bilateral process, where each transaction must separately account for the timing, duration, and MW quantity of the outage and the availability of substitute capacity. In MRP’s view, requiring market participants to solve that optimization problem through bilateral search and negotiation yields worse overall outcomes than a standardized ISO-administered mechanism would.

MRP recognizes that CAISO has also noted stakeholder concerns regarding broader centrally cleared substitute capacity market constructs.^[1] MRP is not advocating for a centralized forward capacity market for general RA procurement, but rather a tailored approach for substitute capacity. Outage substitution is a narrow operational issue for RA resources that need to take an outage, and this process occurs after monthly RA showings are complete. Stated differently, after monthly RA showings are complete, the CAISO operational role over substitute capacity takes over and is outside of LRA compliance obligations. In that context, CAISO should examine whether the concerns stakeholders have raised regarding a broader centralized capacity market are relevant. A limited mechanism designed solely for outage substitution would be materially different from a centralized capacity market for general RA procurement.

As long as CAISO requires full substitution for planned outages and the only option remains sourcing substitute capacity through an inefficient bilateral framework, the issues present in today’s fragmented market will remain and continue to be a significant challenge, and non-RA capacity will continue to be held back for potential self-use during the compliance month. MRP therefore encourages CAISO to continue exploring whether a targeted, standardized, and sufficiently liquid substitute capacity procurement mechanism would better address the problem than the currently proposed “shopping cart.”

[1] Straw Proposal at pg 31

5. Please submit your organization’s comments on the Outage Definitions Proposal.

CAISO proposes modifications to outages in the Straw Proposal to align with the definitions in the RC West outage coordination processes. The Straw Proposal mentions that the “definition of a planned outage [would] include a reference to the planned study window timelines and submission deadlines in the RC West outage coordination procedure.”[1] However, the details are not provided in the Straw Proposal or in the presentation. This information is critical to ensure that market participants understand how urgent and forced outages will be impacted. For instance, the Straw Proposal states that “urgent outages could be submitted before or after planned outage study window deadlines.”[2] This is different from today’s T-7 requirement for outages to be considered planned rather than forced. If outage submission timing is no longer the determining factor in such classification, how would such categories be determined? MRP requests that CAISO provide full detail, including draft redlined definitions and examples, in the next iteration of its Straw Proposal to ensure that market participants understand the impacts.

[1] Straw Proposal at pg 33

[2] Straw Proposal at pg 34

6. Please provide any additional feedback not already captured.

In looking at the CAISO roadmap for RAMPD Track 2 and the current stage of the proposal, MRP does not believe this proposal will be ready for a decision in Q3 2026. MRP is concerned that the revised Straw Proposal that’s set for release in summer 2026 will not resolve the issues identified above but will continue to move forward to a Board of Governors decision in Q3 2026. MRP requests that CAISO continue with policy development throughout 2026 and target a decision in 2027. This will allow for a more thorough proposal, particularly given the in-process CPUC proposed decision on UCAP.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

NextEra Energy Resources, LLC, “NextEra Energy Resources,” appreciates the opportunity to submit comments on the Resource Adequacy Modeling and Program Track Straw Proposal, focused on the Resource Adequacy Availability and Incentive Mechanism (RAAIM), bidding requirements, and outage substitution.  

As discussed in further detail below, NextEra Energy Resources’s comments can be summarized as follows:  

• CAISO should more clearly articulate the reliability objectives and intended behavioral incentives of the proposed RAAIM reforms and evaluate whether targeted modifications to the existing framework, such as elimination of the availability deadband or enhancements to the outage substitution process, would adequately address identified concerns before implementing a broader restructuring of the program. 

• If CAISO proceeds with a two-tiered RAAIM framework, additional analysis and supporting detail are needed regarding the treatment of variable energy resources, Tier 1 criteria, Tier 2 penalty levels, expected reliability benefits, and the potential cost impacts on RA resources. CAISO should also establish reasonable penalty caps and perform retrospective impact analyses before adopting the proposed penalty structure. 

• Any RAAIM reforms should remain aligned with resource accreditation and planning assumptions. Resources should not be exposed to performance penalties above their shown RA or UCAP value. 

• CAISO should provide additional clarity regarding outage definitions, outage timing requirements, and the interaction between outage classifications, substitute capacity, and RAAIM assessments.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

NextEra Energy Resources believes CAISO has not fully articulated the targeted incentives and goals of the proposed RAAIM reforms. CAISO has identified deficiencies in the current program, including rising forced outage rates, low substitution rates, a penalty level below bilateral market prices, and an assessment structure that dilutes accountability through monthly netting and a broad deadband. However, the proposal does not clearly identify the specific resource behaviors the reformed mechanism is intended to incentivize or explain how those behaviors would improve availability during tight operating conditions. Without clearly defined goals, the proposed reforms risk increasing penalty exposure on resource owners without addressing the underlying reliability concerns.

Underlying RAAIM Incentives

CAISO's own data analysis acknowledges two competing explanations for low forced outage substitution rates: either the RAAIM penalty is insufficient to incentivize substitute capacity procurement, or there simply was not enough excess capacity available in the bilateral market during those periods.[1] If substitute capacity was unavailable, increasing the penalty would not improve substitution rates; it would simply increase charges on resources that had no viable replacement capacity to procure. NextEra Energy Resources encourages CAISO to analyze bilateral market depth, the ability of excess supply to serve as substitute capacity during relevant operating hours (e.g., deliverability), and transactional frictions that may have limited procurement of available supply during the June–October 2022 and 2023 periods before concluding that price was the primary barrier to substitution. CAISO should also consider whether enhancements to the substitute capacity process, rather than penalty increases alone, are necessary to ensure replacement capacity is available when needed.

Before advancing a two-tiered penalty structure, NextEra Energy Resources encourages CAISO to analyze whether elimination of the existing 94.5%–98.5% availability deadband alone would be sufficient to meaningfully strengthen availability incentives. CAISO has identified that the deadband allows resources to be unavailable during the most critical hours of a month while still avoiding penalties by performing adequately during lower-risk assessment hours. However, CAISO has not demonstrated retrospectively whether removal of the deadband, paired with the existing penalty structure, would have materially increased the number of resources subject to RAAIM charges during stressed conditions such as September 2022. This analysis should be completed before adopting a more restructured mechanism. In addition, NextEra Energy Resources encourages CAISO to further consider the marginal resource operator actions it hopes to drive via the proposed reforms. For example, much of the success attributed to the introduction of pay-for-performance mechanisms in eastern markets relates to the increased weatherization and dual-fuel capability at gas units. It is less clear whether simply increasing performance penalties would meaningfully drive other types of behavior (e.g., increased maintenance) for other resource types in ways that would materially improve system reliability. 

Proposed Two-Tiered Penalty RAAIM Program

If the CAISO moves forward with a restructure of the entire RAAIM program, NextEra Energy Resources believes additional details are needed to fully understand the implications of the reformed RAAIM project.  

Regarding the current proposed two-tiered RAAIM proposal, NextEra Energy Resources is concerned with the proposal to eliminate the RAAIM exemptions for variable energy resources (VERs).  The Straw Proposal fails to provide supporting analysis demonstrating VER forced outages that have impacted reliability.  VERs only produce energy when wind and solar are available and are already accredited based on an accreditation framework that reflects their contributions to the grid during critical conditions. The accreditation values for VERs are already low, and it is not clear to NextEra Energy Resources what additional reliability benefit is gained by subjecting VERs to RAAIM. It is also unclear how CAISO can measure VER availability or performance given the variability of these resources.

Regarding the proposed Tier 1 proposal, NextEra Energy Resources believes that the framework requires significant supporting details.  First, NextEra Energy Resources opposes the irreversibility of the Tier 1 structure. CAISO proposes that once Tier 1 penalties are triggered, they remain in effect even if system conditions change and become less strained. If the goal of Tier 1 is to identify periods of elevated reliability risk and resources are still penalized in periods that no longer pose a reliability risk, then resources may be penalized for conditions that are more appropriately characterized as forecasting error rather than actual reliability risk (which, notably, the new Imbalance Reserve products have already been implemented to help mitigate). To remain consistent with the stated objective of assessing performance during periods of elevated reliability risk, CAISO should allow Tier 1 conditions to deactivate when system conditions improve. In addition, NextEra Energy Resources believes additional details are needed to develop an appropriate “trigger” for Tier 1, such as whether it will be tied to a single variable, such as peak load, or a combination of variables, such as weather forecasts and peak load.

Regarding the proposed Tier 2 proposal, CAISO has not justified the rationale for proposing a $2,000/MWh penalty price. CAISO proposes to trigger Tier 2 penalties if the CAISO balancing authority area (BAA) fails its Extended Day-Ahead Market (EDAM) Resource Sufficiency Evaluation. For Tier 1, using day-ahead (DA) prices rely on market outcomes from the relevant day to drive penalty values. While CAISO hasn’t provided its rationale for using DA prices for Tier 1, using a market price from the day the resource didn’t perform follows intuitive logic since DA prices should reflect tight operating conditions. However, the Tier 2 penalty value represents the current hard energy offer cap, which may not be a price that is set during a Tier 2 event. In fact, the actual DA price during the Tier 2 event may end up being much lower than $2,000/MWh. Untethering the penalty value from DA prices for Tier 2 events moves away from allowing the penalty to be dictated by DA market prices and sets it to a value that assumes gas prices are at all-time high or there is a load shed event, even when those conditions don’t exist. It also appears inconsistent with the existing Resource Sufficiency Evaluation construct used in EDAM and the WEIM, which allows BAAs that experience temporary supply constraints to receive Assistance Energy Transfers at a surcharge (in addition to the applicable LMP) set at either $1,000/MW (if the soft offer cap is effective) or $2,000/MW (if the hard offer cap is effective).[1]

To the extent CAISO’s goal is to emulate the high penalty prices in eastern markets (e.g., over $11,000/MW currently in ISO-NE), NextEra Energy Resources cautions that these markets are not necessarily comparable to CAISO. Eastern markets have centrally organized capacity markets and, where performance penalties are used, they are typically indexed to the capacity price in the relevant delivery year or Net cost-of-new-energy (CONE) of the reference resource used to develop the capacity market’s demand curve (i.e., a combustion turbine), which arguably provides a more efficient entry/exit signal to generation since these markets rely more heavily on centralized capacity market constructs than CAISO. NextEra Energy Resources also cautions that in some cases, the performance penalties that were initially assessed in PJM were ultimately substantially reduced after litigation and settlement agreements.[2]  Thus, NextEra Energy Resources believes that it is appropriate to perform an impact analysis on performance penalty assessments using past performance during operating hours that would have qualified as Tier 1 and Tier 2 events. This would allow stakeholders and CAISO to fully understand the cost impacts that different penalty levels will have on RA resources, the causes of the grid conditions associated with Tier 1 and Tier 2 events, and what actions RA resources have at their disposal to avoid an outage during the event.  

Penalty Caps

NextEra Energy Resources is also concerned with the lack of penalty caps for resources to limit penalties resources can incur over a year or during a single event. No resource is capable of providing perfect availability over a year.  Based on the unpredictable nature of tight operating conditions, the penalty mechanism should not be set up to cause a resource to operate at a loss for the year based on a single event when that resource is providing available capacity throughout the year. For example, PJM had to revise its stop-loss rules after its performance penalties wiped out many resources’ capacity revenues for the entire forward season during Winter Storm Eliott. CAISO’s proposal does not address this possibility, and the lack of such rule presents a market inefficiency as no resource should be required to provide service for free based on the outcome of a single event.

[1] Tariff §§ 29.34(n)(3); appendix A (Definitions – “EIM Assistance Energy Transfer Surcharge).

[2] PJM Interconnection, L.L.C., et al., 185 FERC ¶ 61,204 (2023). The settlement resolved 15 different complaints filed by generators and reduced market-wide non-performance penalties from $1.8 billion to $1.25 billion.

[1] CAISO. Resource Adequacy Track 2 Straw Proposal (Straw Proposal), pp. 12.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

NextEra Energy Resources appreciates CAISO’s proactiveness to reconsider the must-offer obligation (MOO) formula to accommodate the proposed Unforced Capacity (UCAP) adoption for thermal and storage resources at the California Public Utilities Commission (CPUC). CAISO’s proposed MOO formula may result in scenarios where storage resources under UCAP would have MOOs greater than their shown RA value. For RAAIM exposure, NextEra Energy Resources supports the CAISO’s proposal to assess storage resource performance based on its shown RA value, which will equal its UCAP value.[1]

CAISO can also consider whether expected resource performance during the event should be measured against the average performance of the resource fleet at the time of the event, consistent with PJM’s expected performance measurement method.[2] Under this method, resource performance will be measured against the entire fleet’s performance, rather than individual shown RA obligations. Regardless, resources should not be assessed for RAAIM penalties above their shown RA values, or UCAP values, even if CAISO ultimately adopts a different MOO formula. This is because the shown RA value represents the capacity that load-serving entities (LSEs) and CAISO reasonably relied upon for system planning purposes. 

Moreover, NextEra Energy Resources requests the CAISO to clarify that storage performance assessment will be based on its design duration. For example, if the performance event occurs for eight hours, a four-hour duration battery should only be assessed for performance for four hours within the performance event.

Specifically, if a resource’s bid-in availability during a performance event (e.g., a Tier 1 or Tier 2 event) is less than its UCAP, NextEra Energy Resources believes it would be appropriate to address the underperforming MWs below its UCAP value using a performance-based penalty mechanism. If the resource’s availability is greater than its UCAP but less than its MOO, NextEra Energy Resources believes this deficiency should be treated as a forced outage and only impact the resource’s UCAP accredited value for the following planning year.  There should be no RAAIM exposure in this scenario because the resource has already delivered the capacity that LSEs and CAISO relied upon in planning.  Even if this shortfall occurs during an actual performance event, the resource would not have incrementally worsened the performance event compared to baseline planning assumptions.

Similarly, if the resource’s availability falls below its UCAP outside of a performance event, NextEra Energy Resources believes this shortfall should be treated as a forced outage and therefore only impact its UCAP accredited value for the following planning year since the resource did not actually contribute to a performance event. NextEra Energy Resources believes that the resulting reduction in UCAP accreditation, combined with the risk of experiencing such a shortfall during a future performance event, provides sufficient incentive for resources to maintain full availability. 

[1] CAISO. Straw Proposal, p. 18.

[2] See PJM Manual 18, Revision 62, § 8.4A.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

NextEra Energy Resources has no comment at this time.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

For planned outages, NextEra Energy Resources recommends the CAISO clearly define the RC West Outage Coordination Procedures and identify the study window submittal deadline. In addition, CAISO should clarify if Urgent Outages would be subject to RAAIM if they have substitute capacity. Regarding timing for outage submittals, NextEra Energy Resources recommends the CAISO to identify the timeframe for submittal in defining Urgent and Forced outages. Without the timing definition, it may become subjective in defining which category outages fall into.  For example, the newly defined “Forced Outage” can be defined as “during real time operations” while “Urgent Outages” can be defined as “any time after the short-range study window submittal deadline before real-time operations.”

6. Please provide any additional feedback not already captured.

NextEra Energy Resources has no comment at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

NCPA continues to oppose any material overhaul of the Resource Adequacy Availability Incentive Mechanism (RAAIM) at this time.  NCPA believes that certain limited enhancements to RAAIM should be the focus of this current initiative, and that such limited enhancements to RAAIM will ensure RAAIM remains effective at supporting system reliability while also maintaining affordable service to customers. Overall, CAISO has not shown that the combination of proposed reforms are necessary based on current market conditions.  The problem statements listed on page 6 of CAISO’s May 11, 2026 straw proposal are outdated and should be refined based on current market conditions.  For example, bilateral Resource Adequacy capacity prices have fallen dramatically during the past few years (and are now well aligned with the current RAAIM price), and a significant amount of new capacity has been added to the CAISO system since 2022 (resulting in a material decline in resource scarcity).  CAISO’s analysis does not clearly show that the existing RAAIM is failing to meet its objectives or is misaligned with Resource Adequacy program goals. The proposal instead appears to be driven by outdated market conditions and reference to a single limited historical event, rather than accounting for the actual market conditions that exist today, and the proposal fails to adequately consider the costs it would impose on ratepayers.

NCPA believes that this current initiative should be limited to the following enhancements, if any:

• Calculate and assess RAAIM penalties on a daily basis, rather than on a monthly basis; apply $/kW-day rate for daily performance failures
• Variable Energy Resources – must offer obligations and associated RAAIM penalties for non-performance should be measured against a resource specific VERS forecast

Applying RAAIM to entities already subject to UCAP or other performance regimes would result in duplicative (and therefore economically inefficient) penalties without demonstrated reliability benefit. 

Other particular elements of the Straw Proposal are also problematic. For instance, the proposal does not recognize the conditions and circumstances that justify current RAAIM exemptions. Nor does it clearly explain the proposed changes under consideration. Importantly, for MSS/Load-Following Resources, the Straw Proposal states that the “Potential Enhanced RAAIM Assessment” would be “Eligible outage card,” but there is no discussion of those details or how that differs from the current treatment of MSS/Load-Following Resources. As discussed more in response to the questions below, RAAIM assessment is not appropriate for MSS/Load-Following Resources given the specific and unique requirements already in place for them.

In addition, the Straw Proposal would disrupt existing RA contracts by decoupling the must-offer obligation (MOO) from shown RA capacity and would dilute the RA construct by imposing obligations above contracted commitments.

Finally, NCPA partially supports the Straw Proposal’s discussion of proposed outage definitions. NCPA agrees there is a need for generators to report what are essentially forced outages before the 7-day forced outage timeline, but NCPA does not support the elimination of Short Notice Opportunity RA Outages. NCPA would prefer to leave the outage definitions unchanged rather than eliminate Short Notice Opportunity RA Outages.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

NCPA is concerned that the problem statements underlying the proposal are outdated and do not reflect current conditions and more recent market developments. The RA market has materially changed since 2022, including with significant additions of storage and renewable capacity, extended markets, enhanced resource sufficiency evaluations, updated forecasting, and coordination. The proposed shift from a capacity-based monthly framework to an hourly energy-based assessment represents a fundamental redesign that introduces significant implementation risk and uncertainty. CAISO has not justified this level of change.

Given that ratepayers will ultimately bear the costs of changes to CAISO’s RAAIM construct, it is essential that CAISO first show that any changes will address real problems that currently exist. CAISO, however, has also not shown that RAAIM is failing to meet its intended objectives, and recent market outcomes suggest that availability incentives remain effective under the current structure. CAISO relies heavily on extreme historical events without demonstrating that such conditions are representative or recurring.

In addition, NCPA does not support any modifications or “enhancements” to the existing RAAIM exemption for Load-Following MSS. This is a very important issue, yet the Straw Proposal provides only a high-level overview of this issue in Figure 8 of the Straw Proposal. The Straw Proposal does not explain the proposal for an “Eligible outage card” for “MSS/Load-Following Resources” or the extent to which that differs, if at all, from current treatment.

The current exemptions described in Section 40.9.2 of the CAISO Tariff were implemented for good cause, and have been found to be just and reasonable. For example, Sections 40.9.2 (b)(2) and 40.9.2(c)(2) provide exemptions for a Load-Following MSS that reflects the separate and robust requirements imposed on Load-Following-MSS. A Load-Following MSS operator is required by contract to balance its load and supply in real-time, every 5 minutes, to ensure it has sufficient energy committed to serve its load. To the extent a Load-Following MSS operator fails to balance its load and supply in real-time within a defined band, the Load-Following MSS operator is assessed material deviation penalties. These deviation penalties strongly incentivize a Load-Following MSS operator to comply with these existing contractual requirements.  Because a robust incentive mechanism is separately in place, assessing RAAIM penalties to a Load-Following MSS operator would result in “double penalties” and is neither necessary to incent performance nor appropriate. Sections 40.9.2 (b)(2) and 40.9.2(c)(2) of the CAISO Tariff were designed to account for and respect these unique operating requirements, and such treatment is still valid and applicable today.

To the extent that CAISO is considering eliminating exemptions to improve the economic efficiency of the RAAIM mechanism, removing, or modifying the Load-Following MSS exemption would run counter to that goal. Failing to consider the unique requirements applicable to Load-Following MSS would result in over-penalization of such resources relative to other resources—creating undue discrimination and distorting market outcomes.

Given the lack of detail necessary for stakeholders to evaluate and meaningfully respond to the exemption changes proposed in Figure 8, NCPA submits that it would be inappropriate for the CAISO to move this aspect of the proposal beyond the Straw Proposal Stage (to the extent CAISO continues to consider RAAIM reforms at this time, which it should not for the reasons addressed above). If CAISO continues to consider changes to the RAAIM treatment of Load-Following MSS notwithstanding the comments above, the appropriate course would be to develop a Revised Straw Proposal with additional explanation and solicit further comments before considering whether to further pursue this concept.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

NCPA does not support setting MOO above RA obligations. Under the current RAAIM structure, performance is measured at the resource level and is based on the actual amount of capacity that is committed to CAISO as shown Resource Adequacy capacity.  Performance is not measured based on a resource’s NQC, which simply accounts for the amount of Resource Adequacy capacity that a resource could show as Resource Adequacy capacity.  Only the amount of capacity actually shown as Resource Adequacy capacity is subject to performance requirements under RAAIM.  This is a key distinction because notwithstanding an LRA’s accreditation rules, only the actual amount of capacity shown as Resource Adequacy capacity (not the NQC) is what is expected to be made available to the CAISO for dispatch.  The current RAAIM mechanism does exactly that—it measures the performance of the actual amount of shown Resource Adequacy capacity committed to the market irrespective of LRA-specific accreditation rules. 

Untethering MOO from RA obligations raises several concerns. First, it would disrupt the common and consistent treatment of capacity shown as RA currently provided to LRAs that may adopt different resource accreditation rules. Just as an LRA’s specific accreditation rules do not affect the counting of shown Resource Adequacy capacity, NCPA believes that no adjustment to the RAAIM structure is required to account for differences in LRA accreditation rules.

Second, it is not appropriate for the CAISO to assess any MOO on a resource for a greater amount of capacity than is shown on a Resource Adequacy plan because doing so is, in effect, a “taking” without due compensation. Extending MOO beyond shown RA will also require market participants to adapt their RA contracts and contracting processes to factor in the additional MOO capacity, which could take additional capacity off the market that would otherwise be available, raising costs for ratepayers. NCPA strongly believes that only the actual amount of capacity that is shown to the CAISO as Resource Adequacy capacity should be subject to a MOO.   

Finally, there are many reasons why a resource may elect not to commit capacity as Resource Adequacy, and unjustifiably taking such uncommitted capacity without due consideration or compensation is not commercially reasonable. As discussed on the stakeholder call, a resource may have elected not to commit all of its available capacity as Resource Adequacy capacity because the resource owner knows that it may not be able to provide such capacity due to operational or economic considerations.  In either case, the CAISO should not have the right to claim title to or use uncommitted or unencumbered capacity that has not be explicitly shown to the CAISO on a Resource Adequacy supply plan.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

No comment at this time.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

NCPA partially supports the proposed new outage type, “Urgent Planned Outage.” NCPA agrees there is a need for generators to report what are essentially forced outages before the 7-day forced outage timeline. However, NCPA proposes that these outages also receive “opportunity” treatment similar to the current treatment accorded to off-peak opportunity RA outages. That is, Urgent Planned Outages should not be subject to a substitution obligation if CAISO operators believe there is an adequate supply cushion. The process would be that (1) an SC submits a request for an urgent outage, (2) CAISO assesses system conditions for the duration of the proposed outage, and (3), if there is sufficient supply cushion, CAISO will approve the outage without substitution requirements. If conditions are tight, then CAISO will approve the outage, but include a substitution obligation. If the obligation is not met, then the outage will simply be subject to RAAIM rather than automatic denial. This approach would best encourage resources to take urgent outages in a manner that is coordinated and consistent with system reliability.

NCPA does not support the elimination of short notice opportunity RA outages. Those outage types are an essential tool in providing generators flexibility to perform routine maintenance in summer months when planning outages is typically difficult, if not forbidden, in contracts. If CAISO is concerned that generators are abusing short notice opportunity RA outages, then CAISO should clearly state what constitutes an abuse of an outage type and investigate accordingly so that it can propose a solution narrowly tailored to those abuses—not one that discourages or prevents maintenance consistent with good utility practice. 

6. Please provide any additional feedback not already captured.

No comment at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Ormat appreciates the opportunity to engage CAISO in its RAAIM reform efforts. Ormat operates a fleet of geothermal assets that are subject to the current RAAIM availability and incentive rules. In these comments, Ormat offers several clarifying questions intended to help CAISO further its design. 

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Evaluation Period and Penalty Prices

Ormat was persuaded by stakeholder comments during the workshop that the selection of assessment days in the forward window should not be “sticky.” That is, if conditions improve after the initial designation, then the day should not be assessed. CAISO noted that it may be disruptive to have a trade day designated as an assessment day, then not designated. Stakeholders argued that one might perceive the situation where days are not designated, then become designated at the last minute as equally disruptive. Ultimately, if the particular trade day is not a stressed day, the assessment should not take place. 

• Would the contemplated Tier 1 condition be a full-day or a subset of strained hours? 

• In the contemplated Tier 1, will CAISO be using the nodal LMP at the resource location? 

• Would resources in transmission-constrained areas with frequent negative LMPs be in the position of receiving positive payments due to negative pricing if they fail to comply with their must-offer obligation (RAAIM would charge the participant a negative price)? 

RAAIM Penalty/Incentive Allocation

Overall, CAISO must clarify whether the RAAIM assessment will measure available bidding performance relative to the Must-Offer Obligation or some other value. 

• Are the penalties assessed relative to the “Shown RA” value or relative to the resource Must-Offer Obligation value? For example, if Plant 3 on slide 25 bids 40 MW, would it avoid RAAIM penalties or must it bid 50 MW to avoid RAAIM penalties? 

• Would resources that bid above their Shown RA value or must-offer obligation receive additional compensation under this proposal, or would the RAAIM payout depend only on the Shown RA value or the must-offer obligation? 

• Under Tier 2, given that all resources contribute to RSE compliance, would non-RA resources or uncommitted portions of partially shown resources also receive payments? 

Exempt Outage Definitions

The RA proceeding at CPUC has involved significant discussions about what types of outages should or should not be penalized with EFORD inclusion. Ormat encourages CAISO to consider which outage types would be exempt from RAAIM penalties, as well. 

• CAISO should outline clear principles and rationales it will follow in determining which outage types should be exempt and describe how each designation as exempt or non-exempt complies with those principles and rationales. 

• CAISO should clarify that a resource unable to perform due to events outside of management control, such as a transmission outage, should not incur a penalty. 

• CAISO should clarify that resources operating within their known design specifications, such as de-rates due to ambient conditions, should not incur a penalty. 

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

Must-Offer Obligation

Ormat is also concerned about the implications of the must-offer obligation calculation provided by CAISO. Fundamentally, the must-offer obligation is intended to ensure that resource adequacy providers are offering their available contracted generation into the market. We understand that there is a distinction between the bids verified by SIBR and the outage-adjusted bids ultimately used by the market, and we believe that a resource’s must-offer obligation should be considered satisfied when the resource has submitted appropriately validated bids through SIBR. 

Our primary concern is that the proposed calculation not create must-offer obligations that exceed a resource’s actual available capability during periods of derate or outage. Resources may transact RA either as a percentage of installed capability or as a UCAP-based quantity reflecting expected qualifying performance. In either case, the resource’s obligation should be to offer all available capacity into the market, and RAAIM treatment should be based on the contracted RA quantity rather than an extrapolated bidding obligation derived from Pmax ratios. 

• CAISO should clarify that resources offering their maximum generating capability into the market will be considered compliant with their MOO requirements. 

• CAISO should defer determining treatment of partially-shown resources and PCDS resources until CPUC completes its ongoing CPUC proceeding. 

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Outage Substitution

The lack of a substantial solution to the outage substitution problem will cause more acute and impactful damages with the new RAAIM design, and therefore CAISO must focus on truly resolving this problem. One of CAISO’s stated goals in RAAIM reform is to encourage resources to procure substitution RA for outages. The reform proposal focuses on increasing the cost of failing to procure substitution but does not respond to market participants’ requests for a workable market in which such substitution can be procured. The current format is clearly unsuccessful, based on the very low forced outage substitution rates CAISO cites. Offering another (very similar) space for “peer-to-peer trading” while disregarding the requests of stakeholders for an organized market seems shortsighted, and we encourage CAISO to reconsider its position on adopting its August 2025 straw proposal.  

5. Please submit your organization’s comments on the Outage Definitions Proposal.

No comments at this time.

6. Please provide any additional feedback not already captured.

No comments at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

CAISO’s Track 2 reforms present potential solutions to the working group problem statements and require further analysis and a more detailed understanding to ensure the commercial, operational, and planning aspects of the potential solutions create the appropriate incentives and behaviors.

• RAAIM reform: PG&E supports a short-term availability incentive that considers the impact of scarcity on availability.
• Assessment period and frequency changes will require additional consideration of the impacts of moving to specified conditions or events rather than today’s specific-hours structure.
• Must Offer Obligation efforts require further understanding of the UCAP-based LRA program changes being considered, as well as the contractual and operational implications resulting from those changes.
• Outage substitution efforts must support a more efficient and effective process than today’s bilateral efforts. Proposed solutions must demonstrate that efficiency and effectiveness through analysis and a transparent explanation of the change.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

PG&E continues to support CAISO’s efforts to reform RAAIM so that operational incentives are better aligned with system reliability needs. PG&E agrees that enhancements to RAAIM are needed to complement long-term planning reforms such as UCAP by providing short-term incentives for resource availability, especially during critical system conditions.

Commercial, operational, and planning impacts must be identified and appropriately analyzed before potential solutions are selected.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

CAISO’s effort to improve alignment among MOO, RAAIM, and resource capability and accreditation is encouraging; however, the proposed framework does not appear to fully resolve the inconsistencies introduced by UCAP-based accreditation. To ensure alignment, CAISO should demonstrate how the proposal will translate across LRA RA programs, especially between ICAP-based and UCAP-based accounting frameworks. This will support equitable application of the rules across LRAs and a clear understanding of CAISO system reliability in the aggregate.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Improvements to the outage substitution framework, and CAISO’s effort to enhance efficiency through a voluntary substitution pool, are positive steps forward. Implementing a voluntary, market-based approach to outage substitution must demonstrate sufficient efficiency and effectiveness compared with the current bilateral market before it is considered a viable solution, including for the contracting and procurement of these potential solutions.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

PG&E supports CAISO’s efforts to improve clarity around outage definitions and appreciates the introduction of an urgent outage category.

Additional clarifications on the distinction between outage types would be beneficial.

Urgent vs. forced outages: It is unclear how CAISO will distinguish between:

• An urgent outage, where a resource remains operational but is at elevated risk of failure, and
• A forced outage, for a resource that has not yet failed but must be taken offline imminently
• Timeline for a forced outage — PG&E understands that CAISO will revise the current forced outage definition, under which all maintenance outages submitted at T-7 are considered forced.

PG&E recommends further clarification on:

• The criteria used to classify outages and the associated timeline.
• The operational and settlement implications associated with each category (exposure to RAAIM and UCAP).

6. Please provide any additional feedback not already captured.

 No comments.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Pattern Energy (Pattern) appreciates the opportunity to provide comments on the ISO’s Resource Adequacy Modeling and Program Design (RAMPD) Track 2 Initiative.  

Pattern generally supports the ISO’s efforts to strengthen operational availability incentives and improve alignment between planning assumptions and real-time system performance. However, Pattern is concerned that the removal of the current Resource Adequacy Availability Incentive Mechanism (RAAIM) exemption for variable energy resources (VERs) is a major departure from historical precedence that risks undermining wind and solar development in the west. Overall, the ISO should not apply RAAIM to VERs, but if it does, any outages other than those directly attributable to the generation resource should be separated for RAAIM determinations.

The reliability contributions attributed to VERs are complex and these resources are already subject to significant de-rates under Effective Load Carrying Capacity (ELCC) and Slice of Day constructs. Historically, these resources have fulfilled their availability obligations by providing accurate forecasts rather than fixed-MW bids. Since the capacity value of these resources is already significantly de-rated, applying additional financial non-availability penalties would effectively penalize them twice. Making matters worse, VERs are typically only compensated for the de-rated capacity that can be counted on an LSE’s supply plan, not the nameplate capacity. Since RAAIM would presumably apply to the un-derated form of the capacity forecast into the market, VERs would be penalized at a far more significant level compared to their capacity revenues when compared to other resource types. 

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

While Pattern does not support the application of RAAIM to VERs, we nevertheless believe that the proposed shift toward a more targeted, event-based availability incentive structure that focuses on stressed system conditions represents a meaningful improvement over the current monthly-averaged RAAIM framework, which the ISO correctly identifies as diluting accountability during critical intervals.

Pattern generally supports the ISO’s objective to sharpen incentives for availability during reliability-risk conditions, including the move toward Tier 1 and Tier 2 triggers tied to system conditions. However, the proposal appears to assume a resource paradigm where availability and outages are primarily driven by generator-controlled factors within the CAISO balancing authority area. This assumption does not fully reflect the full operational realities of resources whose ability to meet RA obligations is interdependent on third-party interactions. As a result, the proposal risks misallocating financial responsibility for non-availability in cases where generators are not the root cause of the limitation.

Pattern recommends that the ISO not apply RAAIM penalties for intervals where non-availability is caused by components not attributable to the generator or scheduling coordinator. Under the current proposal, RAAIM exposure would be based on a comparison of shown RA to bids and outage status, which does not adequately distinguish between generator-driven unavailability and other causes of unavailability. In such cases, assigning RAAIM penalties to the generator is inconsistent with cost causation principles.

Finally, we encourage CAISO to consider the unique needs of generators operating in remote locations.  Mobilizing work crews takes careful coordination and there are instances when work must be completed within prescribed availability windows.  The CAISO should ensure there is sufficient flexibility in the outage reporting and RAAIM policies to avoid penalizing generators who must make adjustments to previously reported outages.  Put differently, if CAISO insists on applying RAAIM to wind and solar resources, at a minimum it should design its RAAIM policy to not penalize maintenance.  

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

Pattern supports the ISO’s goal of ensuring that RA resources offer their available capacity into the market to effectuate contractually shown RA obligations. However, resources should not be deemed non-compliant with Must-Offer Obligations (MOO) where limitations outside of a generators control increase MOO using a formula like the one shown in the straw proposal.

Pattern recommends clarifying whether any changes to Net Qualifying Capacity (NQC) determination are contemplated. This clarification will better align the MOO with real-world operational constraints and avoid unintended RAAIM exposure.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Pattern supports enhancements that improve efficiency in outage substitution and reduce artificial tightness in the bilateral RA market. Pattern supports the ISO proposal to move forward with the decentralized substitute capacity pool and revisit an optimized ISO-administered substitute capacity pool at a later date. This could also allow for further discussion of how best to share capacity using increased EDAM functionality and the under-development regional resource adequacy programs.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Pattern requests additional clarification on the meaning of “prioritized similar” to forced outages means for urgent outages. The ISO should also clarify how it will evaluate outage codes that may be unique to non-CAISO resources. Pattern opposes any construct where the timing of a non-planned outage can change depending on ISO instructions because it limits resource operators ability to safely and prudently manage a necessary outage, other than just by equipment failure.

6. Please provide any additional feedback not already captured.

Pattern strongly supports the ISO’s broader effort to improve alignment between RA planning and operational availability. Enhanced transparency and forward signals (e.g., Tier 1 ahead-of-time triggers) paired with strengthened incentives during critical grid conditions can improve overall system performance. However, successful implementation requires clear differentiation between generator and 3^rd party causality as well as appropriate allocation of RAAIM penalties consistent with controllability and cost causation. As CAISO continues to evolve its RA framework these distinctions will be critical to maintaining fair and effective market incentives.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

City of Santa Clara dba Silicon Valley Power (SVP) generally does not support the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal. CAISO has not demonstrated that the proposed reforms are necessary or justified under current market conditions.

CAISO’s analysis does not show that the existing Resource Adequacy Availability Incentive Mechanism (RAAIM) is failing to meet its objectives or is misaligned with Resource Adequacy program goals. The proposal appears to be driven by outdated market conditions and limited historical events rather than current system realities.

The proposal also does not adequately recognize the conditions and circumstances that justify current RAAIM exemptions.

SVP is concerned that the proposal would disrupt existing RA contracts by decoupling the must-offer obligation (MOO) from shown RA capacity and by imposing obligations above contracted commitments. This would create uncertainty for load-serving entities and resource owners.

SVP is also concerned that applying RAAIM to entities or resources already subject to UCAP or other performance regimes would result in duplicative penalties without a demonstrated reliability benefit.

SVP would prefer to leave the existing outage definitions unchanged rather than eliminate Short Notice Opportunity RA Outages.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

SVP is concerned that the problem statements underlying the proposal are outdated and do not reflect current conditions. The RA market has materially changed since 2022, including significant additions of storage and renewable capacity, extended markets, enhanced resource sufficiency evaluations, updated forecasting, and improved coordination.

CAISO relies heavily on extreme historical events without demonstrating that those conditions are representative, recurring, or likely to persist under current market and system conditions. Ratepayers should not be required to fund a program designed to cover all extreme conditions without a clear showing that such reforms are necessary and cost-effective.

CAISO has also not shown that RAAIM is failing to meet its intended objectives. Recent market outcomes suggest that availability incentives remain effective under the current structure.

The proposed shift from a capacity-based monthly framework to an hourly energy-based assessment represents a fundamental redesign that would introduce significant implementation risk and uncertainty. CAISO has not justified this level of change.

SVP does not support any modifications or “enhancements” to existing RAAIM exemptions. The exemptions have strong justifications due to existing requirements to perform that are more punitive than RAAIM. The current exemptions described in Section 40.9.2 of the CAISO Tariff were implemented for good cause and have been found to be just and reasonable.

For example, Sections 40.9.2(b)(2) and 40.9.2(c)(2) apply to a Load-Following MSS. A Load-Following MSS operator is required by contract to balance its load and supply in real time, every five minutes, to ensure it has sufficient energy committed to serve its load. To the extent a Load-Following MSS operator fails to balance its load and supply in real time within a defined band, the Load-Following MSS operator is assessed material deviation penalties. Those deviation penalties are designed to incentivize a Load-Following MSS operator to comply with its existing contractual requirements.

As such, because a Load-Following MSS operator is contractually required to serve its load in real time and incurs material penalties if it fails to do so, assessing RAAIM penalties to a Load-Following MSS operator would result in duplicative penalties. Eliminating this exemption is therefore not needed to incentivize performance. Sections 40.9.2(b)(2) and 40.9.2(c)(2) of the CAISO Tariff were designed to account for and respect these unique operating requirements, and such treatment remains valid and applicable today.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

SVP does not support setting MOO above shown RA obligations. Under the current RAAIM structure, performance is measured at the resource level and is based on the actual amount of capacity committed to CAISO as shown Resource Adequacy capacity. Performance is not measured based on a resource’s NQC.

NQC reflects the amount of Resource Adequacy capacity that a resource may be eligible to show, but only the amount actually shown as Resource Adequacy capacity should be subject to performance requirements under RAAIM. This is an important distinction. Regardless of an LRA’s accreditation rules, only the actual amount of capacity shown as RA capacity is committed to CAISO and expected to be made available for dispatch.

The current RAAIM mechanism already measures the performance of the amount of shown RA capacity committed to the market, irrespective of LRA-specific accreditation rules. Therefore, even though LRAs may adopt different rules for resource accreditation, RAAIM provides a common and consistent treatment for capacity that is actually shown as Resource Adequacy. Because LRA-specific accreditation rules do not affect the amount of capacity shown to CAISO, SVP does not believe any adjustment to the RAAIM structure is required to account for differences in LRA accreditation rules.

SVP strongly believes that only the actual amount of capacity shown to CAISO as Resource Adequacy capacity should be subject to a must-offer obligation. It is not appropriate for CAISO to assess a must-offer obligation on a resource for a greater amount of capacity than is shown on a Resource Adequacy plan.

Imposing a must-offer obligation on capacity that has not been shown as RA capacity would effectively require the use of uncommitted capacity without appropriate compensation. There are many reasons why a resource may elect not to commit all available capacity as RA capacity, including operational, economic, contractual, or other commercial considerations. CAISO should not claim rights to capacity that has not been explicitly shown to CAISO on a Resource Adequacy supply plan.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

SVP has no comment at this time.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

SVP partially supports the proposed new outage type, “Urgent Planned Outage.” SVP agrees there is a need for generators to report outages that are effectively forced outages before the seven-day forced outage timeline.

However, SVP recommends that Urgent Planned Outages receive “opportunity” treatment similar to the current treatment for off-peak opportunity RA outages. They should not be subject to a substitution obligation if CAISO operators determine that there is an adequate supply cushion.

Under this approach, a scheduling coordinator would submit a request for an urgent outage, CAISO would assess system conditions for the duration of the proposed outage, and, if there is sufficient supply cushion, CAISO would approve the outage without substitution requirements. If conditions are tight, CAISO could approve the outage with a substitution obligation. If the substitution obligation is not met, the outage should be subject to RAAIM rather than automatic denial.

SVP does not support eliminating Short Notice Opportunity RA Outages. These outage types provide important flexibility for generators to perform routine maintenance, particularly during summer months when planned outages are typically difficult and may be restricted by contract. If CAISO believes generators are misusing this outage type, CAISO should clearly define what constitutes misuse and investigate specific instances accordingly. CAISO should not eliminate an important operational tool without a demonstrated need and a clear showing that less disruptive remedies would be insufficient.

6. Please provide any additional feedback not already captured.

SVP has no additional feedback at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Six Cities’ Comments:  The Six Cities support the general direction of the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal (the “Straw Proposal”) in terms of focusing incentives on system operational conditions and resource availability during critical hours.  A guiding principle should be adoption of non-performance penalties, bidding requirements, and outage policies that are aligned with obligations assumed by resources and calibrated to encourage performance of assumed obligations, especially during stressed system conditions, without driving unreasonable increases in prices for Resource Adequacy capacity or market bids.  Several elements of the Straw Proposal require further evaluation and/or revision to improve consistency with that principle.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

Six Cities’ Comments:  As noted above, the Six Cities generally support aligning performance incentives with operational conditions and availability during critical hours.  The Six Cities agree with the CAISO’s observation at page 13 of the Straw Proposal that the current RAAIM construct does not focus application of incentives on the times that matter most for reliability of the grid.  Among the proposed reforms described in the overview chart on pages 15-16 of the Straw Proposal, the Six Cities support further exploration and refinement of the concepts of two-tiered assessment triggers and penalty prices and generally support penalty assessment on an event-specific basis.  Because the appropriate framework for exemptions depends upon the details of the penalty structure and rules for assessing penalties, the Six Cities take no position on exemptions at this time.  Further consideration of exemptions should follow refinement of the triggers and levels for non-availability charges.

While supporting the emphasis on availability during periods when stressed system conditions are expected or arise, the Six Cities recommend further exploration and discussion regarding the following elements of the Straw Proposal:

• The CAISO states that there will be three variables for the Tier 1 study - the forced outage MW threshold, load versus shown RA, and an error buffer. (Straw Proposal at page 19).  Stakeholders need additional information about how these variables will determine whether Tier 1 is triggered.  In other words, what are the specific thresholds that would trigger a Tier 1 declaration? 
• The CAISO also states that once Tier 1 status is declared for a future date, it stays in effect even if system conditions significantly improve.  The Six Cities are concerned that this could lead to instances where a resource that recovers early from an outage or is able to provide partial replacement capacity still faces penalties if it cannot fully cover its shown RA by the trade date.  It could also serve as a scarcity signal to RA markets, potentially increasing prices in response to the Tier 1 notification.  Furthermore, there currently is no robust RA substitution market that can be counted on to provide the needed capacity.  The framework for availability incentives should take into consideration the fact that the industry continues to experience strong supply chain constraints that may extend the period of unavailability for resources without fault on the part of the resource owner.
• Tier 2 triggers when the EDAM RSE fails.  However, the RSE encompasses many variables that are outside the control of internal generation.  For example, imports can play a substantial role in the possibility of failing the EDAM RSE.  The penalty structure applicable during a Tier 2 event should not result in penalties for RA resources disproportionate to their contribution to RSE failure.

Further evaluation and discussion also are necessary regarding the proposed allocation of non-availability charge funds.  A non-performance penalty structure, properly framed, essentially provides additional incentives for resources to perform in accordance with commitments they have made voluntarily and for which they are being paid.  Because load is paying resources to be available and suffers the consequences when resources fail to meet their obligations, it would be reasonable to allocate to load all funds payable by resources that fail to perform.  The Six Cities request further explanation of the basis for the proposal to allocate a substantial portion of non-availability charge funds to resources that already have been paid to meet their commitments.  In principle, allocation of non-availability charge payments to other resources should be premised on performance above and beyond the levels for which the resources already have been compensated.

The Six Cities recommend including two additional elements in the RA design.  First, the penalty structure should include a stop-loss mechanism calibrated to ensure that penalties are not excessive or out of proportion to a performance deficiency.  In addition, specifying metrics and a timeline for evaluating the effectiveness of the revised program design would help to focus and refine consideration of design elements.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

Six Cities’ Comments:  The relationships among RA capacity values, RA showings, and Must Offer Obligations (“MOO”) require further analysis and discussion.  Conceptually, maximum RA capacity values should reflect each resource’s capability of reliably supplying the stated capacity value, and RA showings should not exceed the eligible capacity under contract to the entity submitting the showing.  At this time, it is not clear to the Six Cities why the MOO for a resource should exceed the shown RA capacity for that resource, subject to a different agreement between the parties to the RA contract.  If the payment for taking on RA obligations is premised on a stated capacity value, it does not seem appropriate to apply the MOO or other availability requirement to capacity beyond the level for which the resource is being paid and the purchasing entity is receiving credit against requirements.  In any case, the MOO for a resource should not exceed its Pmax or its maximum interconnection capacity.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

Six Cities’ Comments:  As indicated in previous sets of comments, the Six Cities support creation of an outage substitution procurement pool.  However, such a pool would have substantially greater value if substitute capacity could be purchased on a daily basis and if the CAISO allowed resources to be shown for differing RA values on a daily basis within a given month. 

Substitution options should be consistent with exposure to non-availability penalties and, in particular, should enhance the ability of resources to respond to CAISO announcements of anticipated stressed conditions under the proposed Tier 1 approach.  The Straw Proposal states at page 20 that the “Tier 1 assessment approach could provide an incentive to procure replacement for resources on outage that is stronger than RAAIM today, especially for short duration capacity scarcity periods.”  That incentive will be stronger and the objective more achievable if substitution options are more flexible and more granular.  The Six Cities have repeatedly requested that the CAISO allow load serving entities to reflect on their RA showings varying levels of resource availability throughout the month.  Permitting daily granularity for RA commitments by resources and allowing daily capacity transactions through the substitution pool would facilitate resource substitution and reduce incentives to hold back contracted RA capacity not needed to satisfy RA requirements in a given month.  The Straw Proposal at page 30 observes that the substitution process should not encourage scheduling coordinators to hold back capacity to substitute for their own needs nor create risks or uncompensated burdens for LSEs showing resources beyond those needed to meet their own requirements, but the proposed substitution framework could do more to address those objectives.  Allowing daily variations in showings for resources as well as daily substitution opportunities would enhance the ability of both LSEs and resources to satisfy RA requirements and expand availability of RA eligible capacity.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

Six Cities’ Comments:  The Six Cities do not see value in the recommended revisions to outage definitions in the Straw Proposal.  Although the Straw Proposal purports to align outage definitions with operational conditions, in fact the proposed revisions largely retain reporting timelines as the basis for classifying outages.  Moreover, specific elements of the proposed outage definitions framework are counter-productive, undermining the overall effort to incentivize availability during critical hours and appearing to discourage, rather than facilitate, timely performance of necessary and prudent maintenance activities.

For example, the proposed approach appears to increase the notice requirement for planned outages as well as suggesting that the purpose for a planned outage must be “to carry out routine planned maintenance or undertake new construction work.”  Straw Proposal at 33.  Can the CAISO identify a clear and broadly accepted definition of “routine planned maintenance?”  More fundamentally, why would the CAISO seek to discourage resource operators from performing non-routine but necessary maintenance on a pre-planned, coordinated basis?

The proposed definition and treatment of “urgent outages” also appear to be counter-productive.  The proposal to treat urgent outages the same as forced outages for purposes of non-availability penalties and UCAP-based QC value provide no incentive for resources to proactively address conditions that ultimately may lead to equipment failure before such failure actually occurs and at a time when there is less impact on system reliability.

The Six Cities strongly oppose the proposal to eliminate Short Notice Opportunity Outages.  Doing away with Short Notice Opportunity Outages will result in removal of a critical operational tool that certain resources rely on to address near-term maintenance needs.  For example, the short notice outage card may be used to perform important weekend maintenance activities that are necessary to maintain turbine efficiency, emissions compliance, and safe operations.  These outages cannot always be forecasted far—or even eight days—in advance, because they depend on ambient conditions and real time operational loading.  Nonetheless, the maintenance activities may be required under prudent utility practice and to ensure optimal equipment operation.  It is in the interests of all parties for the CAISO to enable this type of maintenance to be performed at times when doing so will pose little to no risk to grid reliability.  If CAISO removes the Short Notice Opportunity Outage option, then resources may be forced to either (1) delay necessary maintenance or (2) take outages without an approved coordination mechanism.  Either outcome increases reliability risk.

6. Please provide any additional feedback not already captured.

Six Cities’ Comments:  As noted in the discussion at pages 24-25 of the Straw Proposal, it would make sense from a reliability perspective to apply incentives not only for availability (in terms of bid submission) but also for performance (in terms of compliance with awarded schedules) both in the Day-Ahead Market and in Real-Time.  The initiative should explore potential application of incentives for compliance with awarded schedules not only to RA resources but to non-RA resources as well.  Failures to comply with awarded schedules that are attributable to transmission outages or natural disasters should not be penalized.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

SCE supports the goals of the Track 2 Straw Proposal but identifies numerous questions and clarifications that must be addressed before a complete analysis of the proposal can begin.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

SCE supports the attempt to revise RAAIM, but there is much work to be done on the proposal before it can be properly assessed. What the CAISO has presented is not a fully developed straw proposal but a concept of a revised RAAIM proposal. The workshop did address some questions but not in sufficient detail to allow the thorough examination required.

Among the questions that still need to be answered are as follows:

• Are the Tier 1 and 2 designations for entire days or for specific hours? In the workshop, CAISO made clear that this was specifically not addressed in the Straw Proposal, but that the designations likely did not refer to the entire day. Especially for Tier 2 with its $2,000 penalty, the designation should clearly not be for the entire day but only the hours when the CAISO has failed the RSE. However, for the Tier 1 designation, the CAISO needs to specify which hours will be in the Tier 1 designation. Will it only include the hours where the deficiency is expected, or will it include all on-peak or current AAH hours? This may depend on the forecasts and data used to determine Tier 1, which have also not yet been specified.
• The Straw Proposal is unclear on what happens when a period that was a Tier 1 also becomes a Tier 2 period. Does the Tier 2 penalty replace any potential Tier 1 penalty, or are the penalties additive? Does the CAISO first have to declare a “Tier 1” day, before any Tier 2 penalties can be applied?  In the workshop, CAISO indicated that the penalties would not be overlapping but that needs to be clearly spelled out in the Straw Proposal.
• Do the Tier 2 penalties apply to the day-ahead market? The reason for asking is that the Tier 2 designation will not be available before the market closes for the next day. If a resource is already subject to the penalty for not bidding into the day-ahead market before the Tier 2 penalty is designated, what incentive do they have to come back online and actually become available in the real-time markets since they are already subject to the $2,000 penalty?
• CAISO stated that FERC has accepted both the types of penalties contained in the Revised RAAIM and the UCAP concepts under consideration for CA LSEs. However, the determination that the penalties do not conflict likely depends on the two different programs creating different incentives for resources to be available, which depends on how the two availability concepts are constructed. This cannot be determined until the CAISO specifies in more detail how the Tier 1 and Tier 2 designations are made, as discussed in the previous bullets. In order for the two programs to not lead to double penalization, they would need to address different issues or timing. That is possible given the more “average” type of availability considered in UCAP and the more specific and targeted availability penalties under the Revised RAAIM, but until both programs are clearly spelled out such a comparison is not possible.
• The straw proposal indicates that the intent is to expand RAAIM to be applicable to more resources and to limit exemptions. SCE supports this, but the details have not been clearly specified. One omission that SCE has noted is for use-limited resources. Figure 8 in the Straw Proposal doesn’t have a listing for use-limited resources, and even for those resources that are included, the “Potential Enhanced RAAIM Assessment” contains only a very general description, which the CAISO notes, is at a “high level.” The CAISO needs to provide a much more detailed table showing the Enhanced RAAIM Assessments will be done for the various different types of resources.
• The Straw Proposal and the workshop discussed the possibility of not just availability penalties, but extending this to potential performance penalties. SCE doesn’t feel that is necessary exclusively for RA resources. All resources that receive awards in the day-ahead market, or in real-time markets, but are then unable to perform should be subject to the same consequences. These consequences already exist in the market. If the CAISO is proposing modifications to the non-performance penalties, that should occur in a separate stakeholder process as it doesn’t just involve resource adequacy resources but is a more general market principle.  With the start of EDAM such rules likely would apply not just to resources in the CAISO markets, but also to EDAM resources and WEM resources. The adoption of Imbalance Reserves in DAME and EDAM was designed to ensure sufficient resources are available in the real-time markets, which in the CAISO had previously (and continues to be) been achieved by the real-time must offer obligations for RA resources. RA resources should not be double penalized under both IR and RA penalty mechanisms for the same thing.
• As the previous bullet has discussed, any revised RAAIM should be analyzed in light of the new market structures adopted in DAME and EDAM to ensure that any MOO requirements are correctly implemented and that there aren’t overlapping penalties.
• Another item that requires clarification is how the potential revenue from the Tier 2 penalties will be treated relative to the BAA charges for failing the RSE. The CAISO needs to specify how any RAAIM Tier 2 penalties will contribute to the BAA charges for failing the RSE.
• The Revised RAAIM also needs to be clear on how availability in the day-ahead market and real-time markets interact. Are resources penalized twice for not being available in day-ahead and real-time, or are they assessed one penalty if they are unavailable in either day-ahead or real-time? Are the penalties the same for both real-time and day-ahead?
• SCE understands and follows the CAISO mechanism to address partially shown resources but asks the CAISO to provide an example of what happens when the two LSEs each showing a portion of a resource use different NQC calculations. For example, if one LSE uses the CPUC UCAP and/or SOD to determine the NQC, and the other LSE uses a different mechanism.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

SCE agrees with the CAISO’s proposal and strongly supports the discussion of what values to use for the MOO and any potential performance benchmark. Making these concepts clear to all is important. It should be obvious that in order for a resource to provide the UCAP amount of RA capacity, the resource’s MOO must be at the PMAX level; otherwise the capacity available in subsequent years would be reduced from the UCAP to account for outages with the result that the RA value of the resource will be decreasing every year. The CAISO’s methodology for splitting the PMAX, MOO, and RA QC seem reasonable, although further discussions may be required for how to split the capacity between different LSEs that use different methods to calculate the QC of the resources.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

SCE agrees with the CAISO that the best path forward is for the CAISO to create a decentralized substitute capacity pool (“shopping cart” approach). As SCE has previously noted, any type of centrally cleared market would require the creation of a standard capacity product that could clear the market; given the numerous different types of resources, as well as potential QC values across different LRAs, creating a standard product does not seem feasible. SCE sees one of the main benefits of the “shopping cart” approach being that the contracting entities negotiate and determine the definition of capacity that works for them. As such, even the suggestion in the workshop presentation of a weekly product seems unnecessary because if the parties desire a weekly product their negotiations could produce such a result.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

SCE appreciates the work the CAISO has put into the revised Outage Definitions. The revised outage definitions seem reasonable, but SCE is still evaluating the new Urgent Outage category and how it interacts with the existing Forced Outage category. SCE also notes that there is no discussion concerning the nature of work definitions that will also play a role in how outages are treated in both UCAP and any RAAIM mechanism.

6. Please provide any additional feedback not already captured.

None at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

Western Area Power Administration (WAPA) is a federal agency responsible for marketing hydropower generated by the federal Central Valley Project (CVP) to meet its statutory responsibilities to serve project-use energy pumping requirements and market available hydropower generation under its Power Marketing Plan to preference power allottees.  In Northern California, WAPA serves load in both the Balancing Authority of Northern California and the CAISO.  WAPA delivers its generation from many large and small hydro facilities of the CVP to its loads.  WAPA owns, operates and maintains an extensive high voltage transmission network extending to the load center of Northern California.

WAPA appreciates the opportunity to provide comments on the CAISO’s straw proposal on Resource Adequacy Modeling & Program Design Track 2 –RAAIM Reform. WAPA noticed that CAISO introduced some conceptually meaningful improvements in the straw proposal, such as targeting only the hours when reliability risk is high, but also some concerning details such as requiring Must-Offer-Obligation (MOO) above and beyond the RA contractual obligation of the generators. Before commenting on the specific design elements, WAPA would like to reiterate its overall stance on this subject and concerns over the potentially detrimental consequences of the proposal.

CVP generators will participate in the Extended Day-Ahead Market (EDAM) after Balancing Authority of Northern California (BANC) joins EDAM in October 2027. CVP generators will have to support generic Resource Adequacy (RA) imports to its power customers in the CAISO Balancing Authority Area. According to WAPA’s understanding of the current EDAM GAP-tie design, RA obligations of Import Resources from BANC to CAISO must be reassigned to physical generators in BANC. Therefore, CVP generators will be required to submit energy self-schedules or bids in EDAM to support the Resource Adequacy (RA) showing in the supply plan.

WAPA would like to ensure this Track 2 Resource Adequacy Availability Incentive Mechanism (RAAIM) Reform does not introduce design elements that would alter the current market rules, prevent CVP from providing RA to its customers in EDAM and, consequently, complicate WAPA’s implementation plan to join EDAM with BANC. According to the current market rules, we believe:

• CVP will qualify as a Use Limited Resource (ULR) and Conditional Available Resource (CAR) in EDAM. As such CVP will be exempt from bid generation.
• As a ULR, CVP will submit a daily energy limit in SIBR and CAISO will observe the daily energy limit in the market optimization; CVP will not incur RAAIM penalties if CVP provides energy according to the market awards.
• As a CAR, CVP will offer its “expected energy” into the market, eliminating RAAIM exposure according to CAISO Tariff section 40.9.3 and FERC order Docket No. ER20-1592-000.

Through various legislative acts implementing the CVP, CVP power generation has low priority among navigation, flood control, irrigation and protecting fish and wildlife. CVP cannot provide its full capacity for the market to dispatch. CVP will provide bids carefully to offer flexibility subject to its water management constraints. The market can only dispatch CVP according to CVP’s bids. CVP will only offer RA capacity to its customers to the extent that it can deliver; and the purpose of the RA is to meet its customers’ load under contract with WAPA. A must offer obligation that requires offering the full CVP capacity, i.e., the Pmax, may prevent CVP from providing RA.

Federal entities are exempt from penalties under the CAISO tariff due to principles of Federalism, Sovereign Immunity, and the Supremacy Clause of the Constitution.  Additionally, the Anti-Deficiency Act prohibits the government from entering agreements where the government’s liability is indefinite or undetermined. This reflected in the  CAISO tariff, Section 22.9(a), which states that "No person or federal entity shall incur any liability by failing to comply with a CAISO Tariff provision that is inapplicable to it by reason of being inconsistent with any federal statutes, regulations, or orders lawfully promulgated thereunder..." WAPA as a federal entity, is exempt from penalties under the CAISO tariff, including those related to RAAIM.

We look forward to working with CAISO in the coming stakeholder processes to enable CVP generation to efficiently and effectively contribute to power system reliability through EDAM participation.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

See the comments in Section 1 regarding WAPA’s overall stance on this subject and concerns over the potentially detrimental consequences of the straw proposal.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

WAPA strongly opposes the proposed MOO formula on page 28:

             MOO = RA * Pmax/NQC

This formula can grossly inflate the RA obligation of the generator relative to the contractual promise of consideration. For example, if RA = 800 MW, Pmax = 2000 MW, and NQC = 1000 MW,

MOO = min (NQC, RA*Pmax/NQC) = 1000 MW

The contractual RA obligation is inflated from 800 MW to 1000 MW. The extra 200 MW would be taken by the CAISO by force without consideration. In the case of CVP generation, this MOO would force the hydro dams to release 25% more water with potentially detrimental environment and safety consequences and violate WAPA’s statutory and contractual obligations, and its Power Marketing Plan that is filed and published in the Federal Register.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

WAPA suggests that CAISO enhance its business process and system functions to allow RA substitution among resources outside the CAISO Balancing Authority Area. For example, if a CVP generator that provides RA to load in the CAISO BAA is derated, WAPA should be allowed to use its transmission to import power from the Pacific Northwest to substitute for the loss of CVP. WAPA’s understanding is that CAISO currently does not support such substitutions.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

WAPA is concerned that the straw proposal creates difficulty for a CVP hydro generator to submit capacity derates due to water release constraints. The straw proposal states that planned outage “must be submitted on a rolling weekly basis by the Monday prior to the week of he outage start date,” and “a forced outage is defined as outage for which sufficient notice cannot be give to allow the outage to be factored in the day-ahead market or real-time market bidding processes.”

WAPA needs 2-day ahead derate notification which does not fit in the description of planned outage or forced outage time frame in the straw proposal. The 2-day ahead change of water release plan can be perfectly captured by the day-ahead market and real-time market bidding processes.

The straw proposal focuses on complete outages. WAPA requests that CAISO describe how a hydro generator that offers its “expected energy” into the market can submit derates due to water management constraints.

6. Please provide any additional feedback not already captured.

WAPA requests that CAISO elaborate how dispatchable hydro as Use-Limited Resource and Conditionally Available Resource is treated regarding MOO and RAAIM in the straw proposal.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal.

The Western Power Trading Forum (WPTF) appreciates the opportunity to provide comments on the Resource Adequacy Modeling and Program Design Track 2 Straw Proposal. WPTF would like the opportunity to present a complete proposal at the next stakeholder meeting that incorporates CPUC UCAP implementation. Specifically, how CPUC qualifying capacity values will align with CAISO's RA program design and operational expectations.

WPTF's primary recommendation is that CAISO sequence this initiative around CPUC QC and CAISO RA programmatic alignment before finalizing new availability penalties. The RA framework must first clearly define what LSEs are procuring and paying for, what RA suppliers are obligated to provide, and what CAISO may reasonably rely on in operations. Without that alignment, RAAIM reform risks using an availability penalty mechanism to resolve issues that should instead be resolved through procurement, accreditation, outage, or operational program design.

WPTF continues to support targeted reforms that incent resource availability during stressed grid conditions, encourage good utility maintenance practices, and create stronger incentives to return from outage or procure substitute capacity when the grid actually needs the capacity. However, these reforms must be grounded in cost causation and sound market economics. Administrative penalty structures that are too high, too volatile, or disconnected from the specific reliability problem will be reflected in RA prices and may increase customer costs without improving reliability.

Accordingly, WPTF recommends that CAISO move forward on two related but distinct tracks. First, CAISO should clarify how CPUC QC values will be incorporated into the CAISO RA framework in a manner that preserves the economic and reliability functions of RA capacity. Second, CAISO should develop a targeted RAAIM implementation proposal that applies during clearly defined stressed conditions, assesses resources against the capacity value actually relied upon for planning, uses bounded and predictable penalty values, and does not shift the cost of LSE procurement deficiencies onto generators.

2. Please submit your organization’s comments on the RAAIM Reform Proposal. The ISO welcomes stakeholders’ specific suggested changes to improve or clarify the proposal.

WPTF supports CAISO continuing to evaluate RAAIM reforms, but the current proposal should be narrowed and better tied to the reliability problem CAISO is trying to solve. As WPTF stated in prior comments, RAAIM was designed as an availability and bidding incentive, not as a broad capacity performance construct. If CAISO intends to move toward a performance-based mechanism, it should first identify the specific behavior the mechanism is intended to change, identify whether that behavior is within the control of the resource owner, and demonstrate that the proposed design will change that behavior in a cost-effective manner.

The current proposal does not demonstrate that a fundamental redesign of RAAIM is necessary or that higher administrative penalties will materially improve availability beyond existing energy market incentives. Resources already have strong economic incentives to be available during tight system conditions, when energy prices are highest. Before adopting a broader penalty framework, CAISO should publish additional analysis showing whether identified availability concerns are caused by avoidable resource behavior, limited substitute capacity, or transaction friction.

Comments on CAISO Straw Proposal

RAAIM reform should complement, rather than duplicate, UCAP. UCAP is intended to reflect expected availability in the forward RA counting value. A reformed RAAIM should therefore provide a targeted operational incentive only when a resource fails to provide the capacity value that was actually shown and relied upon. Resources should not be exposed to RAAIM penalties above the RA value that was procured, shown, and relied upon for planning, i.e., above the UCAP value.

WPTF recommends that any Tier 1 trigger remain connected to actual system conditions. If Tier 1 is intended to identify elevated reliability risk, CAISO should allow the trigger to deactivate if updated information shows that the system is no longer constrained. Otherwise, resources may be penalized based on a forecasted risk that no longer exists, which weakens the link between the penalty and reliability need and converts the mechanism into a forecasting-error charge rather than a reliability incentive.

WPTF recommends that any Tier 2 construct be designed around cost causation. A CAISO BAA resource sufficiency failure should not automatically be treated as generator non-performance. A resource availability penalty is appropriate only to the extent the insufficiency is caused by the non-availability of RA capacity that was actually shown to CAISO and relied upon for the relevant period. If the insufficiency is caused by an LSE procurement shortfall, load forecast error, deliverability limitation, or broader system condition unrelated to a generator's failure to meet its RA obligation, the cost of that deficiency should not be shifted to generators through RAAIM. Shortages should be cured or priced in a manner that preserves bilateral price formation and cost causation.

WPTF does not support tying RAAIM penalties to day-ahead prices without further justification and analysis. Day-ahead prices may reflect energy market fundamentals, congestion, fuel conditions, or market scarcity, but they are not necessarily a reliable proxy for the incremental reliability value of RA availability or the cost caused by a particular resource's outage. Linking RAAIM exposure to day-ahead prices would create volatile and difficult-to-hedge administrative risk that is likely to be incorporated into RA offer prices. That outcome is economically inefficient if the penalty does not correspond to a clear avoidable reliability cost.

Finally, if CAISO proceeds with a two-tier structure, penalty values should be fixed, transparent, and capped. WPTF supports a penalty framework that is strong enough to create incentives during genuinely constrained conditions but not so punitive that a single event can eliminate the economic value of providing RA service for the year. If moving ahead using the DA price, the CAISO should include event and annual stop-loss provisions and publish retrospective impact analysis before adopting final penalty levels. This analysis should show how the mechanism would have applied during prior stressed conditions, who would have been charged, what reliability problem the charge would have addressed, and how the resulting exposure would affect RA market prices.

3. Please submit your organization’s comments on the Bidding Requirements/Must-Offer Obligation Next Steps.

WPTF appreciates CAISO's recognition that CPUC UCAP implementation raises important questions regarding the relationship between QC values, shown RA, and CAISO operational expectations. WPTF recommends that CAISO address this issue as CPUC QC and CAISO RA programmatic alignment, rather than as a narrow must-offer issue. The central issue is not simply how many MW a resource must bid. The central issue is how the RA product is defined after UCAP and how the forward procurement value, operational obligation, and availability incentive interact (e.g., MOO, CPM, deliverability studies, RAAIM, export RA)

WPTF would like to propose a detailed post-UCAP RA product design for CAISO and stakeholder consideration. It will include CPUC QC values could be translated into CAISO RA obligations, how partially shown resources will be treated, how multi-LRA resources will be handled, how storage duration and state-of-charge limitations will be reflected, and how CAISO will avoid imposing RAAIM exposure above the RA value shown and relied upon. These details are necessary before CAISO can finalize either the MOO design or the RAAIM assessment value.

4. Please submit your organization’s questions or comments on the Outage Substitution Enhancements Next Steps.

WPTF supports CAISO’s proposed bulletin board as a reasonable first step toward improving outage substitution opportunities. Increased transparency regarding the need for substitute capacity and the potential availability of replacement supply could help reduce transaction friction and improve market participants’ ability to identify bilateral substitution opportunities.

However, WPTF asks the CAISO to keep working toward a more structured CAISO-administered substitution process. A bulletin board may improve information sharing, but it will not by itself resolve the underlying liquidity, timing, and transaction challenges that can prevent resources from securing substitute capacity when it is actually needed.

5. Please submit your organization’s comments on the Outage Definitions Proposal.

No comments at this time. 

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