Comments on Final Proposal and Draft Tariff Language (export, load, and wheeling priorities)

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

The Bonneville Power Administration (Bonneville)[1] appreciates the opportunity to submit comments on CAISO’s Market Enhancements for Summer 2021 Readiness Final Proposal. We recognize this stakeholder process has proceeded at a very rapid pace and has attempted to tackle foundational issues that remain highly contentious and broad consensus has been difficult. To address this, the CAISO has severed the export, load, and wheeling priorities from the remainder of the Market Enhancements for Summer 2021 Readiness that have already been filed at FERC, as these priorities are arguably the most controversial issues of the original initiative given that CAISO does not have an open access, forward transmission procurement framework in place. Bonneville opposes the Final Proposal on the export, load, and wheeling priorities and provides some suggestions for a more fair and equitable solution.  Bonneville also generally supports the comments of other stakeholders, including the Southwest Load Serving Entities, the Public Power Council (PPC), and the Public Generating Pool (PGP).

Solution for export, load, and wheeling priorities must sunset on December 31, 2021

Bonneville appreciates CAISO’s statement that whatever changes are ultimately implemented as part of this initiative would be temporary and would only remain in effect until 2021. We request that this commitment be memorialized and that these changes specifically sunset on December 31, 2021 whether or not a longer term process has been developed and implemented for external entities to obtain firm transmission over the CAISO transmission system for wheeling on a forward basis. If a forward transmission procurement framework is not in place by December 31, 2021, the priorities of loads and wheel-throughs should revert back to the status quo.

Long-term transmission procurement framework should be a distinct stakeholder initiative

Bonneville acknowledges that CAISO has included the topic on the reservation of import capability and transmission for wheel-through transactions as part of its Maximum Import Capability (MIC) Enhancements. Given the importance of this issue and its implications to the broader energy markets in the West, Bonneville requests that this topic be taken up in a distinct stakeholder initiative rather than be combined with broader MIC enhancements. While MIC is a useful tool to narrowly determine the quantity of import Resource Adequacy (RA) resources for serving CAISO load that can be contracted for on a forward basis, MIC is not a construct that determines or provides transmission rights and priorities, nor should it evolve to become such a framework. Bonneville believes it is more appropriate to advance a forward, open access transmission procurement framework as part of its own dedicated stakeholder initiative.

Final Proposal is inequitable, violates open access principles, and hinders competition

Bonneville does not support CAISO’s final proposal on export, load, and wheeling priorities. We find that the final proposal elevates the priority of CAISO load in a manner that is inequitable and discriminatory, violates open access principles, and hinders competitive trade across the western markets. The final proposal limits the eligibility criteria for wheel-throughs to receive PT wheel status to only those wheel-throughs that have a contract to serve load outside the CAISO BAA prior to the filing date of these proposed changes with FERC (expected to be April 23, 2021) and develops a new, lower priority LPT wheel status for all other transactions consummated after that date. Additionally, the scheduling coordinator must confirm procurement of monthly firm transmission from the source to the CAISO BAA boundary 45 days ahead of the month. In contrast, the eligibility criteria for imports serving CAISO load to receive equal priority to PT wheels are quite expansive. They allow Resource Adequacy (RA) resources that can be registered up to 45 days ahead of the month to serve load in the CAISO BAA and do not currently require transmission. And new self-scheduled non-RA imports to serve CAISO load in the day-ahead market also receive “PT” status.

PT Wheels and RA Imports should have equal requirements and new self-scheduled day-ahead wheels and imports should have equal status

Bonneville recognizes that the CAISO does not have a process in place for external entities to obtain transmission over the CAISO transmission system for wheeling on a forward basis. Additionally the status quo of self-scheduled wheel-throughs having super priority over all imports to serve CAISO load is problematic and warrants modification. Yet Bonneville still believes that a fair and equitable solution can be reached in the interim for this summer.  Bonneville suggests that the eligibility requirements for equivalent “PT” status for wheel-throughs and RA imports be the same—a power supply contract must be in place 45 days ahead of the month. For summer 2021, CAISO should either require a showing of firm transmission from the source to the CAISO border for both PT wheels and RA imports or not have a firm transmission requirement for either of them. Additionally, Bonneville believes that if new self-scheduled non-RA imports to serve CAISO load in the day-ahead market receive “PT” status, then new self-scheduled wheel-throughs in the day-ahead market should also receive “PT” status. In either case, new self-scheduled non-RA imports to serve CAISO load and new self-scheduled wheel-throughs in the day-ahead market should receive the same priority, whether that be “PT” priority or a lower priority status.

[1] Bonneville is a federal power marketing administration within the U.S. Department of Energy that markets electric power from 31 federal hydroelectric projects and some non-federal projects in the Pacific Northwest with a nameplate capacity of 22,500 MW. Bonneville currently supplies around 30 percent of the power consumed in the Northwest. Bonneville also operates 15,000 miles of high voltage transmission that interconnects most of the other transmission systems in the Northwest with Canada and California. Bonneville is obligated by statute to serve Northwest municipalities, public utility districts, cooperatives and then other regional entities prior to selling power out of the region.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

In the event of no transmission requirement on either the PT wheel or the RA import, the proposed tariff language should be revised as follows, consistent with Bonneville’s suggestion in the first section of this comment.

Priority Wheeling Through Self-Schedule

A Self-Scheduled Wheel Through that is supported by (1) a firm power supply contract to serve load in another balancing authority area that was entered into prior to April 23, 2021, and (2) monthly firm transmission under applicable open access transmission tariffs, or comparable transmission tariffs, to deliver the Wheel Through Energy from the sink to the CAISO border during all of the hours covered by the firm power supply contract.  

In the event that firm transmission is required of both the PT wheel and the RA import, then the firm transmission language could be inserted back in. 

Priority Wheeling Through Self-Schedule

A Self-Scheduled Wheel Through that is supported by (1) a firm power supply contract to serve load in another balancing authority area that was entered into prior to April 23, 2021, and (2) monthly firm transmission under applicable open access transmission tariffs, or comparable transmission tariffs, to deliver the Wheel Through Energy from the sourcesink to the CAISO border during all of the hours covered by the firm power supply contract.  

Bonneville also inquires whether there is a need to define a low priority wheeling through self-schedule should that proposal be adopted.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Brookfield Renewable Trading and Marketing LP (BRTM) appreciates the opportunity to provide comments on the CAISO's export, load, and wheeling priorities proposal under its market enhancements for summer 2021 initiative. As a general matter, BRTM supports policies that ensure open, non-discriminatory, and comparable access to all users of the transmission system, including wheel-through customers, and that ensure that transnmission service is provided to those that value it the most. BRTM appreciates the CAISO’s attention to the export, load, and wheeling priorities related issues and acknowledges that CAISO’s effort to balance competing interests. However, BRTM is concerned that the final proposal with respect to the treatment of wheel-though schedules is not balanced and instead places requirements on wheel-through schedules that are not comparable to the treatment of, and requirements for, internal load, including import schedules.

With respect to export priorities, BRTM does not oppose the CAISO’s proposal to establish, and distinguish between, both high- and low-priority exports and to ensure that priority exports are equal in priority to internal load. In addition, BRTM does not oppose the CAISO’s proposal to establish mechanisms to verify that high-priority exports are supported by non-resource adequacy (non-RA) resources, including variable energy resources, and its proposal that lower-priority exports and economic exports that are deemed feasible in RUC and are self-scheduled into the real-time market receive a higher priority than new lower-priority exports and economic exports bidding in the real-time market. However, BRTM remains concerned that with the potential for load under-scheduling (especially on tighter supply/higher-priced days) in the IFM, self-scheduled (price taker) lower-priority exports (exports the intent of which is still intended to economically fill out shorter term identified requirements of LSEs outside of the CAISO BAA) could be curtailed in the RUC process. BRTM believes that any changes in scheduling priorities and perhaps the concomitant changes in incentives, needs to be paired with a suite of scarcity pricing measures and appropriate measures to ensure appropriate level of forward-market load-scheduling.

BRTM also has concerns with respect to the CAISO’s proposal regarding the treatment of wheel-through transactions. In general, BRTM does not oppose the CAISO’s proposal to establish high- and low-priorities for self-scheduled wheel throughs. BRTM understands that the CAISO’s proposal is in part driven by its current policy wherein all self-scheduled wheel throughs have higher priority than priority exports and serving native load from imports and internal generation that have not self-scheduled. The CAISO proposes to set the penalty price for the import leg of new low priority wheels to $0 and to set the penalty price for the export leg set equivalent to low-priority exports. For high-priority wheels, the CAISO proposes, as is done today, to set the penalty price for the import leg of the wheel equal to penalty price for self-scheduled imports and the export leg of the wheel bid equal to high-priority exports. In order to support the above treatment of high-priority wheels, the CAISO also proposes to create a new process after its hour-ahead scheduling process (HASP) to equitably allocate import and internal transmission to high priority wheels and native load. The CAISO states that the use of penalty prices alone is insufficient to equitably allocate import capability and internal transmission since low-priority exports may clear HASP. The CAISO states that in its proposed post-HASP process, all low priority wheels will be set to 0 MW prior to the allocation between higher priority wheels and native load and the CAISO will then apply a pro rata allocation method for allocating transmission capacity among import RUC self-schedules, RA import bids or self-schedules, and high priority wheeling self-schedules on an intertie that is constrained in the import direction by a scheduling limit and when the HASP solution shows uneconomic adjustments among said schedules and/or load. All of the above measures necessary to ensure that high-priority wheels are treated comparable to internal load (including import RA schedules) do not appear unreasonable.

However, what is not comparable and thus is unreasonable, are the CAISO’s proposed requirements for qualifying as a high-priority wheel. In order to qualify as a high priority wheel, the CAISO proposes to require that wheeling customers must have entered into a contract to serve load outside the CAISO balancing authority area prior to the filing date of the proposed changes with FERC (anticipated to be April 23, 2021). In addition, the CAISO proposes to require that the scheduling coordinator for a priority wheel must notify the CAISO 45 days ahead of the month the MW quantity of the wheel and confirm that it has procured monthly firm transmission for the hours of delivery of the contract to the CAISO boundary from an external BAA. The CAISO reasons that such demonstrations are necessary to prove that a scheduling coordinator intends to use the CAISO transmission system to serve load in another BAA. BRTM believes that tying transmission service to the above requirements is unreasonable and is not comparable to the requirements for import schedules to the CAISO. First, it is unreasonable to both require entities to contract prior to the anticipated FERC filing date of the proposal and to make demonstrations 45 days prior to the month. While the CAISO states that such requirements are comparable to the requirements for import RA contracts with California LSEs, the fact remains that external LSEs do not operate under the same RA requirements as California LSEs and linking or tying the terms and conditions of CAISO transmission service to California RA requirements is inappropriate. To BRTM’s knowledge, while most external LSEs/BBAs endeavor to and most likely do forward procure the supplies needed to serve their load, these LSEs frequently do fill out their needs (or changed needs if load is anticipated to come in higher than forecast or certain of their resources are unavailable) on a shorter-term basis. The CAISO should not establish conditions for transmission service that impair external LSEs/BAAs procurement practices. Perhaps most egregiously, the CAISO proposes to require that high-priority wheeling customers demonstrate that they have procured firm transmission service over other transmission systems to the CAISO border. The CAISO does not even impose such requirements on import RA resources needed to service California load. While the CAISO is in the process of developing new transmission requirements for import RA resources, neither the CAISO Governing Board (Board) nor the California Public Utilities Commission (in establishing RA requirements for its jurisdictional LSEs) have approved the CAISO staff’s proposal. Once again, it is inappropriate for the CAISO to tie transmission service on its system to the procurement of service on another system. Finally, while the CAISO states that the proposed treatment of wheel-through transactions will only be in place until longer-term changes can be implemented, BRTM is concerned that the above proposal will be in place well beyond summer 2021. The CAISO has just initiated a stakeholder process to develop a long-term wheel-through policy, but that effort is not scheduled to conclude (before the CAISO Board) until late 2021. Whatever policy is approved by the Board would then have to be submitted to FERC, approved, and then implemented, which may not occur until summer 2022 at the earliest. The CAISO’s proposal is discriminatory as it does not treat wheel-through customers comparably to internal load (and import RA transactions), and thus is unreasonable. BRTM urges the CAISO not to adopt the above-described requirements for high-priority wheel-through transactions and instead consider alternative requirements, such as a day-ahead e-tagging requirement (3PM the day prior), a practice more in line with the best-practices and requirements in the region.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

CalCCA supports CAISO’s final proposal for export, load and wheeling priorities as a reasonable, implementable near-term solution to address deficiencies in the current process.  CalCCA reiterates its previous comments that the CAISO must initiate a process to develop a long-term policy that properly accounts for CAISO’s responsibility to ensure reliable service to firm native loads, while providing open access to transmission that is in excess of that needed to serve native load. The process should consider the extent to which the users of CAISO’s transmission have and will be responsible for paying for the embedded costs of CAISO’s transmission, how the CAISO models the use of the transmission in its Transmission Planning Process and in its deliverability assessments, and any potential interactions between CAISO’s Day-Ahead Market, Real-Time Market and Energy Imbalance Market on the use of, and compensation for, CAISO’s transmission. The assessment also should consider the extent to which CAISO loads and non-CAISO stakeholders are able to access transmission from adjacent Balancing Authority Areas (BAAs) and from the CAISO on comparable terms and conditions.

CalCCA is hopeful that the CAISO’s recently initiated MIC Enhancements initiative will result in a more robust longer-term solution prior to summer 2022 that: i. properly accounts for significant differences in the market structures and access to transmission in the adjacent BBAsas compared to the CAISO organized market; ii. recognizes that load serving entities within the CAISO have paid, and will continue to pay, for nearly the entire $4.3 billion annual CAISO PTO transmission revenue requirement[1], while wheel-through transactions currently need only make a 15-minute to 1-hour commitment to pay for CAISO’s transmission for each scheduled wheeling transaction;, iii. recognizes that CAISO’s loads have relied on imports and the internal CAISO transmission they have funded for decades to meet their load serving obligations; and iv. accounts for internal transmission constraints and the need to deliver RA resources within the state through those internal transmission constraints at the same time the CAISO is ensuring that wheel-through transactions are deliverable.

[1] http://www.caiso.com/Documents/HighVoltageAccessChargeRatesEffectiveJan01_2021Revised03112021.pdf

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

CalCCA supports classifying this element of the summer 2021 readiness within the EIM Governing Body’s advisory role because it would change generally applicable rules of the real-time market, and because the primary driver for this change is not an issue specific to EIM BAAs. The proposed rules will affect participation in EIM by changing the rules governing use of CAISO’s transmission.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

CalCCA has previously provided supportive comments on this element and has not changed its position.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

CalCCA has no comments to offer on this topic at this time.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

CalCCA has no comments to offer on this topic at this time.

6. Please provide additional comments on the final proposal and/or draft tariff language:

CalCCA has no comment on the draft tariff language at this time.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

CDWR has no comment at this time.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

CDWR has no comment at this time.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

CDWR supports the CAISO to provide make-whole payments for hourly block economic imports dispatched by the real-time market during tight supply conditions.  We understand the purpose of this change is to incentivize suppliers to offer hourly import supply to the CAISO balancing authority area during tight supply conditions.  We recommend the CAISO closely monitor bidding activity and make-whole payments during these tight supply conditions and to suspend and/or rescind make-whole payments that do not directly benefit CAISO internal load.  We believe this action is equitable and consistent with CAISO’s Cost Causation Guiding Principles[1].  

[1] http://www.caiso.com/Documents/DraftFinalProposal-CostAllocationGuidingPrinciples.pdf

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

CDWR has no comment at this time.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

CDWR has no comment at this time.

6. Please provide additional comments on the final proposal and/or draft tariff language:

CDWR has no comment at this time.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Please see DMM comments at following location: http://www.caiso.com/Documents/DMM-Comments-on-Summer-2021-Readiness-Final-Proposal-Apr-2-2021.pdf

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

Please see the link to DMM comments in response to question 1.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

Please see the link to DMM comments in response to question 1.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

Please see the link to DMM comments in response to question 1.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

Please see the link to DMM comments in response to question 1.

6. Please provide additional comments on the final proposal and/or draft tariff language:

Please see the link to DMM comments in response to question 1.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

CPUC staff recognizes that California is interconnected to the entire Western electric grid and, as such, must work with neighboring balancing authorities and must treat in state and out of state entities fairly when it comes to access to the bulk transmission grid. We appreciate the challenges the CAISO faces in ensuring equal access to entities that are either exporting from California, or wheeling through California, while also meeting its obligations to provide reliable service to the load within the balancing authority. However, we are concerned that in some circumstances the proposals will unnecessarily increase the risks to California load.

CPUC staff is concerned that the existing and proposed rules prioritize exports and wheels over native load and, if allowed to continue, will seriously jeopardize reliability in the state and undermine the resource adequacy and transmission planning processes. To this end, CPUC staff agrees with the CAISO, the IOUs and other parties that ultimately a durable solution will need to be developed and ask the CAISO to make further development of these rules a priority.

CPUC staff is particularly concerned about this issue because of the uncertainty of the magnitude of wheeling transactions. If wheel throughs are limited to a few hundred MWs, the challenge would be manageable this coming summer, but staff is concerned that wheeling transactions could approach thousands of MWs. For example, during the 2020 August stressed system conditions, the CAISO system was exported 4,000 - 5,000 MW, primarily to the Southwest.  CPUC staff agrees that that recent actions by the CAISO have foreclosed this risk going forward but, we are concerned that these export transactions during tight system conditions will migrate to wheeling transactions. CPUC staff’s concern is further exacerbated by the fact that entities wheeling through the state do not need to reserve this space in advance, nor pay for the entire month or schedule every day. Thus, there is little visibility regarding the magnitude of the issue and little opportunity to plan for and address it, should it arise. 

Further, given that prices are now considerably higher at Palo Verde (in the south) than at Malin (in the north), CPUC staff expects that this could further increase wheeling transactions and, as a result, displace California resource adequacy import contracts for energy and the movement of energy from northern California (where there is typically excess generation) across the constrained transmission system to southern California. In other words, CPUC staff is concerned that the use of the California transmission system to move power from the Northwest to the Southwest could use valuable transmission space and crowd out use by Californians themselves and thereby jeopardize reliability this coming summer.

Finally, CPUC staff is concerned that any number of entities could indicate that they have signed a contract to obtain PT wheeling status to reserve space, but that these contracts could be provisional or have no penalty provisions, because there are no clear requirements or upfront costs. Thus, it seems possible that CAISO could give PT wheeling status to many entities for large quantities of MWs, which may or may not materialize in the operational space and, if they do, would be given priority over load in all instances, except when there is load shedding in which case they would be given a pro rata allocation, to the detriment of reliability for California customers.[1]

Thus, for situational awareness, and because the primary purpose of this stakeholder process is to prepare for this summer, CPUC staff strongly encourages CAISO to request that parties provide information on the wheeling transactions that are signed as of the date of the FERC filing as soon as possible to allow for coordinated planning for this coming summer.

The following sections discuss CPUC staff concerns in further detail.

CPUC Staff Is Concerned that Prioritizing PT and LTP Wheels Over Resource Adequacy Import Contracts at All Times, Except When there is Unserved Load and in that Case Only Allocating Pro Rata Based on Available Bids, Could Jeopardize Reliability this Summer

By way of background, CPUC staff notes that the evolution of this proposal throughout the stakeholder process has moved from prioritizing load over wheeling transactions to the current proposal which now prioritizes wheeling transactions (both PT wheels and LPT wheels) over load, except when there might be a load shedding event, in which case it allocates the transmission system on a pro rata basis. This can be seen in a couple of examples from the draft final proposal and the final proposal:

The following compares the draft final proposal and final proposal with respect to RA imports bidding less than $0 and wheeling transactions (emphasis added).

Integrated Forward Market

• Draft Proposal:  If an import submits a bid below $0/MWh (for example -$5) and it is needed to meet self-scheduled load, the cost of not meeting load is $1455. The cost of not meeting the wheel is $1450. The import will clear IFM and the wheel will not.
• Final Proposal.  If an import submits a bid below $0/MWh (for example -$5) and it is needed to meet self-scheduled load, the cost of not meeting load is $1455. The cost of not meeting the PT wheel is $1850. The cost of not meeting the LPT wheel is $1150. The PT wheel will clear IFM before the import. The import will clear IFM before the LPT wheel.

Residual Unit Commitment Process

• Draft Proposal.  If an RA import that did not clear IFM is needed to meet the CAISO load forecast, the cost of not meeting load is $1600. The cost of not meeting the wheel is $1600. The import or the wheel will clear RUC.

• Final Proposal.  If an RA import that did not clear IFM is needed to meet the CAISO load forecast, the cost of not meeting load is $1600. The cost of not meeting the PT wheel is $2250. The cost of not meeting the LPT is $1350. The PT wheel will clear RUC before the import. The import will clear RUC before the LPT wheel.

Hour Ahead Scheduling Process

• Draft Proposal.  If a real-time import that economically bids less than $0/MWh (such as -$10) is needed to meet the CAISO load forecast, the cost of not meeting load is $1460. The cost of the wheel is $1450. Load will be served before any RUC or RT wheel.
• Final Proposal.  If a real-time import that economically bids less than $300/MWh (such as $200) is needed to meet the CAISO load forecast, the cost of not meeting load is $1250. The cost of not meeting the RUC PT wheel is $2200. The cost of not meeting a real-time PT wheel is $1850. The cost of not meeting the RUC LPT wheel is $1150. The cost of not meeting the real-time LPT wheel is $1050. The RUC or RT wheel will be served before CAISO load. The RUC wheels will clear HASP before real-time PT wheels. Real-time PT wheels will clear HASP before load. Load will clear HASP before RUC LPT wheels. RUC LPT wheels will clear HASP before real-time LPT wheels.

As this demonstrates, wheels are given priority over load in most circumstances.

We note that CAISO proposes a post-HASP adjustment process, which will allocate import capacity between wheels and load on a pro-rata basis, but this would be done only if CAISO were at the point of cutting load, not before, and this only helps to the extent that there are imports available in the real-time to serve load. For example, assuming import capability of 4,000 MW with 4,000 MW of RA imports and 4,000 MW of wheels, load would be cut by 2,000 MW and wheels would be cut by the same amount. This does not seem consistent with the magnitude of the payments made by load and wheels.

Staff’s additional concerns with the final proposal are as follows:

• The examples above address what happens when RA imports are needed to serve load, but in the case when the RA imports are not technically needed to serve load, CAISO’s proposal prioritizes both PT wheels and LPT wheels over resource adequacy contracts for import energy in all instances. Thus, if a load serving entity has procured an energy import contract to meet its RA requirements and serve its load or to ensure reliability, as was done in response to the CPUC reliability OIR, then if there are wheeling transactions, these RA import energy contract would be crowded out. This is an issue because these energy contracts serve as a hedge and are meant to ensure reliability in 1-in-2 conditions.
• Further, if RA imports do not clear in the IFM, they have no further obligation in the real-time. CAISO has indicated that it will commit RA imports in the RUC process if there are infeasibilities, but what happens if there are no infeasibilities in the RUC process, but those RA imports might have been needed to serve load (if the load forecast were higher in the real-time than in the RUC process)? It is CPUC staff’s understanding that CAISO will bias the RUC process to ensure that load uncertainty is covered. Nonetheless, even with this bias in the RUC, we remain concerned that CAISO could be left with insufficient RA resources in the real-time because RUC fails to commit sufficient resources, as was discussed by CAISO during its resource sufficiency meeting (see figure below, which demonstrates that load was higher than load forecast in crucial hours last summer).

• In addition, CPUC staff is concerned that PT wheels can come in during the real-time process and adversely affect the post-HASP adjustment process. For example, assume there is a 300 MW import limit, and CAISO clears 200 MWs of RA import bids and 100 MW of PT wheels and the RUC process is feasible. Assume that due to load forecast changes, the HASP process clears the same amount, but now there are 100 MW of RUC PT wheels and 100 MW of RT PT wheels, in this case, the post-HASP process allocation process will allocate more to wheeling transactions. Which schedule does the operator use?
• Also, should CAISO issue a CPM for an import resource to address reliability concerns, this resource is not guaranteed to flow and could be crowded out by wheeling transactions. Similar to other imports, the CPM resource would not have a real-time must-offer obligation if it is not picked up in the day-ahead process. This process calls into question what reliability benefit import CPM resources (and in fact all imports) provide when they are all prioritized below wheels and at best, during tight system conditions, only a fraction of the RA import and CPM transactions will flow.
• It would also be helpful if CAISO could clarify whether a variable energy resource can support a PT wheeling transaction. 

Finally, as we have stated previously, CPUC staff supports prioritizing high priority exports and load above wheeling transactions, consistent with CAISO’s initial proposal regarding wheeling transactions, as it is consistent with FERC’s open access tariff, with open access tariffs of other entities, and with CAISO’s existing tariff regarding import allocation rights.

Regarding FERC’s Order 888, FERC stated that, “We conclude that public utilities may reserve existing transmission capacity needed for native load growth and network transmission customer load growth reasonably forecasted within the utility's current planning horizon. However, any capacity that a public utility reserves for future growth, but is not currently needed, must be posted on the OASIS and made available to others through the capacity reassignment requirements, until such time as it is actually needed and used.”

Further, other entities, such as BPA, provide either non-firm or firm point-to-point transmission service and only firm point-to-point service is given equal priority to native load, and firm point-to-point service is only granted if it does not impair the reliability of service to Native Load Customers…”

13.2(v) Firm Point-To-Point Transmission Service will always have a reservation priority over Non-Firm Point-To-Point Transmission Service under the Tariff. All Long-Term Firm Point-To-Point Transmission Service will have equal reservation priority with Native Load Customers and Network Customers. Reservation priorities for existing firm service customers are provided in Section 2.2.  

13.5  In cases where the Transmission Provider determines that the Transmission System is not capable of providing Firm Point-To-Point Transmission Service without (1) degrading or impairing the reliability of service to Native Load Customers, Network Customers and other Transmission Customers taking Firm Point-To-Point Transmission Service, or (2) interfering with the Transmission Provider's ability to meet prior firm contractual commitments to others, the Transmission Provider will be obligated to expand or upgrade its Transmission System pursuant to the terms of Section 15.4. The Transmission Customer must agree to compensate the Transmission Provider for any necessary transmission facility additions pursuant to the terms of Section 27. (Emphasis added.)

In addition, CAISO’s tariff includes provisions regarding import allocation rights (see section 40.4.6.2), which are allocated to internal load serving entities to pair with resource adequacy resources to ensure the reliable operation of the grid:

For Resource Adequacy Plans covering any period after December 31, 2007, total Available Import Capability will be assigned on an annual basis for a one-year term to Scheduling Coordinators representing Load Serving Entities serving Load in the CAISO. (Emphasis added.)

CPUC Staff Is Concerned that Allowing Variable Energy Resources to Support PT (High Priority) Firm Exports Could Jeopardize Reliability this Summer

In its March 19^th Final Proposal, CAISO proposes to allow variable resources to support PT exports. CPUC staff is concerned that this could jeopardize reliability if the CAISO system (e.g., resource adequacy resources) are called upon to support PT exports that do not show up in real-time. For example, assume that a load serving entity outside of the CAISO system (LSE A) signs a contract for a 1000 MW (nameplate) wind resource within the CAISO balancing authority. LSE A then self-schedules this wind resource as a PT export in a peak, critical hour (e.g., similar to August 14, 2020 at 6 pm) at 250 MW, but then it produces only 100 MW or 0 MW. In either case, under CAISO’s current proposal, it would export the 250 MW, even though the resource was only producing 100 MW or 0 MW.

CPUC staff are concerned that such a scenario outlined above could occur for the following reasons. First, in its presentation on resource sufficiency on March 30, 2021, CAISO indicated that the forecasts for variable resources are often too high (see CAISO figure below) and that this can occur during critical peak periods. As this figure demonstrates, the FMM dispatches on August 17^th and August 18^th (and presumably forecasts as well) were up to 1,800 MW above actual production in real-time. Second, CPUC staff has reviewed the PT exports during the August events and  there were variable resources that supported PT exports and the self-scheduled quantities in one hour, for example, exceeded actual production by 40 percent. Thus, this is not a theoretical issue.

Given that CAISO could then be exporting a resource that is not producing energy or producing less energy than scheduled out of the system (and, thus, leaning on the CAISO system), CPUC staff does not understand how this proposal supports or increases summer reliability and, in fact, is concerned that this proposal could undermine reliability this coming summer.

Therefore, CPUC staff recommends that the PT export quantity be tied to the actual generation of the facility. CAISO has indicated that this is not possible for this summer, in which case, CPUC staff recommends that CAISO return to its previous proposal, which would only allow PT exports to be supported by resources that can support an hourly block schedule, which would exclude variable resources. This is consistent with treatment in other balancing authorities, such as Idaho Power, which only allow exports to the extent that the underlying resource is generating.[2] Further, other balancing authorities require variable resources to be firmed and shaped to fit into hourly block schedules, which is expensive – CAISO is not requiring that here. Finally, given the importance that CAISO and other parties have placed on not allowing one system to lean on another system, it is incongruous to turn a blind eye to this type of leaning here.

CAISO appears to be arguing that restricting the export level to the lowest of the 15-minute schedule would prevent leaning.[3] However, CAISO’s figure above demonstrates that the FMM dispatch (and presumably the forecast underlying it), can fall short of actual production. Thus, this proposal does not address concerns about leaning (and exporting power that is not being generated). Further, CAISO proposes no consequence for the LSE or resource if the forecast falls short -- forecasts are always wrong and there appear to be no consequence if the forecast does not match actual production. On the other hand, exporting power to support PT exports that are under-generating could jeopardize reliability – a real and tangible consequence that this stakeholder process was meant to address.

In addition, CPUC staff has some concerns about the penalty prices for PT exports. Given that the penalty parameters for RUC PT exports and real-time (RT) PT exports are the same, this would appear to set up a reliability concern if the exports only show up in the real-time and are not taken into account when determining the resources needed to meet load in the RUC process. For example, assume that there is a 1000 MW resource in California that bids into the CAISO market and is dispatched, and thus CAISO does not commit a long-start resource, but then that resource identifies itself as a PT export in the HASP process (where it gets priority equal to load) – this would appear to set up the system for potential uncertainty and instability and would seem to argue for adjusting the RUC process to ensure that sufficient resources are committed to serve load. As a result, CPUC staff recommends that PT exports be given equal priority to load only if they are identified in the day-ahead and that PT exports should not be allowed to materialize in the HASP process and be given equal priority to load and potentially threaten the reliability of the grid. This would be consistent with the current process, where real-time exports are given lower priority than day-ahead exports.

Further, while the final proposal states that PT exports will not be prioritized above load (as in the draft final proposal), there is no discussion regarding what this means in practice. In the appendix, CAISO indicates that the penalty parameters for PT RUC and RT PT exports are the same as load and in a note to Table 2, indicates that “The scheduling priorities are DAPT = RTPT = Load/Demand > DALPT > RTLPT.” Some questions that arise include the following:

• Does CAISO know how this will work in practice and, if so, can they provide this information to stakeholders?  Is it possible that loss factors could result in only cuts to load and no cuts to PT exports and/or what other factors would determine the outcomes under stressed system conditions?
• Will there be any post-HASP adjustment to cut load and PT exports on a pro rata basis?  What would pro rata cut look like if there are 1000 MW of PT exports and 45,000 MW of load? If there is no post-HASP process, how will CAISO be allocating cuts to PT exports and load in the event that there are insufficient resources to support both?

Because these questions are not discussed in the final proposal and were not discussed on the stakeholder call, CPUC staff is concerned that while the final proposal states that PT exports and load have equal priorities, that in practice, PT exports will be prioritized over load. This is even more concerning if this occurs when the supporting resource is under-generating or not generating compared to its forecast and/or schedule.

Finally, CAISO states that imports cannot support PT exports (“Exporters cannot designate an import to support a PT export. These transactions can bid properly as a self-schedule wheel through,” p. 19).  It would be helpful if CAISO could clarify that this this provision applies equally to pseudo-tied and dynamically scheduled imports. If CAISO does not clarify this is the case, a variable energy resource that is pseudo-tied into CAISO could then support a PT export and, in this way, turn a variable import resource into a firm export resource merely by moving it across the CAISO system, again to the detriment of load under stressed system conditions (which would need to support any under generation of this PT export).

Errors in the CAISO’s Final Proposal Should be Corrected

CPUC staff believe that there are a few errors in the final proposal that should be fixed, to avoid any confusion.

• First, in the final proposal, CAISO states that, “The CAISO is creating a new Master File flag that the resource scheduling coordinator should select if it is unable to attest to the rules above, which will prevent the resource by being designated by a scheduling coordinator of an export.” However, CAISO clarified in the last stakeholder call that the Master File flag will default to “no” and only if the resource can support a PT export would the scheduling coordinator select that it is able to attest that it can support a PT export. Thus, this sentence should be updated to read, “The CAISO is creating a new Master File flag that the resource scheduling coordinator should select if it is unable to attest to the rules above, which will only allow those resources that have attested that they meet these rules to be used to support a PT export.prevent the resource by being designated by a scheduling coordinator of an export.” CPUC staff agrees with CAISO that this formulation should be applied as there are thousands of resources and only potentially a handful of resources supporting PT exports. Thus, it makes sense that only those resources able to support PT exports should need to modify the Masterfile, as opposed to scheduling coordinators for all resources attesting that they do not meet the criteria, which would be burdensome, create confusion, and undermine reliability if the flags were all set to allow PT exports for thousands of resources by default.

• Second, on p. 44, in the IFM example, CPUC staff believes that the PT wheel figure of $1450 (highlighted below) should be set to $1850:

“If an import submits a bid above $300/MWh (for example $310) and it is needed to meet self scheduled load, the cost of not meeting load is $1140. The cost of not meeting the PT wheel is $1450. The cost of not meeting the LPT wheel is $1150. The PT wheel will clear IFM before the LPT wheel. The LPT wheel will clear IFM before the import.”

• Third, on p. 45, in the RUC example, CPUC staff believes that the PT wheel figure of $1600 (highlighted below) should be set at $2250.
   

“If an IFM-cleared non-RA import that self-scheduled in IFM is needed to meet the CAISO load forecast, the cost of not meeting load is $2250. The cost of not meeting the PT wheel is $1600. The cost of not meeting the LPT wheel is $1350. The import or the PT wheel will clear RUC, but both will clear before an LPT wheel.”

[1] California customers pay $2.6 billion for the high voltage transmission system each year and wheeling transactions pay $13/MWh, which amounts to $65,000 for 5,000 MW for 1 hour or $3.9 million for 60 hours, assuming that wheeling transactions are scheduled only during stressed system conditions.  By contrast, if wheeling transactions were required to pay to reserve the system for an entire month, which is not required under this proposal, the charge for 5,000 MW would be $47 million.

[2] "One exception is that if, in real time, the third-party generator supporting an export is not generating (e.g., due to forced outage) or is under-generating compared to its transmission exporting schedule, the balancing authority area may curtail the schedules to a level commensurate with generator production to avoid exacerbating the energy shortage and associated imbalance."  CAISO's Final Proposal, p. 13.

[3]  “A variable energy resource not contracted to meet resource adequacy can meet this attestation if the forecast of the resource can support the export quantity in all 15-minute intervals. For example, assume the forecast for interval 1 is 50MW, interval 2 is 45MW, interval 3 is 55MW and interval 4 is 60MW, this resource could support a 45MW PT export.” CAISO Final Proposal, p. 19.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

No further comments at this time. 

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

CAISO proposes that for import bids into the HASP process, that it will provide make whole payments if the fifteen-minute price (FMM) price is lower than the resource’s bid price, but only during alerts, warnings and emergencies. CPUC staff does oppose providing a make-whole payment for real-time market hourly block economic imports during tight system conditions. However, CPUC staff notes the disparity in that CAISO is proposing to protect generators from adverse market outcomes, but not similarly protecting customers from adverse market outcomes. Nonetheless, CPUC staff appreciates that CAISO has limited these payments to only those hours when alerts, warnings or system emergencies are in effect and thus, is supportive of efforts to contain the costs associated with these out-of-market payments. 

In response to comments, CAISO clarified that the make whole payments would apply for alerts, warnings, and emergency time periods inclusively, so that if an alert is issue for the day-ahead, but it is not followed by a warning or an emergency, these provisions would still apply, and provided the following example:

It is not clear why it would be necessary to offer make whole payments if only an alert occurred, if it was not followed by a warning or an emergency, especially since the purpose is to incent bids into the real-time market processes. Why would this be necessary if no subsequent warning was issued? 

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

When CAISO is in a Stage 2 emergency, CAISO begins to “arm load,” which is a process whereby CAISO requests that load serving entities prepare to drop load and, as a result, CAISO releases contingency reserves to use as energy. CAISO proposes that during these conditions, it will release contingency reserves into the market at the bid cap, which could be $1000 or $2,000 per MWh, if there is cost-verified internal bid or an import bid above $1,000/MWh (e.g., $1,010 per MWh).

CPUC staff believes that this change is not warranted for this summer and should be considered in conjunction with system market power mitigation, scarcity pricing, and penalties for generators for failure to perform under stressed system conditions. It is not clear why load should pay scarcity pricing, but RA resources that potentially bid their way out of a day-ahead obligation or otherwise fail to perform are not similarly penalized.

Further, given that CAISO would be at the stage of arming load, it would appear that CAISO at that point is out of generation and demand-side options, so it is not clear what one would be incenting at these high prices (e.g., what purpose did scarcity pricing serve in Texas this past winter). Thus, CPUC staff does not support this change, which might conflict with FERC Order 831, which required cost-verification for bids above $1000 for internal resource and this could potentially circumvent that verification process. For example, if one internal resource had a cost-verified bid at $1,010 per MWh, this proposal would appear to allow CAISO to release the contingency reserve resources into the energy market with $2000 bids (even though the cost-based bid for this resource might only be $80 per MWh), which will certainly increase prices, to the detriment of load, but would not provide any clear reliability benefit.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

No comments at this time.

6. Please provide additional comments on the final proposal and/or draft tariff language:

No further comments at this time.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

The Imperial Irrigation District (“IID”) is disappointed at the CAISO’s proposal to restrict the priority of wheel-through transactions to a narrow set of transactions, for which IID will find challenging to qualify, and which complicates the ability for IID to procure wheel-through resources to meet short-term variations in demand.  The CAISO’s advance contracting requirements provide obstacles that are a reversal of how the CAISO appeared to be approaching this issue.

IID has commented previously in this stakeholder process regarding the treatment of exports.  IID’s concerns were raised initially in response to the CAISO’s emergency implementation of Business Practice Manual (“BPM”) Proposed Revision Request (“PRR”) 1282.  IID commented that an entity located outside of the CAISO’s Balancing Authority Area (“BAA”) should be able to rely on its Day-Ahead E-Tag submittals carrying through with priority into the Real-Time Market.  Otherwise, the CAISO is issuing financially binding Day Ahead Market awards for exports that it is not serving.  The lateness in the CAISO’s market timeline process for declining exports under PRR 1282 creates considerable obstacles for IID in obtaining alternative supply.  At the time of the day when Residual Unit Commitment (“RUC”) awards are published for the day ahead horizon, the timelines for obtaining equivalent, day-ahead products in Western markets outside of the CAISO markets are formally closed.  IID cannot, at that point, turn to those day-ahead markets an option to substitute for non-awarded schedules.  IID’s concerns regarding exports were not resolved through this stakeholder process, and IID has explored diligently alternate means of securing shorter-term supply.

A key alternative for IID is wheel-through transactions.  Wheel-throughs may provide an important option for IID to serve load during tight system conditions, by accessing Western regional resources that are not committed to serve CAISO load.  In response to the Feb. 18, 2021 Draft Final Proposal, IID expressed cautious optimism that the CAISO would treat self-scheduled wheel-throughs as equal priority to PT exports and CAISO load.  See CAISO Feb. 22, 2021 Presentation at Slide 13.  There, the CAISO proposed that CAISO load and high priority exports will have the same penalty price.  See Feb. 18, 2021 Draft Final Proposal at 15.   Even so, in its February 28, 2021 stakeholder comments, IID expressed concern that a risk of non-acceptance existed for Day-Ahead wheel through schedules into the Real-Time Market. 

The Final Proposal retains the priority level to CAISO load in the Final Proposal, but adds conditions to make wheel-through transactions a less realistic alternative for IID.  The Final Proposal would require, for high priority PT wheels, an entity to have a signed contract to serve load in another BAA prior to the FERC filing date (anticipated April 23, 2021) of the relevant Tariff changes.  The entity would be required to procure monthly firm transmission external to the CAISO BAA to reach the CAISO BAA for the hours of delivery in the executed contract.  Next, the entity must notify the CAISO 45-days prior to the month of the MW quantity and verify the transmission purchase.  Lastly, the CAISO would register the export system resource in its Master File prior to the start of the month.  See CAISO Presentation at 7.  Scheduling coordinators would be required to attest to the forward contracting of the resource.  See Final Proposal at 18.  Low priority LPT Wheels would be prioritized well below pre-BPM 1282 status by setting the import leg equal to $0 and the export leg equal to the LPT export penalty price.  See id. 

The Final Proposal creates an unreasonably high hurdle for IID in looking to wheeled-through resources to prepare for the summer.  The cut-off date of April 23, 2021 provides insufficient time for IID to be able to secure contract(s) for wheel-through resources.  In addition, the 45-day prior-to-the-month requirement would leave IID with little-to-no margin for error.  If an internal plant unexpectedly experiences outages or if a line to a resource in an adjacent BAA is unexpectedly derated, IID would have no opportunity to backfill that capacity need with reasonable certainty of delivery via a wheel-through transaction over CAISO transmission.  IID would have to rely on LPT wheel-throughs, purchasing energy first and bearing a higher risk that the energy paid for will not actually flow.  In addition, IID will be unable to rely on wheel-through transactions with reasonable certainty to account for shorter-term variances in forecasts, given that such transactions would, given their timing, be classified as LPT wheel-throughs. 

IID recognizes that the CAISO will be considering the issue of wheel-through transactions further in a new initiative.  In the meantime, IID urges the CAISO to reverse its proposed priority of LPT wheel-throughs and other Tariff changes related to wheel-throughs described above.  This pause is necessary in consideration of neighboring BAAs to allow them sufficient time to adapt to energy prioritization and transmission use changes, not only to achieve sufficient forward procurement in accordance with the CAISO’s timelines, but to adapt day-to-day operations to be responsive to any new paradigm. 

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

IID provides no comment at this time on this issue.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

IID provides no comment at this time on this issue.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

IID provides no comment at this time on this issue.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

IID provides no comment at this time on this issue.

6. Please provide additional comments on the final proposal and/or draft tariff language:

IID reserves the right to change or supplement its positions in these comments in this stakeholder proceeding or in any subsequent process or proceeding in which these issues are raised.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Please see the attachment.  

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Thank you for the opportunity to comment.  MSCG serves loads in both the desert southwest and California markets and appreciates the difficult challenge regarding load and wheeling priorities that CAISO is trying to balance for this summer. 

One thing is for certain; with the current price spreads, the demand for wheeling transmission through the CAISO from COB/NOB to the desert southwest this summer will be extremely high.  The Palo Verde hub is trading at record levels above SP15 in all months of Q3 2021 and especially so for July and August. Market participants will certainly follow these price signals. Should this proposal proceed, the determining factor for how much energy flows as wheelthrough to the southwest versus to California load (as either import RA or self-schedules) will rest on how many wheelthroughs are classified as High Priority Wheels (PT wheel) according to the CAISO’s newly established criteria.

According to the final proposal, for a wheel-through to be designated as high priority (1) a contract must be signed prior to the FERC filing date (expected sometime in April), and (2) the supplier must show the CAISO 45 days in advance of the RA month that it has secured firm transmission to the CAISO boundary.  The requirement for firm transmission with upstream external transmission providers is inconsistent with the current and proposed requirements for import RA and remains a debated topic in the concurrent RA Stakeholder proceedings with both the CAISO and the CPUC.  It is premature to crystalize this requirement.  The contracting deadline prior to the FERC filing date is also inconsistent with deadlines for new import RA deals to be signed. 

Should CAISO proceed with this proposal, MSCG suggests that the requirement for transmission be amended to match the proposed requirements for import RA of ‘firm on the last line of interest’, at most.  MSCG is less concerned about the advance showing of contracts to serve load in southwest as it believes CAISO is being generous to wheelthroughs to begin with by allowing them to get pro-rata allocation of transmission for just one or two key months of the summer when California LSEs have been paying for the transmission system for entire year(s).

The most problematic aspects of the draft final proposal are highlighted in the following paragraphs.  

As constituted, PT Wheels can request and “cherry pick” transmission space for just one or two key months and be given a pro-rata allocation to flow when California LSEs’ contracts are for months or years and California LSEs have been paying for the entire transmission network for a much longer duration.  Furthermore, it  is unclear in the final proposal whether PT Wheels need to request even an entire month or whether they can just “cherry pick” and request key hours (i.e. HE19, HE20, HE21, alone) and expect to receive a pro-rata allocation of those key hours. This would make a pro-rata allocation to PT Wheels even more unfair to California loads. As well, it is not clear if once a transaction is granted PT Wheel status,  if that SC will be required to flow as a self-schedule for each hour of their contract (and will CAISO insert a bid for the schedule if the SC fails to do so?) or does the PT Wheel now have an option to decide which days or hours it can use its PT Wheel status to get pro-rata service?  These are critical details of the final proposal that the CAISO needs to address.

It is MSCG’s opinion that the final proposal giving PT Wheels pro-rata access to transmission on par with load has been rushed without adequate consideration of the unintended consequences. Furthermore, MSCG is concerned that the administrative process being contemplated prior to publishing HASP results has the potential to be disruptive to the market at the very times when the market is distressed.

On slide 11 of the proposal, it is stated that:

“Pro-rata allocation and adjustment of schedule will be done in non-market tool and presented to the operator in the instruction review period”

MSCG is concerned that pro-rata allocations performed in the HASP time period will result in many partially curtailed schedules, leaving counterparties scrambling to resupply downstream clients in the realtime market once EIM deadlines have already past.  These late curtailments to southwest LSEs may even come too late for those utilities to bring up their own long start units to compensate for this loss of MW.  It is well known that additional time to plan for an event will assist with reliability. Yet, CAISO’s proposal calls for adjustments to be made in the HASP timeframe which will not leave much time for market participants and load serving entities to react to the pro-rata curtailments.

Market participants, anticipating the pro-rata reductions on their PT wheelthrough schedules and in an attempt to get a higher pro-rata allocation, may even submit more contracts for high priority wheel status even though they may have other means of serving them. There is not adequate time to fully vet and address these concerns so close to the summer 2021 period.

While trying to accommodate wheelthroughs, CAISO’s latest proposal seems to ignore that in an Open Access world one of the highest priorities is given to native load importing from external designated resources using Network Integration Transmission Service.  This is essentially equivalent to MIC with identified import RA supply plans.  No other provider in WECC allows a short term wheelthrough request to come in and request a subset of valuable hours, days, or even a month and allow that wheelthrough to displace imports needed for reliability that has reserved transmission to serve native load. Once reserved, the Network Integration Transmission Service cannot be superseded.

While MSCG commends the CAISO for attempting to come up with a reasonable approach that balances the requirements for wheelthroughs versus loads for this summer, we fear this proposal could potentially do more harm than good. MSCG respectfully requests CAISO revert to their prior proposal where the import leg of a self schedule wheel was set to $0. 

While some may argue the prior proposal is unfair to wheelthroughs, the counterargument is that allowing a wheel to ‘cherry pick’ and get pro-rata access to the transmission system for one key month or a subset of key hours in that peak month is even more unfair to California LSEs.  The prior proposal would allow self-scheduled wheels to flow if there was space after import RA or self-schedule imports.  Importantly, it would provide some degree of certainty after the day ahead market results so market participants can plan accordingly – rather than being left to scramble after the HASP run with little time to make alternate arrangements.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

No comment.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

MSCG continues to support CAISO’s proposal to provide make-whole payments for real-time market hourly block economic imports during tight system conditions. Having price certainty can be expected to attract more imports which will be critical during tight system conditions, where it is likely that other neighboring markets are also experiencing high prices. MSCG is concerned however with mixed messages should CAISO first state that they are providing make whole payments for certain future hours and then have that message rescinded after market participants have already made arrangements to allocate their supply to CAISO. This will serve to undermine confidence in this mechanism.

MSCG understands CAISO’s desire for flexibility should they find that the make whole payment messages does not result in additional imports at the locations the CAISO needs.  For example, if CAISO needs energy in SP15 it may want make whole payments to apply to NOB, MONA, PV and other interties feeding SP15 to encourage additional supply at those points.  Yet additional imports at COB may not provide any benefit if that energy is getting stranded in NP26.  CAISO should consider whether its HASP optimization can take that prioritization into account before issuing a cancellation of the make whole payment notice for all interties.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

MSCG continues to support this element of CAISO’s proposal.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

NV Energy appreciates the opportunity to comment on the CAISO’s Final Proposal.  While the CAISO has attempted to address the concerns of Southwestern entities, the Final Proposal continues to modify the priorities for wheel-though transactions in a manner that is unduly discriminatory and inconsistent with FERC’s long-standing open access transmission principles as reflected in the terms and conditions of the pro forma Open Access Transmission Tariff (OATT) the Commission established in Order No. 888.  NV Energy understands the CAISO’s desire to strike an improved balance between wheel-through transactions imported and exported on firm transmission and procurement by California load serving entities (LSEs) to meet resource adequacy requirements established by CAISO and the California Public Utilities Commission.  This proposal goes too far in favor of the California LSEs to the detriment of customers in Western Balancing Authority Areas who require transmission through California.

The CAISO is acting to foster deliberate, economic choices made by California regulators and LSEs not to secure resource adequacy import capacity on firm transmission in contravention to the OATT requirement for external designated network resources, the CAISO’s own recommendations, and the requirements of other FERC-jurisdictional Regional Transmission Organizations and Independent System Operators.

In a filing made just two months before the summer, the CAISO unilaterally imposes changes that can have a significant impact throughout the region.  The CAISO’s proposal devalues daily, weekly, and even monthly firm transmission service procured after the date of the CAISO’s filing under the OATTs of other Western transmission providers.  This can interfere with the ability for non-California Balancing Authorities, including NV Energy, to respond to unplanned outages or unexpected load demands and to meet their customers’ needs in an economic and reliable manner. 

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

NV Energy respectfully urges the CAISO to abandoned this unsustainable proposal and to prepare a compromise that respects firm transmission procured under competitive open-access principles through all time frames including monthly, weekly, and daily transactions and minimizes the risks to all western balancing authority areas.  NV Energy understands that the CAISO proposes to limit this approach for the Summer of 2021.  However, many if not all of the Western Balancing Authority Areas have the same short-term concerns and equal responsibility for their native load and third-party transmission customers.  NV Energy must provide firm transmission service to any wheel-though transmission customers or exports going from Nevada into California.  The West should operate under a consistent set of principles that do not discriminate against or modify the regional paradigm of open access transmission.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

PG&E appreciates the CAISO’s continued efforts to address concerns regarding export, load and wheeling priorities by summer 2021. PG&E, however, has some immediate requests for changes, which are described below, that we believe are necessary for reliability this summer. We also want to continue to highlight the risks we see with the current proposal and how it might fail to adequately protect the reliability of CAISO BA load. Finally, we encourage the CAISO to pursue long-term fixes to the problems identified with export, load and wheeling priorities in an urgent manner so that solutions will be implementable by the beginning of 2022.

Immediate Requests for Changes

PG&E requests the following immediate changes to the proposal:

• PG&E believes that the CAISO’s restrictions on PT wheel throughs are necessary to ensure that only those wheel through transactions that are “firm power supply contract[s] to serve load in another balancing authority area” qualify as PT wheel throughs.  In particular, we support the CAISO’s proposal to require firm transmission to the border for PT wheels as a temporary measure that will help to ensure these wheel throughs are meant to serve load in an outside BA, until a permanent solution can be developed. However, we believe that the CAISO should add an additional requirement for PT wheel throughs to either have a must flow obligation or to pay the CAISO transmission access charge on a long-term basis. We and many other stakeholders have argued that the CAISO should seek comparable treatment with other BAs where possible and believe that the CAISO should include this requirement as it is consistent with the general principle in other BAs that in order to receive the same priority as native load you must agree to pay for the transmission on a long-term basis. We understand that the CAISO does not propose to provide full comparability by this summer, however, requiring the wheel throughs to pay for the transmission use on a long-term basis like native load in order to receive the same priority appears to be an implementable and equitable solution.

• PG&E requests that the CAISO clarify that operators may also take steps to curtail PT wheel throughs if they are not necessary to meet an external BA’s load requirements. In the proposal, operators are instructed to exhaust all possible actions to prevent the need for the after-HASP pro rata allocation. The proposal, however, does not acknowledge that the CAISO may still be required to shed load even after there is a pro rata allocation at the intertie. PG&E believes that CAISO should also instruct operators to determine whether they may curtail the PT wheel if the other BA does not need it to serve their own load. We ask the CAISO to add this to the proposal if it is not already a part of its emergency procedures for operators.

• PG&E also requests that for PT exports, the export quantity from a variable energy resource be further limited during the period between peak and net peak load. From our experience, resource forecasting errors are particularly high during this period. Moreover, as this period is often where we face the most significant supply challenges, we would not want to support an export during this period if we cannot accurately account for the expected output when our CAISO BA customers need supply the most. Once additional attestation and validation processes can be developed this restriction may no longer be necessary.

Risks of Current Proposal

PG&E would like to highlight the following risks with the current proposal:

• PG&E continues to highlight that this proposal may lead to enough wheel throughs crowding out our import capacity or creating congestion internally such that shedding native load may be required this summer. Additional high priority wheeling arrangements made between the time of the proposal and the filing date will likely further exacerbate the transmission infeasibility and could lead to additional and unjustified load curtailments in the CAISO BA. We believe that with the addition of the requests described above this risk can be further mitigated.

• PG&E is concerned about the potential effect RUC forecasting errors could have on the CAISO’s ability to import under this proposal. For example, if RUC does not identify an infeasibility for the next day then it would not automatically generate RUC bids for RA imports. Moreover, as PT and LPT wheels would appear to have a higher priority on a constrained intertie when the power balance constraint is not violated then this would reduce the total amount of RA and non-RA imports that received a RUC schedule. If conditions have changed such that in real time the power balance constraint was now violated and the after-HASP process of pro rata allocation to imports and wheel throughs was necessary, then only a limited number of RA imports would be considered in the CAISO’s allocation. PG&E believes that the CAISO should carefully analyze this scenario and consider the proper RUC forecasting error to prevent a deflated amount of imports in real time due to failures to properly set up the day ahead market.

• PG&E also has concerns about the implications of this proposal on LSE’s RA import transactions. Due to PT wheels receiving higher priority than load, this will create uncertainty about the deliverability of our RA imports, specifically at hours in which they are most needed. The CPUC asked PG&E and other LSEs to procure additional capacity including imports for this upcoming summer, which the CAISO supported.

• PG&E would like additional clarity on how the EIM resource sufficiency test would function, particularly with respect to the post HASP allocation process of PT wheels, imports, and internal generation. Specifically, PG&E believes the post-HASP allocation procedure should be complete and the updated inputs be included in the final run of the resource sufficiency test at T-45 to ensure that the CAISO is not cut off from EIM transfers due to incorrect data being used in the test.

Requests for Long-Term Change

• We would also like to reiterate that while this proposal is only intended to act as a temporary solution for this summer, it may still result in wheel throughs crowding out import RA and internal generation requiring firm load shedding. Therefore, it is an imperative that the CAISO move forward pursuing actions that will develop a longer-term solution in time for RA year 2022. PG&E is pleased that the CAISO has begun to pursue these changes through the Maximum Import Capability Enhancements Initiative and looks forward to remaining an engaged stakeholder on the topic. We encourage the CAISO to make a solution for 2022 one of their top priorities as it will have a significant impact on reliability.

• PG&E also appreciates the CAISO’s efforts to address the concerns we and other stakeholders have raised and appreciates the efforts the CAISO has made to ensuring that only non-RA resources contracted by an external BA that can be expected to support a given amount of energy can export with a priority equal to load. We, however, have some remaining concerns regarding the rules and attestation process for these exports and ask the CAISO to pursue additional changes beyond those proposed for this summer. More specifically, PG&E would like to see the CAISO provide additional attestation requirements and validation processes to ensure that the export is in fact sourced only from non-RA resources that are able to support the export.

Requests for Clarification

PG&E requests additional clarification on the following items:

• PG&E requests the CAISO to clarify the way in which it will calculate import RUC schedules versus RA imports bids. On page 48 of the proposal, the CAISO writes that the “total import RUC schedules include both RA imports and non-RA imports that cleared the RUC optimization.” It is unclear if the CAISO would deduct the RUC-cleared RA imports from the total RA import bids (i.e. Total RA Import Bids = RA import bids – RA import RUC schedule). PG&E believes that the CAISO should not deduct these from the calculation.

• PG&E would like to know if an RA import is forbidden from serving a PT wheel through. It is unclear in the proposal and the tariff language if this would be possible. As such, we ask the CAISO to clarify that RA imports cannot be used to support a PT wheel through under any circumstance.

• PG&E appreciates that the CAISO is considering Path 26 congestion as another constraint for wheel throughs. However, we would ask for additional clarification of how the CAISO intends to implement this constraint and some examples of how it would work in practice.

• PG&E requests clarification on the penalty prices used in RUC. In the appendix (page 45), the CAISO details the penalty prices in RUC and says that the IFM-cleared “import or the PT wheel will clear RUC.” However, in its explanation the cost of not meeting load is $2250 and the cost of not meeting the PT wheel is $1600. It appears that the cost of not meeting the PT wheel should also be $2250 if both the import and the PT wheel are on the same priority level. We ask the CAISO to clarify these penalty prices and to resolve any errors int eh proposal.

• PG&E also requests the CAISO to provide some detail of how penalty prices would scale under FERC Order 831 implementation.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

No additional comments. 

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

No additional comments. 

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

No additional comments. 

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

PG&E believes that the CAISO should include some high-level language in the tariff around the post-HASP allocation and operator procedures described in the policy proposal.

PG&E also made one change to the tariff language for the Priority Wheel Through Self-Schedule which can be seen in the attached document. It appears based on the language in the policy proposal that the CAISO mistakenly put in the tariff language that the firm transmission requirement would be from the “sink” instead of the “source” to the CAISO border.

6. Please provide additional comments on the final proposal and/or draft tariff language:

No additional comments.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

PacifiCorp reiterates that it is important for a Balancing Authority Area to know the type of import that is coming into its Balancing Authority Area because it is always ultimately responsible for reliability.  Therefore, PacifiCorp requests that the CAISO provide an indication of the export type (PT, LPT, or economic) as a token in the miscellaneous information field located within the e-Tag. This will allow balancing authority areas to establish a reliability plan for the imports associated from purchases within CAISO. This identification is vitally important for balancing authorities to know the priority level of the imports to appropriately account for additional reserves if determined to be needed. As an example, a customer within a PacifiCorp Balancing Authority Area may purchase energy within CAISO to serve their load.  This CAISO export might have a priority lower than load and may be cut in real-time to serve California load.  If this case were to occur, then PacifiCorp would have to make up this energy to maintain reliability within its Balancing Authority. Since the Balancing Authority is responsible for the reliability of its area at all times, it is a necessity that Balancing Authorities know how much capacity is being imported to serve load as non-firm. This request is very important to PacifiCorp.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Portland General Electric Company (PGE) shares many of the concerns expressed by entities in the Desert Southwest with regard to the proposed changes articulated in the March 19, 2021 Final Proposal for Market Enhancements for Summer 2021 Readiness related to export, load, and wheeling priorities.  While PGE recognizes and appreciates the efforts that the CAISO has made to identify near-term enhancements to prepare for this upcoming summer, the CAISO’s export, load, and wheeling priorities proposal results in a solution that is neither equitable nor aligned with the Federal Energy Regulatory Commission’s goal of promoting wholesale competition through open-access non-discriminatory transmission service.  Therefore, PGE is opposed to the CAISO’s proposal.

CAISO’s proposal to establish LPT priority to wheel-through transactions that do not meet its stringent advance transmission purchase and notification criteria has the likely effect of substantially restricting the marketability and access to capacity that may be available in the Pacific Northwest.  By allowing day-ahead economic bids in the Integrated Forward Market (IFM) to displace wheel-through transactions – regardless of their non-CAISO transmission rights – CAISO’s proposal unduly limits the reliability and deliverability attributes of energy that will be transacted at other regional hubs via wheel through.  While CAISO does not assign transmission rights until the day ahead environment, PGE (like all other transmission providers in the west) allows and encourages our transmission rights to be secured in advance.  By not recognizing the transmission priority rights of transmission service external to its BAA, CAISO’s proposal provides California entities a unique competitive advantage in the marketplace, effectively providing a first rights priority for California Load Serving Entities (LSEs) to resources California LSEs neither own nor control through contractual rights.  This not only risks broader reliability of the market and unfairly advantages California LSEs, but also inherently devalues transmission, capacity and energy sold from the Northwest if implemented as proposed.  

PGE supports the recommendation made by Salt River Project (SRP) that CAISO recognize and consider the existing FERC-approved e-tag framework already being used by Western entities to determine transmission priority.  This framework has been successful and is currently reflected in EIM Entities business practices.  

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

No comment.  

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

No comment.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

No comment.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

No comment.

6. Please provide additional comments on the final proposal and/or draft tariff language:

No comment.  

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Please see Powerex's comments at powerex.com/sites/default/files/2021-04/2021-04-02%20Powerex%20Comments%20on%20CAISO%20Summer%20Readiness%20-%20Wheeling%20Priorities.pdf

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

Please see Powerex's comments at powerex.com/sites/default/files/2021-04/2021-04-02%20Powerex%20Comments%20on%20CAISO%20Summer%20Readiness%20-%20Wheeling%20Priorities.pdf

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

Please see Powerex's comments at powerex.com/sites/default/files/2021-04/2021-04-02%20Powerex%20Comments%20on%20CAISO%20Summer%20Readiness%20-%20Wheeling%20Priorities.pdf

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

Please see Powerex's comments at powerex.com/sites/default/files/2021-04/2021-04-02%20Powerex%20Comments%20on%20CAISO%20Summer%20Readiness%20-%20Wheeling%20Priorities.pdf

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Summary Comments
Public Generating Pool (PGP) continues to support CAISO’s stated objective of equitably balancing the reliability of serving CAISO load with the reliability of exports, while providing open access to the CAISO transmission system. We further continue to support an interim solution that could accomplish this for summer 2021, however, it does not appear that the latest proposal achieves the stated objective and would in fact inequitably prioritize CAISO load over external loads while not ensuring open access to the CAISO transmission system.

Given that this proposal does not arrive at an equitable interim solution, PGP recommends that CAISO either retain the status quo for summer 2021 or explore the recommendations suggested by Bonneville Power Administration to provide for a more equitable interim solution.

Under any approach, PGP believes it is imperative to begin work on a long-term solution that explores developing a framework for transmission priority based on open access principles. Further, any interim solution adopted through this initiative should expire by December 31^st, 2021. 

Detailed Comments
CAISO’s latest proposal is intended to allow external entities to obtain scheduling priority for certain wheeling transactions that would have the same scheduling priority as RA imports to serve CAISO load.  CAISO proposes to differentiate the scheduling priority of wheel through self-schedules into “high priority” (PT) and “low priority” (LTP) categories and only “high priority” wheel through self-schedules would be on equal scheduling priority with imports to serve CAISO load. In order to qualify as a high priority self-schedule wheel, a contract to serve load outside the CAISO BAA must be entered into prior to when CAISO submits the amended tariff to FERC, which is currently planned for April 23^rd. In addition, the Scheduling Coordinator must notify the CAISO 45 days ahead of the month of the MW quantity of the wheel and confirm that it has procured monthly firm transmission for the hours of delivery of the contract to the CAISO boundary from an external BAA.

PGP does not believe the above approach treats imports and self-schedule wheels equitably, nor does it ensure open access to CAISO’s transmission system for wheel throughs. The requirements for wheel throughs to qualify for “high priority” PT status are more limiting than the requirements for CAISO load to achieve this priority. Import RA used serve CAISO load does not require firm transmission, while high priority PT wheel throughs under CAISO’s proposal do require firm transmission. In addition, in order for an entity’s wheel through self-schedule to qualify as high priority under the CAISO proposal, it must enter into a forward contract that is signed by the date when CAISO submits the amended tariff to FERC, whereas this same timing requirement is not imposed on import RA.  

In addition to the specific equity concerns this proposal raises for wheel through self-schedules, PGP is also concerned about the reliability impacts on entities that plan to serve their load using wheeling schedules across CAISO. CAISO’s current prioritization rules would allow these wheeling schedules to flow, however, under this proposal they may be subject to curtailment. PGP does not believe it is appropriate to make market design changes that would enhance the reliability of the CAISO BAA at the expense of the reliability of external BAAs.

Given the inequity of the proposal and its failure to achieve the stated objectives and the reliability consequences that it could have for load outside the CAISO BAA, PGP does not support the CAISO’s interim proposal. PGP encourages CAISO to either maintain the status quo for summer of 2021 or explore the interim solution proposed by Bonneville Power Administration which may provide for a more equitable solution for summer 2021. Under either option, PGP believes it is important to begin work on a long-term solution that explores developing a framework for transmission priority based on open access principles. Any interim solution adopted should expire by December 31^st, 2021. 

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

PGP agrees with CAISO that the export, load and wheeling priorities proposal should fall under the EIM Governing Body advisory authority.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

No comments.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

No comments.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

No comments.

6. Please provide additional comments on the final proposal and/or draft tariff language:

No comments.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Please see attached document.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

Please see attached document.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

Please see attached document.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

Please see attached document.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

Please see attached document.

6. Please provide additional comments on the final proposal and/or draft tariff language:

Please see attached document.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

While SDG&E doesn’t agree with CAISO’s proposal in total, it supports the proposal as being a net improvement over the status quo. SDG&E agrees with PG&E that CAISO needs to work with stakeholders to come up with a framework by which wheeling schedules can pay for transmission on a long-term basis the same way that load has been paying for the current transmission system on a long-term basis. SDG&E recognizes those discussions may not be appropriate given the short timeframe of this initiative and may be more appropriate for the Maximum Import Capability initiative and/or the RA Enhancements initiative. SDG&E reiterates its support for the proposal as a temporary measure to improve the current system but hopes there will be more done to address this issue on a sustained and going forward basis in future initiatives.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

None.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

SDG&E supports the CAISO’s proposal to provide a make whole payment to economic imports.  However, it is still unclear to SDG&E why the CAISO would provide make whole payments to exports as this does not improve reliability.  SDG&E supports limiting the frequency in which make whole payments would be made available to import bids.  SDG&E appreciates the CAISO’s proposal to monitor and suspend the make whole payment to certain scheduling coordinators if there are adverse market outcomes. 

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

SDG&E supports CAISO’s Scarcity Pricing proposal.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

See attached.

6. Please provide additional comments on the final proposal and/or draft tariff language:

None.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Seattle City Light supports CAISO’s initiative objective of equitably balancing the reliability of serving CAISO load with the reliability of exports, while providing open access to the CAISO transmission system. CAISO’s latest proposal and draft tariff language does not achieve these objectives and will inequitably prioritize CAISO load over external loads while not ensuring open access to the CAISO transmission system.

Seattle City Light recommends that CAISO retain the status quo for summer 2021 and begin work to develop a framework that meets open access principles for transmission priority in a separate policy initiative.

Seattle City Light does not believe the CAISO’s latest approach treats imports and self-scheduled wheels equitably. The proposal also does not ensure open access to CAISO’s transmission system for wheel throughs. The requirements for wheel throughs to qualify for “high priority” PT status are more limiting than the requirements for CAISO load to achieve this priority. Import RA used to serve CAISO load does not require firm transmission in order to achieve high priority PT status, while high priority PT wheel throughs under CAISO’s proposal do require firm transmission. Further, the requirement for entities to enter into a forward contract that is signed by the date CAISO submits the amended tariff to FERC is too strict of a timeline, where on the other hand, there is no equal requirement imposed on import RA.  

In addition to the specific equity concerns this proposal raises for wheel through self-schedules, Seattle City Light is also concerned about the reliability impacts on entities that plan to serve their load using wheeling schedules across CAISO. Seattle City Light does not believe it is appropriate to make market design changes that would enhance the reliability of the CAISO BAA at the expense of the reliability of external BAAs.

The inequity of the proposal, its failure to achieve the initiatives’ objectives, and the reliability consequences that it could have for loads outside the CAISO BAA force Seattle City Light to not support the CAISO’s interim proposal. Seattle City Light recommends CAISO maintain the status quo for summer of 2021 and begin work on a long-term solution that explores developing a framework for transmission priority based on open access principles.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

Seattle City Light agrees with CAISO that the export, load and wheeling priorities proposal should fall under the EIM Governing Body advisory authority.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

no comment

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

no comment

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

no comment

6. Please provide additional comments on the final proposal and/or draft tariff language:

no comment

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Shell Energy remains concerned that recent changes to the scheduling parameters for wheeling resources will erect barriers to accessing the CAISO bulk transmission system in a fair manner and will not comply with longstanding FERC-established open access transmission principles.

The inclusion of language which requires PT wheeling resources to:

1. Have a contract for external load service executed, no later than April 23, 2021 and,
2. Require the PT wheel’s SC to notify the CAISO 45 days prior to the delivery month and,
3. Require the PT wheel’s SC to contract or procure transmission of at least monthly firm quality on all physical segments external to the CAISO BAA…

…is wholly inappropriate as requirements 1 and 3 violate principles of open competition for transmission procurement.  While Shell Energy understands the difficult task of finding a solution prior to Summer 2021, any new requirements for PT wheeling resources should conform with established FERC precedent.  

A “drop dead” date for contracting is imprudent as contracts change through time—in response to changing fundamentals/conditions on the bulk electric system.  This change as outlined by the CAISO would totally eliminate the ability to execute a PT wheeling contract after April 23, 2021—well ahead of actual conditions being realized on the system this summer. 

Requirement 3, neccisitates a PT wheel to be scheduled on transmission of at-least monthly firm for all physical segments outside the CAISO BAA and is plainly discriminatory.  No other OATT transmission provider may approve or deny access to transmission capacity conditional on a customer’s transmission portfolio to be used elsewhere on a schedule.  For example, BPA Transmission does not and cannot deny tags or schedules for wheeling energy transactions based upon transmission criteria inside another BAA—these parameters are outside BPA’s BAA—thus BPA has no ability to approve or deny access.

Shell Energy suggests the requirements be altered to require PT wheeling resources:

1. Execute a contract for external load service no later than 60 days prior to the month of flow and, 
2. Require the PT wheel’s SC to notify the CAISO 60 days prior to the delivery month and,  
3. Establish a, first come, first served pro-rata allocation of MIC allocated to RA imports and/or PT wheels if quantity of PT wheels and RA imports exceed MIC capacity by tie and,
4. Limit implementation of these requirements A-C to the remainder of 2021.   The outcome of the MIC enhancements stakeholder process should be allowed to inform open access to transmission service for RA imports and PT wheels, alike.

Finally, these proposed changes further emphasize inconsistencies between PT wheeling and RA import resources.  Adding requirements to one class of resource and not the other creates seams issues and is a discriminatory. 

For these reasons, Shell Energy suggests removing the latest requirements made to PT wheels and moving forward with the MIC enhancements process in an expedited fashion, prior to Q4 2021.

Shell Energy appreciates the opportunity to provide these comments.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

 No comment.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

 No comment.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

 No comment.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

 No comment.

6. Please provide additional comments on the final proposal and/or draft tariff language:

 No comment.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

The Six Cities support the revisions to export, load, and wheeling priorities proposed in the Market Enhancements for Summer 2021 Readiness: Final Proposal dated March 19, 2021 (the “Final Proposal”) on an interim basis.  However, although the Six Cities agree that revisions resulting from the planned initiative for development of a process for wheel through reservations should supersede the modifications recommended in the Final Proposal, the Six Cities do not agree that the modifications included in the Final Proposal should sunset automatically at the end of 2021 (or any other fixed date) for the reasons described in detail below.

There is an urgent need to implement changes to the currently effective priorities for imports, exports and wheeling transactions.  As the CAISO has explained, wheel through transactions currently have a “super-priority” that results in wheeling transactions potentially displacing imports needed to serve CAISO load under stressed system conditions, even Resource Adequacy imports.  As described below, the current super-priority for wheel through transactions is inconsistent with FERC policy and unjust and unreasonable in view of the fact that the Wheeling Access Charge applies on an as-used basis, rather than providing long-term cost support for the CAISO system comparable to the cost support provided by CAISO load.  Recognizing that more comprehensive revisions to import, export, and wheeling priorities will take time to develop and may be more complex to implement, the Six Cities support interim application of the revisions recommended in the Final Proposal as significant improvements relative to the current structure of priorities.

Contrary to positions expressed by some market participants during stakeholder discussions, the modifications to the priority structure included in the Final Proposal are more consistent with FERC’s open access policy than the currently effective priorities framework.  FERC’s open access transmission policy recognizes a priority for native load customers for access to the transmission network to serve their requirements.  In Order No. 888¹,  the Commission held that transmission providers may reserve in their calculation of available transfer capability the existing transmission capacity needed to accommodate native load growth reasonably forecasted within the utility's planning horizon.²  At the time Order No. 888 was issued, the Commission’s holding reflected the already well-established concept that native load customers deserve priority access to their utility’s available transmission capacity, because that capacity was constructed to provide service to such customers and was paid for by such customers.³  Subsequently, in Order No. 890 and its progeny,⁴ the Commission introduced a number of reforms to the open access rules yet retained the fundamental native load priority established in Order No. 888.  In Order 890, the Commission found that “the native load priority established in Order No. 888 continues to strike the appropriate balance between the transmission provider’s need to meet its native load obligations and the need of other entities to obtain service from the transmission provider to meet their own obligations,” and that “these protections for native load are appropriate.”⁵  With respect to curtailment, Order No. 890 held that “if a reliability problem does arise, any curtailment of firm point-to-point transmission service must be on a nondiscriminatory and pro rata basis with the treatment of network service and native load customers . . . this treatment meets the comparability requirements enunciated in Order No. 888.”⁶  Notably, for curtailment priority equal to that applicable for service to native load customers, a non-network service reservation must be firm.

More recently, the Commission has upheld native load priority for transmission service over combined systems in the context of mergers and joint dispatch agreements.  In Sierra Pacific Power Co., et al. v. NV Energy, Inc.,⁷ the Commission held that “Network Integration Transmission Service expressly recognizes the underlying right of the transmission provider to use its network resources to serve its native load needs, including through economic dispatch of those network resources.”⁸  Similarly, in Duke Energy Corp., et al.,⁹ the Commission accepted a joint dispatch agreement filed by Duke Energy Corporation on behalf of its operating companies that contained provisions for the native load priority of wholesale customers.  In its order on remand from a decision of the D.C. Circuit Court of Appeals requiring further explanation,¹⁰ the Commission stated that “[t]he distinction between native and non-native load recognizes the obligation undertaken by public utilities to engage in long-term system planning on behalf of certain customers in exchange for those customers taking requirements service and contributing to the fixed costs of the supplier's system.”¹¹  The currently effective super-priority for wheeling transactions plainly is inconsistent with FERC’s long-standing recognition of native load priority, especially in view of the fact that the structure of the Wheeling Acces Charge does not provide on-going cost support for the CAISO transmission network comparable to the cost support provided by CAISO load.

In recommending equivalent priorities for RA imports and wheel through transactions that demonstrate commitment to meet reliability needs of load in the sink Balancing Authority Area (“BAA”), the Final Proposal moves significantly closer to compliance with FERC’s open access transmission policy than the existing structure of priorities.  For that reason, the Six Cities support implementation of the priorities and eligibility requirements described in the Final Proposal as promptly as possible.  For the same reason, the Six Cities oppose including any automatic sunset provision in implementing tariff language for the Final Proposal.  A return to the existing priorities structure is not an appropriate default outcome.  The Six Cities agree that the priorities recommended in the Final Proposal should be considered interim in nature and subject to modification through the planned initiative to develop a process for firm wheeling reservations, but it is unjustified to create even a potential for reinstatement of the existing super-priority for wheeling transactions over imports needed to serve CAISO load.

1. Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996), order on reh'g, Order No. 888-A, FERC Stats. & Regs. ¶ 31,048, order on reh'g, Order No. 888-B, 81 FERC ¶ 61,248 (1997), order on reh'g, Order No. 888-C, 82 FERC ¶ 61,046 (1998), aff'd in relevant part sub nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002) (“Order No. 888”).
2. Id. at 31,694.
3. See, e.g, Utah Power & Light Co., et al., 45 FERC ¶ 61,095, at 61,287, 61,291 (1988) (recognizing that a merged company could legitimately reserve from its wheeling obligations so much of its capacity as would be necessary to serve native load).
4. Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 118 FERC ¶ 61,119 (“Order No. 890”), order on reh'g, Order No. 890-A, 121 FERC ¶ 61,297 (2007) (“Order No. 890-A”), order on reh'g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on reh'g, Order No. 890-C, 126 FERC ¶ 61,228, order on clarification, Order No. 890-D, 129 FERC ¶ 61,126 (2009).
5. See Order No. 890 at P 107.
6. Id.
7. 143 FERC ¶ 61,144 (2013).
8. Id. at P 112.
9. 166 FERC ¶ 61,112 (2019).
10. Orangeburg v. FERC, 862 F3d 1071 (D.C. Cir. 2017).
11. 166 FERC ¶ 61,112 at P 13 (internal citations omitted).  

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

It is not clear to the Six Cities whether or how relative priorities for imports, exports, and wheeling transactions may affect EIM transfers.  In the Cities’ view, approval authority for the outcome of the initiative properly lies with the CAISO Board of Governors.  However, in light of potential impacts on real-time operations, it is appropriate to inform the EIM Governing Body with respect to the progress of the initiative and to include their input on an advisory basis. 

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

The Six Cities continue to support the proposal to provide for bid-cost make-whole payments for real-time market hourly block economic imports during tight system conditions.  With respect to the allocation of uplift costs arising from such make-whole payments, it remains unclear to the Cities whether imports that receive such payments can be used to support EIM transfers out of the CAISO BAA.  To the extent that imports receiving make-whole payments are or can be utilized to support EIM transfers out of the CAISO BAA, such EIM transfers should share in the allocation of the uplift costs.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

The Six Cities continue to support the CAISO’s proposal to release both contingent and non-contingent operating reserves at the prevailing bid cap price, rather than at bid cost, under conditions when the CAISO is arming load to meet contingency reserve requirements and enable the release of reserves to supply energy.  The Six Cities agree with the CAISO that release of operating reserves priced at the bid cap under conditions where load is armed to provide contingency reserves will provide a more appropriate price signal for tight supply conditions.  The Six Cities also agree with and support the clarification in the Final Proposal that the $1,000/MWh or $2,000/MWh released reserve energy bids will set market prices only when the market clears those bids in merit-order, i.e., after exhausting any other available cheaper supply.

The Six Cities also continue to agree with the CAISO’s determination that consideration of possible additional scarcity pricing measures should occur in the context of a separate stakeholder initiative timed to allow thorough evaluation of the complexities and potential unintended consequences of such measures.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

Subject to their opposition to an automatic sunset provision as a matter of policy as discussed in Item 1 above, the Six Cities have not identified any need for revisions to the draft tariff language.  

6. Please provide additional comments on the final proposal and/or draft tariff language:

The Six Cities have no further comments on the Final Proposal at this time.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

SCE appreciates the opportunity to provide the following comments on the CAISO Market Enhancements for Summer 2021 Readiness Final Proposal[1]. The Final Proposal includes changes mainly on export, load and wheeling priorities, and SCE’s comments herein focus on these topics.[2]

The CAISO proposes that its export, load and wheeling priorities proposal should serve as temporary measures only and remain in effect until 2021[3]. SCE understands the urgency of taking necessary actions to prepare for Summer 2021, as such, while the CAISO proposal should serve as temporary measures for 2021, a longer-term solution must be developed that fully addresses these issues. For instance, resource and transmission requirements to support the scheduling priority received by high priority exports and wheels should be fully developed in the longer-term solution.

The CAISO proposes that to receive priority wheel (PT Wheel) status, the underlying firm power supply contract must be signed prior to April 23, 2021[4] and have firm transmission. The CAISO proposes that the scheduling coordinator (SC) of the wheel must notify CAISO T-45 days prior to the month of wheeling the power. SCE supports this proposal for a cut-off date; however, SCE suggests the SC of PT Wheels also submit their contract quantity to receive a PT Wheel status[5]. This is necessary and appropriate for the following reasons.

• If the amount of wheels is made available only 45 days in advance of the applicable month, it may leave the CAISO and market participants insufficient time to prepare for potential critical conditions during the summer. As recognized by the CAISO and stakeholders, extreme weather and net peak load are of critical concerns. Knowing the expected magnitude of wheels for the summer well in advance will help preparation efforts.[6]^,[7].
• Identifying the quantity of wheels at the proposed T-45 timeline does not provide sufficient information for the CAISO’s Summer Loads and Resources Assessment study (Summer Assessment), which is typically finalized in early May. Without knowing the expected quantity of wheels, the information and assumptions for the Summer Assessment could be incomplete and inaccurate.

For these reasons, the CAISO should require entities with expected wheel through activities during the summer months submit their contract quantity by April 23, 2021. The CAISO should then release the contract quantity aggregated at each intertie and release the information by intertie to all market participants by the end of April 2021.

In the Final Proposal, the CAISO also proposes that if there are uneconomic adjustments in Residual Unit Commitment (RUC), all RA imports will be given a RUC schedule up to their RA capacity even if the RA import didn’t clear RUC optimization[8]. SCE supports this element of the proposal as it reaffirms import RA bids that are available in the event of a RUC infeasibility. In addition, the CAISO proposes that, when there is uneconomic adjustment in Hour Ahead Scheduling Process (HASP), a pro rata allocation process will trigger, which will allocate intertie transmission capability on binding interties among priority wheels and resources supporting CAISO load (i.e., RUC and RA Import bids).  To ensure this pro rata allocation process functions as intended, available RA import bids must be included. Assigning RA imports with a RUC schedule at their RA capacity will make sure those imports are available in HASP for this pro rata allocation.  Therefore, SCE supports the proposal of ensuring that import RA would have a RUC schedule up to their RA capacity in the event of a RUC infeasibility.

[1] Final Proposal, March 19, 2021, available at http://www.caiso.com/InitiativeDocuments/FinalProposal-MarketEnhancements-Summer2021Readiness.pdf

[2] SCE’s comments on other topics covered in the Final Proposal can be found here: https://stakeholdercenter.caiso.com/Comments/AllComments/a1105b73-c668-4ba5-9858-9e183a2cd852#org-f895fa62-66c5-409b-a35f-0578fd86b93b.

[3] Final Proposal, at 4, 12, 21.

[4] Draft Tariff Language – Export, Load and Wheeling Priorities, 3/19/2021, available at http://www.caiso.com/InitiativeDocuments/DraftTariffLanguage-Export-Load-WheelingPriorities-MarketEnhancements-Summer2021Readiness.docx

[5] On April 23, 2021, or shortly after, such as within a week of April 23, 2021.

[6] E.g., see activities under CPUC Proceeding R2011003.

[7] If the reason to choose the T-45 timeline is in reference to the timeline of monthly resource adequacy (RA) showings, which are also at T-45, then it should be recognized that the majority of RA capacity that is above the level of monthly peak load is shown in Year-Ahead timeline. (90% of System RA obligations – 103.5% of peak load – must be procured for the five summer months during the year-ahead RA showings. Local RA has to be shown to the CPUC three-year ahead).

[8] Final Proposal Presentation, at 9, available at http://www.caiso.com/InitiativeDocuments/Presentation-Export-Load-WheelingPriorities-MarketEnhancements-2021SummerReadinessMar26-2021.pdf.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

Please find SCE comments previously submitted: Link.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

 Please find SCE comments previously submitted: Link.

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

  Please find SCE comments previously submitted: Link.

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

The CAISO should consider including the information release, as described in the response to Question 1 above, in Tariff. Alternatively, it should be included in the BPM.

6. Please provide additional comments on the final proposal and/or draft tariff language:

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

Salt River Project Agricultural Improvement and Power District (SRP), Arizona Public Service (APS), Tucson Electric Power (TEP), Arizona Electric Power Cooperative, Inc. (AEPCO) and NV Energy (“Southwest Load Serving Entities” or “Southwest LSEs”) continue to have significant concerns with the proposed changes articulated in the March 19, 2021 Final Proposal for Market Enhancements for Summer 2021 Readiness related to export, load and wheeling priorities. Therefore, Southwest LSEs remain opposed to the CAISO’s proposal. The Southwest LSEs appreciate CAISO’s efforts to find short-term solutions while developing long-term policy proposals to address the wheeling concerns; however, the CAISO proposal is not fair, equitable or aligned with the intent of FERC’s open access requirement and non-discriminatory service.

CAISO has not developed a near-term solution that places wheel-through transactions used to serve load outside the CAISO on even footing with imports to serve CAISO load. The proposal that CAISO has put forth as a temporary solution – creating “high priority” wheels – does not protect the forward contracts Southwest LSEs have entered into to serve their load over the 2021 summer. Discussed in more detail below, the “high priority” wheel option reduces the deliverability of the Southwest LSEs’ forward contracts and places their priority below that of CAISO load. In addition, the near-term solution also substantially and negatively affects the quality and reliability of daily market transactions Southwest LSEs rely upon to serve load because it increases the risk of curtailment if CAISO predicts import congestion.

In general, this latest proposal is not equitable or fair to market participants outside of the CAISO Balancing Authority Area (BAA) and is inconsistent with regional market principles. No other BAA in the Western Interconnection could manage its transmission system to bias import preferences for its own load at the expense of wheels that rely on firm transmission rights. In this proposal, CAISO is essentially exporting to the rest of the West its reliability issues that have arisen due to a number of dynamics occurring within the CAISO BAA.

It is not reasonable, nor should it be acceptable under the framework of the Federal Power Act, for other BAAs in the West to bear the consequences of California’s regulatory and planning decisions, including under-investment in sufficient resources to serve California load. These issues have been raised with California regulators over the past several years with no action. CAISO should not solve deficiencies that are a result of years of inaction by exporting the resulting reliability issues to neighboring BAAs.

Some of the Southwest LSEs’ main concerns with CAISO’s Final Proposal include:

1. Non-firm Resource Adequacy (RA) deliveries to CAISO’s BAA are prioritized over wheel-through transactions that support Southwest reliability

The requirements the proposal places on wheel-through transactions seeking high priority Price Taker (PT) status are above and beyond those placed on California RA Imports.  These requirements – signed contracts, 45-day notice and firm transmission – will give the CAISO BAA priority access to Northwest supply ahead of Southwest needs, regardless of whether the Southwest has transacted for energy on equivalent or higher priority transmission.  The Southwest LSEs request that requirements for wheel-through transactions be consistent with those of California RA imports.

2. Impact to bilateral markets in the West and diminishing quality of energy transacted at Desert Southwest Hubs

Wheel-through purchases not contracted prior to CAISO’s FERC filing date (expected to be April 23, 2021) and included in the scheduling coordinator’s 45-day advance notification to CAISO will receive Lower Price Taker (LPT) treatment in the day-ahead environment and may be curtailed if import congestion is predicted or expected to be a concern for importing CAISO’s requirements.  This will adversely affect day-ahead bilateral transactions both from a firmness and pricing perspective at market hubs across the West, including at Palo Verde and Mead, both of which are major transaction hubs for the Desert Southwest.

CAISO’s proposal to establish LPT priority to wheel-through transactions that do not meet its stringent advance purchase and notification criteria has the likely effect of substantially restricting the marketability and access to capacity in the Pacific Northwest.  By allowing day-ahead economic bids in the Integrated Forward Market (IFM) to displace wheel-through transactions – regardless of their non-CAISO transmission rights – CAISO’s proposal unduly limits the reliability and deliverability attributes of energy that will be transacted at other regional hubs via wheel-through.  While CAISO does not assign transmission rights until the day ahead environment, all other transmission providers allow and encourage their transmission rights to be secured in advance.  By not recognizing the priority of transmission service outside of its BAA, CAISO’s proposal would have the effect of substantially limiting the actual quality of transmission provided by others. This would upend the incentive to secure long-term transmission service and diminish the rights assigned to longer-term transmission holders.  In greatly reducing the incentive for load-serving entities to invest in long-term transmission rights, the proposal distorts the market signals across the West that serve to illustrate to  transmission providers the need to invest in new transmission projects and  conduct maintenance or upgrades to equipment, both of which are essential to ensure robust and reliable markets within the West.  The West is currently challenged by underinvestment in transmission infrastructure, and this proposal would exacerbate that problem.

In addition, by failing to recognize the transmission priority rights of others external to its BAA, CAISO’s proposal would provide California entities a unique competitive advantage in the marketplace, effectively providing a first rights priority for California LSEs to resources California LSEs neither own nor control through contractual rights.  This not only poses broad market reliability risks and provides an unfair advantage to California LSEs, but also inherently devalues transmission, capacity and energy sold from the Northwest if implemented as proposed.

The Southwest LSEs recommend that CAISO recognize and consider the existing e-tag framework already being used by Western entities to determine transmission priority.  This framework has been successful and is currently reflected in EIM Entities’ business practices.  

In addition to the concerns described above, the Southwest LSEs would like clarification on how wheel-through priority is related to the recently initiated Maximum Import Capability (MIC) Enhancements stakeholder process.  The Southwest LSEs understand that the MIC process is an allocation of import rights to LSEs within CAISO to enable and inform how qualifying RA contracts might be pursued, not a forward assignment of firm transmission rights.   The Southwest LSEs have questions regarding timing of the interim changes to wheel-through priority included in the Final Proposal for Market Enhancements for Summer 2021 Readiness and changes that are anticipated as part of the MIC Enhancements initiative. 

The Final Proposal for Market Enhancements for Summer 2021 Readiness indicates the proposed export, load and wheeling priorities will “remain in effect until 2021,” which Southwest LSEs assume to mean through December 31, 2021.  The MIC Enhancements long-term approach to enable external entities to obtain priority transmission for wheeling schedules on a forward basis, is not expected to be implemented until 2023.  The Southwest LSEs request CAISO provide clarification on its intent regarding the governing rules for wheel-throughs after December 31, 2021, and whether the ongoing MIC Enhancements initiative is expected to identify the long-term wheel-through priorities.  If so, how does CAISO foresee addressing any perceived timing gaps between the conclusion of this interim proposal (presumed to be December 31, 2021) and the implementation date of the MIC Enhancements? In agreement with what commenters indicated during the March 18 stakeholder meeting for the MIC Enhancements initiative, Southwest LSEs encourage CAISO to carve out the wheel-through portion of the MIC Enhancements initiative and accelerate its implementation. 

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

Southwest LSEs support CAISO’s proposed EIM Governing Body advisory role classification for export, load and wheeling priorities. Southwest LSEs agree with CAISO that changing the rules governing use of CAISO transmission will affect participation in EIM.

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

No comments

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

No comments 

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

Consistent with comments outlined in item 1, Southwest LSEs recommend the following revisions to the draft tariff language.

Priority Wheeling Through Self-Schedule

A Self-Scheduled Wheel Through that is supported by (1) a firm power supply contract to serve load in another balancing authority area that was entered into prior to April 23, 2021, and (2) monthly firm transmission under applicable open access transmission tariffs, or comparable transmission tariffs, to deliver the Wheel Through Energy from the sink to the CAISO border during all of the hours covered by the firm power supply contract. 

6. Please provide additional comments on the final proposal and/or draft tariff language:

Southwest LSEs are concerned that CAISO is implementing material changes to its market through modifications to its Business Practice Manuals (BPM), rather than its tariff.  In particular Southwest LSEs object to the September modification of the BPM to substitute the CAISO’s Residual Unit Commitment process for the former Integrated Forward Market pricing run.  The goal of this change was to distinguish high-priority from low-priority exports in the day-ahead market.  However, the change did not properly achieve its goal and had measurable adverse effects on Southwest LSEs in the day-ahead market.  Long-standing FERC precedent dictates that provisions that “significantly affect rates, terms, and conditions” of service must be included in the tariff.  There is no doubt that the September modifications and any subsequent modification to the priority of service significantly affect conditions of service.  Along with the September modifications, Southwest LSEs believe that any future change should be included in the CAISO’s tariff.

1. For the final proposal, please provide your organization's comments on the export, load and wheeling priorities proposal:

WPTF is not opposed to the CAISO reaching a reasonable compromise for this summer with regards to load, exports, and wheeling priorities. We appreciate the CAISO going back to the drawing board on this element to try to find a reasonable balance between maintaining the CAISO’s grid reliability and serving load while also recognizing the importance for neighboring BAAs to maintain reliability and serve their load during tight supply conditions. Without the existence of similarly situated network transmission service in adjacent areas that can be coordinated with the CAISO’s network dispatch, the CAISO is left with few good options in accommodating use of its transmission system to accommodate “wheel throughs”. The transparency and additional detail provided in the appendix of this final proposal regarding the interplay of penalty prices and prioritization of exports, imports, load, and wheel-through schedules was extremely useful. However, we continue to remain concerned due to unintended consequences with this element of the proposal, especially regarding the prioritization of wheel-throughs relative to imports, exports, and load. We believe there could be a more balanced approach implemented for this summer while the CAISO continues discussions with the stakeholder community to develop a longer-term solution. 

At the beginning of this effort, the CAISO discussed with stakeholders how self-scheduled wheel-throughs have higher priority than self-scheduled exports and load. While we appreciate the thought that went into developing a high and low priority wheel-through paradigm in an attempt to achieve equitable prioritization, in practice, this proposal will actually result in the majority of self-scheduled wheel throughs now having lower priority. The unbalanced approach this proposal is creating is due to two factors. First, the amount of self-scheduled wheels that can meet the CAISO’s criteria to achieve high priority is minimal. Second, the types of imports, including RA and non-RA as well as self-scheduled and economically offered, that will take priority over wheel-throughs used to serve load in a neighboring BAA encompasses a significant portion of the imports.  

For a wheel-through to be designated as high priority (1) a contract must be signed prior to the FERC filing date, which is expected mid to late April, and (2) confirm with the CAISO 45 days in advance of the RA month that it has secured firm transmission to the CAISO boundary. We are unsure why the CAISO is requiring contracts must be signed by April 23, 2021 when it does not have the same requirements for RA imports which would then receive high priority if/when self-scheduled in the day-ahead market. RA imports can be contracted for on a monthly, and in some cases, intra-monthly basis. Additionally, it is our understanding that how and when firm transmission is secured to support wheel-through transactions rarely occurs with a 45-day lead time. Thus, requiring SCs to show 45-days in advance that they have secured firm transmission is outside of typical business practice. Therefore, these criteria (1) apply inequitable restrictions on wheel-throughs contracted to serve load in a neighboring BAA compared to RA imports contracted to serve CAISO load and (2) will likely result in the majority of wheel-throughs used to serve load in external BAAs being classified as low priority wheel-throughs.

We also recognize that there could be unintended consequences to the extent high priority wheels are prevalent and may only opt to self-schedule during the highest peak days and hours. This could result in the wheel-throughs having equal access to the transmission system alongside California load only during those critical hours when California load pays for the transmission year-round.

While we appreciate the interim nature of the proposed policy, WPTF believes a more balanced interim approach is feasible. One potential modification could be for the CAISO to consider more realistic criteria for what would qualify as a high priority self-schedule. For example, reducing the firm transmission criteria to an attestation stating that the scheduling coordinator will secure the necessary transmission prior to real-time. Additionally, allowing contracts to be signed after April 23, 2021 and still qualify would apply more equitable treatment to when import RA contracts can be signed and still qualify as providing RA.  

Assuming the majority of wheel-throughs will be classified as low-priority, it then follows that the majority of wheel-throughs can and will be cut prior to non-RA imports and RA imports that do not clear the IFM. Based on the examples provided by the CAISO in the Appendix, both an RA import that economically offers into the IFM and does not clear the market and a non-RA import that economically offers and clears the IFM will still clear the RUC process prior to a low priority wheel-through that self-schedules and clears in the IFM.

Furthermore, it seems as though this policy could create some unintended bidding incentives with real-time imports. On page 46 of the Final Proposal, the CAISO describes through three examples how the bid of a real-time import will impact the prioritization order of CAISO load, RUC cleared low priority wheels, and real-time low priority wheels. For example, if the import bids less than $300 and is needed to meet CAISO load, then load will have the higher priority. However, if the import bids more than $400/MWh and is needed to meet CAISO load, then load will have the lowest priority.

2. For the final proposal, please provide your organization's position on the EIM Governing Body classification for the export, load and wheeling priorities proposal:

3. For the final proposal, please provide your organization's comments on the market incentive for imports proposal:

4. For the final proposal, please provide your organization's comments on the real-time scarcity pricing enhancements proposal:

5. For the draft tariff language, please Include redlined comments in the word version of the tariff language posted on the initiative webpage and attach below.

6. Please provide additional comments on the final proposal and/or draft tariff language:

Thank you for consideration of our comments. WPTF understands this is an extremely difficult and challenging issue.