Please provide your perspective on the challenges/Problem Statements you would like the Working Groups to explore further, and if you would be interested in presenting to the community on said problem statement/challenge.
SRP has concern with the CAISO’s mechanism for market power mitigation (MPM) as it pertains to its reliance on the Gas Price Index (GPI). The GPI is considered a lagging indicator that may not account for rapid changes in market conditions, and it may provide inaccurate pricing information that is not reflective of current conditions. The use of outdated GPI values has the potential to create significant issues and cause adverse financial consequences. Further, SRP is concerned that the MPM mechanism proposed by the CAISO for the Extended Day-Ahead Market (EDAM) closely mirrors what is used for the Western Energy Imbalance Market (WEIM). In the context of EDAM, market participants will rely on accurate and timely information to make informed decisions. The use of a lagging indicator could result in participants offering or accepting prices that do not accurately reflect market conditions, which can lead to financial risk and potentially insufficient market outcomes. As a common example of weekly occurrence, currently the SRP will on Friday trade for the following Sunday and Monday, which leaves volatility with unit status and fuel capacity associated to them. It would potentially create risks for SRP to make such commitments in a market that is not flexible enough to account for any significant changes in SRP’s position. Other times where this becomes an issue as well would be the NERC holiday days that extend these forward trading days and increase the risk for day-ahead vs real-time discrepancies. Additionally, SRP would like to draw attention to the current timing misalignment of the default energy bid (DEB) calculation. The DEB calculation is currently performed at 23:00 PPT, which may not align with the gas schedule day. This misalignment can result in discrepancies and potential issues, especially when there are fluctuations in gas prices. Bids submitted during this misalignment period could be unreasonably mitigated for hour-ending (HE) 23 because the DEB process has completed, and a new GPI has been utilized.
SRP encourages the CAISO to provide clarity with respect to how the GPI and MPM mechanisms will be managed. It is important that market participants have a clear understanding of the data sources, methodologies, and timing involved in the GPI calculations. Additionally, SRP recommends the DEB calculation process be adjusted to align with the gas schedule day to allow a more accurate and efficient bidding process.
SRP acknowledges that these comments may be more closely related to the deliberations held during the August 17 Price Formation Enhancements working group session. However, SRP deems them of importance. Further, there is currently not clarity regarding the timeline for submitting comments specifically pertaining to the August 17 working group session.