Comments on Mar 16 Uplift and DEB, Outage Management, and State-of-Charge Management and Issue Paper and Straw Proposal on Mixed-Fuel Resources

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

AES appreciates the opportunity to comment on the March 16, 2026, stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources. AES supports CAISO’s efforts to develop policy for the headroom limit, recognizing its potential to reduce future solar curtailment, improve grid utilization, and deliver cost savings to ratepayers. AES also supports CAISO’s diligence in advancing policy related to the high sustainable limit, which will enhance solar forecasting accuracy. Furthermore, AES supports a holistic review of storage modeling and dispatch, and encourages CAISO to prioritize enhancements that reflect real-time opportunity costs, ensure efficient dispatch, and maintain consistency across CAISO and WEIM markets.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

AES supports the development of a default energy bid (DEB) option for WEIM-only storage resources. A unified DEB framework applicable across both CAISO and WEIM is preferable to avoid fragmentation and ensure consistency. AES requests clarification on the treatment of negotiated DEBs in EDAM and encourages CAISO to consider the implications of balancing authority area (BAA)-level market power mitigation on DEB design.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

No comments.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

AES supports allowing storage resources to submit Reference Level Change Requests (RLCRs). RLCRs are necessary to ensure that storage resources are appropriately positioned in the bid stack during significant changes in system conditions. AES believes that RLCRs complement time-of-day default energy bids and are essential for aligning dispatch outcomes with real-time market conditions.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

AES supports CAISO's proposal to defer the development of hybrid resource DEBs until after the storage DEB methodology is finalized.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

AES supports the proposed headroom limit framework for co-located variable energy resources (VERs). During the stakeholder meeting, CAISO indicated that co-located resources would receive two instructions: a Dispatch Operating Target (DOT) and a headroom limit, rather than a single DOT instruction. CAISO further stated that resources could exceed the DOT and reach the headroom limit. AES seeks clarification on whether these statements accurately reflect CAISO’s intent.

If this interpretation is correct, AES has concerns regarding the proposal. The current Market Operations Business Practice Manual Appendix states that a resource should not exceed its DOT when CAISO issues the follow DOT flag[1]. This raises the question of whether the proposed framework would create a compliance challenge for solar assets. Second, AES recommends that CAISO maintain the DOT equal to the headroom limit and use a separate mechanism to capture the difference between instructed and uninstructed deviations for settlement purposes. AES recommends that CAISO consider implementing changes within its ADS application and downstream systems, rather than requiring hundreds of resources to modify their own systems.

AES supports the pro rata allocation of headroom based on VER energy awards and encourages CAISO to provide additional examples to clarify implementation across various ancillary service products. CAISO has provided examples of why following the DOT flag is needed when storage regulations are down. It will be helpful to understand the expected resource output, settlement calculation, and its implications. 

[1] The CAISO may issue an Operating Instruction directing an Eligible Intermittent Resource not to exceed its Dispatch Operating Target if necessary to maintain system reliability consistent with Section 7.6 or 7.7 of the CAISO tariff.  Operating Instructions are communicated pursuant to NERC Standard COM-002-4.  The CAISO will issue written or verbal communications to relevant Scheduling Coordinators when an Operating Instruction directs EIRs not to exceed Dispatch Operating Targets. The CAISO will also issue a “FOLLOW DOT” flag in ADS when an Eligible Intermittent Resource receives an Operating Instruction not to exceed its Dispatch Operating Target.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

AES supports CAISO’s efforts to enhance telemetry and resource information to improve dispatch. Implementing these changes for solar resources is a positive step toward improving forecast accuracy. AES believes that reasonable improvements in data quality and transparency will contribute to greater market efficiency and system reliability.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

AES supports efforts to improve transparency and performance related to hybrid resource ancillary services and the use of dynamic limits. AES believes that the complexity of any proposed solution should be proportional to the severity of the issue and encourages CAISO to provide additional information on the magnitude of the problem. AES supports continued stakeholder engagement to ensure that any policy changes are appropriately scoped and effectively implemented.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

AES has no additional comments at this time.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) March 16, 2026, Working Group Meeting (WG Meeting) and Mixed Fuels Issue Paper and Straw Proposal. In summary, the CAISO should: 

• Develop a storage default energy bid (DEB) for Western Energy Imbalance Market (WEIM) only storage resources to offer a readily available option for new resources and reduce administrative burden;
• Develop a “time-of-day” storage DEB to better reflect storage resource costs when real-time conditions deviate from day-ahead conditions;
• Reject recommendations to enable storage resources to use the Reference Level Change Request (RLCR) process;
• Expedite discussions related to storage DEB enhancements and continue discussions on hybrid resource DEBs thereafter, ensuring that hybrid resources have a market power mitigation (MPM) mechanism; and 
• Adopt the CAISO’s proposed headroom proposal, and clarify that headroom limits apply to variable energy resources (VER) co-located with resources with downward ancillary service (AS) awards in addition to upward AS awards.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

CalCCA supports the CAISO developing a storage DEB for WEIM-only storage to offer a readily available option for new resources and reduce administrative burden on the CAISO, DMM, and market participants associated with the negotiated DEB option.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

CalCCA supports the development of a “time-of-day” storage DEB to better reflect storage resource costs when real-time conditions deviate from day-ahead conditions. If designed correctly, either approach, demonstrated in Example A and Example B during the WG Meeting, can improve the DEB’s ability to reflect real-time conditions. However, Example A may establish bids that are too high in the net load periods and too low in other periods. This may then result in storage dispatching in a manner inconsistent with grid needs.  Example B, on the other hand, shapes prices to the typical need on the grid. Any solution based on a rolling window like Example A will therefore need to be designed to limit this inconsistency. In addition, the data presented during the workshop supports the periodicity of multipliers in CAISO’s Example B, with different multipliers to cover morning ramp hours, midday hours, and early morning/late night hours. Example B may therefore be a more straightforward approach, and the CAISO should consider whether the additional complexity required to ensure Example A is consistent with grid needs will result in meaningful improvements over Example B.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

While the ability for storage resources to adjust to significant changes in real-time conditions relative to day-ahead conditions is a valid concern, CalCCA agrees with the CAISO that it is likely not reasonable for storage resources to leverage the RLCR process. As stated by the CAISO, storage energy costs are “sourced from the energy market, not bilateral or out-of-market actions,” and not similar to gas resources “in their ability to have ‘better or more accurate’ information about energy costs via the CAISO.” It is therefore likely not necessary for storage resources to use the RLCR process. Instead, the CAISO should consider how enhancements to the storage DEB can mitigate the risk of DEBs poorly reflecting expected real-time opportunity costs.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

CalCCA does not oppose the CAISO’s proposal to expedite discussions related to storage DEB enhancements and continue discussions on hybrid resource DEBs, as the development of the hybrid DEB will likely be based upon the methodology established for storage. However, given there are currently a significant amount of storage resources participating in hybrid configurations without a MPM mechanism, the CAISO should continue to prioritize hybrid DEBs within this initiative upon completion of the storage DEB enhancements.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

CalCCA supports the CAISO’s proposal to calculate a headroom limit equal to the aggregate capability constraint minus the other co-located resources’ upward commodities and energy awards to set the maximum possible real-time generation that a co-located variable energy resource (VER) can reach. This proposal will allow additional flexibility for co-located VERs to better use available interconnection capacity while still ensuring reliability and ancillary service deliverability.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

CalCCA has no comments at this time.  

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

CalCCA has no comments at this time.  

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

CalCCA has no additional comments at this time.  

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

The California Energy Storage Alliance (CESA) appreciates the opportunity to provide comments on the March 16, 2026 stakeholder meeting and the issue paper and straw proposal on mixed-fuel resources. CESA continues to recommend a holistic review of how storage is modeled and dispatched in the day-ahead and real-time markets. CESA reiterates its initial comments in this initiative: we “should discuss the foundational changes regarding SOC management and then how the related design considerations such as BCR, DEB, and other design elements need to be modified to support efficient use of storage in the market.”

CESA is appreciative of “Appendix A - CAISO Storage Resource Constraints: Existing Rules and Planned Enhancements” published on December 12, 2025. The appendix does a good job of consolidating the storage-related constraints in a single document. This is a great first step toward meeting CESA’s request for a holistic review of storage constraints. However, the appendix does not cover all capacity constraints applied to storage resources.  For example, how the Pmax is respected when awarding an energy discharge schedule, upward anciallary services award, imbalance reserve up, and reliability capacity up.

CESA recommends that CAISO and stakeholders review the Market Surveillance Committee (MSC) opinion on ESDER 4[1]. The ESDER 4 initiative introduced the storage DEB in 2020. The MSC opinion highlights that the current optimization does not account for the monetary value of the SOC at the end of the market horizon. This is needed for storage operators to manage and prevent the “end effects” distortions because the time horizon is too short in the market optimization. The MSC recommends that storage operators be allowed to specify both a SOC MWh target and price to be used in the last hour of the day-ahead market and the last advisory interval in the real-time market. The SOC price would reflect the opportunity cost of discharging a storage resource and subsequently being unavailable during those high price intervals. This would allow storage DEBs to be greatly simplified as the DEBs would not be a function of the solely day-ahead market prices as inputs.

CAISO does allow storage operators to specify an end-of-hour SOC parameter in the real-time market, but no price is allowed. This has the effect of forcing the resource to charge at any price once the market constraint is binding. Similar instances of charging at any cost have been observed in the ancillary services state of charge (ASSOC) constraint. A holistic review of storage modeling may identify that the lack of a price-based end-of-horizon SOC parameters is undermining the optimal scheduling and dispatch of storage resources.

The MSC notes that the end-of-horizon SOC parameter (and proposed monetary value for the ending SOC) could both be used to exercise market power. The MSC did not propose a hard and fast criterion for detecting and mitigating market power in end-of-horizon SOC parameters. The MSC instead suggested that, (1) if a storage resource repeatedly (over several days) specifies an end-of-hour SOC value that is much higher than what the day-ahead solution indicates, and (2) if later real-time prices repeatedly do not economically justify that withholding, then the resource could be temporarily prohibited from setting an end-of-hour SOC appreciably different than what the IFM indicates is optimal. 

Under the MSC’s end-of-horizon SOC parameter proposal, storage operators could still be allowed to submit charging and discharging bids, but in the event of market power, the charging bids would be mitigated to cycling costs and discharging bids to zero. This would allow the same DEB to be used in the EDAM and WEIM.

The MSC also highlights that a potential design could allow multiple end-of-horizon SOC quantities and prices. CESA believes this could be a beneficial enhancement that addresses an issue with the T-75 real-time bid submission window. Specifically, system conditions can change over the 135-minute (bid submission to end of operating hour) window in which the energy bids cannot be adjusted by storage operators. A SOC price could be expressed for different SOC levels, for example: 100%-75%, 75%-50%, 50%-25%, and 25%-0%. This would recognize that the marginal value of the first hour’s SOC is higher than additional incrementally stored energy.

CESA believes additional discussion on the MSC approach would be consistent with a holistic review of storage modeling. CESA is not taking the position in support of or opposed to the MSC approach, but this is why a better understanding of storage modeling decisions relates to the appropriate DEB design.   CAISO should highlight any implementation concerns with the MSC approach. Stakeholders should re-evaluate the MSC approach and seek to understand why implementation of end-of-horizon bidding was not pursued in 2020.

[1] https://www.caiso.com/Documents/MSC-OpiniononEnergyStorageandDistributedResourcesPhase4-Sep8_2020.pdf

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

CESA does not believe a separate WEIM-only storage bid is necessary or desirable. The current issue with the standard real-time storage DEB used in the CAISO footprint is that the DEB relies upon day-ahead prices which may not reflect real-time system conditions and thus inaccurately account for opportunity costs. 

From the CAISO material, it is unclear if a storage resource in EDAM will no longer be allowed to use its current negotiated DEB and must use the standard storage DEB. CESA requests that CAISO clarify its intent. CESA also notes it is important to review how the storage DEB will interact with the balancing authority area (BAA) market power mitigation nesting approach currently proposed by the CAISO. If an EDAM BAA and a WEIM-only BAA were import-transfer constrained, all resources within the two BAAs would be mitigated. What are the impacts and potential risks of having different storage DEBs under BAA-level market power mitigation?     

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

CESA notes that the standard DEB’s reliance on calculating an energy cost and opportunity cost using day-ahead energy prices can result in inefficient use of the storage resource if mitigated. Both example A and example B attempt to reflect that real-time conditions may vary from the day-ahead market and – depending upon when the difference occurs – that the cost exposure to storage resources also varies. CESA does prefer the predictability and certainty of using the example B approach. A higher multiplier could be used for hours with higher price divergence between the day-ahead market and real-time market. CESA looks forward to additional discussions on how “time-of-day” storage DEBs would be considered under the MSC approach, per our response to Question 1.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

CESA also supports reference level change request type adjustments to DEBs. If designed correctly, this would ensure that storage is correctly positioned in the bid stack in the event of significant changes in system conditions between day-ahead and real-time. CESA believes both “time-of-day” and a reference level change request could be beneficial. The “time-of-day” change request would provide higher multipliers during hours with higher historical uncertainty. A reference level change request type process would be used when a significant event has occurred and will persist for the balance of the day. 

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

CESA supports consideration of a hybrid resource DEB after additional discussion on the standard storage DEB. 

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

CESA supports allowing VER resources co-located with a storage resource that has received an ancillary services award to generate above its dispatch operating target (DOT) up to available headroom. CESA reiterates its prior comments that use of the VER dispatch as the basis for distributing pro-rata available headroom up to the point of interconnection is a reasonable and equitable approach.  

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

In general, CESA supports reasonable requests by CAISO to enhance telemetry and other resource information that will improve the CAISO dispatch of resources. 

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

CESA requests that CAISO provide additional information on why current monitoring is insufficient to address misuse of the dynamic limit submission. The magnitude of the issue will inform the complexity of the appropriate solution to address the concern. 

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

No additional comments. 

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

Comments on Storage Design and Modeling

Working Group Presentation on March 16, 2026

Department of Market Monitoring

April 3, 2026

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Storage Design and Modeling working group presentation held on March 16, 2026.[1] DMM supports the ISO prioritizing enhancements to the storage default energy bid (DEB) and supports the ISO’s proposal to create a standardized storage DEB option for Western Energy Imbalance Market (WEIM) resources.

DMM has conducted significant analysis of the current storage DEB and finds that in most instances, the current storage DEB performs very well as an input to local market power mitigation and does not create inefficient market outcomes. Nonetheless, the storage DEB could be improved to better reflect the opportunity costs of storage resources and further improve market outcomes when storage resources are mitigated. In addition to having potential efficiency benefits, such enhancements could have significant reliability benefits during extreme conditions by helping to avoid discharging of batteries prior to the most crucial peak net load hours, while still providing protection against market power during those highest priced hours.

DMM recommends the ISO modify the software to allow the storage DEB to vary hourly to enable a new storage DEB formulation that could take on multiple values across the day to reflect intraday opportunity costs. Analysis presented in these comments shows that this simple software modification would allow implementation of a storage DEB framework that could improve market outcomes compared to scenarios using unmitigated bids or mitigation under the current DEB. DMM also recommends the ISO consider designing a scalar to adjust day-ahead prices used to develop the storage DEB to account for variability between day-ahead and real-time prices.

DMM supports the approach of using a simple multiplier to reflect changing intraday opportunity costs over a few time periods within the day. However, DMM does not believe this multiplier should be a function of price separation between day-ahead and real-time markets as described in the ISO’s March 16 presentation. While DMM acknowledges there may be a need for an additional adjustment that accounts for differences between day-ahead and real-time prices, this is a distinct issue from the need to capture variation in intraday opportunity cost. DMM is concerned that the ISO’s current proposal conflates these two issues, seemingly due to a coincidental correlation between day-ahead and real-time price spreads during some ramping hours. DMM recommends the ISO develop a multiplier that reflects changing intraday opportunity costs based on how those costs change across the day, and separately address instances where variability between day-ahead and real-time prices may warrant an additional adjustment.

DMM continues to recommend that it is a relatively high priority to develop DEBs for hybrid resources, as hybrid resources are not subject to local market power mitigation (LMPM). These resources should be subject to LMPM, and the ISO should develop an expedited default energy bid (DEB) approach to estimate the resources’ marginal costs. The hybrid DEB formulation could then be enhanced in future initiatives as necessary. Further, DMM recommends the ISO work with stakeholders to find a viable path to ensure hybrid dynamic limits are not used to limit ancillary service availability and delivery.

Comments

The ISO should prioritize incremental improvements to the storage DEB

DMM has previously noted how the current storage DEB design could be enhanced through some relatively simple changes. Most importantly, the current DEB is a single value for the entire day, and therefore does not account for how intraday opportunity costs change across the day. In addition, the utilization of day-ahead prices does not account for differences that can materialize between the day-ahead and real-time markets.[2] While DMM believes there are improvements that can be made to allow the storage DEB to more accurately reflect real-time conditions and varying intraday opportunity costs, DMM has also shown that the current storage DEB does not result in significant inefficient real-time dispatch caused by mitigation.[3]  DMM continues to recommend that the ISO and stakeholders pursue an incremental approach to improving the storage DEB to address these two issues.[4]

To address the first issue of how intraday opportunity costs change across the day, DMM continues to recommend adjusting the storage DEB so that certain hours have a higher or lower DEB. DMM agrees with the ISO that this could be achieved by maintaining the current storage DEB framework, but having a multiplier that varies across different hours, where such a multiplier is derived from factors related to intraday opportunity cost. This multiplier would result in a higher DEB in the afternoon hours, and a lower DEB during the peak net load hours.

While the most accurate DEB would vary hourly to reflect intraday opportunity costs, DMM recognizes that such a design may involve significant complexity. Therefore, DMM recommends the ISO consider an incremental approach that would allow the storage DEB to take on three or four different values across the day. Analysis by DMM presented in these comments indicates that even a simple adjustment of this type could yield notable improvements over the current DEB.

To address the second issue of reliance on day-ahead prices to estimate opportunity costs in real-time, DMM recommends the ISO consider a real-time storage DEB framework similar to the scalar used to adjust distributed generation aggregation point (DGAP) prices for storage negotiated default energy bids (NDEBs) used by batteries in Western Energy Imbalance Market (WEIM) areas outside of the CAISO. Under the standard NDEB methodology for WEIM resources, a scalar is applied to adjust DGAP prices upward when average real-time prices for WEIM batteries exceed average DGAP prices over the prior three days. While a scalar or trigger that reflects more current market conditions may be preferable, implementing a more dynamic DEB may present feasibility challenges.

Simple adjustments that allow the storage DEB to vary across the day could yield notable benefits

To evaluate the potential benefits of a storage DEB that takes on multiple values per day, DMM estimated counterfactual schedules for storage resources using their unmitigated bids and compared the resulting net revenues to several scenarios in which bids were mitigated using the current DEB and several alternative storage DEB formulations. To model these schedules, DMM used the non-MIO framework described in previous comments.[5] This modeling approach utilizes resources’ bids, locational marginal prices (LMPs), state-of-charge, and ancillary state-of-charge constraint to determine dispatch based on the economics of the binding interval. While this approach does not capture all of the complexities of the market optimization, such as multi-interval optimization (MIO), comparing the net revenues of the different schedules provides insight into how efficiently battery resources are scheduled under different storage DEB formulations.

The analysis summarized in these comments includes all CAISO battery resources during August 2025. Currently, this analysis only calculates schedules for the fifteen-minute market (FMM) and compares estimated daily net revenues from energy schedules based on unmitigated bids to daily net revenues under the current DEB and several other DEB formulations. DMM evaluated six simple DEB formulations where a multiplier increased the storage DEB during hours 12-17 and lowered it by the same proportion during hours 18-24. These formulations are not meant to represent specific options for implementation, but are intended to illustrate the benefits of even simple adjustments to the storage DEB to better align with intraday opportunity costs in different hours. These DEB formulations were tested across three scenarios with different assumptions of when the storage resources’ bids would be replaced with the DEB.

These DEB formulations were specifically designed to test the impacts of higher DEBs in the ramp-up to the peak hours when opportunity costs are highest, and lower DEBs during the peak hours when opportunity cost is lower. The DEB formulations symmetrically increased DEBs in the pre-peak hours using multipliers ranging from 1.1 to 1.6, and decreased DEBs during peak net load hours using multipliers ranging from 0.9 to 0.4. Again, DMM is not recommending these specific designs, but is providing this analysis to help guide the development of a more sophisticated storage DEB.

Figure 1 shows the six adjusted DEBs used in this analysis along with the current DEB that was also used to model counterfactual schedules. DMM also considered variations of these six DEB formulations that decreased the DEBs beginning in other hours (17, 19, 20, 21). This additional analysis can be found in the appendix to these comments.

Figure 1               Range of different DEB multipliers used in analysis

Scenarios 1 and 2 focus on the effect of the DEB values themselves, independent of how often resources are subject to mitigation. Scenario 1 caps all bids at the DEB, while Scenario 2 caps all bids at the maximum of the DEB or the competitive locational marginal price in that interval. Figure 2 shows the ratio of net revenues under these two scenarios—using the current DEB and each of the six DEB formulations—to the net revenues using unmitigated bids.

Scenario 3 incorporates the frequency of mitigation by applying mitigation as usual. When the resource has a non-zero competitive congestion component and their bid exceeds both the DEB and the competitive LMP, bids are replaced with the maximum of the DEB or competitive LMP. Figure 3 shows the ratio of net revenues under this scenario—using the current DEB and each of the six DEB formulations—to the net revenues using unmitigated bids.

Figure 2               Ratio of net revenues under scenario 1 and 2 to unmitigated bid scenario

Figure 3               Ratio of net revenues under scenario 3 to unmitigated bid scenario

Several key conclusions emerge from the results in Figures 2 and 3.

• On average, battery resources’ schedules yielded higher net revenues when bids were mitigated, even when using the current storage DEB. This occurs because some storage resources may bid too high during peak hours, preventing them from receiving an efficient dispatch in high-priced intervals. Figure 2 indicates that if storage resources were never able to bid above their DEB, their net revenues would be around 10 percent higher under the current DEB compared to schedules using unmitigated bids.
• Under DEBs that vary across the day, storage resources’ schedules would earn 10 to 30 percent more net revenues compared to the unmitigated scenario, depending on the DEB formulation. With a pre-peak multiplier of 1.4 or higher, the adjusted DEB formulations result in net revenues that are around 15 percent higher than net revenues under the current DEB.
• As shown in Figure 3, the net revenue differences in Scenario 3 are smaller because mitigation is applied less frequently. However, the same pattern holds—net revenues are slightly higher when bids are mitigated using the current DEB compared to the counterfactual using unmitigated bids , and the DEBs that vary across the day yield higher net revenues than the current DEB.
• Figures 2 and 3 both indicate that the incremental benefit of higher multipliers diminishes after about 1.3 or 1.4. This is consistent with analysis DMM has done when evaluating proposals for battery negotiated default energy bids (NDEBs) submitted under the negotiated default energy bid option of the CAISO tariff.

Overall, this preliminary analysis suggests that incremental improvements to the storage DEB may support more efficient dispatch under mitigation. Allowing the storage DEB to take on multiple values per day helps prevent pre-dispatch in pre-peak hours when opportunity costs are higher while still protecting against potential exertion of market power during peak hours when opportunity costs are lower.

DMM recommends the ISO consider developing a multiplier with a shape similar to those analyzed here but grounded in a more theoretical basis. DMM will continue to evaluate more sophisticated DEB formulations using the framework provided in these comments. DMM recommends that future DEB formulations should focus on some degree of flexibility on which hours include more or less headroom, as these hours likely vary seasonally and may shift with longer-term market trends.

The storage DEB should vary in alignment with intraday opportunity costs, and any multiplier to reflect changing intraday opportunity costs should not be derived from differences between day-ahead and real-time prices

DMM supports the ISO’s approach of using a multiplier to increase the DEB during hours when the intraday opportunity costs are higher and decrease the DEB when those opportunity costs are lower. As DMM has previously explained, the opportunity costs are highest in the hours right before the highest priced hours of the day when there are limited opportunities to recharge before reaching those hours. During these ramp hours, a battery that discharges early forgoes the ability to discharge during upcoming high-priced intervals, making the opportunity cost of discharge the highest of the day. Once prices reach their peak, the opportunity cost of being available for a later discharge diminishes as prices decline after the peak and lower cost recharge opportunities exist before reaching additional high-priced hours.

The ISO presented two examples (A and B) for changing the storage DEB values across the day. Example A attempts to model changing costs by applying the current storage DEB formula to different subsets of hours within the day. The result of this approach as outlined in example A of the March 16 stakeholder presentation is a DEB curve that does not properly align with intraday opportunity costs over the day. For instance, the approach outlined in example A would establish the highest DEB values in the peak and later hours of the day, but these would actually be the hours with the lowest expected intraday opportunity cost. The highest opportunity cost would instead occur in the hours immediately preceding high priced peak hours, reflecting foregone profit if the resource were to discharge before reaching those hours with limited or no opportunity to recharge. During peak high priced hours, the intraday opportunity cost would fall as the highest expected prices of the day have already passed  and the resource may expect lower cost recharging opportunities before again reaching the next set of high priced peak hours.

DMM understands that the results observed in example A are influenced by considering different blocks of hours within the day, but are also impacted by the inclusion of a cost for energy used to charge the battery as in the current DEB formulation. While DMM conceptually disagrees with the inclusion of any sunk charging cost in the storage DEB, interpretation of the results shown in example A is further confounded by the way in which charging costs appear to be incorporated. In example A, the charging cost appears to be calculated by summing the LMPs over the relevant charging hours.[6] However, the storage DEB as described in the CAISO Business Practice Manual (BPM) for Market Instruments uses the average charging cost over the relevant hours rather than the sum.[7] Therefore, in addition to simply including a sunk charging cost in the storage DEB as prescribed in the BPM, including the charging cost as done in example A significantly increases the DEB values for some hours to a level that is very unlikely to be a reasonable estimate of marginal cost. Although calculating the charging cost, as done in example A, will result in a much higher DEB in some hours, even using the approach outlined in the BPM in the “rolling window” framework results in a DEB curve that can have the highest values misaligned with the highest intraday opportunity cost.

Example B instead creates a multiplier that is based on the spread between day-ahead and real-time prices. While DMM agrees that there may be a need to include a scalar that accounts for this price spread, or some type of trigger that allows for storage DEBs to be raised during days/hours where real-time prices are higher, DMM cautions against using this type of design to shape storage DEBs in a way that intends to reflect intraday opportunity cost. Although there may be some correlation between day-ahead and real-time price spreads and the ramping hours when opportunity costs are higher, there is no theoretical basis linking hours with high intraday opportunity costs to hours with large day-ahead/real-time spreads. DMM recommends that the ISO address the variation between day-ahead and real-time prices separately and design a multiplier that shapes DEBs based on the hours when intraday opportunity costs are highest and lowest.

The ISO should place priority on creating a standard DEB option for WEIM storage resources

DMM agrees with the ISO’s statement that developing a WEIM-only storage DEB based on the approach used for most negotiated default energy bids could be readily implementable. DMM recommends the ISO prioritize this enhancement so that market participants do not have to use the NDEB process. DMM believes that the improvements being discussed with the CAISO storage DEB would translate well to the WEIM storage DEB.

Currently, the NDEB typically used by WEIM storage resources utilizes day-ahead default generation aggregation point (DGAP) prices, along with a scalar that captures volatility between day-ahead and real-time prices. DMM recommends the ISO could consider a similar type of scalar for the CAISO storage DEB that is aimed at reflecting instances where real-time prices may be higher than day-ahead prices.

DMM is completing an analysis of NDEBs in WEIM areas during Q3 2025, and will provide these results in follow-up comments for reference in this stakeholder process. Results show that NDEBs for batteries in WEIM areas were rarely less than the resource’s LMPs for more than 4 hours per day in Q3 2025. The main cause of these findings is that day-ahead DGAP prices used in setting battery NDEBs for WEIM areas tended to be significantly higher than real-time prices for battery resources in WEIM areas. These results are highly consistent with analysis DMM has done of NDEBs for batteries in WEIM areas for longer time periods.

DMM continues to place a high priority on the development of a hybrid resource DEB that will support mitigation of hybrid resources

Hybrid resources currently do not have a DEB, and as a result are not subject to local market power mitigation. In December 2024, the storage component of hybrid resources totaled about 1,500 MW of capacity, or about 12 percent of storage capacity on the system.[8] With such a large portion of the storage capacity exempt from local market power mitigation, DMM continues to place a high priority on the development of a hybrid resource DEB to facilitate local market power mitigation for hybrid resources.[9]

DMM reiterates support for development of a hybrid resource DEB in the near-term by calculating the maximum of the DEBs that apply to each of the generation components that make up the hybrid resource.[10] This initial approach should be easy to implement and should achieve the goal of subjecting hybrid resources to local market power mitigation. After a near-term solution for hybrid resource DEBs is implemented, the ISO should continue to enhance hybrid resource DEBs to more accurately reflect the costs of hybrid resources as a full system of different generation components. DMM recommends the ISO and stakeholders discuss potential issues with using the current storage DEB or any enhanced storage DEB developed for hybrid resources, and consider these issues in the ongoing refinements of a DEB for hybrid resources in the future.

Hybrid dynamic limits can limit deliverability of ancillary service awards

The Issue Paper detailed a concern DMM has raised with the use of the hybrid dynamic limit and the inability of hybrid resources to provide awarded ancillary services.[11] Standalone storage resources have the ancillary services state-of-charge (ASSOC) constraint to manage state-of-charge (SOC) to ensure deliverability of ancillary services schedules. However, hybrid resources with a storage component must actively manage their own SOC to ensure deliverability of ancillary service awards. Hybrid resources may need to use the dynamic limit to manage SOC within the close of the bidding window to ensure deliverability of ancillary service awards. However, the dynamic limit may also be used for many competing needs, and as a result the dynamic limit may reduce the operational range of the resource during ancillary service awards and render the awards partially or fully undeliverable.

For summer 2025, DMM analyzed the average megawatts of day-ahead regulation awards that were undeliverable in the real-time due to the hybrid dynamic limit. Figure 4 shows data on the average megawatts of regulation in the day-ahead market, from July to September 2025, that were unable to be provided in real-time. The calculation specifically takes the day-ahead regulation award minus the real-time availability from the hybrid dynamic limit, and averages the undeliverable regulation quantity over the day for the hybrid resource fleet.

Figure 4         Average undeliverable day-ahead regulation awards due to hybrid dynamic limit 

Over the period shown in Figure 4, there was an average of three megawatts undeliverable because of the hybrid dynamic limit use, with some level of undeliverability on 93 percent of days. Over the same period, the average daily maximum undeliverable regulation megawatts was 23 MW. Additionally, DMM found there are cases where hybrid dynamic limits cause undeliverable regulation in real-time after the real-time market can procure additional quantities of regulation.

In the Issue Paper, the ISO discusses improvements to the outage management system that may limit this behavior, but notes hybrid resources must continue to be fully responsible for meeting all their ancillary service requirements. While there are long-term improvements to limit the undeliverability of ancillary services, such as real-time ancillary service reoptimization or an ASSOC for hybrids, in the near-term, DMM continues to recommend that the ISO clarify it is not acceptable to use the dynamic limit to restrict the deliverability of ancillary services for economic reasons when it is physically possible for a hybrid resource to deliver their ancillary services schedule. Additionally, DMM recommends the ISO work with stakeholders to ensure the hybrid dynamic limit does not limit ancillary service availability and delivery.

Appendix: Sensitivity analysis of hour when lower DEB takes effect

Figure 5               Net revenues under scenario 1 – All bids capped at DEB

Figure 6               Net revenues under scenario 2 – All bids capped at max (DEB, competitive LMP)

Figure 7               Net revenues under scenario 3 – Mitigation applied as usual

[1]  Storage Design and Modeling: Working Group on Uplift and Default Energy Bid, Outage Management, and State-of-Charge Management presentation, California ISO, January 22, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Design-Modeling-Jan-22-2026.pdf

[2]  Comments on Storage Design and Modeling Working Group Presentation on November 12, 2025, Department of Market Monitoring, November 26, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-nov-12-2025-working-group-presentation-nov-26-2025.pdf

[3]  2024 Special Report on Battery Storage, Department of Market Monitoring, May 29, 2025: https://www.caiso.com/documents/2024-special-report-on-battery-storage-may-29-2025.pdf

[4]  Comments on Storage Design and Modeling Updated Discussion and Issue Paper on Uplift and Default Energy Bid, Department of Market Monitoring, January 8, 2026: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-updated-discussion-and-issue-paper-on-uplift-and-default-energy-bid-jan-8-2026.pdf

[5]  Comments on Storage Design and Modeling Working Group Presentation on September 29, 2025, Department of Market Monitoring, October 14, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-sep-29-2025-working-group-presentation-oct-14-2025.pdf

[6] For example, the “En” component for hours 13-24 on slide 24 is calculated by summing the LMP for the lowest priced block of hours for a total of 4.44 hours: 10 + 11 + 12 + 13 + 0.44*14 = 52.16 https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Design-Modeling-Jan-22-2026.pdf

[7] Business Practice Manual Change Management – Market Instruments, California ISO, pp 307-311: https://bpmcm.caiso.com/BPM%20Document%20Library/Market%20Instruments/BPM_for_Market%20Instruments_V92_Redline.pdf

[8]  2024 Special Report on Battery Storage, Department of Market Monitoring, May 29, 2025: https://www.caiso.com/documents/2024-special-report-on-battery-storage-may-29-2025.pdf

[9]  Comments on Storage Design and Modeling Working Group Presentation on September 29, 2025, Department of Market Monitoring, October 14, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-sep-29-2025-working-group-presentation-oct-14-2025.pdf

[10]  Ibid.

[11] Comments on Storage Design and Modeling Working Group Presentation on June 30, 2025, Department of Market Monitoring, July 16, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-jun-30-2025-working-group-presentation-jul-16-2025.pdf

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

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

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

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

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

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

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

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

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

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

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

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

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

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

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

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

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

Energy Division staff (ED Staff or Staff) of the California Public Utilities Commission (CPUC) develops and administers energy policy and programs to serve the public interest, advises the CPUC, and ensures compliance with CPUC decisions and statutory mandates. ED staff provides objective and expert analyses that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California [1].

ED staff appreciates CAISO’s presentation of two potential options for a new Default Energy Bid (DEB) framework. At this stage, ED staff does not support selecting any specific design without further stakeholder discussions and analysis. ED staff recommends: 

• Focused DEB-specific stakeholder discussions to clarify what the new DEB framework is trying to solve.  
• Discussion and analysis of impacts on bid cost recovery (BCR). 
• Consideration of alternative options (beyond the proposed examples A and B) that move away from a static DEB and better capture hourly opportunity costs that storage resources face.

[1] More information about the CPUC Energy Division is available at: https://www.cpuc.ca.gov/about-cpuc/divisions/energy-division.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

ED staff supports development of a new storage DEB methodology to better reflect real-time conditions and address current limitations, as well as the development of software enhancements to support such functionality. Consistent with previous comments, ED staff emphasizes the need for a storage DEB that is not static and is reflective of changing opportunity costs throughout the day. ED staff is concerned about over- or under-estimating opportunity costs across hours, and its effect on unwarranted bid cost recovery (BCR) payments and inefficient dispatch outcomes. 

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

Option one produces two block (12 hr) values and remains a more static construct that does not fully address the need for dynamic DEBs. ED staff requests more discussion and analysis on the methodology that would be used for option two. At the same time, ED staff recommends that CAISO explore other intermediate approaches to reflect a more granular time-of-day design. ED staff encourages the ISO and stakeholders to refine the problem statement and guiding principles for a DEB time of day concept. It is unclear based on the proposed examples what the DEB is primarily intended to do, or which problem it intends to address. ED staff recommends that CAISO define these questions to better inform the next design iteration and evaluate the proposed DEB framework in the context of BCR and market power mitigation.  

At this stage, ED staff does not support selecting any specific design without further stakeholder discussions and analysis.  

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

No comments at this time.  

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

No comments at this time.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

No comments at this time.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

No comments at this time.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

No comments at this time.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

No comments at this time.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) appreciates the opportunity to comment on the California Independent System Operator Corporation’s (CAISO) March 16, 2026 meeting on CAISO’s Storage Design and Modeling Initiative presentation (Workshop)[1] and the March 9, 2026 Issue Paper and Straw Proposal (Issue Paper).[2]

Cal Advocates provides the following comments on the March 16 Workshop and the Issue Paper:

• Examples A and B for CAISO’s proposed “time-of-day” default energy bid (DEB) methodology rely on erroneous energy cost calculations.
• CAISO’s approximation of opportunity costs based on the current DEB methodology is not appropriate for CAISO’s calculation of time-of-day DEBs.
• CAISO should apply the standalone and co-located storage DEB to hybrid resources until CAISO develops a hybrid-specific DEB.

[1] CAISO, Storage Design and Modeling Working Group on Uplift & DEB and Mixed-Fuel & Distribution-Level Resources, March 16, 2026 (Workshop Slides).  Available as “Presentation - Storage Design and Modeling - Mar 16, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

[2] CAISO, Storage Design & Modeling Issue Paper & Straw Proposal on Mixed-Fuel Resources, March 9, 2026.  Available as “Issue Paper and Straw Proposal on Mixed-Fuel Resources - Mar 09, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

Cal Advocates does not have comments at this time. 

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

CAISO currently employs a storage DEB that is the same for every hour of the day.  CAISO derives this static DEB based on day-ahead (DA) locational marginal prices (LMPs) used in the calculation of the real-time (RT) DEB.[1]  CAISO’s use of a static RT DEB is problematic because a single time-invariant DEB will tend to underestimate mid-day opportunity costs, while overestimating peak-interval opportunity costs.[2]  If CAISO mitigates a resource’s mid-day bids to the DEB in the Local Market Power Mitigation (LMPM) process, CAISO may prematurely dispatch the resource if RT LMPs are higher than the mitigated DEB.[3]  This early dispatch can be a problem if storage is needed during the peak period, but CAISO’s premature dispatch leaves the storage resource with insufficient stored energy to dispatch later.  Likewise, if CAISO sets the DEB too high later in the day, the DEB may be higher than necessary during peak load conditions, leaving the resource operator more latitude to exercise market power.  Cal Advocates previously commented that opportunity costs in peak-price hours are low or zero because there is limited benefit in holding onto charge at the end of the operating day.[4]

CAISO proposes two alternatives to calculate time-varying DEBs, which are illustrated in Example A[5] and Example B[6] in the Workshop Slides.  In Example A, CAISO divides the operating day into two, three, four, or six equal length segments.  CAISO uses DA hourly LMPs to calculate a DEB for each segment.  CAISO proposes to use a “rolling window” of DA LMPs to calculate the DEBs so that CAISO uses only the future-period DA LMPs to calculate the DEB for a given segment; CAISO does not use any prior hours in the calculation.[7]  CAISO explains that the DA LMPs are proxies for time-varying RT energy and opportunity costs, which are not readily available due to the limited look-ahead in the RT market.[8]  In Example B, CAISO multiplies the current static RT DEB by an hourly shape based on the difference between historical DA and RT LMPs, for periods when the DA price was lower than the RT price.  CAISO’s methodology recognizes that DA prices are imperfect as RT price forecasts and attempts to capture the dynamic relationship between DA and RT prices.  Ideally, CAISO would calculate the RT DEB over an expanded RT look-ahead period that includes peak hours; however, that approach is currently limited by the computational complexity of the RT market.[9] 

Cal Advocates has two concerns regarding CAISO’s proposals.  First, CAISO incorrectly calculates the energy cost component of the DEB in Examples A and B.  CAISO states that the calculation of the rolling energy cost in the proposed DEB formula uses the current DEB calculation methodology.[10]  The CAISO Business Practices Manual contains the current DEB formula, which uses the average cost of charging over the lowest priced hours of the day.[11]  However, Examples A and B use the total charging cost over the lowest priced hours of the day rather than the average cost.  In Example A, CAISO sums the lowest-priced 4.44 hours to reach the energy component result of 32.40 (32.40 = 7 + 4 + 8 + 9 + 10 × 0.44),[12] but the correct value for this calculation should instead be 7.30 (7.30= 32.4 / 4.44).  When the error is corrected in Example A, the RT DEB is a constant value that corresponds to the 4^th highest DA LMP opportunity cost.  CAISO should correct this error in future discussions so CAISO staff and stakeholders can have an accurate understanding of policy proposals.

Second, CAISO currently uses and proposes to continue to use the Nth highest DA hourly LMP (where N is the storage duration in hours) to represent opportunity cost,[13] which may not accurately reflect the opportunity cost during peak-price conditions.  Conceptually, opportunity costs represent a resource owner’s expectations of future real-time prices expressed through bids and used to reserve energy for dispatch in a later period when prices are higher.[14]  In other words, it is the cost of a resource discharging in one hour and being left without the energy to discharge later.  However, opportunity costs in peak-price hours are low or zero because there is minimal benefit in holding onto charge to discharge later.[15]  CAISO’s proposal to continue using the Nth highest DA LMP as an estimate for RT opportunity cost is an inaccurate approximation.  The Nth highest LMP assumption is designed for a DA perspective, with a full 24-hour look-ahead that optimizes charging and discharging.  Within that 24-hour window, the opportunity cost represents the cost of a deviation from that optimal schedule.  Such an assumption does not provide a useful framework in the RT market.

Consider an example in which day-ahead prices are $10 per megawatt-hour (MWh) for hours ending (HE) 1-18 and $50/MWh for the remaining HE 19-24.  In CAISO’s formulation, the opportunity cost for a four-hour battery is set to a static $50/MWh based upon the fourth-highest DA LMP.  However, for a storage operator considering discharging in HE 19, instead of HE 20, there is no cost of holding charge because the opportunity cost – the cost of avoiding discharge now so that energy is available later – is zero, even though the fourth highest price for the rest of the day is still $50/MWh.  As such, the DEB significantly overstates storage opportunity costs during the period of the day when storage is most needed and resource owners potentially have the greatest market power.

Alternatively, CAISO could adopt a methodology similar to Example B.  To do so, CAISO should scale the DA DEB by the hour-of-day, based on the expectation of RT energy prices and opportunity costs, to accurately capture historical patterns of high mid-day opportunity costs and low peak-period opportunity costs.  While this scaling would be an improvement over the current DEB methodology, and would allow CAISO to reflect RT DEBs to capture known patterns in opportunity costs, it would fail to fully capture the intra-day RT price dynamics.[16]  CAISO’s proposals, as illustrated in Examples A and B, are flawed because CAISO bases the RT DEB only on DA LMPs, and CAISO does not incorporate any prompt RT intra-day information.  Ideally, CAISO should expand the RT market optimization to incorporate modeled or estimated RT prices beyond the current look-ahead period as a more accurate representation of RT energy prices and opportunity costs.  However, given CAISO’s current limited ability to include RT information in the DEB, an approach such as Example B that incorporates historical RT information is superior to Example A that incorporates no RT information.

[1] “DEB Today” calculation in Workshop Slides at 23.

[2] CAISO Market Surveillance Committee, Opinion on Energy Storage and Distributed Energy Resources Phase 4, September 9, 2020 (MSC Opinion) at 14.  Available at: https://www.caiso.com/documents/msc-opiniononenergystorageanddistributedresourcesphase4-sep8_2020.pdf.

[3] CAISO Department of Market Monitoring, Comments on Storage Bid Cost Recovery and Default Energy Bids, July 18, 2024 at 5-6.  Available as “DMM-Comments-on-Storage-BCR-and-DEB-Jul-8-2024-Workshop-Jul-18-2024.pdf” at: https://stakeholdercenter.caiso.com/Common/DownloadFile/6a07fe60-f791-489c-8100-64e2f7b55118.

[4] Cal Advocates, Comments on December 4 meeting and the Updated Discussion & Issue Paper regarding Uplift & Default Energy Bid (DEB), January 8, 2026 (Cal Advocates Comments on December Workshop and December Issue Paper), response to Question 6.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/b0efb859-0aef-42d3-a3d2-1499c7418cc3#org-707abf65-82f5-4f71-82f0-6e0ade064efd.

[5] Workshop Slides at 24.

[6] Workshop Slides at 31.

[7] Workshop Slides at 20-21.

[8] CAISO, Workshop on Storage Design and Modeling, March 16, 2026 (Workshop Recording) at 1:05.  Available at: https://www.youtube.com/watch?v=It57lb6CC3s.

[9] MSC Opinion at 17-18. 

[10] Workshop Slides at 21.

[11] CAISO, Business Practice Manual for Market Instruments, June 25, 2025 at 307 and 309-311.  Available as “BPM_for_Market Instruments_V92_Clean” at: https://bpmcm.caiso.com/Pages/BPMDetails.aspx?BPM=Market%20Instruments.  CAISO confirmed the error in an email to Cal Advocates on March 30, 2026.

[12] Workshop Slides at 23.

[13] Workshop Slides at 22.

[14] MSC Opinion at 14.

[15] See Cal Advocates Comments on December Workshop and December Issue Paper, response to Question 6.

[16] Workshop Recording at 1:09.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

Cal Advocates does not have comments at this time.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

Cal Advocates opposes CAISO’s proposal to continue to exempt hybrid resources from the LMPM and defer the development of a hybrid DEB calculation until a final DEB is developed for standalone and co-located storage.[1]  CAISO perpetuates the status quo by postponing development of a hybrid DEB policy, which treats hybrids more favorably than standalone or co-located storage resources.  Without a CAISO-applied DEB, hybrid resources will continue to be exempt from market power mitigation, which enables hybrids to exert market power in ways that could harm both consumers and market efficiency.  CAISO should apply the standalone and co-located storage DEB to hybrid resources, and then subsequently develop a hybrid-specific DEB formula once CAISO finalizes the standalone and co-located DEB.

[1] In this context “hybrid resources” are distinct from co-located resources; hybrid resources have two or more fuel types but are visible to CAISO markets for dispatch as a single resource.  See CAISO, Business Practice Manual for Generator Management, December 19, 2025 at 21.  Available as “BPM_forGeneratorManagement_V39_clean” at: https://bpmcm.caiso.com/Pages/BPMDetails.aspx?BPM=Generator%20Management.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

Cal Advocates does not have comments at this time.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

Cal Advocates does not have comments at this time.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

Cal Advocates does not have comments at this time.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

Cal Advocates does not have comments at this time.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

N/A

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

N/A

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

N/A

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

N/A

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

N/A

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

CES understands the intent of the Headroom Limit is to allow VERs to generate above their DOT, up to the ACC limit or Pmax (whichever is lower), when the co-located BESS is providing ancillary services. CES also understands the CAISO’s proposal is to provide the Headroom Limit through ADS as a “secondary” dispatch instruction, in which the VERs can deviate from DOT up to this secondary instruction but not below DOT.

CES agrees with the intent of the Headroom Limit, however has several concerns with the implementation proposal. First, by retaining the follow DOT flag when the Headroom Limit exceeds the DOT, does the VER still have a NERC requirement to follow DOT and not to exceed that signal? Secondly, a resource receiving two dispatch signals in ADS is an untested concept which could present significant operational challenges for automated control systems on these resources. An alternative proposal would be to remove the follow DOT flag and allow the VERs to generate as capable up to but not exceeding the Headroom Limit. In other words, the Headroom Limit should be an upper bound on generation rather than a secondary dispatch instruction. Whether this mechanism should exist within ADS or not remains unclear. CES encourages the CAISO to consult with its implementation teams to discuss the feasibility of all proposals currently being considered in stakeholder process.

Lastly, CES reiterates its comments during the March 16^th stakeholder meeting that the scenario where storage resources are responding to a Regulation Down award is crucial to the VER Headroom Limit proposal, not just the Regulation Up scenario. In the examples the CAISO published on March 27^th, it is worth noting that the last scenario (a battery not fulfilling its Regulation Down obligation) would not occur under the current proposal, since the Headroom Limit would respect the ACC and therefore constrain the solar generation as needed. Implemented correctly, the Headroom Limit obviates the need for the follow DOT flag. Only scenarios 1 and 2 would remain for co-located resources in which the BESS was responding to a Regulation Down award: (1) a Headroom Limit greater than zero and (2) no additional headroom.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

N/A

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

N/A

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

N/A

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

LSA’s comments focus on one issue in the proposal document – the Headroom Limit for Co-located Variable Energy Resources (VERs).  LSA generally supports the proposal in the area but asks the CAISO to consider a modification that would give more flexibility to projects with multiple VERs behind a single Aggregate Capability Constraint (ACC).

LSA also asks the CAISO to reconsider the restriction on allowing a non-VER resource in a Co-Located configuration that receives an Ancillary Services award to reduce its energy output in real time to allow the VER resource to increase production, within the ACC/sub-ACC limitation. 

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

LSA has no comments on this topic at this time.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

LSA has no comments on this topic at this time.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

LSA has no comments on this topic at this time.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

LSA has no comments on this topic at this time.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

LSA appreciates NextEra raising this issue, and the CAISO for being responsive with this proposal.  LSA supports the proposal but asks the CAISO to consider two modifications.

The current treatment is discriminatory and inefficient.  This proposal could provide additional flexibility for solar/wind resources co-located with storage to produce above their dispatch target in real-time, as stand-alone VERs are allowed to do.  This construct discourages non-VERs in co-located configurations from providing A/S and unnecessarily restricts clean and economic VER production.

As we understand it, the CAISO proposal would provide a new measure, the “VER Headroom Limit,” to allow co-located VERs to produce up to the “maximum possible real-time generation” without impairing the A/S award.  For our example, with a 100MW project having 100MW of storage and 100MW of solar generation, where the storage had a 30MW Ancillary Services award and the solar capacity had a 50MW DOT, the VER Headroom Limit would be 70MW.

This would be a tremendous improvement, and LSA supports this framework.  However, LSA asks the CAISO to consider two modifications to the proposal, addressing the admittedly rare situation where there are multiple VERS behind a single sub-ACC – for example, wind, solar, and storage capacity. 

• Allow any VER resource to use the available headroom.  The CAISO proposal would allocate the VER Headroom Limit proportionally to the VERs based on their respective Energy schedules.  This would work well where the VER output does not overlap much – e.g., the wind project would get the entire headroom limit at night.

However, in many hours, it is not always easy to know in advance which of the VERs will have the ability to generate additional energy in real time, and that ability may not be at all related to the respective Energy schedules.  In fact, the resource with the lower schedule may have more upward ability to produce.

Instead, the CAISO should allow either VER to use the entire headroom limit, and not restrict each resource to only a portion of that limit.  Software changes will be needed in any case, and it seems like the new design could incorporate this flexibility without additional time or complexity.

• Allow the non-VER to reduce its output in real time, as long as the ability to satisfy the Ancillary Services award is not impaired.  Currently, non-VERs in Co-Located Resource configurations without Ancillary services awards are allowed to reduce their real-time output below the dispatched level to the extent that the VER resource(s) can produce above the DOT, so overall the CAISO grid receives the dispatched level of energy.  This is a sensible accommodation that enables production of additional clean energy, without impairing grid reliability.

However, this flexibility is not allowed if the VER receives an Ancillary Services award, and LSA asks the CAISO to reconsider this restriction, as long as the non-VER ability to satisfy the Ancillary Services award is maintained.  Like the VER DOT directive, this restriction was imposed when the CAISO had little experience with Co-Located Resources, or Mixed-Fuel Resources generally.  It is time now to reassess this position and determine whether this restriction can safely be lifted.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

LSA has no comments on this topic at this time.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

LSA has no comments on this topic at this time.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

LSA has no comments on this topic at this time.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

NextEra Energy Resources, LLC, (“NextEra Energy Resources”), applauds CAISO for making important changes in its Issue Paper and Straw Proposal on Mixed-Fuel Resources (“Issue Paper and Straw Proposal”), particularly regarding the proposed “Headroom Limit for Co-Located Variable Energy Resources.”  NextEra Energy Resources looks forward to CAISO’s collaboration with stakeholders for this initiative.  As discussed in detail below, NextEra Energy Resources’ comments focus on the following: 

• Headroom Limit for Co-Located Variable Energy Resources (VERs):?NextEra Energy Resources strongly supports CAISO's straw proposal to establish a headroom limit for co-located VERs, which builds on NextEra Energy Resources' own prior proposal to remove the automatic Follow Dispatch Operation Target (DOT) flag when a co-located battery participates in the ancillary services market. While supportive overall, NextEra Energy Resources identifies four areas requiring further clarification: (1) explicit confirmation that upward ancillary service awards will be netted against a co-located battery's energy awards in the headroom limit calculation; (2) clarification of how downward ancillary service awards factor into the headroom limit to ensure full deliverability; (3) implementation details on how the headroom limit will function as a control signal; and (4) confirmation that the proposal does not disturb the existing exemption of Eligible Intermittent Resources from setpoint deviation penalties under Tariff section 34.13.1. 

• High Sustainable Limit (HSL) Guidance:?NextEra Energy Resources supports CAISO's efforts to clarify the definition of high sustainable limit data in the Business Practice Manual (BPM), recognizing the importance of high-quality HSL data for accurate forecasting.  

• Default Energy Bids for Hybrid Resources:?NextEra Energy Resources does not oppose CAISO's efforts to develop a default energy bid methodology for hybrid resources, but urges CAISO to prioritize other topics within the Storage Design and Modeling initiative, such as outage management and state-of-charge management.  

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

NextEra Energy Resources has no comment at this time but reserves the right to provide future comments. 

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

NextEra Energy Resources has no comment at this time but reserves the right to provide future comments. 

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

NextEra Energy Resources has no comment at this time but reserves the right to provide future comments. 

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

NextEra Energy Resources is grateful for CAISO’s continued attention to this important topic and for the thoughtful stakeholder discussions. Overall, NextEra Energy Resources strongly supports the “Headroom Limit for Co-Located Variable Energy Resources” straw proposal. This proposed rule change can maximize the value of VERs and remove barriers to co-located energy storage resource participation in the ancillary services market, particularly during solar hours.  

Under the “Headroom Limit for Co-located Variable Energy Resources” proposal, CAISO proposes a headroom limit for co-located VERs with a dispatch operating target. As stated by CAISO, “[t]his headroom limit would communicate the maximum possible real-time generation that a co-located variable energy resource could reach. The headroom limit calculation would be a new output by the real-time market and reflect available aggregate capability constraint capacity for the co-located variable energy resource.”¹  The CAISO’s proposal builds off NextEra’s proposal to remove the “Co-Located Follow DOT” submitted and accepted in the 2026-2028 Final Policy Initiatives Roadmap.²  NextEra’s proposal urged CAISO to remove the “Follow DOT” for VERs when the battery component of the co-located configuration is picked up for ancillary services because it limited the ability for VERs to generate up to the Point of Interconnection limit.  Under the current straw proposal, CAISO maintains the “Follow DOT” as advisory but introduces a new “headroom limit” that allows VERs to generate up to their aggregate capability constraint (ACC).  NextEra believes this straw proposal achieves the goal of unlocking additional VER generation when available.  

NextEra Energy Resources supports CAISO’s stated goals of ensuring the deliverability of ancillary service awards to co-located energy storage resources and preserving a transparent delineation between “Instructed” and “Uninstructed” imbalance energy for settlement purposes. NextEra Energy Resources also supports CAISO’s proposal to allocate headroom limits to multiple co-located VERs in proportion to their market-cleared energy awards.  

However, NextEra Energy Resources believes several key issues need further clarification in the final proposal and subsequent Tariff and/or Business Practice Manual (BPM) revisions. 

First, CAISO should explicitly clarify that upward ancillary service awards to a co-located energy storage resource will be netted against its energy awards for purposes of calculating headroom limits for co-located VERs.  

• For example, suppose a co-located energy storage resource has a Pmax of 50 MW and a Pmin of -50 MW. Suppose the energy storage resource clears to charge 50 MW of energy and provide 50 MW of Regulation Up in the real-time market.  

• Effectively, this means the battery is on standby to reduce and/or cease charging in the event of deployment to provide Regulation Up.  

• NextEra Energy Resources understands that under CAISO’s proposed formula, this 50 MW Regulation Up award would be netted against the battery’s 50 MW charging award, such that VER Headroom Limit = ACC limit – (50 MW + (-50 MW)) = ACC limit.  

• In other words, there would be no net impact on the VER headroom limit in this scenario. NextEra Energy Resources believes this outcome is appropriate because any incremental generation from the VER would not inhibit the battery’s ability to deliver Regulation Up by operating between -50 MW and 0 MW.  

• The CAISO should codify this interpretation in its final proposal and future Tariff and/or BPM revisions. 

Second, CAISO should clarify how downward ancillary service awards for a co-located battery will affect the headroom limit calculation.  

• For example, suppose a co-located battery with a Pmax of 50 MW is co-located with a VER with a Pmax of 120 MW behind an Aggregate Capability Constraint limit of 100 MW.  

• Based on the March 16, 2026 stakeholder call and the additional examples subsequently provided by CAISO, NextEra Energy Resources understands that if the battery is awarded 50 MW of energy and 50 MW of Regulation Down, under CAISO’s proposal, the VER’s DOT and calculated headroom limit would both be 50 MW.  

• It is NextEra Energy Resource’s understanding that this is intended to ensure the full deliverability of the Regulation Down award (i.e., the battery’s ability to follow an AGC signal by continuously ramping up and down anywhere in the 0 MW – 50 MW range). 

• NextEra Energy Resources agrees with CAISO’s statement on the March 16, 2026 stakeholder call that ignoring the battery’s Regulation Down award for purposes of calculating the headroom limit would jeopardize the award’s deliverability. For example, if the battery ramps down pursuant to its Automatic Generation Control (AGC) signal, it could be prevented from ramping back up due to incremental generation from the VER. However, this scenario is not fully reflected in the headroom limit formula, which only considers upward ancillary service awards. 

• NextEra Energy Resources requests that CAISO revise its proposal to address the treatment of downward ancillary in the headroom calculation. Future Tariff and/or BPM language should also be explicit. 

Third, CAISO should clarify implementation details. Specifically, the CAISO should explain how the proposed headroom limit will be communicated to resources as a control signal during operations. Providing these details well in advance of go-live is critical to ensuring resources control to the correct signals and maintain reliability by accurately following dispatch.  

• NextEra Energy Resources believes the simplest approach for resource owners would be to adjust the VER DOT calculation to reflect the amount of available headroom instead of the VER’s most recent forecast, which would require no changes to site control logic. 

• However, NextEra Energy Resources understands CAISO’s need to consider and accommodate downstream settlement requirements and therefore recommends CAISO implement the headroom limit as a new control signal in Automated Dispatch System (ADS). This new signal would exist alongside the current DOT signal and would always be broadcast as a non-null value. This approach provides the necessary means to distinguish between Instructed and Uninstructed imbalance of energy for settlement purposes. Under this approach, the co-located VER would always receive a DOT and a headroom limit, which may or may not be equal in value.  

• NextEra Energy Resources believes this is the most straightforward framework for resource owners to manage as VER site controls could simply be programmed to respond to the maximum of the DOT and headroom limit signals. This would avoid the need for cumbersome logic that would otherwise require first checking whether the headroom limit signal exists before determining the appropriate site response. 

More broadly, NextEra Energy Resources urges CAISO to critically examine how implementation of this proposal interacts with the existing Follow DOT construct.  

• NextEra Energy Resources understands that CAISO’s proposal would effectively discontinue the current practice of automatically issuing a Follow DOT flag whenever a co-located energy storage resource participates in the ancillary services market. However, there may be other operating scenarios in which CAISO would still need to issue the Follow DOT flag. In such scenarios, CAISO must ensure that the headroom limit signal does not misleadingly suggest to resource owners that the VER may produce above its DOT.  

• For example, under CAISO’s proposed formula, suppose a VER with a forecasted output of 30 MW receives a Follow DOT flag reflecting an operational curtailment and a reduced DOT of 20 MW to implement the curtailment.  

• If the headroom limit calculation doesn’t account for the Follow DOT flag, the VER could receive a headroom limit greater than its DOT, the VER may choose not to control output below the Follow DOT flag and instead control to the higher headroom limit. This outcome could deteriorate operating conditions and raise compliance concerns, as CAISO would be issuing conflicting dispatch instructions. 

Finally, CAISO should clarify that this proposal is not intended to modify the current exemption of Eligible Intermittent Resources (EIRs) from setpoint deviation penalties and related penalty allocations and/or sanctions under the Tariff.  

• Specifically, NextEra Energy Resources understands that under CAISO’s proposal, a co-located VER will continue to receive a DOT equal to its most recent forecast value, and thus be able to “produce to its capability” (as modified by the headroom limit) per Tariff Section 34.13.1 unless it receives a Follow DOT flag for reasons other than the participation of a co-located battery in ancillary services. 

• CAISO should clarify this interpretation explicitly and conduct a thorough review of other potentially implicated Tariff sections prior to issuing its final proposal, in order to avoid unintended consequences, such as unreasonable VER deviation penalties. 

¹ Issue Paper and Straw Proposal, p. 10.

² See 2026-2028 Final Policy Initiatives Roadmap, p. 6. 

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

NextEra Energy Resources supports CAISO’s intent to clarify the definition of HSL data in the BPM. NextEra Energy Resources understands the importance of high quality HSL data to ensure accurate forecasting.  For solar resources providing high sustainable limit data, NextEra Energy Resources already incorporates solar irradiance data into its generation calculations to account for weather-driven variability. NextEra Energy Resources looks forward to working with CAISO to refine HSL data quality standards that support accurate forecasting. 

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

?NextEra Energy Resources has no comment on this time but reserves the right to provide future comments. 

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

While NextEra Energy Resources does not oppose CAISO's proactive efforts to develop a default energy bid methodology for hybrid resources, this item should not take priority over more pressing matters within the Storage Design and Modeling initiative, such as outage management and state-of-charge management. As CAISO itself acknowledges, only 1,228 MW of batteries currently participate as hybrid resources, suggesting that other sub-topics within this initiative would impact the remainder of 14,637 MWs of batteries on the CAISO grid.³ 

³ Issue Paper and Straw Proposal, p. 4.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

NV Energy appreciates CAISO’s efforts to develop a Default Energy Bid (DEB) option for WEIM-only storage resources.  However, NV Energy advocates for a simple and easily implementable Storage DEB that incorporates opportunity costs.  NV Energy’s storage fleet faces the risk of being mitigated to an inaccurate DEB that results in the early discharge of storage resources.  The early discharge of storage resources presents reliability risks over peak periods when the energy is truly needed.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

NV Energy is supportive of a readily available DEB alternative to the negotiated DEB option.  A readily available DEB option for WEIM-only storage resources relieves WEIM entities from the administrative burden to negotiate a DEB for every single storage resource during a time of accelerated growth for storage resources.

However, NV Energy requests that CAISO staff provide clear examples of how a standard readily available Storage DEB based on the DGAP used in the Negotiated DEB option would be calculated.  NV Energy cannot come to a definitive conclusion on whether a standard Storage DEB based on the DGAP is appropriate because it is unclear how the negotiated DEB is calculated today.  NV Energy requests CAISO provide stakeholders with more detailed information in order to determine if the Storage DEB is appropriate. For instance, it is unclear whether the DGAP is a day-ahead or real-time aggregated price. This is an important distinction considering a day-ahead aggregated generator price may not be appropriate for use in the real-time market.

NV Energy also seeks information on why a Storage DEB based off the existing Storage Hydro DEB was not considered alongside the DEB calculation used in the Negotiated DEB option.  Similar to the Negotiated DEB option, the Storage Hydro DEB is also readily available.  However, the Storage Hydro DEB also accounts for a lost opportunity cost based not only on the Day-Ahead price but a comparable gas unit. 

NV Energy believes an accurate DEB for WEIM-only storage resources is important due to its implications beyond financial risks.  A WEIM-only storage resource mitigated to an inaccurate DEB could lead to the storage resource being discharged earlier than expected or not able to charge to an appropriate level, therefore adding reliability risks to hours where the storage resource was expected to be discharged, specifically over peak hours.  NV Energy believes that it is inherent that any DEB applied to storage resources captures lost opportunity costs in its calculation. 

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

NV Energy seeks clarification on Example B, specifically how the multipliers are determined and how multipliers are applied to specific hours.  NV Energy seeks clarification if the multipliers and their associated hours would be determined through analysis and/or if they would be negotiated between scheduling coordinators and CAISO given that not all entities peak at the same time.  While a negotiated multiplier and hours option would be more reflective of real-time operations, the negotiation process should not be so overburdensome to eliminate the benefits of a readily available DEB as discussed above.

NV Energy understands that by not making changes to the DEB during morning ramp hours and evening hours would result in discharging over peak periods when energy is needed to meet base schedules or for reliability. Conversely, increasing the DEB during the midday, late night, and early morning hours would prevent discharging before morning or evening peak. But as previously mentioned, NV Energy seeks clarification on how these hours would be determined.

However, NV Energy notes that a single high DEB throughout the day accomplishes the same result without needing an hourly shaped DEB.  The central issue of a storage resource being mitigated to a low DEB and discharging prematurely can be solved with a single higher DEB throughout the day without limiting the storage resource’s ability to charge.  A shaped DEB may actually present the opportunity for a storage resource to discharge prematurely if the multiplier isn’t high enough.  This situation could also be prevented if a DEB floor was implemented as well, similar to the gas floor component in the Storage Hydro DEB.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

PG&E would like to thank the CAISO for its work on the Issue Paper and Straw Proposal on Mixed-Fuel Resources and appreciates the opportunity to provide comments on it and the March 16, 2026 stakeholder meeting. Our comments can be summarized as follows: 

• More discussion on the "time-of-day" storage default energy bid (DEB) methods is needed 

• PG&E supports proceeding with the Headroom Limit and High Sustainable Limit straw proposals 

• PG&E does not support storage resources being able to leverage the Reference Level Change Request process 

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

More discussion on the "time-of-day" storage default energy bid (DEB) methods is needed  

PG&E appreciates the CAISO’s working group discussion on storage default energy bids (DEBs). The “time-of-day" DEB concepts presented in the working group require additional exploration and discussion before a straw proposal. The incorrect calculation of the expected energy cost of the DEB in the presentation (slide 28) is one reason for additional stakeholder dialogue and concept development. As previously stated in comments, PG&E believes that a guiding principle of the real-time DEB calculation should be to enable storage resources to bid their true opportunity costs. We encourage the CAISO to hold a dedicated session comparing the two “time-of-day" DEB concepts and others (perhaps between these two "bookend" concepts) with additional analysis showing each’s ability to reliably cover a storage resource’s operator resource’s true opportunity cost. We're also interested in the trade-offs between bidder certainty versus accuracy on how bids might be modified when mitigated down to the DEB.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

PG&E does not support storage resources being able to leverage the Reference Level Change Request process  

PG&E appreciates the opportunity to provide comments on storage resources and the Reference Level Change Request (RLCR) process. We agree with the CAISO’s assessment and do not believe that it would be reasonable for storage resources to leverage the RLCR process at this time.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

PG&E supports proceeding with the Headroom Limit straw proposal.  

PG&E would like to thank the CAISO for its work on the straw proposal for the Headroom Limit for Co-located Variable Energy Resources. We agree with the proposal’s concepts and details, and support moving forward with it. As an additional step, we believe the CAISO should provide stakeholders with an education session prior to launching the new Headroom Limit. This would provide any additional clarity that stakeholders may need. 

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

PG&E supports proceeding with the High Sustainable Limit Guidance straw proposal. 

PG&E would like to thank the CAISO for its work on the straw proposal for the High Sustainable Limit Guidance. We agree with the proposal’s concepts and details, and support moving forward with it. 

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

PGE appreciates the opportunity to provide comments on CAISO’s Storage and Hybrid Resources Draft Final Proposal. PGE supports CAISO’s focus on mixed-fuel resources and hybrid resource configurations, recognizing that these resource types are becoming increasingly prevalent and operationally significant across the Western Interconnection. As asset configurations grow more complex, it is important for market design and participation models to evolve accordingly. PGE views this initiative as an important step toward ensuring that market rules appropriately accommodate emerging technologies while maintaining reliability and efficiency.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

PGE supports the development of a default energy bid (DEB) option for storage resources that are located outside of California. As CAISO advances this framework, PGE recommends that similar considerations be extended to storage resources participating in EDAM. These resources are subject to different regulatory requirements and obligations associated with serving native load, which may warrant additional flexibility. In particular, PGE encourages CAISO to continue to allow for negotiated DEB’s, or comparable alternatives, to ensure that default bidding structures appropriately reflect the operational and contractual realities of non-California resources.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

PGE appreciates CAISO’s inclusion of illustrative approaches for developing a time-of-day storage DEB. PGE supports the use of a multiplier-based methodology, as reflected in Example B, as it more appropriately captures the operational and market dynamics affecting storage resources. In particular, a multiplier approach better accommodates differences between the day-ahead and real-time markets conditions, allowing the DEB to more accurately reflect prevailing system needs and price formation.

PGE does not support the approach outlined in Example A, as it may not sufficiently account for these temporal and market variations and could result in less representative default bids. PGE encourages CAISO to further develop and refine the multiplier-based framework to ensure that time-of-day DEBs align with the operational characteristics of storage resources and promote efficient market outcomes.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

PGE encourages CAISO to evaluate opportunities to modernize and simplify the Reference Level Change Request (RLCR) process, with a focus on improving usability and accessibility for market participants. As storage resources play an increasingly important role in responding to dynamic system conditions, it is important that administrative processes such as RLCR do not create unnecessary barriers to participation.

PGE also recommends that the RLCR process be clearly available and applicable to storage resources, particularly during scarcity conditions when the ability to justify bids that reflect prevailing market dynamics is critical. Ensuring that storage resources can effectively utilize the RLCR framework will support more accurate price formation and enable these resources to respond efficiently to system needs.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

PGE supports the development and implementation of a DEB framework for hybrid resources that is both reasonable and reflective of the operational characteristics of these assets. In particular, PGE encourages CAISO to ensure that the DEB construct appropriately accounts for the unique considerations associated with co-located and long-duration storage resources, including their intertemporal constraints and operational flexibility.

As hybrid configurations continue to evolve, it will be important for DEB methodologies to remain adaptable and sufficiently robust to accommodate a range of resource types while supporting efficient market participation and accurate price formation.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

PGE supports the headroom limit for co-located variable energy resources.

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

PGE generally supports initiatives that improve the quality and granularity of data used in market operations. However, as a WEIM participant and prospective EDAM Entity that develops and submits its own 5-minute forecasts, PGE seeks additional clarification on the necessity and value of requiring submission of 12-second High Sustainable Limit (HSL) data to CAISO. In particular, PGE requests that CAISO further explain how this level of granularity would be utilized and how it would provide incremental benefits within a 5-minute market construct.

PGE also notes potential implementation challenges associated with this requirement. Many existing resources, particularly legacy variable energy resources and co-located facilities, may not have control systems capable of producing accurate HSL calculations at a 12-second interval. As a result, requiring this level of data granularity could impose significant operational and system upgrade burdens without clear corresponding benefits.

PGE encourages CAISO to further evaluate the applicability of this requirement for WEIM and EDAM Entities and consider alternative approaches that balance data quality improvements with practical implementation considerations.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

PGE encourages CAISO to provide additional clarity on the interaction between hybrid resource ancillary services and dynamic limits, including the specific risks this proposal is intended to address and the potential operational or market benefits it is expected to provide. Greater transparency of the underlying objectives will help stakeholders better evaluate the necessity and design of any proposed changes.

As hybrid resource configurations become more complex, it is important that any enhancements in this area clearly demonstrate how they improve reliability, operational flexibility, or market efficiency. PGE recommends that CAISO further articulate these considerations and, where possible, provide illustrative examples to support stakeholder understanding.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

PGE reiterates the importance of enabling more dynamic adjustment of Available Charging Capacity (ACC) for hybrid and co-located resources. As resource configurations continue to evolve, new projects will include both a site-level ACC and a subordinate ACC components (sub-ACCs), each of which may vary based on real-time system conditions.

For example, site-level ACC may depend on transmission rights that can be curtailed or otherwise limited due to system conditions, while sub-ACC values may be driven by equipment availability (e.g., parallel transformers), where outages or derates directly reduce available capacity. Under the current design, these types of limitations are primarily reflected through a Master File updates and outage management processes, which may not provide sufficient flexibility to reflect intra-day changes in resource capability.

PGE recommends that CAISO consider enhancements to allow for more timely and dynamic adjustments to ACC and sub-ACC values, or alternative mechanisms that can better capture changing operational constraints. Providing this capability would better align market participation parameters with actual system conditions, support reliable operations, and ensure more accurate representation of hybrid and co-located resource capabilities in the market.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

Southern California Edison (SCE) appreciates the opportunity to provide comments on the March 16, 2026 stakeholder meeting.  SCE’s comments can be summarized as follows: 

Default Energy Bid for WEIM-only storage resources
SCE supports CAISO’s efforts to develop a default energy bid for WEIM-only resources.   

Time-of-Day Storage Default Energy Bid (DEB)
SCE supports the Example B approach using “shaping factors”.  However, SCE proposes refinements to CAISO’s approach and believes shaping factors should be applied to the price-based opportunity cost and not to the energy cost. SCE also requests consideration of a corresponding default energy bid for charging and requests additional information on the absence of a charging-side DEB.  

Headroom Limit for Co-Located Resources
SCE supports introducing a headroom limit for co-located variable energy resources to improve operational flexibility while preserving ancillary service deliverability. SCE emphasizes the importance of clear and consistent implementation, requests that CAISO retain responsibility for key calculations, and requests a market simulation if system specification changes are required prior to implementation. 

High Sustainability Limits Guidance
SCE supports CAISO’s efforts to clarify High Sustainable Limit guidance to improve forecast accuracy, while noting that expanded submission requirements should remain voluntary for non-hybrid, non-storage variable energy resources. 

Dynamic Limits for Hybrid Resources 
SCE supports CAISO clarifying expectations for the use of dynamic limits by hybrid resources providing ancillary services. SCE requests consistent alignment with tariff requirements to ensure resources accurately represent their capabilities.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

SCE supports CAISO’s proposal to develop a default energy bid for WEIM-only resources.  The is a process improvement that would automate the DEB formulation compared to what currently exists today. SCE looks forward to discussions regarding the details of how DEBs are formulated for WEIM-only resources.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

Southern California Edison (SCE) supports a modified version of Example B as the preferred approach for developing a time-of-day storage default energy bid (DEB). SCE supports the general framework presented in Example B, which applies time-of-day shaping factors to reflect differences between day-ahead and real-time market conditions. This approach preserves a transparent and schedule-anchored construct while allowing hourly differentiation that better reflects observed price patterns between the day-ahead and real-time markets. 

While SCE supports the use of shaping factors, SCE recommends a refinement limited to how the price-based opportunity cost (PB_OC) is calculated under Example B. Under the current formulation, PB_OC is derived from the fourth-highest day-ahead priced hour and applied uniformly across the operating day. SCE recommends retaining the fourth-highest-hour construct but modifying the input prices used to determine PB_OC so that it better reflects expected real-time conditions. 

Under SCE’s proposal, time-of-day shaping factors—developed based on historical differences between day-ahead and real-time prices over a representative historical window—would be applied at the hourly level to each corresponding day-ahead price. Once each day-ahead hourly price is shaped in this manner (to roughly represent expected real-time prices in each hour), the fourth-highest shaped hourly price would be identified and used to establish the daily PB_OC. This refinement preserves the existing PB_OC structure while allowing the opportunity cost signal to reflect both the day-ahead price profile and systematic differences between day-ahead and real-time market outcomes. 

The following example illustrates SCE’s proposed refinement to the price-based opportunity cost calculation based on the example data used on slide 30 of the presentation for Storage Design and Modeling presented on March 16, 2026.¹ 

Step 1: Calculate the Hourly Shaped Prices using the Day-Ahead LMPs and Shaping Multiplier:

Step 2: Rank Shaped Prices from Step 1 and use the fourth-highest hourly Shaped Price to determine the PB_OC:

1. HE20: 59.4
2. HE21: 55
3. HE22: 47.15
4. HE23: 47.15
5.  HE05: 46 

PB_OC = $47.15

This modification does not change the underlying energy cost formulation used in the storage DEB. The refinement is limited to the determination of PB_OC only.  The real-time default energy bid for each hour would continue to be determined by either the applicable energy cost or the PB_OC, consistent with the existing DEB framework.

For clarity, we are suggesting simply changing the calculation of PB_OC and doing everything else the same as today.  (i.e., there would only be 1 default energy bid for each day).  The formula on slide 30 of March 16, 2026, presentation would stay the same, only the calculation of PB_OC would change.  SCE believes this modification improves Example B by anchoring the price-based opportunity cost to a shaped day-ahead price distribution rather than unadjusted day-ahead prices alone. This results in a more transparent, stable, and operationally intuitive opportunity cost signal that preserves the current market design while better aligning PB_OC with expected real-time price conditions. 

In addition, SCE requests that CAISO consider developing a corresponding default energy bid formulation for charging. A discharge-only default construct does not fully reflect the operational realities of storage resources. Establishing a charging-side default energy bid would improve internal consistency within the DEB framework, provide clearer dispatch guidance under default conditions, and better support reliable real-time operations. SCE further requests that CAISO provide additional information and rationale explaining why a charging-side default energy bid has not yet been considered.

¹ California Independent System Operator (CAISO), Presentation – Storage Design and Modeling, March 16, 2026, available at https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Design-Modeling-Mar-16-2026.pdf. 

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

No comments.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

SCE understands that CAISO intends to defer development of a hybrid-specific default energy bid while focusing first on refining the storage DEB framework.  SCE does not oppose this sequencing and agrees that resolving foundational storage DEB issues should take precedence.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

SCE generally supports the concept of introducing a headroom limit to allow co-located variable energy resources greater operational flexibility while preserving ancillary service deliverability. SCE agrees that the existing Follow DOT construct can unnecessarily constrain variable resource output when sufficient interconnection capacity remains available. 

SCE emphasizes that implementation details are critical. In particular, SCE strongly recommends that CAISO retain responsibility for calculating and embedding headroom limits directly into the dispatch operating target, rather than requiring resources to interpret and reconcile multiple signals. Placing this logic on the ISO side will reduce operational complexity, minimize the risk of errors, and ensure consistent treatment across resources. SCE also supports prorating headroom across multiple co-located resources behind a shared point of interconnection, provided that the calculation methodology is transparent and consistently applied. In the event CAISO determines that ADS specifications need to be changed to implement this feature, SCE requests CAISO to conduct a market simulation prior to go-live. 

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

SCE supports CAISO’s effort to clarify High Sustainable Limit (HSL) guidance, particularly as it relates to improving forecast accuracy for variable energy resources. As discussed during the meeting, poor-quality HSL data can undermine both dispatch efficiency and system reliability, and clearer guidance on methodology and expectations is therefore beneficial. 

However, SCE emphasizes that expanded HSL submission requirements should remain voluntary for non-hybrid/non-storage, standalone VER resources. Making such requirements mandatory could impose significant burdens on resource operators without a clear demonstration of commensurate system benefits. SCE supports CAISO’s proposal to provide guidance and best practices for HSL calculation, especially for co-located and hybrid resources, while preserving flexibility for other resource types.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

SCE supports CAISO’s efforts to reinforce appropriate use of dynamic limits for hybrid resources providing ancillary services. As discussed in issue paper, there is concern that dynamic limits could be misused to make ancillary service capacity unavailable without triggering corresponding performance consequences, potentially affecting reliability and market integrity. 

SCE agrees that dynamic limits and outage-related tools should be applied consistently and in alignment with tariff requirements to ensure that resources accurately represent their capabilities. Clarifying expectations and reinforcing accountability will help prevent unintended exploitation of operational tools.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

SCE does not have any further comments.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

Terra-Gen appreciates CAISO’s efforts as provided in the issue paper and straw proposal. At a high-level we agree with considering a hybrid DEB only after CAISO and other stakeholders have coalesced around a final single DEB design for storage resources and clarified best practices and a path forward related to SOC management. 

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

Terra-Gen does not support the creation of a separate DEB for WEIM-only resources. Terra-Gen believes that one storage DEB that is inclusive of real-time opportunity costs should be the goal for a DEB applied to all storage resources. CAISO should however, clarify how if at all, the development of a WEIM-only storage DEB impacts future consideration of a DEB for hybrid resources. CAISO should clarify if the intent is to then create a WEIM-only DEB for hybrid resources. 

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

Terra-Gen has concerns with both Examples A and B as described at the March 16, 2026, stakeholder meeting. While each option attempts to update the storage DEB in unique ways, they both fail to capture actual real-time opportunity costs and maintain the underlying issue with the existing methodology: an overly strict adherence to outdated outputs from the day-ahead market. Terra-Gen therefore recommends that CAISO continue to create alternative DEB formulations that better reflect real-time opportunity costs for storage. Between the two options presented, Terra-Gen does have a slight preference for Example B as a better option relative to the status quo. While Example B is preferred, Terra-Gen is not sure if the creation of multipliers that represent the historic difference between DAM outcomes and RT prices will necessarily capture the specific differences for that particular trading day. It may help if CAISO provided more information on the scope of historic days that would be used to create the multipliers. CAISO could also provide relevant examples from past trade dates for stakeholders to assess each option rather than hypotheticals for illustrative purposes. Additionally, CAISO should confirm multipliers would only raise the DEB rather than lower it. Terra-Gen would not support Example B in instances if a multiplier was less than 1 and would otherwise lower a DEB relative to the status quo. 

CAISO does provide analysis on the divergence of DAM prices relative to RT prices. Terra-Gen appreciates this work and finds that it is relatively inconclusive. CAISO notes thata DEB based on DAM LMPs could overestimate costs 50-75% of the time or underestimate costs 25-50% of the time. While this may be accurate based on these overarching trends, CAISO should compute the relative magnitude of over or underestimating real-time costs. If 50% of the time a DEB underestimates real-time costs by $10/MWh and 50% of the time it overestimates costs by $1/MWh, then there is a clear issue with underestimation relative to overestimation. Terra-Gen agrees with comments made by CESA at the March 16, 2026, meeting that the goal of any DEB should be to accurately reflect where a resource should show up in the merit order dispatch relative to other resources. Ensuring that a DEB properly accounts for a storage resource’s real-time opportunity cost is a central component of this reflection and is a key factor as to why both examples provided still fail to move in a sufficient direction.  

Finally, CAISO provides some implications for a potential storage DEB based on its analysis. Terra-Gen agrees with the intent of raising the DEB in early morning and late-night hours to “limit pre-mature discharging”, meaning that storage resources should maintain their SOC until the highest priced hours at which point it becomes economic to discharge.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

Terra-Gen recommends that CAISO refrain from making any final determinations regarding a storage resource’s ability to access the Reference Change Request Process (RLCR) until there is final alignment on a DEB methodology. If CAISO moves towards a method that looks like Example B, the static nature of those DEBs (i.e., their reliance on multipliers) may in fact warrant the ability for resources to utilize the RLCR in select instances. CAISO highlights that traditional gas resources may maintain better or more timely information related to their fuel costs, which could justify increased bidding flexibility. Similar to Terra-Gen's comments above in response to #3, if a storage DEB does not properly account for real-time opportunity costs, scheduling coordinators should be permitted to submit information after the fact justifying such pricing. CAISO appears to suggest that because a storage resource’s costs are derived from the market that the scheduling coordinator does not possess any external information unknown to the CAISO. This assertion breaks down when a DEB inappropriately mitigates a resource below its true costs. 

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

Terra-Gen finds it sufficient to work through an appropriate DEB for standalone storage prior to creating a DEB applicable to hybrids. We reiterate that any DEB applied to hybrids must not only account for changing marginal costs but also operational constraints including grid charging restrictions. Any DEB that does not inherently recognize and account for the unique operational constraints applicable to hybrids will result in inappropriate levels of mitigation. 

Additionally, any hybrid DEB formulation should occur after CAISO fully implements solutions to allow for clearer and robust SOC management. We reiterate that while obtaining express permission to utilize dynamic limits is Terra-Gen's preferred outcome, a suitable secondary option is to include SOC as a distinct variable within the market mode. See our answer to #8 for more information.  

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

Terra-Gen is supportive of CAISO’s proposal to allow for headroom for co-located VERs when the non-VER maintains a non-energy award. Based on the discussions at the March 16, 2026, stakeholder meeting, Terra-Gen recommends that CAISO memorialize discussions around the scenario in which the non-VER resource has a reg down award and the associated VER is provided headroom. Creating another numerical example like the one on page 12 would be useful to illustrate this scenario. 

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

Terra-Gen is concerned about the HSL Guidance as applied to hybrids. While we appreciate the CAISO’s attempts to obtain higher quality HSL data from resources, there does need to be a method for hybrids to accurately report an HSL when resource owners are charging an associated battery system from the VER. This would not be feasible under the CAISO’s proposal: “The high sustainable limit data should match generation data when generation data is not impacted by market or operator instruction. The high sustainable limit is allowed to be greater than the generation data when the resource receives supplemental dispatch instructions, ancillary service awards, or operating instructions from the ISO. For hybrid resources, the high sustainable limit must be unaffected by battery charging or discharging because the variable energy component’s potential generation is not impacted by the battery.” (p.17) 

CAISO only provides that the HSL can be greater than actual production only when the entire resource is given instructions by CAISO itself. We recommend including an additional example here and allow HSL to be greater than actual production when resource owners make specific operational decisions to best manage their resources. CAISO should update Figure 5 to account for a scenario where there is either full or partial sun, no ISO limit, and operational considerations preventing the HSL from exactly tracking generation. 

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

As mentioned in Terra-Gen's prior comments, we believe it is paramount that SCs are given the needed tools to manage SOC given that the ISO does not currently include SOC as a constraint in the market model. We understand the CAISO’s position that both “the ISO and Department of Market Monitoring have identified challenges related to the interaction between the hybrid dynamic limits and compliance with the requirements listed above regarding ancillary services.” 

Unfortunately, this still leaves SCs in a precarious position. Without the express permission to utilize dynamic limits to communicate real-time conditions and co-optimize the battery and the VER, scheduling coordinators run the risk of not fulfilling their awards and resorting to outage cards to communicate unavailability. While the automatic acceptance of certain outage cards would help to quickly communicate and assimilate the most up to date information, it still leaves SCs without a needed tool to truly manage and co-optimize resources. 

Terra-Gen finds that the next best option to dynamic limits for SOC management is a true constraint in the market model for SOC.  

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

CAISO’s current mitigation framework for storage does not accurately reflect real-time opportunity costs. Because real-time market mitigation occurs in the Fifteen Minute Market and the Five-Minute Market, the DEB formulation must reflect opportunity costs across both the Fifteen-Minute Market and Real-Time Dispatch. Any methodology that bases real-time opportunity cost estimates on the Day-Ahead Market’s Integrated Forward Market (IFM) prices will be a poor representation of real-time expectations. Further, trying to forecast exactly which hour or sets of hours within the operating day are going to need to have higher or lower opportunity costs is extremely difficult and more likely to be at risk of error.

Vistra does not support differentiating similarly situated resources under mitigation such as daily use-limited resources with typical four hours dispatch or resources within different Balancing Authority Area (BAA). Storage resources, regardless of location, participating in a single integrated real-time market – Western Energy Imbalance Market (WEIM) - face the same underlying challenges with managing their limited energy against dynamic opportunity costs. Creating separate Default Energy Bid (DEB) methodologies for CAISO WEIM BAA and non-CAISO WEIM BAA resources would introduce false distinctions between similarly situated resources participating in the same integrated real-time market.

CAISO has already established a FERC-approved framework that addresses these challenges through the hydro DEB. The proposed time-of-day DEB options rely on incremental refinements to the existing storage DEB that has been shown to be flawed and would increase risk of misestimation error. Time-of-day options would only increase complexity and reliance on granular assumptions, increasing risks of inaccurately valuing their opportunity costs. CAISO has already established a framework through the hydro DEB that explicitly avoids false precision targeting market results to align with daily use-limited resources typical use. It estimates short-term opportunity costs subject to a gas price floor using a simplified, robust methodology rather than attempting false precision within the operating day. Vistra urges CAISO to build from this existing, FERC-approved construct and apply it consistently to daily use-limited storage across the full footprint whether storing energy or storing water.

In parallel, CAISO should fully implement the Reference Level Change Request (RLCR) framework consistent with FERC Order No. 831 and the policy developed in Commitment Cost and Default Energy Bid Enhancements (CCDEBE). RLCR was designed to apply to all resource types, including non-natural gas resources, recognizing that opportunity costs may constitute short-run marginal costs. However, RLCR implementation remains incomplete for storage and hydro resources, as these DEB frameworks were developed after the original policy design. As a result, storage – water or energy - resources today do not have full access to RLCR mechanisms to update opportunity costs in a manner consistent with the intent of Order 831.

Vistra therefore urges CAISO to:

• Avoid creating separate or location-specific DEB constructs, ensuring consistent treatment of similarly situated resources within the WEIM;
• Adopt a single, unified DEB framework grounded in the hydro DEB, applicable across both CAISO WEIM and Non-CAISO WEIM areas; and
• Complete implementation of RLCR for all use-limited resources, including hydro storage and energy storage, consistent with FERC Order No. 831 and FERC Order in ER20-2360 adopting RLCR for non-natural gas resources. 

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

Vistra does not believe a separate WEIM-only storage DEB is necessary or desirable.

Regardless of where a limited energy storage resource is located within the Extended-Day Ahead Market (EDAM) or the WEIM – internal to California or external to California – its incremental costs are based on similar operational constraints and the need to accurately capture real-time opportunity costs as they evolve during the day. In real-time market, the market is solving for the least cost solution across the entire WEIM footprint where estimating costs differently without cause to a similarly situated storage resource would lead to undesirable market outcomes.

The IFM clearing prices are a poor basis for estimating real-time opportunity costs regardless of where the storage asset is located. The storage DEB should no longer be based on IFM.

A modified hydro DEB approach that removes long-term opportunity cost components not applicable to storage provides a practical and well-founded starting point. The hydro DEB methodology requires minimal adjustment using bilateral indices that is in use in the WEIM for stored water – hydro DEB. The hydro DEB is an approved Tariff mechanism to allow hydro across the footprint to be mitigated based on “opportunity costs that would apply to all hydroelectric resources with storage capability that participate in the CAISO markets or the EIM”.[1]

Further, CAISO chose to use bilateral prices instead of CAISO market prices for a principled reason: “opportunity costs of potential sales in bilateral markets outside of the CAISO market is particularly important for hydroelectric resources participating in the WEIM in balancing authority areas outside of the CAISO”.[2] The CAISO fairly acknowledged that resources in CAISO BAA may also sell energy in the bilateral markets. These policies apply consistently across the WEIM.

CAISO should adopt storage DEB that uses the hydro DEB methodology without a long-term component where all storage would have its opportunity cost better valued and in a manner that situates it in the supply stack at the same level as other intra-day use-limited resources.

[1] CAISO LMPE Transmittal Letter at Pages 1-2.

[2] Id. at Page 33.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

Vistra does not support a DEB that varies across the operating day. Based on our operational experience, it is the false precision with trying to identify opportunity costs based on Nth lowest hour and Nth highest hour that began to highlight that in practice these hours may not be accessible to the storage and therefore a poor representation of its costs even if the price forecast were improved. Transitioning to time-of-day methods would only increase our concerns that false precision would lead to DEBs that do not cleanly represent opportunity costs in the hours to which that time-of-use would apply.

When developing the hydro DEB to estimate real-time opportunity costs, the CAISO stated, “[t]he proposed hydro DEB would appropriately account for these resources’ opportunity costs, while acknowledging such costs are inherently difficult to calculate precisely”.[1] Because it is difficult to precisely calculate opportunity costs trying to precisely calculate changes in opportunity costs based on time of day is likely to increase estimation error rather than decrease.

In its transmittal letter, the CAISO summarized the rationale for using the short-term component to estimate daily use limitations clearly:

“The CAISO worked with stakeholders to design the Short-Term component so that if the CAISO market dispatches a hydroelectric resource on a particular day, the market will implicitly recognize the hydroelectric resource’s daily use-limitations, and consequently, it is unlikely to dispatch the resource during the day for more than four hours.”[2]

The CAISO included a multiplier used in the short-term component to address the issue raised here regarding time-of-day. The single multiplier is based on the typical maximum number of hours per day units with storage can run before exceeding their short-term use limitations. Where stakeholders came to a consensus that four hours per day was a reasonable typical value, and conveniently also the assumption used for limited energy storage resources. This makes the short-term component and its multiplier well suited for Limited Energy Storage Resources (LESR). It also means that by taking an approach designed to mitigate units to levels that would result in real-time dispatches that respect their typical operational use across a day instead of risking false precision within an operating day.

In addition to the short-term component, the Gas Floor Component should also be retained in the storage DEB as a “fail-safe” to ensure the use-limited resource when mitigated sits at the right place in the supply stack by making the market indifferent to dispatching either the hydro or gas such that the mitigated price remains above the value of a typical gas generator calculated by heat rate multiplied by the fuel region gas price where the use-limited resource is located. The same should be done for daily use-limited energy storage resources such that its mitigated levels should not be lower than the cost of procuring energy from gas within its fuel region.

Consequently, Vistra does not think continuing to develop the CAISO’s options has merit since modifying the hydro DEB should be pursued.

[1] Id. at Page 2.

[2] Id. at Page 39.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

FERC Order 831, with which CCDEBE sought to comply, led to CAISO adopting a compliance approach that added the ability to submit energy cost-based offers (i.e., RLCR) subject to ex ante verification via reasonableness threshold or ex post verification. At the time, the hydro DEB and storage DEB were not approved leading to not implementing the policy on the new DEB options. Absent the ability to submit RLCRs, hydro and storage resources may be positioned too low in the supply stack during periods of rapidly changing real-time conditions, leading to premature discharge and inefficient market outcomes.

On March 16^th, CAISO mischaracterized the RLCR as being largely for gas resources. This is not the intent of FERC Order 831 or approved CCDEBE RLCR policy. Order 831 clarified: “In the NOPR the term “resource” referred to all supply resources, including demand response resources, that offer incremental energy to RTO/ISO energy markets. As such, a demand response resource that submits incremental energy offers to the energy market based on short-run marginal cost would be subject to the verification requirement if that incremental energy offer exceeds $1,000/MWh. For such a resource, the short-run marginal cost may equal its opportunity costs.”[1] Given the importance of this issue, parties sought rehearing on the issue and while FERC declined to prejudge ISO/RTO to change which costs may be included in cost-based offers – DEB – they did reaffirm their position that opportunity costs are legitimate short-run marginal costs.[2]

On compliance, CAISO stakeholdered adding the ability to submit a cost-based offer instead of its default practice of inserting the DEB when mitigated. CCDEBE stakeholder reference level calculations for both gas and non-gas.[3] When describing the documentation that should be retained by resources when using the RLCR, the CAISO clarified that for non-gas they should document “Fundamental drivers affecting non-gas units “fuel” or “prime mover” equivalent that will require documentation supporting exogenous factor is impacting ability to produce energy changing non-gas fuel equivalent costs from those registered in Master File. Supporting documentation will be required.”[4]

The reasonableness threshold for DEB specified if gas resource and if non-gas resource because at the time the hydro DEB and storage DEBs were not in use. Storage was not subject to mitigation, and hydro largely had negotiated DEBs. Non-gas resources registered their incremental cost curve for their fuel-equivalent cost estimates in Master File Generator Resource Data Template. CAISO clarified in its policy that the elements that a resource could adjust included gas prices, average cost curve for non-gas resources, and GHG allowance rate.[5] The proposal for non-gas resources was to calculate the reasonableness threshold with scaled fuel equivalent costs and resource-specific feedback loop inputs through any manual verifications. The scaled fuel equivalent costs are calculated by applying a volatility scalar of 110% to Master File registered fuel equivalent cost values.[6]

RLCR were intentionally designed to be applicable to all resources whether gas or non-gas. At the time, the policy was finalized and approved by the board in March 2018, the hydro DEB[7] and storage DEB did not exist. Now that there is a hydro DEB/storage DEB, the RLCR should be supported with the same core logic of a 110% volatility scalar on the fuel-equivalent costs. Given our desired outcome is that the hydro DEB and storage DEBs are merged into a single DEB, the RLCR should apply to the fuel-equivalent (i.e., opportunity costs) associated with the use-limited resources.

The formulation excluding the long-term component with the inclusion of the CCDEBE volatility scalars could easily be conformed as follows:

maxUnitConversionFactor*HRGT*GPIScaled*1.1,DApk*multiplier*Scalar)

Where multiplier is the hydro DEB established multiplier described above and the DApk represents the applicable bilateral prices in the hydro DEB. To align with CCDEBE policy, the RLCR would use the Scaled Gas Price Index as approved by FERC[8] in the gas floor components and would add the Scalar (i.e., volatility scalar) to the fuel-equivalent short-term component at 110% consistent with FERC policy on non-natural gas resources reasonableness thresholds.[9] This likely works for hydro DEBs even if there is a long-term component because RLCR are intended to update actual or expected costs to manage dispatches within a stressed day or set of days rather than over months.

Vistra urges the CAISO to fully implement CCDEBE on the newer DEB and to do so to a single aligned DEB for hydro and storage.

[1] FERC Order 831 at Paragraph 157.

[2] FERC Order 831-A at Paragraph 38.

[3] CCDEBE Second Revised Final Proposal at Page 13 and Sep. 2020 FERC Order at Paragraph 12.

[4] Id. at Page 38.

[5] Id. at Page 52.

[6] CCDEBE Second Revised Proposal at Page 39 and Sep. 2020 FERC Order at Paragraph 13.

[7] CCDEBE was board approved in March 2018 and filed for FERC approval to establish RLCR on August 30, 2019, that was rejected in part and later refiled in July 2020 and approved in September 2020. In parallel, the board approved the hydro DEB in November 2019 and was approved by FERC in September 2019; the board approved the storage DEB in December 2020 and was approved by FERC in October 2021. While the LMPE and the Storage DEB policies should have contemplated how the RLCR would work on the new DEB types, the policy scope omitted the issues.

[8] See Scaled Gas Price Index formula in CCDEBE at Page 56 and Sep. 2020 FERC Order at Paragraph 14.

[9] Sep. 2020 FERC Order at Paragraph 15.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

None currently. 

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

Vistra is unclear on the CAISO’s proposal and its implications on asset management. We seek the following targeted clarifications:

• Confirm that the CAISO is proposing to amend Tariff Section 34.13.1 that states: “In any event, the CAISO may issue an Operating Instruction if necessary to maintain system reliability consistent with Sections 7.6 or 7.7. Upon receiving such an Operating Instruction, an Eligible Intermittent Resource must not generate in excess of its Dispatch Operating Target until the Operating Instruction expires, except when physically impossible. When such an Operating Instruction is in effect, Eligible Intermittent Resources should follow a linear ramp between Dispatch Operating Targets, except when physically impossible.”
• Confirm that CAISO will clarify that Variable Energy Resources (VER) operating to the higher of Dispatch Operating Target (DOT) or headroom limit will not be deemed “non-conforming” or “non-compliant” under Tariff Section 34.13.2 and Market Operations BPM Section 7.2.3.7.
• Confirm that the CAISO is proposing to modify Market Operations BPM Section 7.2.3.6 to revise “An Eligible Intermittent Resource when ramping from one DOT to the next pursuant to a negative supplemental Dispatch Instruction or Operating Instruction and when sufficient fuel (solar irradiance or wind) permits.” The BPM will need to clarify the difference between Operating Instruction without any leniency for compliance purposes regarding following dispatch versus when operators are telling VERs they can deviate up to headroom limit and be considered conforming/compliant per Section 34.13.2. 

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

None. 

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

Ancillary Services unavailability for storage or paired resources should be included in No Pay quantities.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.

None.

1. Please provide a summary of your organization’s comments on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources.

WPTF appreciates the opportunity to comment on the March 16, 2026 stakeholder meeting and the Issue Paper and Straw Proposal on Mixed-Fuel Resources. WPTF’s comments focus primarily on the development of default energy bid (DEB) methodologies for storage resources and the importance of ensuring that such methodologies accurately reflect real-time opportunity costs and evolving market conditions.

WPTF remains concerned that DEB approaches relying heavily on day-ahead pricing constructs will continue to produce outcomes that are misaligned with real-time system needs and do not address the underlying concerns of the existing DEB framework. This misalignment can lead to inefficient dispatch, including premature discharge of storage resources and reduced availability during peak demand periods. WPTF encourages CAISO to prioritize approaches that better approximate real-time opportunity costs into the DEBs.

2. Please provide your organization’s comments on developing a default energy bid option for WEIM-only storage resources.

WPTF supports the need for WEIM-only storage resources to have a default energy bid (DEB) option other than the negotiated DEB.

However, WPTF believes that, ideally, the enhanced storage DEB methodology being developed through this initiative should be constructed in a manner that is broadly applicable across all storage resources, including those participating only in the WEIM. If designed appropriately, a single, unified DEB framework could be applied consistently across both CAISO and WEIM contexts, thereby eliminating the need for a separate WEIM-specific storage DEB.

WPTF encourages CAISO to prioritize the development of a cohesive DEB approach that avoids unnecessary fragmentation while ensuring that opportunity costs are accurately reflected.

3. Please provide your organization’s comments on Examples A and B related to the alternatives for developing a “time-of-day” storage default energy bid.

WPTF’s primary concern with both approaches shown as Example A and Example B is that neither approach sufficiently captures real-time opportunity costs, which remains a fundamental limitation of the current DEB framework. While WPTF recognizes the practical challenges associated with constructing a fully real-time DEB, the proposed alternatives should more closely approximate real-time conditions than approaches that rely primarily on day-ahead prices.

With respect to Example A, WPTF does not believe the rolling window methodology adequately addresses the underlying concerns. Because the approach continues to rely on day-ahead prices, it does not resolve the misalignment with real-time market conditions. Additionally, the rolling window construct does not sufficiently mitigate the risk of storage resources discharging prematurely during midday periods and subsequently being unable to recharge ahead of peak net load hours. WPTF also has concerns with the proposal to scale energy costs based on the remaining hours in the day, as the cost of fully charging a resource does not decrease simply because fewer hours remain. Further consideration should be given to the design of the time windows and whether seasonal adjustments may be necessary.

WPTF acknowledges that Example B represents an improvement in that it appears to increase DEBs during midday periods, which may help reduce the risk of premature discharge. However, it remains unclear whether this approach adequately captures real-time opportunity costs. WPTF requests additional data analysis supporting the development of the hourly blocks and multiplier values, as well as greater transparency into how these parameters were determined. WPTF also encourages CAISO to consider whether multipliers should vary seasonally rather than remain static throughout the year.

Overall, while Example B represents a step in the right direction, neither proposal fully addresses the need to reflect real-time intraday opportunity costs. We encourage the CAISO to evaluate the applicability of using a modified Hydro DEB approach that simply removes the longer term opportunity cost components that do not apply to storage resources. This could be a very reasonable starting point of discussion for how to construct a storage DEB given they both rely on ensuring opportunity costs are adequately captured.

Additionally, WPTF emphasizes the importance of clearly distinguishing between charging and discharging DEB calculations. WPTF requests additional clarity on how the charging-side DEB would be calculated and seeks to avoid outcomes where mitigated bids converge across charging and discharging ranges.

Looking ahead, WPTF recommends that CAISO conduct additional resource-level analysis comparing IFM, FMM, and RTD prices, evaluate the use of prior-day, resource-specific real-time prices in DEB formulation, provide further detail on charging-side DEB construction, and offer greater transparency into the development of multipliers and time windows.

4. Please provide your organization’s comments on storage resources and the Reference Level Change Request process.

WPTF does not agree with the CAISO that storage resources should not be able to make Reference Level Change Requests. In situations where real-time market conditions change significantly, such as when the hard energy bid cap is effective, static DEBs that cannot be adjusted may result in storage resources being pushed to the bottom of the bid stack. This, in turn, can lead to premature discharge and reduced availability during periods of highest system need.

In addition, when real-time prices are expected to exceed the levels used to calculate DEBs, the opportunity costs faced by storage resources increase accordingly. FERC has consistently recognized opportunity costs as costs that should be reflected in market outcomes. WPTF therefore believes that CAISO should not preclude storage resources from updating their bids when actual costs diverge materially from those embedded in DEB calculations. Allowing such updates would better align dispatch outcomes with real system conditions and support efficient market operation.

5. Please provide your organization’s comments on Default Energy Bids for Hybrid Resources topic.

6. Please provide your organization’s comments on the Headroom Limit for Co-located Variable Energy Resources (formerly Co-located Follow DOT).

WPTF supports continued discussion of the proposed headroom limit framework and appreciates the clarifications provided during the stakeholder meeting. WPTF understands that under the current framework, when a battery energy storage system (BESS) component receives an ancillary services award, the co-located variable energy resource (VER) is subject to a follow DOT limit that may restrict output even when additional generation would be feasible within the POI and ACC limits.

Under the proposed approach, the introduction of a headroom limit would establish a new dispatch limit that is always equal to or greater than the existing DOT. This would allow the VER component to generate above the DOT, up to the headroom limit, when the BESS is providing ancillary services, with any incremental generation settled as uninstructed imbalance energy. From a dispatch perspective, the headroom limit would effectively function as the operative “generate up to” instruction, while the follow DOT would primarily serve a settlement function. We would appreciate the CAISO’s confirmation that this is accurate.

Additionally, WPTF appreciates the additional slides posted that include additional examples, notably ones where the BESS has regulation down awards. Based on WPTF’s understanding, in a regulation down scenario, the VER component can generate above the DOT and up to the headroom limit. The headroom limit would be the ACC minus awarded energy (assuming no additional reg up awards). WPTF asks CAISO to confirm whether this interpretation is correct.

Assuming this is accurate, we seek clarification that the only reason the follow DOT is still needed is purely for settlement purposes to distinguish between energy settled as instructed vs uninstructed imbalance energy. Even in the example on slide 25, the headroom limit would equal the DOT because the ACC minus the energy awards is 0, thus the DOT plus the headroom limit would be the same value as the DOT. Put differently, can stakeholders think of the DOT on the VER as the dispatch point that they can generate above, if capable, and the headroom limit value (Headroom plus DOT) as the “do not exceed” value?

7. Please provide your organization’s comments on the High Sustainable Limit Guidance.

8. Please provide your organization’s comments on the interplay between hybrid resource ancillary services and dynamic limits.

9. Please provide any additional comments, feedback, or examples. You may upload examples or data using the Attachments field below.