Comments on Mar 23, 2022 workshop presentation and discussion

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

APS appreciates the opportunity to comment on NV Energy’s Residual Emergency Energy Service (REES) proposal. APS supports the idea of the proposal to assist in forestalling reliability events in areas that have failed the resource sufficiency test while not introducing the sharing of consequences of resource insufficiency with areas that passed the resource sufficiency evaluation. APS supports conservative assessments of sufficient entities ability to supply deficient entities with energy under the REES proposal. The implementation and development timeline are quick which can introduce risk that can be unacceptable to uncover through trial and error during Summer 2022.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

APS supports implementing the market and settlement changes associated with the REES program for Summer 2022. APS would support coordination with vendors to implement the settlement changes through the release user group based on any approved policy elements

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

APS supports the declaration of NERC defined Energy Emergency Alert level 1 or above in concert with the availability of REES program. APS also supports that the EIM footprint must have a conservative assessment of surplus before the REES is available for a failing entity. This assessment should consider uncertainty that could realize in the operating hour and only allow incremental transfers as the sum of energy surplus to the uncertainty requirements of each passing entity. The objective of this mechanism is to not push passing entities to the edge of reliable operations by maintaining energy within the passing entities that could cover uncertainty that may arise during the operating hour.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

APS supports the ability for the surplus entity to elect to have all, a portion, or none of their surplus capacity eligible to be transferred through the REES. This allows supporting entities to assess risk associated with current operation conditions, which likely will be stressed in all EIM areas when the REES is activated prior to committing supply to be eligible in REES.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

APS supports the impact of price formation to sufficient balancing authority areas. APS also recognizes the complexity to address this aspect in the short-term and can support evaluation of the pricing of the REES in the long-term within the upcoming scarcity pricing stakeholder initiative.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

APS supports the current pricing proposal under the first instance of REES supply received by an EIM entity. However, APS is concerned that too much reliance on the REES can be an economical decision to not procure needed supply on a forward basis. For this reason APS would support a ratcheted pricing mechanism for subsequent seasonal usage of the program. As example the second instance may be priced to equate to the applicable day ahead on-peak block energy cost as to discourage forgoing a block energy purchase to cover a single hour through REES. As a further example the administrative charge for a third instance of use could be that of the second instance with a multiplier applied. This sort of pricing ratchet with a cap of three daily uses of the REES per season could strike the right balance between supporting regional reliability while not allow cost shifts among market participants transacting in different trading horizons.

APS would also support the addition of a $4000 pricing mechanism in intervals in which the real-time market is operating with a $2000 energy bid cap. APS believes this would be necessary to keep the REES pricing ratio consistent between intervals with $1000 and $2000 bid caps.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

APS believes the transmission assessment during the RSE test timeframe is necessary as not to allow incremental transfers through the program that are not able to be supported by the footprint.

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

APS prefers an allocation option that more closely aligns the allocation of revenue to those entities that made surplus energy available to REES.  

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

APS prefers this solution above over pro-rata to those entities that pass because the revenue is allocated to those within the footprint who made surplus energy available during the REES event.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

APS is opposed to the exporting of ABC from sufficient BA’s to insufficient BA’s. EIM Entities may hold ABC within their area to maintain reliability for uncertainty or conditions no modeled within EIM and for that reason should be able to preserve this capacity within it’s own BA.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

APS supports the full utilization of ABC in the deficient entities BA prior to access to REES transfers from outside areas. ABC is maintained in many instances as excess reserve capacity within a BA to maintain reliability and should be dispatched prior to any transfers of REES.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

Please see the attached comments. 

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

Please see attached comments.

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

Please see attached comments.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

Please see attached comments.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

Please see attached comments.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

Please see attached comments.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

Please see attached comments.

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

Please see attached comments.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

Please see attached comments.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

Please see attached comments.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

Please see attached comments.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

Please see attached comments.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

NCPA appreciates NVE bringing to the forefront liquidity issues in the bilateral market associated with increased participation in the EIM. Unfortunately, there is not enough time to correctly implement REES in time to address the potential issues by summer 2022. RSE phase 1 and scheduling parameter adjustments are already encroaching into summer so developing, vetting, testing, and implementing such a fundamental change to the EIM is infeasible. Furthermore, NCPA is concerned that CAISO is routinely scheduling risky summer releases and respectfully requests CAISO to put more emphasis on adhering to spring and fall releases. NCPA looks forward to further discussing RSE topics raised by NVE in RSE Enhancements Phase 2 and EDAM initiatives.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

NCPA discourages implementation of market and/or settlement changes during the summer 2022 operating season. CAISO and market participants deliberately avoid risky winter and summer releases when volatile conditions are more likely to occur. Such updates are typically released in in early spring or fall after thorough vetting and internal CAISO testing and market simulations. NCPA is already concerned with the upcoming CAISO market update to increase scheduling parameter values for intertie transmission constraint relaxation. CAISO has assured market participants that extensive sensitivity and counterfactual analyses confirm there will be no unintended consequences but the release is not scheduled until well into June. Further, NCPA understands that RSE Enhancements Phase 1 was approved by the CAISO Board of Governors without the NVE proposal in February, but it is unclear what exactly is being released when and requests a detail implementation timeline.  

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

As noted above, NCPA does not believe that there is sufficient time to adequately vet this concept for summer deployment this year. NCPA believes that this concept, if pursued for later implementation, must be carefully vetted to ensure there are no undesirable impacts on price formation.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

As noted above, NCPA does not believe that there is sufficient time to adequately vet this concept for implementation this summer.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

PG&E opposes implementing EIM market and settlement changes in summer 2022

PG&E thanks the CAISO and stakeholders for providing ideas and potential solutions to reliability issues in the EIM, and we encourage the CAISO and others to continue that engagement as we move forward with future RSE enhancements and EDAM.  However, PG&E opposes implementing any new initiatives before summer 2022 as it will not allow the CAISO and stakeholders to fully vet, test, and implement a new program.  We encourage the CAISO to identify potential out of market activities, efforts, or agreements to assist NV Energy (or any other BA) if they have an emergency need during summer 2022. 

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

Please see Powerex’s comments available at: CAISO March 23 EIM RSE Enhancements Workshop Comments

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

The Public Generating Pool (PGP^[1]) appreciates the opportunity to comment on the WEIM RSE Enhancements initiative.  PGP takes great interest in this initiative as there are PGP members who are EIM participants that will be directly impacted by the outcome of this initiative. 

PGP supports the development of an emergency energy assistance program for the EIM and believes that NV Energy’s proposed Residual Emergency Energy Service (REES) has merit as an interim market option that allows surplus supply in the EIM to cure real-time emergencies. However,  it is important that the design of this program is carefully crafted to avoid unintended market and reliability consequences. PGP is hopeful that this can be achieved in time for Summer 2022. PGP believes that this interim solution should be in effect until Phase II of the RSE Enhancements initiative is completed.  However, PGP believes that there are some areas of the REES proposal that could use additional development:

Appropriate circumstances for Utilizing REES

The initial REES proposal allows a deficient market participant to access emergency energy assistance anytime there is an RSE failure.  Since this interim proposal may be in effect for the next couple of years, PGP is concerned that a market participant may opt to rely on REES rather than procure forward capacity per their Resource Adequacy program or Integrated Resource Plan.  PGP believes that CAISO should consider creating a different trigger for utilizing REES, such as the declaration of an EEA.

Determination of Residual Emergency Assistance

PGP agrees that REES should not inadvertently spread capacity insufficiency to other WEIM BAs.  At the March 23^rdworkshop, CAISO pointed out that testing residual transmission as well as residual supply is important and proposed a “robust” and a “simple” solution for determining residual transmission.  Since CAISO indicated that the implementing the “robust” solution would be very challenging for this summer, PGP supports the “simple” solution, which would only allow emergency energy transfers from neighboring BAAs, for Summer 2022.  

CAISO also asked the question of whether WEIM market participants should have the discretion on whether surplus capacity that was bid into the EIM may be used for emergency energy assistance.  On the surface, it makes sense that if this capacity is made available to the market, it should be available for REES.  PGP would appreciate further discussion on this topic to better understand why some market participants may not want to make this capacity available for REES.

Determination of the Amount of Emergency Assistance

When there is an RSE failure, REES proposes an amount of emergency energy deliveries that assumes EIM transfers that are capped at the previous interval’s level.  Powerex proposes that the amount should be determined assuming zero EIM transfers, but CAISO suggested that this is unworkable until the interaction of CAISO exports and EIM transfers is sorted out.  PGP agrees in principle with Powerex that the amount of emergency assistance should reflect the amount of shortage without relying on EIM transfers.  However, PGP also understands the complexity of the interaction of CAISO exports and EIM transfers and the desire to not have unintended consequences that may spread reliability problems throughout the WEIM footprint.  PGP believes that the best course is to implement the REES proposal for Summer 2022 and to prioritize sorting out issues related to CAISO exports and EIM transfers.  If these issues are sorted out prior to implementation of Phase 2, PGP would like REES modified to capture the Powerex proposal.

[1] PGP represents eleven consumer-owned utilities in Washington and Oregon that own almost 8,000 MW of generation, approximately 7,000 MW of which is hydro and over 97% of which is carbon free. Four of the PGP members operate their own balancing authority areas (BAAs), while the remaining members have service territories within the Bonneville Power Administration’s (BPA) BAA. As a group, PGP members also purchase over 45 percent of BPA’s preference power.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

PGP supports the development of REES as an interim solution for Summer 2022.

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

See above comments for question 1

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

See above comments for question 1

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

As an interim solution, PGP supports the REES proposal of pricing emergency energy assistance deliveries at $2000/MW.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

 See above comments for question 1

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

As stated in previous comments, Salt River Project Agricultural Improvement and Power District (SRP) considers allowing an WEIM Entity to elect to utilize the WEIM to cure energy emergencies a foundational change to WEIM. Shifting this support to the WEIM would be a significant operational change. When an emergency arises, the current emergency assistance programs (e.g., Southwest Reserve Sharing Group and Western Power Pool Reserve Sharing Program) are designed to provide assistance on equal footing regardless of WEIM Resource Sufficiency Evaluation pass/fail. Having an emergency assistance program that encourages market competition is not the goal during an emergency. This may create gaming opportunities when market conditions are tight.

SRP supports the exploration of options to expand the purpose of the WEIM during such conditions (after the Balancing Authority Area [BAA] deploys existing tools), but this type of foundational change should require a robust stakeholder process. Additionally, the CAISO should not rush this type of change to the market; therefore, SRP does not support implementation of the NV Energy proposal, or other interim solutions for emergency assistance through the WEIM, for summer 2022.

For each option presented during the March 23 stakeholder meeting, SRP is concerned that the CAISO could not effectively implement complex software changes that would be required without robust testing from WEIM participants.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

SRP does not support implementing market or settlement changes during summer 2022. Changes of this type should be thoroughly evaluated for unintended consequences prior to implementation.  SRP’s past experience has contributed to SRP’s concerns that robust testing of a software solution cannot be thoroughly completed prior to summer. Incomplete and/or inaccurate implementation can have substantial implications (both reliability based and monetarily based) to WEIM participants.

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

The WEIM was not designed for this purpose and has operated with a “no leaning” principle. SRP and other WEIM Entities work together during energy emergencies to cure them through the Southwest Reserve Sharing Group and Western Power Pool Reserve Sharing Program. Shifting this support to the WEIM would be a significant operational change that should require a robust stakeholder process.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

SRP does not support summer 2022 implementation of a WEIM energy assistance program. However, if the CAISO moves forward with implementation of WEIM energy assistance, this should be an optional service provided to WEIM Entities that wish to participate in such a program. SRP requests that any opt-out feature allows a WEIM Entity to opt-out of this program long-term rather than placing the burden on system operators to opt-out on a case-by-case basis. Allowing each WEIM Entity the ability to determine if its surplus capacity should be used to facilitate energy assistance would be a critical component any WEIM energy assistance program. This optionality would give WEIM Entity system operators the opportunity to assess conditions in their own BAA prior to determining if their surplus capacity should be used for energy assistance.

SRP is also concerned that even if a BAA opts out of participating in such a program, the market could still dispatch that BAA’s generation to support a deficient BAA through displacement of transfers between BAAs. For example, if BAA1 opts out and BAA2 does not, the market could increase transfers from BAA1 to BAA2 so that BAA2 could provide assistance to an energy deficient BAA3.  The very nature of EIM creates substantial challenges to effectively accommodating such optionality.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

The CAISO and stakeholders should thoroughly examine and understand the potential for WEIM energy assistance to affect price formation in sufficient BAAs prior to implementation. This is one reason the CAISO should not implement WEIM energy assistance for summer 2022.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

 Appropriate pricing of energy assistance is a complex topic that will require a robust stakeholder process; therefore, the CAISO should not implement WEIM energy assistance for summer 2022. 

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

As stated, SRP does not support implementation of WEIM energy assistance in a rushed manner. However, if the CAISO moves forward with implementation of WEIM energy assistance for summer 2022, SRP feels it will be critical to include transmission testing.

WEIM energy assistance should include three-way testing to ensure reliability, transmission capability and resource capacity are available for such a program to work. Reliability in this context means that the Network model is capable of supporting such transfers. Transmission capability refers to sufficient Available Transfer Capability for such transfers to occur. Resource capacity refers to additional capacity within a BAA to support the transfer.

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

Revenue allocation for WEIM energy assistance is a complex topic that should be addressed through a robust stakeholder process. SRP has concerns that pro-rata revenue allocation would result in poor cost causation because not all WEIM Entities are providing similar quantities of additional energy.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

As stated in item 9, revenue allocation for WEIM energy assistance is a complex topic that should be addressed through a robust stakeholder process. SRP has concerns that revenue allocation to all entities that pass the WEIM RSE and are net exporters may not appropriately compensate WEIM Entities that experience increased costs from clearing more supply in the WEIM.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

The revenue allocation framework presented by NV Energy should be considered as a potential option if WEIM energy assistance is considered as part of a more robust stakeholder process. Summer 2022 implementation would not provide adequate time to evaluate this or other potential frameworks.  If implemented, CAISO must provide for a process that provides guarantees to responding BAAs that they will be the sole recipients of revenue allocation benefits and allow for a meaningful appeals process, up to and including market re-run in order ensure responding BAAs are allocated appropriate revenues.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

SRP has concerns about utilizing available balancing capacity (ABC) in a sufficient BAA to cure deficiencies in the neighboring BAAs. By using ABC in this manner, the market may spread reliability risk to the sufficient BAA. SRP does not support such utilization of ABC because the purpose of ABC is to cover uncertainty within a BAA.   Given that the reliability obligations of BAAs are not intended to be affected by the WEIM, deployment of ABC must remain a solely discretionary decision of the operators of the sufficient BAA, to avoid impact to the reliability obligations of the sufficient BAA.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

SRP supports the position to utilize the ABC within the deficient BAA prior to the utilization of the WEIM energy assistance program.  

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

As discussed more fully in response to questions below, the Six Cities generally support the NV Energy proposal regarding Residual Emergency Energy Service (“REES”) through the Energy Imbalance Market (“EIM”) as summarized at pages 4 – 5 of the presentation for the March 23, 2022 Workshop except for NV Energy’s proposal regarding distribution of revenues resulting from application of the penalty price to incremental REES transfers to Balancing Authority Areas (“BAAs”) that fail the Resource Sufficiency Evaluation (“RSE”) test.  In response to Questions 9 - 11 below, the Six Cities recommend consideration of several alternative approaches for distribution of REES penalty revenues.  Throughout these comments, the terms “REES transfers” or “incremental REES transfers” mean transfers above the limitations on EIM transfers that otherwise would be imposed as a result of RSE failure.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

In view of on-going concerns regarding sufficiency of resources throughout the EIM footprint, especially during the summer and early fall months, the Six Cities support implementation of a REES option as soon as possible.  Due to the accelerated nature of the stakeholder process, the initial implementation of a REES option should be subject to close evaluation and expressly subject to potential modification through further stakeholder proceedings.  In addition, due to the possible occurrence of unintended consequences giving rise to significant adverse impacts on reliability or market processes, the CAISO should request authority to suspend availability of the REES option (after reasonable notice to all market participants) subject to prompt review by the FERC.

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

The Six Cities support making the REES option available to any BAA that fails either of the RSE tests and, as a result, would be subject to limitations on EIM transfers.  Although it seems reasonable to anticipate that REES transfers would be most likely to occur when emergency conditions as defined by the NERC are occurring or are anticipated, it would not be sound policy to force a BAA to the point of declaring an emergency before requesting incremental REES transfers.  It is more consistent with robust protection of reliability to permit incremental REES transfers to head off development of emergency conditions rather than waiting until they occur.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

As described in response to Question 12 below, BAAs should not be required to commit Available Balancing Capacity or operating reserve capacity to support incremental REES transfers.  However, to the extent BAAs have other surplus capacity that has been bid into the EIM or relied upon for the RSE tests, such capacity should be available to support REES transfers.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

The Six Cities agree with NV Energy’s proposal that REES transfers be settled out-of-market and that LMPs in resource-sufficient areas be determined through standard market processes.  However, it does seem possible that incremental dispatch of higher cost resources to support REES transfers could impact either the System Marginal Energy price or LMPs in BAAs with transmission constraints.  The Six Cities do not have sufficient information regarding the expected volume of REES transfers or the system conditions likely to be in place at the time of REES transfers to estimate the potential impact of REES transfers on System Marginal Energy prices or LMPs in resource-sufficient BAAs.  The Six Cities urge the CAISO to monitor the price impacts of REES transfers on resource-sufficient BAAs, and the appearance of significant price impacts on resource-sufficient BAAs could provide a basis for modifying the REES framework.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

The Six Cities support NV Energy’s proposal to price incremental REES transfers at $2,000/MWh and to settle such transfers out-of-market.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

For initial implementation of a REES option, it would appear reasonable to rely on the existing EIM constraints on exports from BAAs utilizing upward Available Balancing Capacity or experiencing power balance constraint relaxation to avoid exceeding residual transfer capacity between BAAs.  However, as noted in response to Question 5 above, if it appears that REES transfers are giving rise to non-trivial impacts on LMPs in resource-sufficient BAAs, it would be appropriate to consider prompt modifications to the REES framework to mitigate such impacts, including testing for residual transfer capacity.

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

If feasible to implement, the Six Cities recommend that distribution of penalty revenues arising from REES transfers track identifiable price impacts resulting from such transfers.  For example, if the CAISO determines that REES transfers have resulted in increases in System Marginal Energy prices, then it would be reasonable to distribute the penalty revenues to all BAAs that passed the RSE tests in proportion to their loads during the affected intervals.  If the CAISO determines that REES transfers have not increased System Marginal Energy prices but have affected LMPs in specific BAAs due to transmission constraints, then it would seem reasonable to distribute the penalty revenues to the affected BAAs in proportion to their loads during the affected intervals.

If it is not feasible to identify price impacts resulting from REES transfers, then the Six Cities support distribution of penalty revenues to all BAAs that passed the RSE tests for the hours in which the transfers occurred in proportion to their loads during those hours.  Distributing penalty revenues to all resource-sufficient BAAs (if distribution based on adverse price impacts is not feasible) is appropriate to recognize that dispatches for all resource-sufficient BAAs may be modified to help support REES transfers and that reductions in imports as well as increases in exports may provide such support. 

The penalty revenue distribution method adopted for initial implementation of the REES concept, as well as all other elements of the REES framework, should be subject to evaluation and potential modification based on experience during an initial implementation period.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

See the Six Cities’ response to Question 9 above.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

The Six Cities do not support NV Energy’s proposal for distribution of penalty revenues.  See the Cities’ response to Question 9 above.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

It is the Six Cities’ understanding that Available Balancing Capacity (“ABC”) is reflected in the calculation of resource sufficiency under the RSE tests in recognition that such capacity may be dispatched by the BAA to maintain reliability, but that ABC is not offered for dispatch by the EIM optimization process.  If those understandings are correct, it would not seem appropriate to require BAAs to make ABC available to cure insufficiencies in neighboring BAAs.  Such a requirement would appear inconsistent with the concept of voluntary participation in the EIM and could increase the risk of cascading reliability problems from an initially insufficient BAA to otherwise resource-sufficient neighboring BAAs.  Further, to avoid double counting in the evaluation of overall system capacity, any ABC voluntarily transferred from one BAA to another through a bilateral arrangement should be attributed to the transferee BAA for RSE testing purposes and deducted from the resources available to the transferor BAA for the period covered by the transfer.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.

Based on the understanding that ABC is counted toward passing the RSE tests on the expectation that such capacity may be dispatched by the relevant BAA to maintain reliability, it is appropriate to require that BAAs utilize their ABC prior to requesting REES transfers.

1. Please provide your organization’s position regarding the proposal as put forth by NV Energy on behalf of the joint commenters. Please indicate any elements of the proposal your organization supports, any specific elements which your organization opposes, or elements that need additional development.

2. Please provide your organization’s position on implementing market and or settlement changes during the summer 2022 operating season.

3. Please provide your organization’s position regarding the appropriate circumstances, or signifiers, for utilization of the WEIM to cure capacity insufficiencies.

4. Please provide your organization’s position on the optionality of allowing WEIM entities to determine if their surplus capacity should be used to facilitate energy assistance through the WEIM.

5. Please provide your organization’s position on the potential for energy assistance facilitated through the WEIM to effect price formation in sufficient balancing authority areas.

6. Please provide your organization’s position on the appropriate pricing of energy assistance facilitated by the WEIM.

7. Please provide your organization’s position regarding the need to explicitly test for residual transfer capacity between WEIM balancing authority areas. As discussed in the workshop, it appears an existing constraint in the WEIM may ensure that WEIM exports cannot occur simultaneously with either a power balance constraint relaxation or the utilization of upward available balancing capacity; this may negate the need to test transmission capacity for reliability purposes. What is your organization’s position on transmission testing for the purposes or limiting or minimizing impact to price formation in sufficient balancing authority areas in both an interim and permanent enhancement?

9. Please provide your organization’s position on the concept of pro-rata revenue allocation to all entities who pass the WEIM RSE in both interim and permanent enhancements.

10. Please provide your organization’s position on the concept of revenue allocations targeted to all entities who pass the WEIM RSE and are net exporters in both interim and permanent enhancements.

11. Please provide your organization’s position on the revenue allocation framework as presented by NV Energy for both interim and permanent enhancements.

12. Please provide your organization’s position regarding the potential to utilize available balancing capacity to cure insufficiencies in neighboring balancing authority areas.

13. Please provide your organization’s position regarding the utilization of available balancing capacity within the deficient balancing authority areas prior to the utilization of the WEIM energy assistance.