Comments on 4/14 meeting and BPM policy changes

1. Please provide your organization’s comments on the April 14th meeting and related materials.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on Proposed Revision Request (PRR) 1627. The PRR aims to address a shortcoming in the current state-of-charge (SOC) calculation. That is, the SOC calculation does not consider the impact of the flexible ramping product (FRP) on the SOC. CalCCA agrees with the CAISO that this issue must be addressed to prevent adverse reliability and price formation outcomes, and that CAISO should implement a solution for this summer (2025). However, the solution proposed by the CAISO in the PRR appears to have shortcomings, as discussed below, that necessitate the development of a long-term solution in the Storage Design and Modeling stakeholder initiative that can replace the solution proposed in the PRR after this summer.

For example, the proposed BPM language in the PRR only includes flexible ramping up (FRU) in the calculation and not flexible ramping down (FRD) so that the two types of awards do not offset each other. While this approach may be reasonable for this summer, when the ability to obtain FRU is higher priority, both types of awards can impact a resource’s SOC. Therefore, the CAISO should explore how both awards could be incorporated into the long-term solution.

Upon implementation of the proposed PRR language, and while the long-term solution is being developed, the CAISO should report out monthly on the results of this change to demonstrate whether it has performed as intended and whether there were any unintended consequences. If major unintended consequences arise, the CAISO should have the ability to roll back the calculation to its original state. This reporting can inform the long-term solution to be developed in the Storage Design and Modeling stakeholder initiative.

CalCCA also recommends the CAISO document all storage constraints for all markets in one place, so stakeholders can evaluate this proposal and other forthcoming proposals in the Storage Design and Modeling initiative. At present, it is difficult to track and define all the terms in the storage resource constraints and having one place with all this information will help stakeholders better assess the merits of proposed calculation changes.

1. Please provide your organization’s comments on the April 14th meeting and related materials.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) appreciates the opportunity to comment on the proposed changes to the California Independent System Operator Corporation’s (CAISO) Business Process Manual (BPM) Sections 6.2.2.3 and 7.8.2.5 on real-time market energy storage state-of-charge (SOC) modeling.[1]

Cal Advocates supports CAISO’s near-term expedited solution to modify the CAISO BPM to include Flexible Ramping Product (FRP) in the real-time market energy storage SOC modeling constraint before summer 2025.[2]  A large share of FRP is procured from energy storage, yet CAISO finds that in summer conditions up to 60 percent of FRP awards may be infeasible.[3]   Because FRP is not included in the SOC modeling constraint, SOC consumed for energy and ancillary service awards may result in insufficient SOC to support FRP.[4]  Undeliverable FRP puts system reliability at risk, and may increase energy prices under stressed conditions because real-time replacement energy must be procured from other resources to meet system needs.  CAISO’s solution involves a targeted change to the SOC modeling constraint that can be implemented before August 2025.[5] 

Cal Advocates agrees with stakeholders that CAISO should test the modified SOC modeling constraint in market simulations prior to summer 2025.[6]  Stakeholders point to unknown and potential unintended consequences of CAISO’s proposal.[7]  However, alternative stakeholder proposals[8] have similar unknowns and may also have unintended impacts.[9]

Cal Advocates agrees with CAISO’s remarks that FRP is a capacity product, not an energy product, and that FRP should not be priced as if it were energy.[10]  Pricing FRP as if it is energy may lead to FRP prices that fail to accurately value the product.  Cal Advocates also agrees with Pacific Gas and Electric Company (PG&E) that enhancements to the FRP product to enable capacity bids may allow market participants to manage FRP awards and may also benefit price formation.  However, because PG&E’s proposal cannot be implemented by summer 2025, PG&E’s proposal should be considered for later implementation.

Cal Advocates agrees with CAISO and stakeholders that CAISO should pursue a durable solution following summer 2025 for a target implementation in summer 2026.  CAISO should include ongoing enhancements to FRP modeling in the Energy Storage Modeling and Design initiative or a subsequent initiative with high priority.  A follow-on effort will provide greater time for stakeholders to conduct sufficient rigorous review of longer-term CAISO and alternative stakeholder proposals.

[1] CAISO, Storage Design and Modeling, State of Charge (SOC) Management and Capacity Awards, Policy Review: Draft BPM Changes Stakeholder Meeting (CAISO SOC BPM Presentation), April 14, 2025 at 12-13.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-SOCManagementCapacityAwards-Apr14-2025.pdf.

[2] CAISO SOC BPM Presentation at 5.

[3] CAISO SOC BPM Presentation at 10.

[4] CAISO SOC BPM Presentation at 9.

[5] CAISO SOC BPM Presentation at 11.

[6] CAISO April 14, 2025 Meeting.  Recording available at: https://www.youtube.com/watch?v=__91nSYAw4g (CASIO Meeting) California Energy Storage Alliance (CESA) comments at 23:20 and Pacific Gas and Electric Company (PG&E) comments at 27:32.

[7] CAISO Meeting, CESA comments at 23:42.

[8] CAISO Meeting, CESA proposal at 29:45.

[9] CAISO Meeting, PG&E comments at 34:45.

[10] CAISO Meeting, CAISO comments at 38:30.

1. Please provide your organization’s comments on the April 14th meeting and related materials.

The California Energy Storage Alliance (CESA) appreciates the opportunity to comment on the BPM changes to include the upward flexible ramping product (FRU) in the state of charge (SOC) constraint with attenuation factors. 

CESA continues to believe that if both FRU and FRD cannot be addressed simultaneously, this is evidence that an underlying market design flaw remains. Last year CAISO identified instances of the flexible ramping product (FRP) being awarded to storage resources without sufficient SOC to convert the FRP awards to energy dispatches to discharge/charge.  The implementation of FRP has struggled with the market optimization identifying resources without an energy opportunity costs and awarding FRU and/or downward FRP (FRD).  CAISO discussed the issue at the December Market Performance and Planning Forum and at the start of the Storage Design and Modeling initiative.  Stakeholders broadly supported addressing this design flaw.  In response, CAISO published redline BPM changes on March 4 which provided little context for the changes.  Particularly, if the issue with FRP applied to both FRU and FRD why is only FRU being addressed? 

CESA continues to request CAISO document the current and planned storage-related constraints used in each of the following market runs: integrated forward market, residual unit commitment process, short-term unit commitment process, fifteen-minute market, and the real-time dispatch.  In order to effectively assess changes in storage-related constraints it is necessary to review each of the constraints enforced in each market run.  For example, incremental ancillary services can be procured in the fifteen-minute market and considered in the ancillary services SOC (ASSOC) constraint; however, ancillary services are held fixed in the real-time dispatch enforcement of the ASSOC constraint.  CESA’s understanding is that the real-time market uses telemetry for the initial SOC, why did the ASSOC constraint not bind when there was insufficient SOC and prevent a FRP award?  CESA requests that CAISO share additional information regarding why the ASSOC constraint was unable to prevent awarding FRP to storage resources with insufficient SOC.

Also, as demonstrated when expected energy from regulation up and regulation down were added to the SOC constraints this can result in odd awards and price formation of other products as the market optimization sees then energy impacts to the SOC as free.  This is why negative regulation down prices were observed during testing.  The market optimization realized it could schedule regulation down to charge the battery for free and discharge the battery later, whereas an energy schedule to charge would have incurred the energy price.  There are potential interactions in the proposal to include FRU in the SOC with attenuation factors. CESA seeks clarification on the following:

1. Will this allow additional regulation down awards because FRU has “discharged” the battery? 
2. What is the impact of the e market optimization assuming energy from FRU, regulation up and regulation down have no bid costs?

Stakeholders would benefit from a more robust discussion about why both FRU and FRD cannot be included in the SOC constraint with attenuation factors.  During periods of upward ramping, the FRD opportunity cost is zero for resources dispatched up to meet the subsequent interval net load.  This is because if uncertainty materializes in the next market run, the resources that had planned to be dispatched up can be left at their previous dispatch level.  Thus, in most upward ramping situations, the FRD price/cost will be zero.  If FRD was included in the SOC constraint with attenuation factors, this could allow additional FRU awards using FRD awards with a zero cost which can have the effect of driving the marginal price of FRU to zero.  This highlights the importance of a holistic review of the storage model in the Storage Design and Modeling initiative and the importance of clear documentation of constraints by market run.

Lastly, with the introduction of imbalance reserves there will be a new ramp deviation settlement between imbalance reserves awarded in the integrated forward market and flexible ramping products awarded in the fifteen-minute market.  For example, if a storage resource is awarded imbalance reserve up in the integrated forward market and is then discharged for energy in the fifteen-minute market, the resource will be paid for imbalance reserves in the integrated forward market, paid for its incremental energy dispatch at the fifteen-minute LMP and charged the FRU price in the fifteen-minute market for the amount of imbalance reserves converted to energy.  With the introduction of ramp deviation settlement, CAISO must ensure that the awards and pricing of both upward and downward FRP are accurately calculated, not just FRU as proposed for Summer 2025.

CAISO committed to brief the Market Surveillance Committee (MSC) on the energy storage envelop constraint multipliers.  The intent is to review the frequency and magnitude of sufficient SOC to meet the imbalance reserve awards.  However, by setting the constraint multipliers to 0.85 the impact to the imbalance reserve price relative to the energy opportunity cost should also be assessed.  A potential solution to the FRP issues is to have similar envelope equations in the real-time market.  However, the fundamental premise behind development of FRP was to compensate storage resources awarded FRU with the same profit as it would have received if discharged for energy.  The same logic applies for storage resources awarded FRD, the resource awarded FRD should receive the same cost savings as it would have received if charging.  CESA is concerned that the constraint multipliers may undermine the fundamental opportunity cost calculation for imbalance reserves and FRP.

In summary, the CAISO must provide additional information on the drivers behind the market optimization awarding FRP to storage resources with insufficient SOC.  Providing redline changes to BPM language is insufficient.  The follow-on presentation did provide historical data on the magnitude on infeasible FRP awards, but discussion of the market formulation was minimal and focused on the fifteen-minute market not having FRP in the SOC constraint.  CAISO did provide additional testing information at the May 9^th Storage Design and Modeling initiative call and highlighted that including FRU in the attenuation factor SOC did result in additional unit commitment in the fifteen-minute market.  This is positive.  The CAISO should provide stakeholders and the MSC with additional information regarding the testing on impacts on other market products and price formation.    

1. Please provide your organization’s comments on the April 14th meeting and related materials.

NV Energy appreciates CAISO’s continued commitment to improve market participation and optimization of energy storage resources.  NV Energy understands that the Business Practice Manual (BPM) change proposal is needed to ensure deliverability from storage resources, particularly this summer.  However, the addition of only accounting for Flex Ramp Up in the State of Charge calculation may lead to unintended consequences and further exacerbate deliverability issues.  NV Energy urges CAISO, at the very least, to commit to a sunset date for the BPM changes and prioritize addressing the interaction between the Flexible Ramp Product and State of Charge in the Storage and Modeling Design initiative in a more holistic approach. Additionally, CAISO should monitor for any adverse energy storage market outcomes because of this BPM update. This could aid in the development of a new market design in the Storage and Modeling Design initiative. 

1. Please provide your organization’s comments on the April 14th meeting and related materials.

SRP continues to support CAISO's objective to ensure storage resources can meet both energy and ancillary service commitments. The proposed change to the real-time state of charge is logical and supported. Understanding the impact of this change on the dynamics around the sibling constraints for ancillary services would be beneficial. SRP requests data driven explanations regarding how this change is expected to impact observed SOC once implemented. While it seems clear that the adjustment will improve the correspondence between the expected and actual SOC measurements, some informed expert discussion regarding the practical impacts would be appreciated. For example, are ancillary service awards expected to decrease? Will FRP awards to LESRs increase or decrease due to this change? Will this change altogether eliminate the gap in actual availability of FRP observed (cf. April 14th presentation, pg. 10) or merely reduce it, and if the latter by how much.  What is the time frame that CAISO expects for these changes to take place?

Additionally, regarding unavailable FRP awards, the dynamics of settlements of these awards is of interest to SRP. Is the awardee still paid for the ramping capability even though it is not actually available or is the award transferred to an alternate party who can provide the product?

1. Please provide your organization’s comments on the April 14th meeting and related materials.

WPTF appreciates the opportunity to submit these comments on the CAISO’s proposed change to the SOC AT formulation discussed on the April 14^th  and May 9^th stakeholder calls. WPTF submitted these comments both on the policy page as well as within the PRR process.

We understand the CAISO is concerned that some of the Flexible Ramping Up product awarded to storage resources cannot be supported due to insufficient SOC. While we generally support improving the accuracy of SOC formulations and constraints to ensure feasible schedules and awards, we remain extremely concerned with the lack of transparency and thorough vetting of the proposed solution with stakeholders, most notably the implications this may have on how storage resources are utilized by the market throughout the day. The high level analysis presented by CAISO seems to indicate a significant impact on storage resources, thus should be well understood by all participants prior to implementation.

The CAISO has already acknowledged that this proposed change is (1) overly conservative and (2) does not accurately represent the fact that when a resource is utilized for the ramping product, the ramping occurs across two intervals as opposed to wholly within the interval of the FRU award. Additionally, when awarded there is no guarantee the market will use the ramping capability starting in that interval, if at all. There are clearly some modifications to what the CAISO is proposing that should be considered.

WPTF respectfully requests the following from the CAISO prior to implementation of the proposed formulation:

• Share and discuss thorough testing results of the modification with stakeholders: During the May 9^th stakeholder meeting the CAISO did present testing results but they were extremely limited. The one testing result provided by the CAISO that showed the impact the proposed change will have on storage resources was limited to one resource in one real-time market run. While the CAISO showed 7 intervals of results, it was the 7 intervals within the market horizon, thus only one of those 7 corresponded with actually binding schedules and prices. It is challenging for stakeholders to get a complete understanding of potential impact when only looking at one binding interval result.
• Provide an explanation for how the CAISO is identifying FRU awards that are undeliverable due to insufficient SOC: The CAISO has presented some data analysis that seems to indicate a non-trivial amount of FRU awards are undeliverable due to insufficient SOC. However, WPTF remains unclear on how the CAISO is identifying awards as undeliverable due to insufficient SOC. When a resource is awarded FRU the CAISO market already has a constraint (ASSOC) to ensure that there is sufficient SOC to support the award in that interval. Additionally, when a resource is awarded FRU there is no guarantee it will be used for the ramping capability starting in that interval, if at all, and the real-time SOC is updated frequently based on telemetry. Therefore, conducting such an analysis is extremely challenging and not entirely straightforward. Thus, we would like to understand what assumptions and logic the CAISO is using to identify the MWs that are undeliverable.
• Commit to develop a long-term durable solution: The CAISO has already acknowledged the current proposal has some room for improvement, including accurate reflection of the cross-interval ramping and incorporation of FRD. However, stakeholders have already noted that CAISO cannot simply add FRD to the formula as that will likely result in the market simply awarding FRU and FRD to support regulation awards. That will have significant market and reliability impacts. The fact that the proposal cannot simply be expanded to FRD further supports the notion that the current proposed modification is not a robust solution and the CAISO and stakeholders should strive to develop an efficient and effective solution to address the concern.