2.
Please provide any additional feedback regarding the associated principles for guiding Phase 2 design.
Revise the first principle to say: "Congestion revenues should be allocated in an equitable manner so as to avoid undue cost shifts between EDAM BAAs and within EDAM BAAs."
EDAM BAAs do not fund EDAM Transmission Service Providers' (TSP) transmission revenue requirement. EDAM Entity TSPs' Network Transmission (NT) customers are responsible for shouldering the revenue requirement, after accounting for the total contribution of Point-to-Point (PTP) customer transmission revenues. It is those two types of customers that are ultimately allocated the congestion revenues collected by CAISO and returned to the EDAM Entities under the current CRA policy, or credited directly to the customers themselves. It is just as important that CRA-2 policy provides a framework that allows for accurate, transparent, equitable allocation at the customer level as it is that the allocation is equitable at the BAA level. During the meeting, TEA noted that existing non-CAISO EDAM TSP Tariff provisions are directionally incompatible with existing CRA policy in that NT customers will frequently be ineligible to receive Tier One congestion allocation due to their reliance on 6-NN rights, i.e., non-firm network, despite being allocated their share of their TSP's annual transmission revenue requirement the same whether scheduling on 7-FN or 6-NN rights. TEA believes there are immediate and longer-term enhancements that could be made to address this narrow but impactful issue and requests that this principle be revised to ensure asymmetries in sub-allocation between customer clasess are not overlooked.
Revise the second-to-last principle to say: "Provides a comparable allocation method for the CAISO balancing area with a CRR construct and for EDAM balancing areas which sell firm OATT transmission that is based on holding the rights rather than using the rights."
CAISO's Congestion Revenue Rights (CRR) market does not require a CRR holder to schedule energy transfers or otherwise "use" the CRR source-sink path represented by the CRR in order to receive congestion revenue or be assigned revenue uplift. The CRA policy does the opposite. Non-CAISO EDAM area transmission rightsholders must schedule on their rights in order to receive direct congestion revenue allocation through the Tier One reversal process. This fundamentally undermines the value of investing in or owning these rights and distorts allocation between NT and PTP rightsholders given the nature of PTP vs. NT billing determinants. CRA-2 policy cannot provide a "comparable allocation" between the CAISO area's CRR construct and the non-CAISO EDAM areas' OATT-based construct unless it addresses this current asymmetry and TEA therefore requests the principle be revised to ensure it is.
Add a principle that reads: "Supports efficient, reliable scheduling of bilaterally-contracted Firm energy transfers between and within regions and markets."
EDAM is not an ISO/RTO market with a common RA program and must-offer obligation or common Tariff, and EDAM's existence does not change many aspects of the CAISO market, including its RA/RPS programs, AS optimization, use of convergence bids, access to a robust and liquid intertie market, and various other unique programs that do not currently extend to the non-CAISO EDAM areas.
EDAM is instead a novel hybrid organized market that maintains separate BAAs and includes a financially-binding RSE program that requires all Load Serving Entities (LSE) to forward contract with resource owners such that on any given day each LSE within a non-CAISO EDAM BAA can meet its RSE obligation. This is challenging given that RSE obligations fluctuate day-to-day based on load forecast estimates and historical estimates of DA-to-RT uncertainty, and given that LSEs must also navigate planned and forced outages, fuel availability, and other factors that influence their supply portfolios. The EDAM footprint is not structurally oversupplied, nor does it have the plurality of sellers necessary to ensure liquid and competitive contracting among resources within EDAM's footprint.
EDAM therefore MUST have policies that allow for efficient, reliable bilateral contracting for Firm energy transfers from outside EDAM's footprint in the pre-DAM window, ranging from as little as an hour prior to the IFM run each day to days, weeks, months, or years in advance.
The current CRA fails to meet this need, especially for the non-CAISO areas, and exposes EDAM LSEs to undue financial risk. Under the current CRA, LSEs must deal with the lack of open economic intertie bidding at non-CAISO EDAM BAA borders, the cumbersome nature of Designated Network Resource (DNR) registration required to receive Tier One eligible 7-FN rights, and the lack of Tier One eligible 7-F PTP rights available on non-CAISO EDAM systems - and even when they can overcome these hurdles, must make an untenable choice between forgoing the potential benefits of economic dispatch and ring-fencing their price-risk through self-scheduling their supply resources. Further, the existing CRA adds unnecessary complexity to effecting interregional transfer of Firm energy with certain capacity attributes, such as RA- and RPS-qualifying capacity.
It is imperative that the CRA-2 initiative addresses these flaws and supports contracting of uncommitted supply from adjacent bilateral markets. It is also imperative, however, that as adjacent organized markets are implemented, including SPP's RTOE that goes live before EDAM and SPP's Markets+ that goes live the year following, EDAM LSEs are still able to contract efficiently with uncommitted supply located in either of those two markets. More changes are required here than fit within the scope of CRA-2 but it will still be important to address the role congestion revenue allocation plays in resolving seams issues associated with scheduling energy between regions and markets.
Last, there is a basic reciprocity issue that was overlooked when current CRA and EDAM policy was set that must be addressed in this CRA-2 initiative. CAISO's existing intertie and CRR markets, including as they will be updated with the changes filed with FERC in its EDAM/DAME Tariff Clarifications, ensure that CAISO LSEs have the tools they need to efficiently and reliably contract with uncommitted capacity from outside the CAISO BAA, whether that capacity is in a WEIM-only area or in a non-CAISO EDAM area. LSEs in the non-CAISO EDAM areas must be afforded the same, including the ability to contract with uncommitted Firm energy and capacity in the CAISO area for export to an EDAM area on a forward basis. Similar to the last point above, TEA recognizes there are issues here that extend beyond congestion revenue allocation. However, as those issues are addressed, reciprocal congestion revenue allocation issues will also need to be addressed. It follows that consideration of them should fit within the scope of this initiative, which requires the addition of the principle TEA requests here.
TEA below requests an opportunity to expand on these comments through a stakeholder presentation at a future meeting.
