Comments on Revised Straw Proposal

Extended day-ahead market

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Comment period
Aug 31, 05:00 pm - Sep 26, 05:00 pm
Submitting organizations
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ACP-California
Submitted 09/26/2022, 03:21 pm

Submitted on behalf of
ACP-California

Contact

Caitlin Liotiris (ccollins@energystrat.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

The need for increased coordination across the West is both great and urgent, as the grid undergoes significant changes that increase the necessity of sharing regional diversity of load and resources. To meet this need, it is imperative that EDAM move forward in as timely a fashion as possible to provide the necessary “next step” in Western coordination. ACP-California strongly supports the expansion of organized wholesale markets in the West, including EDAM. We express our deep appreciation to the CAISO team for the significant work that has been put into EDAM’s development so far, including tackling complex issues related to the interaction of the Open Access Transmission Tariff (OATT) and CAISO frameworks. In these comments on the EDAM Revised Straw Proposal, we offer comments and request additional information in several areas, primarily focused on the impact to third-parties that own transmission rights and ensuring that, within EDAM, the value of those transmission rights can be maintained. Maintaining the value of existing transmission rights is important under the incremental EDAM framework, which does not fully transition to an RTO, and this issue is vital to Transmission Customers and Transfer Providers alike. We therefore urge follow-up workshops and discussions on this topic in order to keep the EDAM proposal on schedule.

ACP-California appreciates CAISO’s coordination and collaboration with stakeholders in developing the EDAM Revised Straw Proposal. However, we remain concerned about the uncertainty and impacts of EDAM in a number of areas. ACP-California requests additional discussion and market design improvements in several key areas:

  1. EDAM must provide appropriate protections for Transmission Customers within EDAM in order to help retain the value of transmission rights within and across the EDAM footprint. At present, the proposed market design not meet this need. A variety of additional discussions are necessary and several solutions should be explored in more detail:
    1. EDAM should ensure that Transmission Customers who donate their transmission for use by EDAM (including through Bucket 2, Pathway 2) have, to the greatest extent possible, direct settlement relationships with CAISO. This will incent more transmission to be provisioned in this manner, increasing EDAM’s benefits. The settlement for Transmission Customer that provide transmission in this way should include direct allocation from CAISO of both congestion and transfer revenue. This will reduce the substantial uncertainty that presently exists regarding allocations of congestion revenue by EDAM Entities and will increase the benefits of provisioning transmission in this manner.
    2. EDAM should ensure that Transmission Customers who do not donate their transmission for use to EDAM are kept whole if there is an uplift that results from scheduling on their transmission between day-ahead and real-time. At present, there is no assurance this type of scheduling will receive the appropriate uplift allocations, which may devalue transmission rights in EDAM areas. CAISO should convene a technical workshop to develop the appropriate mechanisms to keep Transmission Customers whole when they schedule on rights that were not donated to EDAM between day-ahead and real-time.
      1. Given the current uncertainty and potential that this issue will not be adequately addressed at initial go-live of EDAM, CAISO should consider the development of an “opt-out” option. This option would enable Transmission Customers to opt-out of providing their transmission to EDAM. Ideally, an “opt-out” provision would allow Transmission Customers to continue to operate under the status quo, which CAISO’s proposed “Bucket 2, Pathway 1” self-scheduling option does not appear to provide, given that it does not offer a clear pathway for Transmission Customers to be kept whole for schedule changes between day-ahead and real-time.
  2. CAISO should condense Bucket 1 and Bucket 2 transmission into a single bucket and focus additional discussions on the three pathways that transmission could be provisioned under this new bucket (while continuing forward with the general framework for Bucket 3).
  3. Additional discussions are required on how resources can demonstrate delivery within and through EDAM. Demonstration of delivery of a specific resource to load within EDAM will continue to be necessary under the EDAM construct for a variety of reasons, including delivery requirements under the California RPS. CAISO should work with stakeholders to provide specific examples and explicit mechanisms to illustrate how resources within EDAM BAAs might be able to demonstrate delivery.

While it is not a perfect market design, given the urgency of the need for greater regional collaboration, we support the expedited design of EDAM and encourage CAISO to move forward with seeking Board and EIM Governing Body approval of design elements where it has significant consensus at the end of 2022. As part of that approval, CAISO could leave some design elements outstanding, where necessary. For those outstanding elements, CAISO should commit to further exploration of details and issues through the ongoing tariff process and a continued stakeholder initiative. Key areas that CAISO could commit to further work include: 1) appropriate mechanisms to retain the value of transmission under EDAM; and 2) development of a solution for demonstrating delivery of resources to load to meet various rules and regulations (including the delivery requirements of the California RPS). This type of an extended process may enable EDAM to continue to move towards implementation, while allowing for more time for evaluation of elements of the proposal where there significant stakeholder questions and concerns remain.

ACP-California appreciates the CAISO’s continued efforts to improve organized market outcomes in the West, including the development of the EDAM Straw Proposal. We look forward to continuing to work with CAISO on the EDAM market design.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

ACP-California supports the expansion of Western organized wholesale markets, with a hope that the incremental market development represented by EDAM will continue, ultimately culminating with a Western RTO. ACP-California hopes EDAM truly is a “stepping stone” along the path to a full RTO in the West and one which can provide meaningful benefits to a diverse set of existing and future clean energy resources across the EDAM footprint. The voluntary nature of EDAM appears to offer an attractive option for Western utilities to take an incremental step in Western market advancement and, therefore, ACP-California supports the voluntary nature and structure outlined in the Revised Straw Proposal. However, we note that the voluntary participation option, at present, only applies at the BAA level which may be problematic if critical issues are not addressed. In this section, ACP-California also points out the importance of the concept of “Base Scheduling” for documentation purposes and the need for more certainty on how resources can demonstrate delivery of a specific resource to a specific load under EDAM.

The Revised Straw Proposal would generally require complete EDAM participation for all generation, load and transmission within an EDAM BAA. This construct should maximize EDAM’s benefits and move the West closer to a fully flow-based transmission paradigm, which are goals ACP-California supports. However, many of the critical components of the market design will be left to individual EDAM Entities to implement, including congestion revenue allocation, charge code allocations, and potential requirements for loads/generators under the new EDAM construct. The provisions of EDAM Entity tariffs may have substantial implications for the loads, generators and Transmission Customers in these BAAs, who will not have a choice of whether or not to participate in this “Voluntary” market. Given this dynamic, we urge CAISO to include as many elements of the EDAM market design in the CAISO tariff as possible. And, as ACP-California has discussed in the governance discussions, we support a role for the EDAM Governing Body in reviewing EDAM Entity tariffs to ensure they are consistent with the overall market design.

Additionally, while not ideal for market optimization and a transition to flow-based transmission, given the current uncertainty of the impact of EDAM on Transmission Customers, it may be necessary to explore the development of a pathway Transmission Customers within an EDAM BAA to determine whether or not they wish to participate in EDAM or if they would like to “opt out.” This would extend the “voluntary” nature of the program to not only BAAs, but also to certain customers within EDAM BAAs. Exploration of this voluntary option should include additional optionality, above and beyond the “self-scheduling of supply with existing transmission rights” that CAISO describes in the Revised Straw Proposal and should enable those opting out to use their transmission rights in day-ahead and real-time without EDAM settlement implications. 

Finally, with respect to the concept of Base Scheduling and demonstrating/documenting delivery of resources, additional discussions and examples are necessary. Within EDAM, because BAAs are not being consolidated, delivery of specific resources to specific loads/BAAs will be necessary. Notably, within EDAM renewable resources located outside of California that deliver to California LSEs under Portfolio Content Category (PCC) #1 of the California RPS will continue to require demonstration of their delivery to CAISO. To date in the EDAM discussions, we have not heard of a clear mechanism for resources whose BAA elects to join EDAM to demonstrate their delivery to CAISO. We also continue to request clarification on how dynamic schedules and pseudo-ties delivering to CAISO today would demonstrate such delivery if their host BAA, or an intermediary BAA, is part of EDAM. It is imperative that there is a clear pathway for demonstrating delivery of resources to CAISO within EDAM in order to meet requirements of existing contracts and regulatory requirements.

Similarly, ACP-California supports additional discussions on the concept of Base Scheduling for documentation purposes within EDAM, as there will continue to be a need for demonstration of delivery of resources under EDAM and the concept of Base Scheduling (which should be distinct from self-scheduling) deserves further exploration. In any event, CAISO should provide assurances that necessary documentation frameworks will be designed within EDAM, whether they are called “Base Schedules” or something else, the functionality of documenting delivery of resources to specific BAAs will continue to be important under the EDAM framework.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

ACP-California does not have specific comments on “Confidence in Market Transfers” at this time, but notes the importance of providing confidence in transfers in ensuring that EDAM benefits are maximized and expresses our appreciation for CAISO’s efforts on this topic to date.  

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

ACP-California does not have substantive comments on “Confidence in Market Transfers” at this time. As stated above, confidence in transfers is critical to ensuring that EDAM benefits are maximized. Generally, equal priority between market transfers and load in edge reliability scenarios should help enhance confidence in EDAM transfers.  

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

ACP-California does not have substantive comments on this topic at this time.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Initially, within the EDAM proposal, the three-bucket framework for transmission provision appeared logical and reasonable. However, under the current proposal for the “buckets” of transmission commitment, the differentiation of Bucket 1 and Bucket 2 now appears unnecessary. The distinction only appears to serves to distinguish between “who” is donating transmission and creates unnecessary and problematic differences in requirements for provisioning transmission to the market for EDAM Entities themselves and for other/third-party Transmission Customers. Whether transmission is provisioned for use by an EDAM Entity (via Bucket 1) or by another Transmission Customer (via Bucket 2, Pathway 2), there should be comparable treatment, including the same deadlines for submitting that transmission availability to CAISO. Unfortunately, as currently designed, there are very different requirements, including a much earlier submission deadline for Transmission Customers wishing to provide their transmission for use by EDAM. This creates the potential for inequities and the shifting of risks between different types of market participants. ACP-California agrees with other stakeholders that have suggested “condensing” Buckets 1 and 2 into a single bucket. Transmission in this new, combined bucket could use one of the three pathways described under the current Bucket 2 proposal in order to become available to EDAM. This would ensure comparable treatment and uniform deadlines regardless of whether the transmission is given by an EDAM Entity itself or by a transmission customer.

More specific comments around Bucket 2 and the utilization of transmission rights between the day-ahead and real-time are provided in response to the subsequent questions on transmission commitment.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

As discussed above, absent a clear justification for not doing so, CAISO should condense Buckets 1 and 2 into a single bucket and hold additional discussions on the three pathways for transmission to become available to EDAM under this new, combined bucket.

Under the current proposal for Bucket 2, Pathway 1 provides an option for self-scheduling of transmission rights in EDAM, such that the transmission rights are not available for EDAM optimization. However, unless an entity is able to perfectly follow its day-ahead self-schedule, it will remain subject to settlements for real-time deviations under the EDAM framework. We urge CAISO to hold additional discussions on how Transmission Customers within EDAM can rely on their transmission rights to keep them whole not only when used in day-ahead but also when modifications to those schedules are made in real-time. Without these assurances, the value of holding transmission rights (including long-term rights) in EDAM will be greatly diminished which will, ultimately, serve to create transmission cost shifts that the EDAM market design has not been structured to recover. We urge CAISO to work with stakeholders to develop an allocation mechanism that keeps Transmission Customers whole when exercising their transmission rights between day-ahead and real-time. Additionally, it may be necessary, at least initially in EDAM, to develop an option for those with eligible transmission rights to “opt-out” of market participation entirely and avoid settlement under EDAM. We support further exploration of an opt out option.

Bucket 2, Pathway 2 provides an option for Transmission Customers that are not LSEs themselves (and thus not subject to the RSE) to provide their transmission rights for use in EDAM. ACP-California appreciates that CAISO has provided, under this option, eligibility for direct transfer revenue settlement from the ISO. This provides additional certainty to Transmission Customers and reduces the risks of this transfer revenue not getting properly allocated to the customer by the EDAM Entity. We support expansion of the direct settlement with CAISO to include not only transfer revenue but also congestion revenue. This would increase the attractiveness of this option for Transmission Customers by providing a much more direct risk mitigation tool for Transmission Customers within EDAM than is available with suballocation of congestion revenues from EDAM Entities (which are uncertain and could vary by EDAM Entity). ACP-California also supports CAISO’s efforts to allow Bucket 2, Pathway 2 to be shaped on an hourly basis across a 24-hour horizon, as mentioned in the Revised Straw Proposal.

Bucket 2, Pathway 3 serves to provision unscheduled and undonated firm/conditional firm transmission rights to EDAM for use. This will help to increase the transmission capacity available for EDAM optimization. CAISO indicates that under Pathway 3, transmission rights holders may schedule on their transmission between day-ahead and real-time but would be subject to congestion costs (which would be allocated by the EDAM Entities) and the transmission rights would become a lower priority. While ACP-California applauds CAISO for seeking to maximize the transmission capacity available to EDAM in order to increase the benefits provided by the market, this proposal raises a number of concerns, including the potential to devalue longer-term transmission rights within EDAM BAAs. The transmission commitment framework for EDAM needs to be considered holistically, including its implications for transmission purchases (shorter-term and long-term) outside of the EDAM framework, as those purchases will have important implications for the incentives to join EDAM and for how much transmission revenue may need to be collected via “Bucket 3.” To help mitigate impacts on the value of transmission rights within EDAM, ACP-California recommends that CAISO work with stakeholders to seek to develop a solution. Solutions might include a make-whole payment to Transmission Customers who elect to exercise their transmission rights in real-time. Additionally, (as discussed above under Bucket 2, pathway 1) another option that should be explored is allowing entities to “opt-out” of provisioning their transmission to EDAM. It is notable that an option to opt out could help mitigate concerns around the Bucket 2, Pathway 3 proposal, by providing an alternative option for those who seek to retain use of their transmission rights in day-ahead and in real-time. Over time, this opt-out provision could be slowly phased out or, ideally, market participants will realize the value of market participation and will not choose to utilize the “opt-out” option after gaining experience with EDAM. But it would provide increased optionality that may be necessary to garner additional support for EDAM. To address concerns with Bucket 2, Pathway 3, ACP-California recommends continued exploration of make-whole payments, opt-out provisions and other solutions through the ongoing EDAM stakeholder process.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

At this time, ACP-California does not have specific comments on how ISO transmission is made available to EDAM. But we look forward to continued discussion on transmission commitment overall.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

ACP-California generally supports the structure for TRR revenue requirement included in the Revised Straw Proposal. And we commend CAISO for working towards a proposal that does not require hurdle rates in the market optimization in order to address these transmission compensation issues. We also commend CAISO for development of a proposal that might help reduce the volume of costs recovered under this mechanism over time, helping move along a “glide path” to an RTO framework for transmission compensation. While ACP-California does not have a position on the proposed compensation for “net wheel-through” entities, we support continued discussions on this topic.

With respect to collecting the TRR shortfall, ACP-California recommends these costs be recovered from load, rather than from load and supply. Allocation of these costs to supply-side resources creates inherent uncertainty for supply-side resource which will likely need to seek to recover these costs through energy bids. This has the potential to decrease the efficiency of EDAM and, in the end, load will bear the costs in the form of higher bids from all supply-side resources. It would therefore be more straightforward and efficient to recover the costs directly from load.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

As discussed in the responses to prior questions, ACP-California recommends the following modification to transmission commitment in EDAM:

  1. Enhancements to the EDAM proposal must be made to provide appropriate protections for Transmission Customers within EDAM in order to help retain the value of transmission rights within and across the EDAM footprint. At present, the proposed market design not meet this need. A variety of additional discussions are necessary and several solutions should be explored in more detail, including:
    1. EDAM should ensure that Transmission Customers who donate their transmission for use by EDAM (such as through Bucket 2, Pathway 2) have, to the greatest extent possible, direct settlement relationships with CAISO. This should include direct allocation from CAISO of both congestion and transfer revenue.
    2. EDAM should ensure that Transmission Customers who do not donate their transmission for use to EDAM are kept whole if there is an uplift that results from scheduling on their transmission between day-ahead and real-time.
      1. Given the current uncertainty and potential that this issue will not be adequately addressed at initial go-live of EDAM, CAISO should consider the development of an “opt-out” option for transmission customers to opt-out of providing their transmission to EDAM.
  2. CAISO should condense Bucket 1 and Bucket 2 transmission into a single bucket (with three pathways). This will ensure equitable treatment and uniform requirements for transmission commitment for EDAM Entities and other transmission rights holders.

As we have noted, the transmission commitment framework for EDAM needs to be considered holistically, including its implications for transmission purchases (shorter-term and long-term) outside of the EDAM framework, as those purchases will have important implications for the incentives to join EDAM and for how much transmission revenue may need to be collected via “Bucket 3.” We believe additional stakeholder discussion and workshops are necessary to ensure the EDAM design achieves this goal.  

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

ACP-California does not have substantive comments on this topic at this time.   

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

ACP-California does not have substantive comments on this topic at this time.   

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

ACP-California does not have substantive comments on this topic at this time.   

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

ACP-California does not have substantive comments on this topic at this time.   

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

ACP-California does not have substantive comments on this topic at this time. However, to increase transparency, CAISO should ensure that all market participants (not just EDAM Entities) have access to any advisory runs that are performed as part of EDAM.  

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

ACP-California does not have substantive comments on this topic at this time.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

ACP-California does not have substantive comments on this topic at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

ACP-California does not have substantive comments on this topic at this time.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

ACP-California does not have substantive comments on this topic at this time. However, we note that to the extent a net EDAM transfer export limit constraint is utilized, the provisions for use and implementation of these limits should be transparent, including public posting of any limits in a timely manner.   

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

ACP-California does not have substantive comments at this time.  

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

ACP-California does not have substantive comments at this time.  

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

ACP-California does not have substantive comments at this time.  

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

ACP-California has some concerns with having some portions of the market utilize convergence bidding while others do not (at least initially), as currently proposed. However, we recognize the potential benefits to EDAM Entities from the use of a transition period to implement convergence bidding. ACP-California appreciates that CAISO will be monitoring for impacts and unintended consequences from the lack of convergence bidding in EDAM Entities at the beginning of their participation. We would encourage a regular report (perhaps quarterly) from CAISO and DMM on this topic as the market begin operations. 

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Allowing for greater external resource participation could increase market efficiency in EDAM. More expansive external resource participation could increase the benefits of EDAM and create a more effective dispatch by allowing resources outside the footprint to make supply offers into EDAM. However, we recognize that more expansive external resource participation than currently proposed raises a set of questions and design challenges that may be difficult to address prior to the initial go-live of the market. Thus, ACP-California will not oppose an EDAM market design that, initially, excludes several types of external resource participation as long as this issue is revisited, in-earnest, at a date-certain after EDAM implementation.

We also request that CAISO clarify that non-source specific, non-contracted supply could self-schedule through the EDAM market if it has transmission rights to do so. Table 9 of the Revised Straw Proposal indicates that non-source specific, non-contracted supply cannot economically bid or self-schedule in EDAM. However, entities that have transmission rights through EDAM should be able to self-schedule through the market to deliver their output outside of EDAM and we recommend Table 9 be modified to make that clear in order to better provide for the continuation of OATT rights under EDAM.

ACP-California continues to request that CAISO clearly document that dynamically transferred resources (dynamic schedules and pseudo ties) from within the EDAM footprint will continue to be able to deliver as they do today (and will have associated e-Tags to demonstrate their delivery to CAISO). We also request additional discussions on how non-dynamic resources can demonstrate delivery to CAISO in order to meet delivery requirements of the California RPS. At present, under the EDAM Revised Straw Proposal, it appears as though the only option for resources to deliver from within or across EDAM to CAISO would be through self-scheduling. If self-scheduling is the only mechanism CAISO envisions entities will have to demonstrate delivery resources from within or through EDAM to CAISO, then we encourage CAISO to explore other options, including the development of a “Base Schedule” for documentation purposes that could demonstrate a resource was scheduled specifically to serve a designated load within EDAM.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

ACP-California does not offer specific comments on GHG accounting within EDAM. We note that it will be important for CAISO to remain agile in addressing GHG accounting, such that it can align the market solution with the requirements of state regulators and address any seams that may arise. We encourage ongoing discussions on the GHG solution as the market moves towards operations and on a regular basis once it has been stood up.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

ACP-California does not offer specific comments on the GHG counterfactual run, except to reiterate its importance in approximating how resources would be used to serve native load. The goal of the GHG counterfactual should be to approximate this and not to precisely determine a counterfactual dispatch solution.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

ACP-California does not offer specific comments at this time, but supports efforts to increase transparency around GHG attribution and accounting. 

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

ACP-California does not offer specific comments at this time, but supports continuing discussions on the merits of a zonal GHG approach. 

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

ACP-California does not offer specific comments at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

ACP-California does not have any additional comments at this time. 

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

ACP-California continues to request:

  1. To the extent possible, CAISO should create more options for direct transfer/congestion revenue allocation from CAISO to generators/transmission customers/load, including implementing direct transfer and congestion revenue allocation for Bucket 2, Pathway 2. 
  2. That there be additional discussion on allocation of congestion/transfer revenues from BAAs/Transmission Providers to their own customers and development of a “standard” approach to this type of suballocation to provide additional certainty to customer and consistency across the EDAM footprint.

We appreciate that CAISO has provided one option for transmission customers (who are not BAAs/Transmission Service Providers) to directly be allocated transfer revenue from CAISO. That option, which is currently provided under Bucket 2, Pathway 2, is a notable improvement in the EDAM Revised Straw Proposal. CAISO should work to expand the direct settlement options to include congestion revenue as this will provide greater certainty and transparency for customers

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

ACP-California supports additional discussion, as EDAM’s design process continues, on creating more direct settlement relationships between CAISO and third-party load, generators, and Transmission Customers. Direct settlement relationships with CAISO will increase the consistency of the market and provide additional transparency to load, generation, and transmission within EDAM BAAs.

Additionally, to the extent there will be EDAM Entity settlements and suballocations to load and generation customers with EDAM BAAs, we continue to support standardization and consistency in these settlements. CAISO should commit to working with stakeholders to develop a template or standardized plan to help ease the burden on loads and generators that transact across multiple EDAM BAAs.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

The voluntary EDAM model offered by CAISO, the proposed fee structure (allowing a single entity to move forward with EDAM and not requiring a critical mass), along with the absence of exit fees and a short exit notice period are likely to be strong incentives for Western utilities to begin participation in EDAM. The anticipated implementation fee also appears to be very reasonable for potential EDAM Entities. Thus, ACP-California generally supports the approach CAISO has proposed for the EDAM fee structure. 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

ACP-California supports the decisional classification that the entire EDAM initiative falls under Joint Authority of the Western EIM Governing Body and the CAISO Board, given the importance of this initiative to CAISO and the broader West.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

The need for increased coordination across the West is both great and urgent, as the grid undergoes significant changes that increase the necessity of sharing regional diversity of load and resources. To meet this need, it is imperative that EDAM move forward in as timely a fashion as possible in order to provide a “next step” in Western coordination. EDAM will not be perfect when initially stood up; no market has ever been. EDAM will need to undergo improvements and evolutions over time, hopefully evolving to a full RTO. While EDAM will not be perfect, there are a number of areas of improvement that are outlined in these comments which ACP-California hopes can be implemented by CAISO and can better provide for optionality to generators/transmission customers and also ensure more equitable treatment of different types of participants. We look forward to continuing to work with CAISO and other stakeholders as the EDAM design advances.

We also encourage CAISO to coordinate closely with the Western Resource Adequacy Program (WRAP) to better understand what EDAM market design modifications might be necessary for program interoperability. Ultimately, it is paramount to ensure that EDAM and WRAP can jointly operate and that WRAP participants are not hindered from participating in EDAM, by ensuring that they can meet the requirements of that program concurrently with EDAM.

Finally, ACP-California reiterates that EDAM should be an incremental step towards additional regional coordination and cooperation. While EDAM many offer a number of benefits, it does not offer the same level of benefits that can be provided by implementation of a full RTO. Thus, one key benefit of EDAM is development of relationships and trust, along with market policies and governance frameworks that can be used as building blocks for a future RTO, where more benefits can be captured. ACP believes there may be significant benefits to clean energy resources under EDAM, including reduced curtailment and the expansion of options for selling small amounts of uncontracted output. However, the benefits of an RTO will be much greater and would inherently include additional structures to incent the development and construction of clean energy resources to meet corporate or other clean energy goals (through virtual PPAs), something that appears unlikely under EDAM. Given this, we urge the CAISO, potential EDAM entities, and other stakeholders to think of EDAM as an incremental step in Western market expansion and not the “end game.” To the extent market design elements can be implemented to help put the market on “glide path” towards an RTO or begin to address any RTO-specific design challenges, they should be pursued now.

ACP-California sincerely appreciates the CAISO team’s efforts to create a market design that will help the West take a significant step in increased regional cooperation. We look forward to continuing to work with CAISO on this important proposal.

Arizona Public Service
Submitted 09/26/2022, 04:42 pm

Contact

Tyler Moore (Tyler.Moore@aps.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

APS appreciates the opportunity to comment on the EDAM revised straw proposal and the extensive work put into the proposal by CAISO and informed by stakeholders. We provide detailed areas of support, dissent, and need for clarification in the forthcoming responses to the CAISO’s numbered questions. However, we want to clearly outline several previously communicated areas of importance to APS upfront.

  1. Governance –The current structure is not sufficient for APS to commit to EDAM and may be an impediment to addressing market design issues in the short and long term.  To have an equitable organized Day Ahead market, governance must be free of undue influence by one state. APS recognizes the passing of ACR 188 and looks forward to the report on regionalization benefits that could be unlocked if the governance structure is modified.  
  2. Resource Adequacy – APS believes that a common RA structure for all participating entities (including CA/CAISO) is needed to have a well-functioning DA market. The current design presumes different RA requirements will apply to different participants, including different definitions of what “counts” as an RA resource. A daily RSE requirement does not resolve this problem, because as we have seen in the WEIM entities can pass the RSE while being deficient and in Energy Emergencies.
  3. Transmission Wheel Through – APS requires resolution on this existing issue that respects the forward procurement of resources and transmission done by non-CA entities in a fair and equitable manner to that of CA entities utilizing the CAISO transmission system. APS would like to see transmission service procured in the proposal TSMSP Phase 2 proposal being commensurate with firm point to point OATT service priority.
  4. Price formation – APS acknowledges that a separate track is ongoing on this subject but is concerned with the lack of momentum in developing a straw proposal. APS believes this is an essential aspect of the market design. 

 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

APS generally supports the voluntary participation framework proposed and appreciates the incorporation of transitionary measures included in the revised straw proposal. APS would like to better understand the transitionary measure of market disruption of an EDAM participant initiated by CAISO, and if an EDAM entity could initiate a market disengagement. This is something that has been developed in WEIM that has served entities well to coordinate disengaging from the market during events like IT outages or other planned events that impact WEIM entity’s ability to communicate to market applications or transmit data for market functions. These planned events being well coordinated to other impacted entities has shown to be a best practice to limit impacts to the market and other participants.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

APS supports the constraint with the additional elements presented in the stakeholder meeting around also limiting the amount of imbalance reserves and reliability reserves to the constraint to avoid awards of capacity to address uncertainty resulting in a deficiency to an entity in real-time as presented in the example scenario within the proposal.  

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

APS believes that leaving operator discretion to make decisions in haste is problematic and is interested in specific protocols and tools to help differentiate the various priorities and operator expectations to facilitate the priorities in real-time.  

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

APS believes a middle ground of the lower priority may be needed, where the lower priority is contained to amount of failure. If the market can cure the deficiency through the administrative charge, then the entity could be of equal priority coming out of day ahead. On the other hand, if the footprint cannot cure the deficiency this is signaling a stressed system condition and the priority level of transfers that are delivered to this entity should be lower priority up to the amount of failure. If the entity remains deficient into real-time, then the EDAM entities need to have visibility to any transfers that are of lower priority to facilitate any necessary curtailments should they not be able to maintain reliability in the footprint. This element is very important and should be considered for a focused workshop on the topic. The CAISO should be held to the RSE standard that is equitable to other entities, ensuring that they can’t inaccurately pass during stressed conditions, and have access to higher priority EDAM transfers while EDAM entities are relegated to lower priority when similarly situated.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

APS is indifferent in the discontinuation of the bucket terminology and is not certain if conversion to another phrasing would be beneficial or detrimental. APS does support a mapping of ways that transmission is made available to the buckets may be helpful, as something that is bucket 2 to one entity may be bucket 1 to another entity depending on who the transmission customer is on certain segments on the full path from source to sink. We believe that this has caused some confusion and may be improved if the way transmission is made available to the market and who holds the rights is mapped to a bucket for reference. While the way transmission is made available as described by NVE could be helpful for transmission service providers to reference for their purposes.  

 

APS seeks clarity around if bucket 1 transfer revenue is distributed through the EDAM entity or directly to the transmission customer. The language included in the proposal is unclear on what is the responsibility of the transmission provider to allocate, versus what is distributed between the CAISO and the transmission customer directly.    

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

APS is concerned about bucket 2 - pathway 3. Particularly, how to identify the customers that utilized the transmission after they did not schedule for proper sub-allocation by TSP’s. APS also believes there are issues around transmission priority in the market through Pathway 3, because it is comparable to what would be released as non-firm today but gets firm priority in EDAM. If an entity wants to schedule their long-term firm rights after the Day Ahead Market run, there is no way to deal with the priority level difference between market schedules and OATT rights, if a curtailment is needed.

 

APS believes that the release of transmission by customers in Bucket 2 – Pathway 2 at 6AM is too early in the day for customers to know and evaluate all potential uses of transmission before determining they can make their rights available to the market for usage. Is there a benefit to EDAM participants to have this election made before the market deadline of 10AM? If not, APS would prefer giving transmission customers up to the market deadline of 10AM for this pathway.  

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

APS has no further comment. 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

APS recognizes absent a hurdle rate that there is a need for TSPs to recover short-term transmission revenue that is no longer procured under the TSPs OATT, but rather is utilized by EDAM. APS believes that the review period of only two years may be too short, and lead to uncertainty about foregone transmission revenues from the sale of short-term products if the policy was to change shortly into EDAM operation. APS requests that there be a longer period before review to have more certainty and experience around the mechanism and make necessary improvements further into the operation of EDAM.

 

APS supports incorporating new build transmission into the TRR recovery methodology as this transmission in certain cases would result in additional sales of short-term transmission by way of increased TTC or new paths to connect POR/POD that are utilized by transmission customers.

 

APS supports the concept of wheel-through-revenue being included net of import/exports that is facilitated by intermediary transmission systems. This concept would capture some OATT sales that are currently conducted bilaterally between counterparties in the day ahead and real-time.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

APS has no further comment. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

APS believes that the EDAM entity should not be required to show transmission demonstration as part of the ancillary services obligations that each entity retains as a balancing authority area. It is unclear what the market operator would do with this information, as an EDAM entity can adjust the transmission made available to the market for any necessary reserve sharing program deployments that may be represented by TRM, CBM, or otherwise utilized by the balancing authority area to maintain compliance with their obligations to reserve sharing groups.   

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

APS believes that WSPP schedule C (and equivalent contracts) that have a specific resource and BAA and firm transmission need an avenue to be credited and seen by the market in terms of RSE and the market solution. This is so that BAAs relying on these contracts are given credit and/or debit for the supply forward contracted for in the RSE. Then in the operational sense they are considered in terms of balancing supply with load and interchange in the BAA. In stressed conditions, contracts that don’t have identified specific resources and firm transmission may not deliver, therefore, should not be counted toward the RSE.  For this reason, APS supports the requirement of tag creation three hours after publication of market results and supports the monitoring of the usage of these types of supply contracts and how often they are not e-tagged.

 

Intertie bids at the CAISO border that are under contract to an CAISO LSE or otherwise have a contract under the CAISO tariff will be eligible for the CAISO resource sufficiency evaluation and be subject to the tagging requirements. Moreover, if it is the expectation that the tag shows the transmission legs demonstrating that the resource has firm transmission, then that must be applied across the board to intertie bids at the CAISO border as well.   

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

APS supports inter tie bids that support contracted supply by LSE’s inside of CAISO. APS is concerned about incongruence between supply made available at inter-ties to CAISO counting in RSE with no transmission firmness requirement and the requirement of EDAM BAAs needing high priority transmission service if wheeling through CAISO to count as RSE. It is evident that inter-tie bidders can wait till before the STUC run to tag these awards which could be done on lower priority transmission service external to the CAISO. APS recommends equitable treatment be given to these similar transactions sinking to CAISO or EDAM BAAs and would prefer that firm transmission be utilized on external systems to the CAISO.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

APS supports the ability to reflect demand response that doesn’t conform to current CAISO modeling within the demand forecast like the WEIM. APS would like recognition that EDAM entities outside of CAISO may have programs that are like RDRR and shouldn’t be required to dispatch the resources if such a program exists with real-time requirements for deployment. APS also supports continued ability to represent unique demand response programs across the West into the broader market through increased modeling capabilities and requirement modifications.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

APS appreciates the CAISO listening to stakeholder concerns surrounding gas management in the EDAM. APS believes that challenges surrounding gas pipeline constraints may be unique and different than current CAISO DAM participants face as the pipelines supplying a large amount of gas generation outside of California may have less flexibility from storage and tighter operating capacities that lead to more frequent utilization of strained or critical operating conditions that expose gas shippers to financial or physical penalties for deviations from scheduled takes.  

 

APS believes the D+2 will have limitations that will impact its effectiveness to inform gas procurement by entities. Those limitations include the misalignment from day ahead market runs over weekends and when gas is procured. For example, gas procurement for Monday is done on Friday, this would require a D+3 non-binding market run to understand the full weekend schedules required. While on holiday weekends this could be even longer extending into D+4 to cover Tuesday gas procurement. There is also an inherent issue regarding the quality of inputs to the market run impact the results, it is hard to estimate the accuracy and thus the usefulness of this tool for gas procurement. APS would like to understand how expected transmission availability would be made available in this market run; a reasonable approach may be to take the most recent limits made available to the EDAM in the prior day.  

 

APS also would like to better understand tools available in the current market that could be leveraged in EDAM for entities. These tools include nomogram, energy limited resources, and aggregate power plant capabilities. Each of which appear to have limitations to be utilized by participants, the nomogram is difficult to implement with multiple BAAs, energy limited resources can’t be placed on multiple resources, and aggregation must be connected to same Pnode in the market. APS would like to request that the reference level request be revised to include the gas day hours which do not coincide with a calendar day. Market participants procure gas based on the gas day and need to be able to reflect the updated price for the full gas day in which the price is relevant. The applicable gas day timelines are from HE8-HE7 Pacific. APS supports item 6.1.23 submitted in the Annual Policy Catalog by NVE to evaluate the ability to include opportunity cost in the DEB and would request it be placed on the upcoming roadmap. This initiative could be expanded to also include modeling tools to reflect growing gas constraints by market participants.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

 APS supports a principle that the administrative charge disincentivize the failure of RSE for economic reasons. APS is concerned utilizing bilateral market prices may not be sustainable as that market may become illiquid or under-utilized as the West moves to more centralized market constructs. APS would like CAISO to consider the merits of a fixed surcharge that could be based on energy price caps or capacity costs be captured but is generally supportive of utilizing bilateral trading hubs in the short run.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

APS supports the creation of an hourly bid-range trading platform to facilitate passing of the RSE ahead of the EDAM run. This functionality will be essential to have optimization within the footprint that avoids large block purchases bilaterally that would be fixed interchange that cannot be optimized. APS looks forward to further development of this concept to facilitate market efficiencies within the EDAM.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

APS has no comment at this time. 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

APS does not oppose the ability for entities to hold back supply above the RSE and supports the net EDAM transfer export limit with additional design elements proposed in the workshop to manage a sufficient BAA being exported to a deficient position through energy and capacity products.  

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

APS has no further comments

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

 APS has no comment at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

APS appreciates the price formation enhancement and is engaged in that forum as it pertains to market power mitigation within EDAM. APS believes that a significant consideration and potential adoption of conduct and impact tests for market power mitigation. APS requests that CAISO continue to make progress in the initiative by way of a straw proposal being created.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

APS would support the evaluation of convergence bidding activation in EDAM entity areas after EDAM launch but does not oppose a planned transition at this point understanding that stakeholders can provide input to the transition plan after operational experience is achevied in the EDAM, including any modifications to convergence bidding that would be justified for convergence bidding across the EDAM footprint. APS does not oppose the transition period for convergence bidding proposed by CAISO and believes that any market design flaws that could be problematic and exploited by convergence bidding should be addressed expeditiously by the CAISO in the early onset of EDAM.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

APS supports the proposal of external resource participation to be done through dynamic schedules and pseudo-ties like is done in WEIM today. APS has performed a considerable amount of work to implement pseudo ties for resources located outside of the BAA under this framework.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

APS has no further comment at this time. 

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

APS is concerned surrounding the ability to deem generation that is not incremental to reference level pass amounts to serving CAISO load in the resource-specific approach. Deeming of energy from resources that do not increase output above the reference level pass, or worse decrements energy output can impact the accuracy of marginal congestion cost and erode the environmental benefits intended by the GHG program.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

APS has no further comment at this time. 

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

APS has no further comment at this time. 

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

APS has no further comment at this time. 

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

APS has no further comment at this time. 

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

APS has no further comment at this time. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

APS has no further comment at this time but looks forward to more detailed workshops and documentation of settlements when the policy framework is solidified. 

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

APS believes the framework for EDAM fees based on implementation and administrative fees in the WEIM is a reasonable approach.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

APS is supportive that EDAM needs to go to both boards for approval as a joint authority item and appreciates the Board of Governors extending authority to the Governing Body for this important policy development for current WEIM Entities.  

 

APS requests that the scope of delegation of joint authority presented in the Governance Review Committee’s Phase 3 Straw Proposal be expanded beyond the “apply to” test and broadened to apply to all aspects of day-ahead and real-time market rules.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

An important element to the success of EDAM and the larger Western Interconnect is the ability to participate in WRAP and not interfere with the ability of WRAP participants to benefit from the WRAP program. APS sees this coordination among WPP, SPP, and CAISO as an aspect where all three entities need to address the program in a fair and equitable manner. The CAISO should assume that there is a need to address WRAP participants that are within EDAM, withing Markets +, and outside of both EDAM and Markets +. There are various elements that need to be considered in this coordination including energy schedule priorities, timelines, RSE requirements, WRAP holdback requirements, and likely others.

 

APS appreciates the draft tariff framework publication but was unable to provide comments at this time and will look to do so in the future during the draft tariff language meetings.

 

BANC
Submitted 09/26/2022, 06:13 pm

Submitted on behalf of
Balancing Authority of Northern California (BANC)

Contact

Kevin Smith (kevin@westernenergylaw.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

BANC appreciates the refinements and details contained in the Revised Straw Proposal (Straw Proposal).  It is vastly improved and provides far greater clarity around several key issues. It is a good foundation to further develop the EDAM proposal and BANC commends CAISO staff for the significant efforts it expended in this latest version.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

BANC supports the voluntary participation model, as described in section II.A.1.

BANC does believe that the CAISO should consider a longer period, perhaps up to six months, as opposed to three months, for day-ahead price correction.

As for Resource Participation, because this is not an RTO market, resources need to continue to purchase OATT transmission for any transactions they intend to export from an EDAM entity BAA, if there is no RA or RS transmission obligation.  EDAM cannot encourage or facilitate an opportunity for free-riders on the transmission system of the EDAM entity or transmission providers within the EDAM entity footprint (note: not all EDAM entities are transmission service providers (TSP)).

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

This topic is inextricably linked to the Resource Sufficiency Evaluation (RSE).  As such, we provide some general comments here and offer more detailed comments on market priority in the RSE section, below.

First, BANC agrees with the overall concept of equal priority for all EDAM transfers, including edge cases.  

For this to work, however, all EDAM entities need to have confidence both in the market solution and the market operator’s actions.  As the CAISO correctly notes:

Establishing confidence in market transfers is a critical design component of the overall EDAM framework.  Load serving entities and BAAs rely on bilateral procurement of supply and transmission to deliver supply reliably to serve load.  In the EDAM, these same load serving entities and BAAs will make resources and transmission available to the market, which will derive an optimal solution for serving load across the EDAM footprint by optimally scheduling transfers between EDAM BAAs.  The EDAM design should build collective confidence in transfers emerging out of the market and enhance the capability of the EDAM entity and the market to respond to stressed system conditions. Straw Proposal at 14.

EDAM entities are being asked to trust the market solution, which is some instances my involve de-committing their own internal resources and relying on the EDAM transfers to reliably serve their load.  This involves two key elements: 1) confidence in the market solution and the resources behind that solution, and 2) trust that in certain edge case scenarios, EDAM entities are being treated on a fair and non-discriminatory basis by the market operator. 

With respect to the first element, “confidence in the market solution and the resources behind that solution,” the CAISO has set forth several elements to establish this confidence.  These are: the RSE, robust transmission availability, Imbalance Reserves and market parameters preventing propagation of shortfalls (i.e., the ability to isolate a supply shortfall in one BAA so as to not propagate that shortfall to another BAA).  While each of these elements are essential and need to function collectively, the foundation is the RSE.  This will be addressed further in the sections below.  It suffices to say that for the other elements, BANC certainly supports the development of an Imbalance Reserve product to cover real time uncertainty, supports a transmission design that encourages the maximum release of transmission to facilitate EDAM transfers and agrees with the CAISO’s use of market parameters to prevent the shifting of supply shortfalls and potentially causing cascading outages. 

On the second element, “trust that during certain edge case scenarios, EDAM entities are being treated on a fair and non-discriminatory basis by the market operator,” providing data and transparency around market operator actions taken during these edge case scenarios is essential.  BANC believes that since the events around August 2020, the CAISO and the Department of Market Monitoring have made significant progress in the area of transparency and analysis.  Moreover, there was significant cooperation and communication among the CAISO and EIM entities during the recent September 2022 heatwave.  BANC believes that continuing on this path to provide market participant with transparent analysis around both data and operator actions is essential.  Moreover, while recognizing that, as an organized market, the CAISO and EDAM entities have diverse operational design characteristics, the CAISO should strive to ensure there is a level playing field among all EDAM BAAs.  This is particularly important around the area of the RSE.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

As noted above, BANC supports the concept of equal priority among all EDAM transfers and load under all scenarios, including edge cases.  While BANC has had some experience with this concept of obtaining equal priority to CAISO load through its exporting of non-RA resources (PT Exports) from the CAISO BAA, there is something of an art rather than an exact science in the actual application of curtailment priority under certain scenarios, such as during edge cases.  In such instances, there will often have to be some level of operator discretion.  For this reason, the CAISO needs to make as much of the process and decisional tree as transparent as possible.  Moreover, this is where an EDAM entity is being asked to trust that any decisions involving how this equal priority is implemented by the Market Operator is being done in without bias and in order to obtain the optimal solution to address the particular edge case scenario.  In other words, EDAM entities need to trust that such decisions are being made without bias either for or against CAISO load.  To ensure transparency and consistency, all of these extreme actions should possibly be reviewed to determine whether they were indeed carried out in accordance with good utility practice and on a non-discriminatory basis.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See BANC response to Question 16, below.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

BANC supports the bucket framework in Straw Proposal as a general convention for describing the various market uses of transmission, both by the TSP and by transmission customers.  Buckets allow a more focused discussion around transmission uses and how transmission might be made available to the EDAM.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

BANC supports the general approach the CAISO has outlined for the treatment of transmission customer rights, both under an OATT and pre-OATT paradigm.  More specifically, for OATT transmission, BANC agrees with the outlined “Pathways” 1 through 3, with the following clarifications:

Pathway 1: Any transfer revenues would accrue to the transmission provider.  The intent is to use these revenues to mitigate any cost exposures to the transmission customer in exercising its OATT rights. The transmission provider is best positioned to determine how to utilize transfer revenues on behalf of its customers under its OATT.

Pathway 2: It should be absolutely clear that if a transmission customer exchanges its firm point-to-point rights for transfer revenues directly from the CAISO, its rights are gone for duration of the exchange.  This doesn’t preclude market participation, but the rights are forfeited for this time.

Some discussion has arisen regarding the 6 am deadline to inform the CAISO of an intent by the transmission customer to exchange its rights.  Since this is largely an issue of CAISO timelines required to process such a request in advance of the day ahead market, BANC only notes that it should be as close to the 10 am close of the day ahead market as practicable.  To be more specific, we think an hour prior to the close of the day ahead market (9 a.m.) would seem appropriate.

Pathway 3: BANC supports the use in the optimization of OATT rights that remain unscheduled at 10 am, noting that such rights can continue to be exercised through redispatch.  However, such redispatch costs may result in additional costs to maintain that schedule, which may or may not be offset by transfer revenues.  Moreover, under certain circumstances (which should be rare), there could be an infeasibility resulting in a schedule being below the full point-to-point right.  Today, firm rights are subject to derates as well.  At least in the case of foreseen edge days, the customer would be better-served by scheduling its rights by the 10 am close of the day market to protect its rights.

BANC supports different treatment for pre-OATT (legacy) agreements, which may require a carve out in the optimization or that could possibly participate in “Pathway 2” if both the transmission provider and the customer agree.  In such cases, the customer would also interface directly with the CAISO to perform such an exchange.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

BANC supports the CAISO’s transmission availability model.  Because the CAISO does not have the same transmission reservation system aligned with the traditional OATT framework, the primary concern is one of under-collecting revenues due to lost wheeling charges.  BANC believes the TRR framework put forward in the Straw Proposal to allow each transmission owner/provider to recover lost TRRs should create a level playing field between the CAISO and the other EDAM entities/transmission providers.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

BANC supports a model that allows a transmission provider to recover lost short term transmission revenues under the assumption that the implementation of EDAM will result in lost short-term firm and non-firm transmission sales.  For example, under existing OATTs, short term non-firm transmission is sold based on firm transmission being unscheduled.  If the firm customer reclaims its rights, the non-firm customer is bumped, but the revenues from the sale of non-firm is retained as a revenue credit.  These non-firm sales, which for some EDAM entities/transmission providers is a significant source of annual revenue, will be directly displaced by EDAM.

BANC supports the categories of qualified transmission as described, both firm and non-firm, on pages 35-36 of the Straw Proposal. More specifically:

Non-Firm Products

  • Hourly non-firm point-to-point
  • Daily non-firm point-to-point
  • Weekly non-firm point-to-point

Firm Products

  • Hourly firm point to point (if product is offered by the transmission provider)
  • Daily firm point-to-point
  • Weekly firm point-to-point

BANC further Supports the following:

  • Developing a percentage attributable to Lost TRR (LTRR) is essential and maintaining that percentage for some fixed period to allow data to be collected and reviewed by the CAISO and EDAM entities.
  • CAISO’s proposal for BAA-specific rates to ensure that the individual EDAM entity’s/transmission provider’s customers are not paying for their own LTRR (cost shifting).
  • The ability of an entity proposing new transmission to recover the same LTRR percentage for the new facilities.
  • Compensation for lost wheeling revenues, net of Imports/Exports, to be set at the entities filed and approved non-firm hourly point-to-point rate to prevent free riding at the expense of an intermediate EDAM BAA.
  • Application of the rate developed and charged (outside of the market) on a volumetric basis should be applied to Gross Demand.  This, however, must be balanced by a requirement in the (non-CAISO) EDAM entity BAAs that any merchant generation (which is not a Designated Network Resource) continue to pay its share of transmission costs to the EDAM entity BAA border to preserve the funding of long-term OATT rights – no free riders.  Unlike the CAISO BAA, which allows generators to simply put in market bids without regard to transmission reservations, the EDAM entities will be retaining their underlying OATT structures and do not have socialized transmission funding mechanisms, like the transmission (or wheeling) access charge.  Long term point-to-point rights are therefore still needed to move energy from a generator bus to an intertie (unless going to serve NITS customers).  This cost recovery needs to be maintained.  This cost recovery is addressed through either a generator being a Designated Network Resource (in which case transmission is paid by the NITS customer) or the generator will be required to pay for firm point-to-point transmission service to the EDAM entity border.  Failure of having transmission either as part of a NITS or purchasing firm point-to-point transmission to the border of the EDAM entity BAA could result in the potential application of an Unreserved Use Penalty by the transmission provider.  One option is that the CAISO require any Participating Resource Scheduling Coordinator in EDAM to show each Participating Resource has transmission to the EDAM entity BAA border to be eligible to provide market bids.
  • An annual true up of estimated LTRR with actual TRR recovery. Any over or under collections should be applied to the subsequent year’s recovery.
  • Ongoing oversight and monitoring process which allows CAISO and the EDAM entities to actively monitor and address any unintended consequences of the LTRR recovery mechanism and to discuss possible adjustments to the methodology.
10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

To preserve the OATT structure and encourage investment in transmission, all users of the system must pay the cost for the use.  There cannot be unintended free riders created through EDAM. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

BANC supports the general framework of the EDAM RSE proposed, including the ability to conduct advisory runs at 6:00 a.m. and 9:00 a.m. prior to the binding RSE run at 10:00 a.m.. 

BANC shares some of the same concerns raised by stakeholders around deliverability, since the RSE, as proposed, is not a full network model optimization and therefore does not consider transmission constraints in its assessment.  While we recognize that the computational timelines do not allow a full optimization to test constraints for RS deliveries, this raises some obvious concerns around actual deliverability of resource sufficiency resources under actual market conditions. While BANC can perhaps support a simplified approach at start up, we are greatly concerned that this approach may prove problematic.  Thus, in addition to careful monitoring, we believe there should be further thought in advance for a Plan B, if this does in fact pose reliability risks once EDAM is implemented.  If significant deliverability issues arise, resulting in reliability risks, it might take too long to develop a solution on the fly. 

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

E-Tags

BANC fully supports the requirement that all RS resources submit a valid e-tag no later than 3 hours after the close of the day ahead market at 10:00 a.m..  To the extent this is infeasible, this must be completed no later than the STUC horizon to remain in the EDAM RS Pool.  This is essential to demonstrate that RS resources are tied to actual physical supply obligations.  As noted by the CAISO, failing to provide “e-tags prior to the conclusion of the WEIM RSE” should be part of the existing reporting and monitoring conducted by the Department of Market Monitoring.  In addition, any patterns or repeated problems with particular resource/supplier should be investigated.  If specific RS resources are routinely untagged, there should be implications, including removal from the pool of RS resources being relied upon by the EDAM entity BAA to pass the RSE.

WSPP Schedule C

BANC fully supports counting WSPP Schedule C supply contracts for RSE counting purposes.  However, there are a couple of conditions: 1) the supply must be tagged in accordance with the tagging requirements to count; and 2) It cannot be non-source specific if it originates in the CAISO BAA and is to be exported to an EDAM entity BAA. 

On this latter point, the CAISO has rules around export priority.  To obtain PT status for an export (firm as internal CAISO Demand), there must be physical capacity in the CAISO BAA not also committed to an RA obligation for an internal CAISO LSE (i.e., it must be “non-RA”).  This arrangement allows the exporting BAA to point to the un-committed non-RA capacity in support of its export.  As such, it receives a scheduling and curtailment priority equal to CAISO Demand.  A non-specified source from the CAISO cannot be firm, so any contracts with an unspecified CAISO source (e.g., NP 15 EZ Gen Hub), even if they are so-called firm, cannot obtain PT priority (it is LPT) and are therefore lower priority export and subject curtailment ahead of a PT export. Securing a PT export is costly and a challenge to those needing to export from the CAISO.  If used for RSE, unlike EDAM transfers which will not pay the Wheeling Access Charge (WAC), the PT export used to pass the RSE will in fact pay the full WAC, which is akin to purchasing OATT transmission to ensure firm delivery.   These factors set these arrangements apart from a simple supply agreement for export from the CAISO BAA without any associated resource.  Such arrangements are not afforded high priority and susceptible to uneconomic adjustment under strained system conditions.  For BANC, unsupported exports from the CAISO do not qualify for RA counting purposes.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

BANC supports the counting by the CAISO of import bids from a non-EDAM BAA at its border provided the bids are associated with a supply contract and fall under the specific criteria set forth in the Straw Proposal, which support the Seller’s obligation to deliver to the CAISO BAA.  These include:

  • Intertie bids associated with a resource adequacy contract.
  • Intertie bids associated with a forward contract, but not otherwise shown as part of a resource adequacy supply plan.
  • Intertie bids originating from resources that are pseudo tied with the ISO BAA – these resources have their output telemetered into the ISO and deemed produced in the ISO BAA under the terms of a contract with the ISO under the tariff.
  • Intertie bids originating from dynamically scheduled resources into the ISO BAA – these resources provide telemetered readings of their intertie schedules and have an agreement with the ISO (with scheduling coordinator and host balancing authority area) under the tariff that sets out operating requirements.
  • Intertie bids originating from a non-dynamic resource –specific system resource – these are source specific external resources that have an executed agreement with the ISO that sets out performance and operating requirements.  In practice, these resources have a contractual relationship with ISO LSEs so they also can be considered as contracted supply.  Id. at 50.

As is the case with other RSE supply, all associated tagging requirements would also need to be met.  This also needs to be pared with what the CAISO describes as a commitment to “continue to monitor deliveries from these supply resources and evaluate enhancements to address any identified concerns.” Id. at 51.  BANC adds that the monitoring and evaluation of these deliveries should be transparent to stakeholders and potentially added to the existing market reporting the Department of Market Monitoring already conducts for the WEIM. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

BANC supports bone fide demand response programs as a tool to pass the RSE.  Currently those participating in WEIM reflect this in a reduction to BAA load.  This should be allowed in EDAM.  Such flexibility is needed to allow for valid demand response programs that are not currently able to offer supply bids into the market.  BANC expects that, as the market evolves, more transparent structures will be adopted by EDAM BAAs.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

BANC supports the CAISO proposal to make advisory D+2 market results to inform gas procurement.  While this may be far from a perfect solution, this is a step in the right direction.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

BANC recognizes that this, perhaps, is one of the most foundation elements of the entire EDAM.  As noted above in the questions on “Confidence in EDAM Transfers,” the market will live or die on whether participants can ultimately rely on the market solution to be sound both in terms of economics and reliability.  But reliability trumps economics every time, and this is where the RSE is fundamental.  The conundrum is balancing solutions that both discourage leaning on the market, while not forging a penalty structure that is so draconian it is either patently unreasonable or, worse, undermines the reliability objective for which it stands.

While BANC and other entities have contemplated stiff penalties and even blocked transfers for failure, we are trying to find a more balanced and proportional penalty structure.  For example, should an entity that is one MW short of meeting its RSE be hammered with a 16-hour block energy penalty or should there be some form of reasonable deviation element to account for magnitude.  Therefore, we believe the CAISO should consider a tiered approach to RSE failure.

For example, the first tier could be tied to a minor RSE shortfall, established at some reasonable tolerance band (e.g., within a small percentage of the uncertainty requirement, a small percentage of Day Ahead load forecast, a MW cap, or a combination thereof).  For Tier 1, the market cures, the failing entity stays in the RSE pool and there are no administrative penalties.

For the next tier, which would be a RS shortfall in excess of the first tier, there would be an ability for the market to cure at an administrative penaly price, up to some cap.  This would also allow the entity to remain a member of the RSE pool and not test separately for the WEIM RSE, unless the cap was exceeded.  The level of the administrative penalty requires further discussion, but one bookend could be the level proposed by the CAISO (an indexed 16-hour block price), but there may need to be some consideration of mitigating this amount by crediting some portion back for hours in which the failure did not occur.  The price would be assessed only for those shortfalls in excess of the Tier 1 tolerance band.

For the third tier, which occurs if the second tier cap was exceeded, the failing EDAM entity must pay the administrative penalty for any portion that is cured by the market and is out of the RSE pool. The failing entity must also separately test in the WEIM RSE. We would like further discussion, however, as to whether transfers to the failed EDAM entity BAA can be considered lower priority (for the amount not cured by the market).  This lower priority, rather than being administered in the operational horizon and the practical challenges of operators administering lower priority, would be have to be effectuated through the real time market (WEIM).  We do have concerns about the practical application of this, and we would want to work through some examples.

In addition to considering a tiered approach, there must be some safeguard in place to address serial leaning.  We cannot have a pattern of leaning for any tier, even the first tier.  This also raises the concept of robust oversight and reporting.  We do not want to see a diminution to reliability as an unintended consequence of such a process.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

While the details are still not fully clear, BANC supports the concept of having the ability to trade bid range among EDAM BAAs.  There is no reason not to explore platforms that will enable entities to cure occasional deficiencies in additional to traditional bilateral markets, which are potentially more tailored to the actual deficiency, for example, than purchasing a 16-hour block purchase. Moreover, as organized markets continue to expand, traditional bilateral markets may continue to contract, leaving fewer options to cure.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

BANC supports a pooled WEIM RSE for the benefit of the EDAM entities which pass the EDAM RSE.  It may be appropriate to withhold the full allocation of the diversity benefit, at least for some initial period, to allow the CAISO and other BAAs to gain confidence in market.   

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

BANC is not opposed to the concept of allowing both EDAM entities and CAISO LSEs to retain some amount of capacity in excess of what is needed to pass the RSE.  However, while we recognize the apparent incongruence created by initially limiting this ability to the EDAM entities and not having a similar mechanism for the CAISO LSEs, it is of note that the CAISO LSEs are not BAAs and do not have the ultimate responsibility for meeting BAA reliability obligations.  Indeed, the genesis of this concept has always been rooted in the BAA’s retained reliability obligations.  It was also always expected by the EDAM BAAs that this practice would likely be relaxed after gaining confidence in the new market.  It is therefore expected that over time, such a practice would be the exception, not the norm.  If the EDAM market is properly functioning and reliable, as the CAISO also noted, it would be in every entity’s interest to put all available capacity into the market.  Assuming the market does in fact perform properly, this issue should therefore largely self-correct out of economic self-interest.

As to which mechanism, direct identification or a net EDAM export transfer limit, BANC would like to better understand the pros and cons of each.  From a BAA perspective, it would seem more logical to maintain control over resource selection.  This is also consistent with the original concept put forward by the BAAs – i.e., the BAA’s decision to maintain a reserve unit or fleet in excess of that needed to pass RSE, depending on system conditions.  In terms of simplicity and consistency, however, the export transfer limit seems easier to implement.  In any event, we would like further discussion on both of these options.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

BANC has no further comments at this time. 

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

BANC support the concept addressed in the Straw Proposal that:

[A]ll resources offering energy bids in the IFM must submit bids for reliability capacity in the RUC at the same quantity as their energy bid plus ancillary service self-provision.  This ensures all resources shown in the EDAM RSE are fully available for use in RUC, including excess supply that participants offered above their RSE requirements.  Id. at 63.

In addition, BANC also supports the ability of an EDAM entity to hold back supply in excess of its RSE resources to address any internal BAA reliability obligations or concerns.  Under a fully functioning market, and once confidence in EDAM transfers are established, such hold backs would be expected to be infrequent. Indeed, it is in the economic interest of the EDAM entity to offer as much surplus capacity as possible.  Nevertheless, each EDAM BAA will need to determine how to best balance the economic and reliability risks of its own BAA as they become more familiar and comfortable with the performance of the EDAM.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

BANC generally supports extending the MPM framework to the EDAM and retaining the ongoing assessment of potential market power mitigation enhancements within the Price Formation Enhancements initiative.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

While BANC does not support requiring EDAM entities to facilitate convergence bidding at start up, we have some concerns regarding the potential unintended consequences caused by the asymmetry between the CAISO allowing convergence bidding in its footprint and EDAM entities not allowing convergence bidding.   Nevertheless, EDAM participation will be a significant implementation challenge, and we fully support allowing the option to select a transition period. Equally important will be the CAISO’s monitoring of the impacts of this asymmetry and regular reporting.

Should an EDAM entity facilitate virtual bidding and there is a reliability concern, the CAISO notes it can suspend it inside its own BAA.  The CAISO further notes that should an EDAM entity recommend suspending convergence bidding in their BAA, “[t]he CAISO will evaluate the request and make the ultimate decision.” Id. at 67.  BANC questions how the CAISO can assert itself in another BAA’ reliability obligation?  While we understand the need to coordinate such an action, the BAA alone is responsible for its own reliability and cannot have such a decision reside with the CAISO.  BANC believes this concept needs to be properly modified to ensure proper lines of BAA accountability are maintained.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

BANC agrees that external resource participation (intertie bidding) at the EDAM entity boundary should not be a day one feature for a variety of reasons, including potential risks to EDAM entity BAA reliability and free riding on the EDAM BAA transmission system.  These concerns are noted by the CAISO:

Stakeholders, particularly WEIM entities, support extending the WEIM framework for external resource participation to the EDAM out of concern that allowing non-contracted, non-source-specific resources to submit economic bids at their interties in the day-ahead timeframe might adversely affect reliability by displacing internal generation incapable of commitment in real-time horizon if the external supply ultimately is not delivered.  In tight system conditions this would create operational uncertainty, which these stakeholders believe outweighs any benefit of increasing the potential pool of economic supply.  Furthermore, we are concerned about potential free riding on the EDAM entity’s transmission system.  This could occur if economic bids from non-source specific, non-contracted, supply at their interties flowed without first acquiring transmission rights under the EDAM entity OATT.  Id. at 68. 

BANC supports the concept of revisiting this issue after some reasonable period of operational experience and after a careful assessment of the potential issues and proposed solutions to address these reliability and free rider concerns.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

BANC supports the extension of the WEIM approach to GHG, noting the CAISO’s expressed intent to continue to evolve the approach in accordance with regulatory changes — e.g., the LADWP hybrid approach.  In summary, BANC views the CAISO approach as a rational starting point to avoid delay in EDAM start-up.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

BANC has no additional comments at this time.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

BANC has no additional comments at this time.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

BANC has no additional comments at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

BANC has no additional comments at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

BANC has no additional comments at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

BANC generally agrees with the allocation structure of transfer revenues between the EDAM entities – e.g., 50/50 on a shared path.  However, this issue continues to challenge many of the WEIM entities considering EDAM.  These concerns are simply rooted in a lack of clarity around the dichotomy between ETSR constraints resulting in price separation reflected in marginal energy costs and ITC constraints reflected price separation in marginal congestion costs and how this impacts revenue allocations between BAAs.  While CAISO has made attempts to further explain the “why” around this, significant confusion exists nonetheless. We urge the CAISO to clear a path for a simple and elementary discussion and explanation.  Whether we agree with the policy or not, we need to be able to fully understand and articulate the “why” around this dichotomy.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

BANC has no comments at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

BANC has no comments on the fee structure and understands that the GMC, which will be a significant element of the cost structure, will require a better understanding of which WEIM entities are opting to join the EDAM.  That noted, having all of the estimated fees as soon as practicable will be essential in completing any cost-benefit assessment for EDAM participation. 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

BANC agrees with the decisional classification of joint authority.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

BANC has no comments at this time.

Bonneville Power Administration
Submitted 09/26/2022, 04:31 pm

Contact

Andy Meyers (apmeyers@bpa.gov)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Bonneville would like to thank the CAISO for their continued collaboration and dialogue with stakeholders as the EDAM market design continues to evolve.
Bonneville is largely supportive of the market design and framework that CAISO shared in its EDAM revised straw proposal. Bonneville continues to have concerns as the EDAM market design develops. Regarding transmission commitment and transmission revenue recovery, our comments today are similar to those filed during the first evaluation of EDAM straw proposal in June of 2022 and we suggest continuing conversations on this topic. Bonneville supports the CAISO’s proposed equal treatment for load and EDAM exports recognizing that it provides faith in the reliability of EDAM transfers. Bonneville generally supports the proposal’s framework for Resource Sufficiency. We appreciate that the design provides market entities with advisory and on demand evaluation. We support the CAISO’s choice to include WSPP schedule C transactions in EDAM RSE evaluation but we encourage the CAISO to consider all alternatives around circumstances where source specificity and transmission remain unavailable by 10:00 AM. We encourage CAISO to consider our comments surrounding market power mitigation and we support the transitional approach to the adoption of convergence bidding. We seek some clarification on external resource participation and we generally support a zonal greenhouse gas accounting framework rather than the proposed resource specific framework.
As Bonneville continues to evaluate all day-ahead market opportunities, we believe that there is an increased likelihood that multiple day-ahead market initiatives will be successfully implemented in WECC. Bonneville is uniquely situated in WECC in that we have preference loads in eight adjacent BAAs. As such, our evolving belief is that some Bonneville loads may be outside any organized market, some Bonneville loads may be inside an organized market in which Bonneville is not a participant but where it has loads, and some Bonneville loads may be in an organized market if Bonneville makes a decision to participate. A potential outcome as just described highlights the fact that Bonneville will need to be informed of all market rules and structures in order to ensure we appropriately serve our loads throughout the Northwest. Bonneville believes that “seams” between markets will be an increasingly important topic as all day-ahead market initiatives continue to advance and mature. Seams issues may include differences in transmission operating rules, power market design, scheduling practices, settlement practices, resource adequacy programs (e.g. the Western Resource Adequacy Program), etc. Bonneville suggests that the CAISO and other market initiatives be open to discussions to identify and address “seams” issues as soon as practical.
Bonneville recognizes that the EDAM initiative is not solely rooted in just the market design but is also affected by several parallel stakeholder initiatives. Bonneville intends to continue to participate in the stakeholder conversations of governance, resource sufficiency evaluation, price formation, and Day Ahead Markets Enhancements in parallel with our continued engagement in EDAM.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Bonneville largely supports the voluntary participation methods surrounding market entry and exit outlined in the proposal, as well as the transitional measures which would allow new EDAM entities to enter the market with a reduced risk of experiencing or creating adverse market impacts.


Bonneville appreciates that the CAISO clarified that all resources located in an EDAM BAA would be participating resources and that such resources would receive settlement statements from the CAISO. While it was not clearly stated in the proposal, this does imply that each resource would have a contractual relationship with the CAISO. Bonneville requests that CAISO clarify whether independent generators will have a direct relationship with CAISO for settlement purposes.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

We understand that developing a market framework in which market participants have confidence in EDAM transfers is important to successfully establishing a day-ahead market. As such, the CAISO proposes to apply equal priority to EDAM exports and loads and to relax the power balance constraint for a BAA experiencing a shortfall. Bonneville supports the proposal as it helps to provide a framework and design where market participants can have much needed faith and reliability in EDAM transfers. The CAISO notes five design elements (Resource Sufficiency, Market Optimization through IFM & RUC, Robust Transmission availability, Imbalance Reserves, and Market Parameters preventing propagation of shortfall) which have significant importance in affecting the confidence in EDAM transfers. Bonneville agrees with CAISO of the importance of each of these elements in relation to the overall market design. Establishing confidence in market transfers begins with ensuring each EDAM BAA is successfully prepared to serve load and meet uncertainty in their respective BAA. Bonneville would like to specifically comment on the design element of Market parameters preventing propagation of shortfalls. Bonneville supports the CAISO's proposed approach of limiting relaxation of the power balance constraint to only the BAA experiencing a shortfall. It is important to Bonneville that the market design restricts and isolates shortfalls to the BAA experiencing them. Relaxing the power balance constraint across the footprint would result in unacceptable higher costs outside of the BAA experiencing the shortfall.
Bonneville does seek clarification from CAISO on reliability actions on etags. It is Bonneville’s assumption that each respective BAA will be responsible for taking all the reliability action on in and out of market etags but we would like CAISO to confirm that position.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Bonneville supports the CAISO's proposal of equal priority for loads and transfers. In edge case circumstances the role of reliability continues to rest with each individual BAA who should utilize their operational tools to manage the shortfall and maintain grid reliability. If loads and exports were not afforded equal priority, and a BAA elected to curtail EDAM exports, it could potentially cause a cascading shortfall to other market participants.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

In the revised proposal CAISO suggests applying a lower priority to exports for any BAA that fails to meet the RS evaluation. This approach seems logical and we support the idea of a source BAA being in control of whether or not to afford the lower priority transfer equal priority as load. This design will allow the BAAs to coordinate and communicate through the stressed conditions. Applying this approach where transfers to RSE-failing BAA's risk earlier curtailment should incent BAA's to come to the market sufficient or seek out-of- market transactions to backstop lower priority transactions during stressed conditions.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Bonneville continues to have concerns that we shared in June 2022.
Bucket 1 transmission is meant to be firm or conditional firm transmission that is needed to support resource sufficiency plans, and therefore must be made available to the market in order to ensure a reliable day-ahead commitment and support confidence in market transfers.1 The EDAM straw proposal later proposes that WSPP Schedule C and ISO RA Import contracts, along with economic bids at the CAISO interties, should count towards meeting the EDAM Resource Sufficiency Evaluation despite the fact that the source (both resource and source BAA) and transmission are unknown at the time of the day-ahead market optimization.2 The allowance of any firm energy contracts which do not have identifiable firm or conditional firm transmission at the time of the day-ahead market optimization is contradictory to the foundational reasons for providing bucket 1 transmission. Additionally, allowing these types of contracts to count towards bucket 1 transmission will likely undermine confidence in the firmness of bucket 1 transmission, and could lead to unintended consequences with the usage of bucket 2 transmission, particularly if the CAISO decides to pursue a market design which automatically assumes unscheduled bucket 2 transmission may be used for day-ahead market optimization. Specifically, by these WSPP Schedule C and ISO RA Import contracts not having their own transmission identified, the unscheduled bucket 2 transmission would presumably be utilized to support transfers of those contracts in the market optimization, thus enabling transmission in support of those contracts to go unsourced, and for the contract-holders to lean on the participants who have previously purchased those bucket 2 transmission rights for their own intended uses. Given this, Bonneville prefers to support the allowance of WSPP Schedule C and ISO RA Import contracts to count towards meeting resource sufficiency if and when the source and transmission is known at the time of the EDAM optimization. Acknowledging this is not always the case, Bonneville suggests the CAISO work with stakeholders to determine a reasonable solution on how to include these contracts while mitigating the concerns outlined above. Our response to this issue is elaborated on in comment #12.

Bonneville also has concerns about the EDAM presuming the availability of unscheduled transmission rights for bucket 2 transmission that a transmission rights holder does not electively donate to the market for use. Section 1235 of the Energy Policy Act of 20053 prohibits the Federal Energy Regulatory Commission from forcing any electric utility or person in the Pacific Northwest to convert firm transmission rights to financial rights for Transmission contracts that were in place as of 2005. Bonneville requests that CAISO and stakeholders further analyze the implications of this provision and develop an understanding on the implications for entities in the Pacific Northwest who may wish to participate in a day-ahead market.
In addition to these concerns, the proposal for bucket 3 transmission donation suggests that all ATC at the time of the day-ahead market run would be made available to EDAM for optimization. This construct essentially diminishes the need for transmission customers to continue to purchase PTP transmission beyond their bucket 1 needs, given that the additional transmission would be made available by the TSP to the market for use. This results in shifting transmission cost recovery onto load or creates a higher uplift charge for the market, creates uncertainty in the transmission rate recovery process for TSPs, and undermines the value of the transmission bucket construct

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

As Bonneville stated in their response to comments in June 2022 and in response #6, Bonneville has concerns about the EDAM presuming the availability of unscheduled transmission rights for bucket 2 transmission that a transmission rights holder does not electively donate to the market for use. While the proposal notes a caveat that transmission rights holders would still be able to utilize their unscheduled rights out of market between day-ahead and real-time, this would result in market re-optimization and likely increase congestion costs. This construct inherently conflicts with OATT rights by forcing firm transmission rights holders to pay additional congestion costs in order to use those rights. For the proposal to assume that buckets 1 and 2 transmission are available for market optimization, it seemingly requires the consent of OATT transmission customers within a participating BAA. Given the improbability of all transmission customers in the Pacific Northwest and throughout an EDAM footprint agreeing to make their transmission available to the market in exchange for the potential of receiving congestion revenues, Bonneville strongly suggests the CAISO work with entities whose firm transmission rights are protected by the Energy Policy Act of 2005 to develop an option for meaningful non-participation.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

The straw proposal appears to offer a similar framework for the how CAISO makes transmission available to the EDAM market when compared to the framework by which transmission contract holders in an EDAM BAA and the EDAM BAA make transmission available to the EDAM. The primary difference appears to be in bucket 2 transmission. CAISO proposes that legacy transmission rights holders will not have unscheduled transmission donated to the market due to their ability to use this legacy transmission up and in to Real Time.
Bonneville understands that CAISO has established specific rights associated with legacy transmission. It may be useful to Bonneville and other stakeholders if the CAISO quantified the aggregate amount of legacy transmission.
If CAISO is capable of designing a process by which some unscheduled transmission is not made available to the market they may want to consider whether similar functionality should be offered to stakeholders outside the ISO BAA. Bonneville realizes that CAISO is concerned about withholding transmission from the market and the impacts that this behavior could have on the market results. This concern should be balanced against stakeholders needs to set aside unscheduled transmission from market utilization. Further discussion with stakeholders on this topic may be warranted before finalizing the market design.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

Bonneville shared our concerns in the June 2022 comments and continues to be concerned that transmission used by the market must be compensated at a rate which adequately covers the costs of actual or forecast transmission. Bonneville’s governing statutes require Bonneville to set rates to recover its costs in a formal administrative hearing and to equitably allocate the cost of the Federal transmission system between Federal and non-Federal power utilizing such system, and requires Commission approval of the cost recovery component of its rates. Therefore, Bonneville emphasizes that bucket 3 transmission rates should also be developed based on cost-causation.
Bonneville appreciates the consideration in the updated straw proposal of a true up, however, Bonneville has concerns with the updated version on what is being considered in the transmission revenue requirement. As part of the OATT construct, sales to the transmission provider’s marketing arm are recoverable costs and therefore should be considered in the calculation of the transmission revenue requirement.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Bonneville encourages CAISO to model transmission and transfers that reflects actual system operations. CAISO’s proposal for transmission availability and transfer revenue does not adequately reflect how potential EDAM entities operate in the Pacific Northwest. This disconnect creates a significant burden for transmission providers and balancing authorities while creating the potential for seams and inaccurate price signals.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Planning and balancing supply and load starts before the day-ahead timeframe. Entities need transparent Resource Adequacy requirements with a clearly defined planning reserve margin requirements before the day-ahead timeframe. These requirements aid in transitioning into the day-ahead timeframe and lay the groundwork for meeting Resource Sufficiency Evaluation.
Bonneville agrees with the proposal for a 6am and 9am advisory run to be provided by the CAISO for each EDAM participant. Given forecasts are locked on the day before trading, Bonneville suggests that it may be beneficial for the first advisory run provided by the CAISO to run at 5am rather than 6am. This earlier time would be in alignment with the bilateral market trading which begins around 5am. Additionally, we support the CAISO initiative to make available on-demand RSE testing software for use by participants.
Bonneville acknowledges the difficulty and complexity associated with ensuring resource delivery for RSE; however, we encourage CAISO to take any reasonable design action that would confirm the likelihood of deliverability, short of creating a proxy DAM run. This may include a demonstration of transmission rights prior to the binding RSE run. The proposed approach of monitoring whether capacity is undeliverable could result in a useful measurement, but may not provide market participants with adequate assurances if it does not include demonstration of transmission..

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Bonneville agrees and supports the fact that WSPP Schedule-C contracts are reliable and dependable tools for bilateral energy trading.
CAISO proposes that non-source-specific contracts be tagged three hours after DAM close, and Bonneville recognizes the challenges in tagging prior to the market run. However, in absence of a more thorough forward showing of a load service plan, a more comprehensive and proactive approach to ensuring deliverability should also consider some sort of transmission identification before the market run. This can be as basic as demonstrating a long or short-term transmission reservation. The proposal leans too heavily on reactive measures and Bonneville suggests that the addition of proactive measures may better accomplish shared objectives. DMM monitoring and reporting is essential, but it should not be relied on solely to enforce tagging requirements where proactive measures could supplement the proposal and provide better information for the market run.
Bonneville supports the proposed requirement that the source BAA be specified prior to the IFM process and that transmission should be demonstrated at the transfer point from non-EDAM BAAs. Allowing e-tags to be submitted (or capacity schedules replaced) prior to the STUC, without penalty, seems to ignore the RSE requirement. Bonneville believes an RSE failure should be incurred if a valid e-tag is not submitted prior to 3 hours after the day ahead market results are released.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Bonneville believes the conditions under which EDAM RSE import bids from non-EDAM BAAs count towards RSE must be equivalent for both the CAISO BAA and a participant EDAM BAA. Load in a BA might be served by external resources. All load should have the ability to supply their RS requirement on an equal basis regardless of the location of their resource. All resources that meet the equivalent technical and commercial requirements should count towards passing the RS test regardless of whether they are in an EDAM BAA or a non-EDAM BAA.
14.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Bonneville reiterates concerns from prior comments that “emergency” demand response should not be included for RSE. Bonneville does not believe it appropriate to include “emergency” demand response in RSE as it appears to be a product and tool for operators to utilize in emergency grid conditions, rather than a tool and product for use in the base scheduling time horizons to adequately prepare for participating in the EIM. Bonneville questions whether the inclusion of “emergency” demand response allows entities to lean on the market for supply at lower cost. We do not believe the demand forecast adjustment is a sufficient deterrent to prevent this behavior. Bonneville continues to support inclusion of non-emergency demand response for RSE.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Bonneville has no comments at this time.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

Bonneville has concerns with the proposal to charge an administrative surcharge and instead believes that an entity should be required to demonstrate resource sufficiency in order to participate. The proposal of a surcharge does not address Bonneville’s concern regarding insufficient resources and leaning on others.
Further, basing the administrative surcharge on a bilateral 16-hour block may not adequately capture hourly price volatility within that 16-hour period. If this approach is adopted, CAISO should consider hourly shaping factors that more accurately estimate the value of energy during peak hours. It appears the proposed approach disproportionately penalizes those who fail few hours versus those who fail many hours. The failing EDAM BAA should not be indifferent between the bilateral market or the EDAM, should it fail in all peak hours. The surcharge should be reasonably higher than the bilateral price, demonstrating that the full cost of utilizing the unscheduled EDAM capacity is more costly than the bilateral market.
Allocating revenues to EDAM exporters appears on the surface to appropriately reward BAAs, but we question whether development of a counterfactual would be a better way to compensate BAAs that take action to cure deficiencies. The mere ability to cure deficiency is inferior to actions that resolve deficiency. For example, every entity that demonstrates surplus could share in a portion (ratio TBD) of the penalty funds collected.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

Bonneville supports the development of a bid range trading platform. Allowing trading activity the opportunity to cure deficiencies that may otherwise result in out-of-market actions appears to have no downside, especially since administrative actions remain an option should deficiencies persist.
Bonneville does not believe CAISO should administer this new market platform, but rather leverage existing trade platforms or encourage an independent 3rd party provider to fulfil this need to ensure market neutrality.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Bonneville supports utilization of a pooled WEIM RSE as it is expected to more accurately reflect the capabilities of various electrically similar regions. We encourage CAISO to target failure consequences specifically to offending entities within each pool. We appreciate any assurances CAISO can provide that failure consequences will be attributed to appropriate entities.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Bonneville supports the ability of all market participants to deploy surplus capability based on their risk preferences. The mechanism to introduce any surplus into the market should be primarily incentive-driven. Should some participants desire additional mechanisms to assist in managing their surplus energy, such mechanisms should be available to all EDAM participants. Bonneville strongly urges the CAISO to monitor the development of such mechanisms for unintended consequences.
Bonneville has no preference between the two proposed excess supply management mechanisms or the possibility to implement both mechanisms.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Bonneville has no additional comments.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

Bonneville does not have any specific comments on the IFM and RUC design discussed in the EDAM straw proposal. We acknowledge that CAISO intends not to co-optimize IFM and RUC.
We recognize that IFM and RUC continue to be central components to CAISO’s DAME initiative. We understand that CAISO will be publishing a fourth version of the DAME straw proposal in early October. Bonneville intends to submit comments in response to the upcoming revised proposal. We encourage CAISO to reference Bonneville’s prior comments on the DAME initiative

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Bonneville is indifferent regarding which initiative houses market power mitigation enhancement discussions. We do, however, feel strongly regarding the outcome and general philosophy demonstrated by CAISO during these discussions. CAISO’s approach of mitigating bids based on the mere potential of market power serves as a disincentive for supply to participate in multiple energy-related products.
Bonneville reiterates our concern that over-mitigation endangers our ability to reliably meet load obligations without over-reliance on market purchases. We request, again, the ability for entities to have their bids removed from the market run rather than be mitigated resulting in sub-optimal system dispatch

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Bonneville supports CAISO’s cautious approach toward implementing convergence bidding in EDAM. We recognize the important role convergence bidding plays in organized energy markets, and we believe the transition period is appropriate to ensure that market participants understand its nuances.
We support the CAISO’s interest in closely monitoring the effects of implementation across the EDAM footprint, especially that relationship between the ISO BAA (with convergence bidding) and those EDAM BAAs without convergence bidding. Bonneville requests an explanation of why convergence bidding is not allowed at intertie locations between EDAM BAAs, and between EDAM and non-EDAM BAAs.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Bonneville continues to advocate for external resource participation from known resources that have a contractual relationship with the EDAM BAA. The revised proposal states that the WEIM external resources policy will be carried forward into EDAM and rehashes the concern about reliability from unknown resources. The table on page 68 indicates that known external resources will be able to self-schedule into an EDAM BAA, which appears to be different than what is described in the text above the table. The proposal further contradicts itself in the first paragraph on page 69, stating:
Similarly, source specific supply that is otherwise not pseudo-tied or dynamically scheduled, but is owned or under contract to serve load within the EDAM BAA, can be self-scheduled or economically bid at EDAM external interties because these resources have a contractual relationship with the EDAM entity or another LSE within the EDAM BAA. (emphasis added)
This explanation is distinctly different from carrying the WEIM external resource policy forward into EDAM. Bonneville requests clarification from the CAISO regarding these contradictions within the proposal. Bonneville supports the interpretation in the quote above and strongly believes that known resources with a contractual relationship with the EDAM or an LSE located inside the EDAM BAA should be able to self-schedule and economically bid resources that are imported into the EDAM BAA. If this interpretation is not correct, CAISO should pursue effective means of external resource participation. Bonneville has a statutory obligation to serve public utility districts, cooperatives, and municipalities in the Pacific Northwest and many of these customers are located in BAAs that will potentially be in the EDAM. Bonneville holds long-term transmission contracts with almost all of the potential EDAM participants in the Northwest and schedules power to its load-following customers continuously. These transactions are currently a significant part of the potential EDAM everyday business and thus do not present any reliability concerns if they are allowed to self-schedule and economically bid in the EDAM. In addition, with long-term transmission contracts in place, there would be no shortfall of transmission revenue or free ridership associated with allowing these known resources to self-schedule or economically bid in the EDAM.
In addition to having the load service obligation in these potential EDAM participants BAAs, most of the potential EDAM participants are Bonneville’s trading partners in the bilateral market. Prohibiting known resources with transmission contracts from self-scheduling and economically bidding into the EDAM BAAs could squelch this trading activity and may have a detrimental impact on the amount of supply available to the EDAM participants. Similar to the start of the WEIM, some BAAs will take longer to join EDAM than others, and some may join another day-ahead market altogether. Bonneville believes that allowing known external resources with contractual relationships with the EDAM participant or LSEs within the EDAM participant BAA to self-schedule and economically bid into the EDAM is absolutely necessary and must be a day one feature of the EDAM.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

While Bonneville believes that the zonal approach has advantages that make it a more durable, long-term solution, Bonneville understands that the CAISO is proposing to adopt the resource-specific approach at the outset of EDAM. Bonneville believes some of the positive aspects of the zonal approach can be utilized in the resource-specific approach to improve accounting of GHG emissions attributed to states with GHG programs like California and Washington. Bonneville urges the CAISO to not wait until state air regulators update their rules to further explore adoption of some of these aspects of the zonal approach.
GHG accounting in market design needs to be addressed in a joint/parallel process with state air regulators, where updates to state programs are made in conjunction with market design, both recognizing the limitations of each other. The CAISO is in a position to facilitate this process with the California Air Resource Board (CARB) and Washington Department of Ecology (Ecology). Bonneville is concerned that if the CAISO waits for CARB and Ecology to update their rules to enable a zonal approach, that update may not happen and could lack the benefit of coordination with regulators.
Specifically, Bonneville encourages the CAISO to work with CARB to ensure the measures to mitigate the potential for secondary dispatch under the resource specific approach meet CARB’s criteria for sufficiently minimizing leakage. Absent this, Bonneville is concerned that CARB may apply the same outstanding emissions calculation as used in the EIM to the EDAM as well. If state air regulators treat EDAM imports into their state as unspecified that is likely to be a major deterrent to EDAM participation for entities with load in a state with a GHG pricing program.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

Bonneville generally supports this approach as a sensible solution for establishing a baseline. However, Bonneville believes additional constraints should be included to limit the deeming of resources to their incremental dispatch. Bonneville believes it is inappropriate to deem a zero carbon resource to a state with a GHG program when those resources are meeting a BAA’s native load. Thus, the amounts deemed to meet load in a state with a GHG program should be limited to the amount that is surplus of what is needed to meet a BAA’s native load.
In addition, there may be other appropriate considerations that would enable a resource to be deemed to a state with a GHG program, such as if the resource is contractually committed to load in that state. Bonneville supports further exploration of how to incorporate these limitations into the market design or through out-of-market solutions coordinated with state air regulators.

Lastly, Bonneville requests the CAISO explain how the GHG Reference Pass and GHG counterfactual will work for BAAs like Bonneville where its footprint spans multiple states, including states with GHG programs such as Washington and states without GHG programs.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

Bonneville supports the CAISO making available data on the GHG Reference Pass and other relevant information to understand how the amount deemed to the GHG area was calculated. Bonneville also requests the CAISO make available data related to the calculation of the GHG boundary for a BAA that has some, but not all, of its area located in a GHG regulation area.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

While Bonneville supports continued development of the zonal approach as a long-term solution for GHG accounting in EDAM, Bonneville believes aspects of the zonal approach can already be used to improve GHG accounting for the resource-specific approach (see question 26 above). Bonneville urges the CAISO to not wait for CARB to make changes to the cap-and-trade program in order to explore how to incorporate aspects of the zonal approach into the market design or pursue a more holistic shift to the zonal approach. Rather, Bonneville urges the CAISO to facilitate a collaborative process with CARB (and Washington Department of Ecology) to consider how this can be done.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

Bonneville appreciates LADWP developing alternative solutions. Should the CAISO pursue LADWP’s proposal in the future, Bonneville would like to better understand if and how the method compensates clean generation that is deemed to meet load in a GHG area. Appropriate price signals and compensation for clean generation is important for incentivizing clean generation and achieving long-term reduction of GHG emissions.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

There are two other areas that Bonneville requests the CAISO spend more time developing:
1) Geographical boundaries (i.e., how to identify imports to a state with a GHG program for BAAs with a footprint in multiple states that includes a GHG zone).This issue exists regardless of GHG accounting approach and for both the EIM and EDAM. Bonneville submitted comments to the CAISO on September 6, 2022 regarding the CAISO’s initiative for WEIM upgrades for Washington’s cap-and-invest program. Bonneville refers the CAISO to those comments and does not repeat them here. Bonneville requests the CAISO work directly with impacted BAAs such as Bonneville to determine an appropriate method for identifying Washington load in Bonneville’s BAA.
2) Attribution methodology for identifying what resources are deemed to what GHG area. Bonneville repeats its previous request for the CAISO to explain and provide examples of how the market will determine which resources are deemed as delivered to each GHG area (e.g. California and Washington). While Bonneville understands this will generally be done on a least-cost basis, the CAISO needs to better explain how this will work in practice.
Finally, Bonneville does not currently have a position on enhancements the CAISO indicates it may be able to make in the future, such as the ideas discussed on page 81 of the CAISO’s Revised Straw Proposal regarding tracking of emission intensity and/or data sharing of GHG attributions with WREGIS. Bonneville requests that if the CAISO pursues such further enhancements, it would be done through a separate stakeholder process at that time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Bonneville continues to support transfer and congestion revenues allocation methodologies which result in distributing revenues to the entity making transmission available to the market. Our previous comments submitted in June 2022 supported compensation to the entity that makes transmission available to the market and is used by the market. Further, we suggest that the CAISO consider implementing a simple consistent uniform process for allocation and sub-allocation of transfer and congestion revenues based on load cost ratio.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

Bonneville appreciates that the CAISO identified the numerous settlement categories and described the intended calculation of each category identified in the straw proposal. It is clear that settlement will continue to remain a complex and complicated feature of the market. Bonneville does not have any explicit feedback at this time. We did observe the importance of the DAME stakeholder initiative’s impact to a number of settlements categories. We feel that stakeholders can gain better clarity and understanding of the impacts between the DAME and EDAM proposals if the CAISO were to describe, cite, or link to settlement materials being developed for DAME in the EDAM proposal.
Additionally, stakeholders could improve upon their understanding of settlements in EDAM (and changes in EIM settlements), if CAISO were to develop detailed settlement examples for each category discussed in the straw proposal. Further, Bonneville suggests that time at a future stakeholder workshop be devoted to review and discuss the settlement categories and examples.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Bonneville appreciates the CAISO’s specificity of expected EDAM onboarding costs to be approximately $1,200,000 per entity. This figure appears reasonable and in line with cost experienced by entities when joining the EIM market. Bonneville requests that the CAISO commit to providing an updated estimate of the start-up costs at the time of signing the Implementation Agreement based on the known complexity of the joining entity. We accept the proposed requirement of an initial deposit followed by incremental deposits. We appreciate the CAISO’s clarification that once a party transitions to EDAM they will only pay the EDAM administrative fee and will no longer pay the EIM administrative fee. We would appreciate it if CAISO could clarify if market participants who remain in EIM and do not join EDAM would see an increased administrative fee as EDAM entities would stop paying the EIM administrative fee and only pay the EDAM administrative fee.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Bonneville appreciates the CAISO’s recognition that the EDAM initiative, and its accompanying adjustments to the EIM, affects a broad set of stakeholders. Bonneville believes that it is important to consider a decision paradigm which affords both the CAISO Board of Governors and the EIM Governing body joint decisional authority. Bonneville supports the May 11th proposal and thanks the CAISO for enhancing the EDAM decision framework

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Development of a day-ahead market is a significant undertaking and Bonneville appreciates the CAISO’s consideration of all stakeholder responses as the next iteration of the market design is developed. As we discussed in our response to question 1, “seams” are likely to become an increasingly important issue as market development continues. We believe that CAISO should strive for thorough coordination with neighboring systems and developing markets. Bonneville would like to point to the Coordinated Transmission Agreement (CTA) as an example of the type of coordination that should occur with neighboring systems.
If there are any aspects of our response that you would like to discuss please don’t hesitate to reach out to us. We look forward to reviewing and responding to the next iteration of the EDAM market design.

California Air Resources Board
Submitted 09/12/2022, 09:09 am

Contact

RYAN W SCHAULAND (ryan.schauland@arb.ca.gov)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

See response in question 25, greenhouse gas accounting, and letter attached.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See response in question 25, greenhouse gas accounting, and letter attached.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See response in question 25, greenhouse gas accounting, and letter attached.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See response in question 25, greenhouse gas accounting, and letter attached.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See response in question 25, greenhouse gas accounting, and letter attached.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See response in question 25, greenhouse gas accounting, and letter attached.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See response in question 25, greenhouse gas accounting, and letter attached.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See response in question 25, greenhouse gas accounting, and letter attached.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See response in question 25, greenhouse gas accounting, and letter attached.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See response in question 25, greenhouse gas accounting, and letter attached.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See response in question 25, greenhouse gas accounting, and letter attached.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See response in question 25, greenhouse gas accounting, and letter attached.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See response in question 25, greenhouse gas accounting, and letter attached.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See response in question 25, greenhouse gas accounting, and letter attached.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See response in question 25, greenhouse gas accounting, and letter attached.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

Dear Mr. Mainzer:

The California Air Resources Board (CARB) appreciates the opportunity to submit comments on the Revised Extended Day-Ahead Market (EDAM) Straw Proposal released by the California Independent System Operator (CAISO) on August 16, 2022. As indicated in our letter on June 14, 2022, a clean, reliable, and affordable electricity grid is critical to the state’s transition away from fossil fuel combustion across the economy, and CARB supports CAISO’s efforts to develop an accounting framework for greenhouse gas (GHG) emissions in EDAM that meets CARB’s legal and regulatory requirements. In effort to continue our ongoing coordination, we have several comments on the GHG accounting proposals in the Revised EDAM Straw Proposal (Revised Proposal).

CARB’s understanding is that the EDAM GHG design is not seeking to reshape GHG accounting or GHG reduction policy objectives at the state or federal level, nor are they seeking to change state or federal laws. Rather, we understand this effort aims to ensure accurate accounting of GHG emission costs incurred by sellers of power, to reflect those costs in the least-cost dispatch, and to facilitate CARB’s and other states’ required GHG reporting. The Revised Proposal indicates that CAISO intends to adopt the Resource-Specific Approach at the outset of EDAM. Given this, CARB intends to focus solely on the Resource-Specific Approach going forward.

CARB is assessing the Resource-Specific Approach in the context of legal constraints and regulatory requirements. Under Assembly Bill (AB 32), CARB must account for all GHG emissions from the generation of electricity delivered to and consumed in California, whether that electricity is generated in-state or imported. The Regulation for Mandatory Reporting of GHG Emissions (MRR) establishes requirements for the accurate reporting GHG emissions and for third-party verification of reported data. Broadly, CARB is evaluating (1) whether the proposal meets AB 32 requirements and MRR reporting and accuracy requirements, (2) the robustness of the GHG reference run and export constraints, and (3) whether GHG attribution (deeming) would be a sufficient basis for specified source reporting under MRR. CARB must assess these issues considering California’s emission reduction goals, the large amount of MWh expected to be transacted in EDAM, the need to implement consistent reporting requirements for all specified sources of imported electricity, and requirements under AB 32 to minimize emissions leakage.

CARB appreciates that the Revised Proposal contains additional information on how the Resource-Specific Approach may reduce leakage. However, as described in the Revised Proposal, the information available today on how leakage may be minimized is limited; CAISO is only able to provide an approximate indication of the possible impacts of the proposed constraints. Given these limitations, and the large amount of MWh that is expected to be transacted in the EDAM, CARB must ensure that it has appropriate tools to calculate and address the remaining emissions leakage that is not addressed by the EDAM algorithm itself. CARB’s understanding is that all EDAM transactions will be settled in the WEIM. As is our normal practice, CARB continues to monitor and evaluate the effectiveness of the existing mechanisms in the Cap-and-Trade Program related to addressing leakage in the context of the WEIM. Any changes to CARB’s regulations will occur in a future rulemaking, which will be noticed publicly.

CARB appreciates the additional information in the Revised Proposal regarding what data will be made available to reporters and CARB under the Resource-Specific Approach. CARB must ensure that the data available to entities that must report pursuant to MRR can serve as the basis for enforceable compliance obligations under the Cap-and-Trade Program. Specifically, MRR requires that reporting entities have access to accurate data used to calculate their total emissions for electricity imported from outside California. Data made available from CAISO to EDAM participants for the purposes of emissions reporting to CARB, including the MWh quantities imported via EDAM and the source of those MWh for specified source reporting, must be made available to reporters, must be auditable by verifiers to MRR standards, and must meet MRR standards of accuracy, transparency, and verifiability. CARB looks forward to working with CAISO to ensure that these standards continue to be met.

The Revised Proposal includes two other approaches to GHG accounting in the EDAM: a “Zonal Approach” and the “Los Angeles Department of Water and Power (LADWP) Approach.” CARB’s assessment is that, as with the Resource-Specific Approach, these two approaches will also require changes to CARB’s regulations. The full scope of the amendments required for the EDAM cannot be determined until there is a final proposal. However, both the Zonal Approach and the LADWP Approach appear to require changes to CARB’s point of regulation for electricity imports, the First Jurisdictional Deliverer (FJD). As such, the requirements and concerns raised in our June 14 letter related to possible deviations from the FJD framework continue to apply. In particular, the possibility of a load-based point of regulation that would shift responsibility for imports from the FJD to in-state load-serving entities raises concerns for CARB regarding (1) how the carbon price signal can be acted on by the proposed regulated entities, (2) compatibility with the source-based point of regulation for other sectors in the Cap-and-Trade Program, and (3) compatibility with Intergovernmental Panel on Climate Change GHG accounting methods. CARB is also concerned that a load-based point of regulation may result in inconsistent treatment of different types of imported electricity transactions as well as inconsistent treatment between electricity importers and in-state generators. This is because a load-based point of regulation necessitates placing the responsibility for reporting imported electricity and associated GHG emissions on an entity other than the importer of that electricity, which may not provide the same level of accuracy and verification as the reporting for other imports and in-state generators. The Zonal Approach and LADWP Approach also raise feasibility and implementation questions related to reporting and verification under MRR and compliance in the Cap-and-Trade Program. These may be significant hurdles. In addition, the potential impacts of these alternate proposals on emissions leakage and on the accuracy of California’s GHG emissions reporting are unclear. CARB appreciates the ideas raised in both alternate approaches and are evaluating the Resource-Specific Approach with these ideas in mind.

CARB is committed to continuing to work with CAISO and stakeholders on an EDAM design that meets our legal and regulatory requirements while ensuring the availability of clean, reliable, and affordable electricity.

Sincerely,

 

Rajinder Sahota, Deputy Executive Officer, Climate Change and Research

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See response in question 25, greenhouse gas accounting, and letter attached.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See response in question 25, greenhouse gas accounting, and letter attached.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See response in question 25, greenhouse gas accounting, and letter attached.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See response in question 25, greenhouse gas accounting, and letter attached.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See response in question 25, greenhouse gas accounting, and letter attached.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See response in question 25, greenhouse gas accounting, and letter attached.

California Community Choice Association
Submitted 10/04/2022, 03:27 pm

Contact

Shawn-Dai Linderman (shawndai@cal-cca.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

The California Community Choice Association (CalCCA) appreciates the extensive work by the California Independent System Operator Corporation (CAISO) and stakeholders on the Extended Day-Ahead Market (EDAM) Revised Straw Proposal and the opportunity to comment on the proposal. In summary:

  • CalCCA remains concerned about the impacts the imbalance reserve product proposed in the Day-Ahead Market Enhancements (DAME) initiative will have on the California resource adequacy (RA) program;
  • CalCCA supports a voluntary EDAM participation model in which all resources within the EDAM balancing authority area (BAA) participate in the market through economic bids or self-schedules;
  • CalCCA generally supports EDAM transfers receiving equal priority to load but asks for further consideration around the situation where an economic import into CAISO supports an EDAM transfer out of CAISO;
  • CalCCA does not oppose the proposal to give BAA operators the discretion to assign lower priority to EDAM transfers into a BAA that failed the day-ahead resource sufficiency evaluation (RSE) so long as it is reserved for emergency situations and so long as EDAM BAAs and/or their load serving entities (LSEs) have opportunities to cure the RSE deficiency first;
  • CalCCA generally supports the concept of transmission “buckets” as a way to frame the discussion around the treatment of different types of transmission;
  • CalCCA supports the CAISO’s proposal to automatically make bucket 2 transmission not scheduled by 10:00 a.m. available to the EDAM for optimization through the market;
  • The CAISO should not make costs associated with new transmission build eligible for transmission revenue recovery;
  • CalCCA supports the RSE framework that would conduct the binding EDAM RSE at 10:00 a.m. prior to running the day-ahead market with the ability to conduct advisory runs prior to the binding run;
  • CalCCA supports the proposal to not include transmission constraints within the EDAM RSE and monitor the results of the EDAM RSE at the onset of EDAM; 
  • CalCCA supports the ability to count WSPP Schedule-C contracts and import bids at the CAISO BAA border in the RSE;
  • The curing process to resolve an RSE shortfall in the CAISO BAA requires further development given the BAA is not the LSE and multiple LSEs are contributing towards meeting the resource sufficiency evaluation;
  • CalCCA supports including BAAs that pass the day-ahead RSE or cure a day-ahead RSE insufficiency by the short-term unit commitment (STUC) horizon in the pooled Western Energy Imbalance Market (WEIM) RSE;
  • Of the two mechanisms proposed to manage supply in excess of the RSE, CalCCA prefers mechanism two (the net EDAM transfer export limit constraint);
  • CalCCA supports the development of system market power mitigation for the CAISO BAA; and

CalCCA supports the resource-specific approach for green-house gas (GHG) accounting in EDAM. Any future modifications to the resource-specific approach for EDAM, or any deviations from the resource-specific approach, will require California Air Resources Board (CARB) acceptance.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

CalCCA supports a voluntary EDAM participation model, in which EDAM entities may voluntarily enter and exit EDAM with a six-month notice period and no exit fees. CalCCA also supports the clarification in the proposal that all resources within the EDAM BAA will participate in the market through economic bids or self-scheduling, rather than through base scheduling, given the cost-shifting that would occur should base scheduling extend to EDAM.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

CalCCA generally supports the CAISO’s proposal to give EDAM transfers equal priority to load. To encourage robust EDAM participation, all EDAM BAAs must have confidence that EDAM transfers can be relied upon, even under stressed system conditions. However, CalCCA requests additional clarity around how the EDAM initiative and the Transmission Services and Market Scheduling Priorities initiative will interact and how the market would treat EDAM transfers out of the CAISO BAA if that EDAM transfer is supported by an economic import into the CAISO. Cutting the import and not the EDAM transfer could have adverse impacts on California reliability that must be considered.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

CalCCA has no additional comments on this topic.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

The CAISO proposes source EDAM BAAs have operational discretion to assign lower priority to market transfers sinking into an EDAM BAA that has failed the day-ahead RSE if there is an infeasibility and the source EDAM BAA has already exercised its other operational tools. CalCCA does not oppose this proposal so long as it is reserved for emergency situations and so long as EDAM BAAs and/or their LSEs have opportunities to cure the RSE deficiency first. If the EDAM BAA or its LSEs cure the RSE deficiency, then it should not be subject to a lower priority.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

CalCCA generally supports the concept of transmission “buckets” as a way to frame the discussion around the treatment of different types of transmission and how they are treated with respect to compensation, who is making the transmission available, and cost recovery.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

CalCCA supports the CAISO’s proposal to automatically make bucket 2 transmission not scheduled by 10:00 a.m. available to the EDAM for optimization through the market. CalCCA shares parties’ concerns outlined in the paper around allowing the voluntary release of transmission. Allowing transmission rights holders to voluntarily make transmission available could diminish EDAM benefits by restricting the amount of transmission available to the market and could result in withholding of transmission in the event a small number of entities hold the rights to a majority of the transmission. Automatically releasing unscheduled transmission will ensure EDAM BAAs unlock the full economic benefits of day-ahead market participation.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

CalCCA has no additional comments at this time.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

CalCCA is concerned with the CAISO’s proposal to make costs associated with new transmission build eligible for transmission revenue recovery, particularly given the way the CAISO proposes to allocate the uplift charges used to cover the transmission revenue recovery payments. The CAISO proposes to allocate costs through uplifts assessed either to gross load across the footprint or to demand plus supply across the footprint. This methodology does not consider, however, the extent to which the EDAM BAAs paying for the transmission revenue recovery benefit from the new transmission build. As the BAA with the most load, CAISO’s LSEs are at the greatest risk of paying the majority of uplift charges for new transmission that it does not benefit from or benefits from less than other EDAM BAAs. Under a future EDAM, entities should factor in the impacts an EDAM will have on forecasted transmission revenues when making decisions around new transmission build. A transmission revenue recovery payment is not necessary under an EDAM construct.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

CalCCA has no additional comments at this time.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

CalCCA supports the proposal to conduct the binding EDAM RSE at 10:00 a.m. prior to running the day-ahead market with the ability to conduct advisory runs prior to the binding run. As described in section 16 below, a process is needed to determine how the CAISO BAA and/or its LSEs will resolve deficiencies identified in the advisory runs prior to the binding run or in the binding run.

CalCCA supports the proposal to not include transmission constraints within the EDAM RSE and monitor the results of the EDAM RSE at the onset of EDAM given the additional complexities modeling transmission elements would introduce to the RSE.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

CalCCA supports the ability to count WSPP Schedule-C contracts and import bids at the CAISO BAA border in the RSE. The CAISO’s proposal to require day-ahead e-tags three hours following the day-ahead market results with the opportunity to cure by the STUC horizon if there is no e-tag is reasonable. However, the CAISO should clarify that, if an import resource fails to tag by 3 hours following the day-ahead market or by the STUC horizon, the BAA will not fail the RSE if it has sufficient capacity from bids from other resources to pass the RSE

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See response in Section 12.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

CalCCA has no comments at this time.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

CalCCA has no comments at this time.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

It is important that EDAM BAAs and LSEs have ample opportunities to cure RSE insufficiencies, whether through the EDAM market or outside of the EDAM market. The ability to run advisory RSE runs before the binding run would allow BAAs and LSEs to identify and resolve potential RSE insufficiencies in advance of the need to use the EDAM market to cure. In the event RSE failure occurs, BAAs could cure through the EDAM market, cure outside of EDAM until the STUC run, or forego curing and, therefore, forego inclusion in the WEIM RSE pool.

The process of curing upon a shortfall in the CAISO BAA, however, requires further development given the BAA is not the LSE and multiple LSEs are contributing towards meeting the resource sufficiency evaluation. This clarity is relevant to the CAISO BAA because for the CAISO BAA, the is not also the LSE and multiple LSEs are doing advanced procurement to meet the RSE requirements.

The CAISO proposes to allocate costs of curing RSE insufficiencies through EDAM first to LSEs whose failure to meet RA obligations led to the RSE failure and then to all LSEs pro-rata. CalCCA supports allocating curing costs to LSEs that contribute to the RSE failure. This approach is consistent with cost causation principles in that LSEs that cause the costs to be incurred bear the responsibility of paying for those costs. Additional clarity is needed with respect to the opportunities to cure, however, so that LSEs can make decisions around how to resolve RSE insufficiencies in the event they will be identified as causing the failure.

The following questions need to be further considered regarding the curing process for the CAISO BAA:

  • What defines an RA failure causing an RSE insufficiency?
    • Different LRAs have different RA requirements
    • Would this assessment rely on monthly RA showings data or daily RA availability data (e.g., outages and substitutions)?
  • When would the LSE know that it is the cause of the RSE failure?
    • LSEs should be informed after the advisory runs that they need to cure before the binding run in order to pass the RSE
  • What options are available to the LSE that is causing the deficiency to cure in advance of curing through EDAM at the admin charge?
  • How would the CAISO BAA make the choice to cure (through EDAM at the admin charge) versus foregoing participation in the pooled WEIM RSE?
17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

CalCCA has no comments at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

CalCCA supports BAAs that pass the day-ahead RSE or cure a day-ahead RSE insufficiency by the STUC horizon being a part of the pooled WIEM RSE.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

CalCCA thanks the CAISO for including this topic in the revised straw proposal. It is critically important that resource adequacy resources can be retained to serve native load through real-time.

Of the two mechanisms, CalCCA prefers mechanism two (the net EDAM transfer export limit constraint). Mechanism one (reserving day-ahead supply in excess of RSE requirements) appears to be too blunt of an instrument that could result in a large portion of capacity not used for the RSE being held out of the market. Ideally, resource adequacy resources would not be held out of the market. Instead, they would be prioritized to serve native load, with the ability to be scheduled outside of the native BAA if there is excess. The net EDAM export constraint more closely reaches this objective. To enhance this proposal, the CAISO should allow for a constraint on the amount of firm EDAM export transfers and allow any amount of non-firm EDAM exports. Additional discussion is needed from the CAISO BAA perspective to determine when to use the net export limit and where to set the limit, given the number of LSEs and LRAs in California.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

CalCCA has no additional comments at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

CalCCA remains concerned about the impacts the imbalance reserve product proposed in the DAME initiative will have on the California RA program. CalCCA’s concerns are twofold:

  1. Costs: Today’s RUC framework requires RA resources to bid zero dollars into RUC. This is because RA contracts already factor in the costs of RA resources being available to serve CAISO load through real-time. Allowing RA resources to bid and be paid above zero dollars for imbalance reserves will result in LSEs paying twice for the same capacity.
  2. Reliability: Removing the real-time must-offer obligation for California RA will potentially threaten California reliability by absolving RA resources of their obligations to serve California load if they do not receive a day-ahead award.

Given these concerns, CalCCA recommends the CAISO continue discussions with stakeholders within the DAME initiative and this initiative to address these concerns. Additionally, CalCCA reiterates its request and the requests of other stakeholders for the CAISO to provide more analysis that explains the perceived benefits of the imbalance reserves in terms of reliability and cost.[1]

 


[1]             CalCCA comments to the Day-Ahead Market Enhancements Third Revised Straw Proposal (May 19, 2022): https://stakeholdercenter.caiso.com/Comments/AllComments/372995fa-30ec-4166-9bbc-f92619b8014f#org-89f71fc4-56dc-4bf0-b7c5-7e74d31dc79e

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

CalCCA supports the development of system market power mitigation for the CAISO BAA. The CAISO has appropriately scoped the evaluation of market power mitigation enhancements within the Price Formation Enhancements initiative.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

CalCCA has no comment at this time.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

CalCCA has no comment at this time.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

CalCCA supports the resource-specific approach for GHG accounting in EDAM, as opposed to the zonal approach or LADWP approach. The resource-specific approach has worked for years in the WEIM, allowing the market to optimize resources based on GHG costs reflected in their bids. Importantly, the CARB has accepted the resource-specific approach. Any future modifications to the resource-specific approach for EDAM, or any deviations from the resource-specific approach, will similarly need CARB to accept them.

CalCCA is concerned, however, that the proposal to address “secondary dispatch” would limit the ability for external resources to sell to California. CalCCA encourages the CAISO to reconsider this proposal and identify ways such that secondary dispatch can be quantified and account for secondary dispatches appropriately within the applicable GHG regulations, rather than mitigating secondary dispatch by limiting transfers into a GHG area. Limiting transfers into a GHG region at the outset stops secondary dispatch emissions but could instead place the GHG region at a reliability risk if it cannot import resources into its area. This approach is too restrictive and should be reconsidered such that reliability and emissions are both addressed.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

CalCCA has no additional comments at this time.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

CalCCA has no additional comments at this time.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

CalCCA has no additional comments at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

CalCCA has no additional comments at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

CalCCA has no additional comments at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

CalCCA has no additional comments at this time.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

CalCCA has no additional comments at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

CalCCA has no additional comments at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

CalCCA supports extending the joint authority model proposed in the WEIM Governance Review Committee’s (GRC) EDAM Governance Straw Proposal to the EDAM initiative, as opposed to applying joint authority to the entire EDAM initiative. This approach would extend the joint authority model used for the WEIM currently and categorize proposed policy changes under an “apply to” test. CalCCA recommends the CAISO apply the joint authority model’s “apply to” test structure to each element of EDAM to ensure the appropriate classification is applied to each element.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

CalCCA has no additional comments at this time.

California Department of Water Resources
Submitted 09/26/2022, 02:20 pm

Contact

Rodrigo (rodrigo.avalos@water.ca.gov)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

CDWR overall supports the EDAM initiative. In general, CDWR expects that the EDAM will lower costs though better coordination and optimization of the day-ahead market. Along with lower costs the overall West will benefit from increased system reliability.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

CDWR agrees that the participation model should be voluntary with a 6-month entrance and exit period.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comment.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

CDWR supports that BAA native loads have equal priority to EDAM transfers (exports or wheel-throughs) under severe emergency conditions.  Under severe conditions, where there is a risk of load shed in a BAA, priority should not be given to export transfers (meaning that load is curtailed ahead of export transfers).   The burden of reducing load or curtailing exports under limited transmission capacity should be distributed evenly (load and exports curtailed in equal amounts).

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comment.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

No comment.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

No comment.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comment.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

No comment.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comment.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

CDWR understands that the framework and structure of the RSE described in this section is intended to apply to all EDAM BAAs, including the CAISO.  CDWR also understands that all resources will continue to be allowed to self-schedule in the day-ahead market and the EDAM design will continue to support California’s resource adequacy program.  CDWR asks the CAISO to clarify if self-scheduled hydro resources and pumping loads (specifically, participating loads providing resource adequacy and/or non-spin) will count towards the CAISO BAA passing the RSE.  If not, will there be any consequences to the individual scheduling coordinator?  Section II.B.2.c.(2) is not clear on this.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

No comment.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comment.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comment.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comment.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

CAISO proposes to allocate surcharge to RA deficient LSEs. In this case an RA deficient LSE would not have RA capacity available in the day ahead market timeframe. That LSE could have no deficiency in the monthly showing. With the existing provisions, a substitution by the resource can take place for the unavailable RA capacity. If substitution is provided by the LSE or the resource owner, then the LSE would not be RA deficient. Please clarify, in this scenario, the surcharge would not apply to the LSE. In addition, if substitution is not provided and if Resource Adequacy Availability Incentive Mechanism (RAAIM) is applied to the resource, will the LSE be subject to the surcharge? If so, it would be a double penalty, one for the resource and the other for the LSE. Double penalty for the same cause is not justified. If surcharge applies to other hours beyond the RAAIM hours, how that will impact the settlement should be considered. A significant amount of use limited resources is providing RA for a limited number of hours and if the surcharge applies to hours when they are not available will the LSE be allocated the surcharge?

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comment.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

No comment.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

The proposal will allow LSEs to indicate if the RA capacity offered can be reserved for reliability needs provided the aggregate RA capacity exceeds BAA RSE needs. It is essential that such an option should be only voluntary. The reserved capacity would be diverted from IFM and can be subject to exceptional dispatch. In that case what would be the impact on RAAIM estimation which is based on IFM availability?

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comment.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

No comment.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

No comment.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

No comment.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

No comment.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comment.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

No comment.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comment.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comment.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comment.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

No comment.

California Efficiency + Demand Management Council
Submitted 09/26/2022, 04:14 pm

Submitted on behalf of
California Efficiency + Demand Management Council

Contact

Luke Tougas (l.tougas@cleanenergyregresearch.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

The Council provides limited comments focusing on the treatment of demand response (DR) within the context of the Resource Sufficiency Evaluation (RSE). The Council supports the Revised Straw Proposal’s use of non-aligned (i.e., non-market integrated) DR to reduce EDAM Balancing Authority Area (BAA) demand forecasts. However, the CAISO should further allow for EDAM BAAs to utilize Reliability Demand Response Resources (RDRRs) as it would allow itself to use them (i.e., to modify the CAISO EDAM and RUC forecast). In addition, in anticipation of a potential future Proxy Demand Resource (PDR)-equivalent product for EDAM BAAs, the CAISO should explicitly allow for these products to be used as supply resources in the RSE subject to a Must Offer Obligation, while continuing to allow non-aligned DR to reduce the demand forecast linked to a commitment to dispatch it during specified hours.

The Council also expresses support for adjusting the decisional classification of the EDAM initiative to fall under the joint authority of the WEIM Governing Body in addition to the CAISO Board of Governors. 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

The Council reserves comment.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

The Council reserves comment.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

The Council reserves comment.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

The Council reserves comment.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

The Council reserves comment.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

The Council reserves comment.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

The Council reserves comment.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

The Council reserves comment.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

The Council reserves comment.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

The Council reserves comment.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

The Council reserves comment.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

The Council reserves comment.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

The Council recommends that the Revised Straw Proposal be adjusted or clarified with regard to how certain DR programs and resources would be accounted for in the RSE. The CAISO alludes to its Proxy Demand Resource (PDR) and Reliability Demand Response Resource (RDRR) DR models and notes that EDAM entities may have their own separate DR programs that do not align with the PDR and RDRR models. The CAISO proposes to allow EDAM BAAs to reduce their demand forecast commensurate with the expected real-time dispatch of these “non-aligned” programs. The CAISO then appears to propose that RDRRs located within the CAISO BAA can be used to bridge the gap between any “potential inability for the ISO BAA to meet its next day obligations” by modifying its forecast in the EDAM and RUC.

The Council provides feedback on two specific areas. They are:

  1. It appears that the CAISO proposes that RDRRs located within the CAISO BAA can be used to bridge any gap in the EDAM RSE by modifying its EDAM and RUC forecast. If this is the case, this capability should be provided to other EDAM BAAs as well. WEIM entities may already create and utilize RDRRs, so the Council recommends that EDAM entities be eligible to do so as well.
  2. The CAISO should plan for a future in which EDAM entities are deploying supply-side DR programs comparable to PDRs, in addition to RDRRs. Though the CAISO currently does not offer such a PDR-equivalent product for EDAM entities outside of the CAISO BAA, it should plan for this eventuality and reflect this in the EDAM proposal. In such a case, PDR-equivalent products should be eligible to be shown as supply resources, not modifications to an EDAM entity’s load forecast.  As such, they would be subject to a Must Offer Obligation consistent with the hours in which they would be claimed in an RSE but would not be subject to the requirement that they be dispatched unless needed, contrary to how the CAISO currently proposes for load management programs in the Revised Straw Proposal.
15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

The Council reserves comment.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

The Council reserves comment.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

The Council reserves comment.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

The Council reserves comment.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

The Council reserves comment.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

The Council reserves comment.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

The Council reserves comment.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

The Council reserves comment.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

The Council reserves comment.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

The Council reserves comment.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

The Council reserves comment.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

The Council reserves comment.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

The Council reserves comment.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

The Council reserves comment.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

The Council reserves comment.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

The Council reserves comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

The Council reserves comment.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

The Council reserves comment.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

The Council reserves comment.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

The Council supports adjusting the decisional classification of the EDAM initiative to fall under the joint authority of the WEIM Governing Body in addition to the CAISO Board of Governors. This is a logical and appropriate step given that the EDAM will directly impact the participation of the entities represented by the WEIM Governing Body in the CAISO market.  As such, they should have an oversight role comparable to the CAISO Board of Governors.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

N/A

Center for Resource Solutions (CRS)
Submitted 09/26/2022, 11:36 am

Contact

Todd Jones (todd.jones@resource-solutions.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Our comments and recommendations address Greenhouse Gas (GHG) Accounting and Reporting and subsections on Compliance and Reporting. Please see comments of Center for Resource Solutions on the EDAM Revised Straw Proposal attached.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

Please see our comments attached.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

We do not provide specific comment on the use of the GHG Reference Pass as the GHG counterfactual.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

Please see our comments attached.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

Please see our comments attached.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

Please see our comments attached.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

Please see our comments attached.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Our comments are limited to the section on GHG Accounting and Reporting and subsections on Compliance and Reporting. 

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Please see our comments attached.

CPUC - Cal Advocates
Submitted 09/26/2022, 04:01 pm

Contact

Edmond Yi (edmond.yi@cpuc.ca.gov)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

 Cal Advocates does not have comments on this issue at this time

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

 Cal Advocates does not have comments on this issue at this time

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

 Cal Advocates does not have comments on this issue at this time

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

 Cal Advocates does not have comments on this issue at this time

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

 Cal Advocates does not have comments on this issue at this time

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

 Cal Advocates does not have comments on this issue at this time

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

 Cal Advocates does not have comments on this issue at this time

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

 Cal Advocates does not have comments on this issue at this time

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

Cal Advocates agrees with the intent of the proposed Extended Day Ahead Market (EDAM) transmission revenue requirement (TRR) recovery framework design.  The intent is to reimburse EDAM participants for any foregone revenue from short-term transmission sales and wheeling access charges (WAC) due to EDAM participation.[1]  Cal Advocates supports recovery of historical CAISO WAC through the EDAM TRR, as it will protect California ratepayers from the loss of WAC revenue due to transmission commitment to the EDAM.

Cal Advocates supports the CAISO’s proposal to account for actual transmission revenues in the eligible transmission products and only allow for the recovery of the EDAM TRR shortfall from all BAAs except the one recovering the revenues.[2]  The CAISO also requests stakeholder feedback on a bound to the EDAM TRR based on the energy ratio of EDAM transfers versus the total exports from a Balancing Authority Area (BAA).[3]  While Cal Advocates observes that a high level of transmission usage in the EDAM may render this bound on the recovery of the EDAM TRR shortfall unnecessary, we support the implementation of this bound as a structural safeguard against cost shifting to the EDAM.

 

Review of EDAM TRR Recovery Framework, Sunset Date, and Data Transparency

The CAISO should publish annual reports showing the breakdown of the monthly EDAM TRR recovered by EDAM participant, as well as the category under which the TRR was recovered (Component 1, Component 2, Component 3), and post them publicly.  These reports should be published and archived on the CAISO website for transparency and public accountability, allowing EDAM stakeholders to engage on any concerning trends in cost recovery through the EDAM.[4]

Cal Advocates recommends a sunset date for the EDAM TRR of five years after the start of the EDAM.  By this time the CAISO should evaluate the EDAM TRR framework using historical data and propose modifications to the EDAM TRR framework necessary to address any cost shifts or structural inequities discovered during the first years of EDAM operations.   If the review of historical, real-world data shows the existing EDAM TRR framework functions as intended and results in fair cost recovery across EDAM participants, the existing framework should be extended for another five years.  Setting a sunset date will require action by the CAISO to thoroughly reevaluate the EDAM TRR framework using real-world data and protect all EDAM-served load, including California ratepayers, from cost shifts resulting from the EDAM TRR structure.   Additionally, as discussed below, Cal Advocates recommends modifications to the TRR recovery framework design to make EDAM participants whole for planned or in-progress transmission investments that will support EDAM activity.

 

Modification to EDAM TRR Framework for Transmission Investments Underway

The EDAM proposal recommends a review and update of EDAM participants’ recoverable TRR after the first two-years of participating in the EDAM.[5]

Cal Advocates suggests an annual evaluation of the EDAM recoverable TRR for the first three years of participation in the EDAM, and a final evaluation after five years.  This evaluation schedule will account for transmission investments that were approved and underway prior to the EDAM.[6] An annual evaluation also will confirm, based on evaluation of patterns in transmission usage, if an EDAM participant’s loss of TRR revenue is due to EDAM activity. 

 

Modification to EDAM TRR Framework for Anticipated New Transmission Investments

The proposed EDAM TRR reimbursement framework would allow recovery of a certain percentage of the TRR for new transmission facility upgrades that increase the transfer capacity between EDAM BAAs.  The percentage of new transmission facility costs recovered in the TRR would be based on the “ratio of the non-firm and short-term firm point to point revenue requirement, associated with third party sales on the new upgrade.”[7]  Cal Advocates requests the CAISO provide additional detail on how it will determine that a new transmission facility increases EDAM transfer activity.  Cal Advocates recommends that a description of this determination and the resulting increase in EDAM transfer capability should be published along with the recovered revenue for each project eligible for EDAM TRR as part of annual EDAM TRR publication recommended by Cal Advocates above. Publication of this determination will create transparency around the transmission facilities that are receiving uplift through the EDAM TRR and allow all EDAM stakeholders to verify that the transmission facilities included in the EDAM TRR are in fact providing an increase in transfer capability between EDAM BAAs.  

Finally, CAISO staff indicated during the September 8, 2022 EDAM Stakeholder meeting that interregional projects will be excluded from EDAM-recoverable TRR.[8]  Cal Advocates recommends that interregional projects be defined as follows:

An interregional transmission project (ITP) is a proposed new transmission project that is publicly recognized – by the project sponsor, state regulators, or public utility transmission providers - as benefiting two or more Planning Regions.

This revised definition of an ITP[9] remove several existing barriers[10],[11] that prevent consistent, transparent, and meaningful benefits analyses of ITPs.  Moreover, this definition would not require the approval of any proposed projects, nor would it result in the allocation of costs for an ITP to any specific planning region.  

Cal Advocates further recommends these projects be eligible to receive partial cost recovery through the EDAM TRR framework.  Cal Advocates observes that commitment of the transmission capacity of an interregional project to the EDAM may also result in the same loss of short-term transmission revenues as projects that are approved by individual BAAs.  Appropriately defined interregional transmission projects can increase the transfer capacity between BAAs and may be built for that specific purpose, and thus should be eligible for the same cost recovery as regionally approved projects.  This will protect ratepayers in regions approving interregional projects by allowing fair cost recovery for projects that increase transfer capacity between BAAs.

 


[1] EDAM Revised Straw Proposal, p. 34.

[2] EDAM Revised Straw Proposal, p. 37, 39.

[3] EDAM Revised Straw Proposal, p. 38.

[4] The CAISO posts similar transmission revenue requirement breakdowns for CAISO participating transmission owners (PTOs) in its publication of the CAISO High Voltage Transmission Access Charge (HV TAC).   These publications are available at: http://www.caiso.com/Pages/documentsbygroup.aspx?GroupID=570D3E00-5AB5-408D-9142-5AA547D419A8

However, unlike the HV TAC publications, which only go as far back as 2017, Cal Advocates recommends the archived annual EDAM TRR reports be kept accessible until the termination of EDAM.

[5] EDAM Revised Straw Proposal, p. 37.

[6] Without the EDAM in place, the CAISO is considering multiple new transmission builds and capacity increases that likely assume a certain percentage of cost recovery from other BAAs through WAC or other short-term transmission sales.  These projects may be approved by the time EDAM is implemented but may not be constructed and included in the CAISO TRR until a few years after the EDAM starts.

[7] EDAM Revised Straw Proposal, p. 38.

[8] EDAM Stakeholder Meeting, September 8, 2022.  Accessed on September 20, 2022, at https://www.youtube.com/watch?v=ZjTRlTX2Q_Q. Timestamp 1:03:11 of recording.

[9] Each of the three Transmission Planning Regions in the Western states – the California Independent System Operator (CAISO), WestConnect, and NorthernGrid – defines an ITP as “A proposed new transmission project that would directly interconnect electrically to existing or planning transmission facilities in two or more Planning Regions and that is submitted into the regional transmission planning processes of all such Planning Regions.” This definition is used in the CAISO’s Open Access Transmission Tariff (Appendix A, available at http://www.caiso.com/Documents/Conformed-Tariff-as-of-Jun17-2022.pdf)

[10] The current definition of an ITP requires, in part, that the developer of the potential ITP submit the project to the regional transmission planning process of each transmission planning region.  This requirement presents two hurdles to the consideration of the benefits that an ITP could provide to each region: 1) the developer may simply decline to submit the project and 2) certain regions require that the region first identify a regional need that the ITP can fill before the ITP can be submitted and considered. 

[11] The latter part of the current ITP definition - that a project “interconnect electrically to existing or planned transmission facilities in two or more Planning Regions” – can also preclude a benefits analysis. This part of the definition ignores the nature of the modern transmission network, in which a transmission project may benefit a region it is not directly connected to.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Cal Advocates does not have comments on this issue at this time.  

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Cal Advocates does not have comments on this issue at this time.  

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Cal Advocates does not have comments on this issue at this time.  

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Cal Advocates does not have comments on this issue at this time.  

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Cal Advocates does not have comments on this issue at this time.  

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Cal Advocates does not have comments on this issue at this time.  

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

The RSE process will be run daily to ensure the supply offered by each EDAM BAA is sufficient to meet its forecasted energy demand and capacity needs.[1]  If an EDAM BAA fails to show enough supply and/or capacity to pass the RSE, it will face a surcharge and may not be able to participate in the EDAM Integrated Forward Market (IFM) run for that day if the IFM cannot resolve the deficiency itself.[2]  The EDAM BAA may be able to still participate in the Western Energy Imbalance Market (WEIM) if it is able to cure its deficiency shortly after the IFM completes.[3]  An EDAM BAA may cure its RSE deficiency by securing additional supply or trading off part of its RSE requirement to another EDAM BAA with surplus supply.

It is unclear if the proposed design of the RSE penalty and curing opportunities would support EDAM operations if multiple EDAM BAAs fail the RSE evaluation and the IFM as a whole cannot secure sufficient total supply to meet total demand.  Such scenarios may be rare now but may become more frequent as climate change worsens, given the August and September 2020 events[4] and the September 2022 heat wave which all greatly surpassed forecasted weather-driven demand.[5]  In the next draft proposal, the CAISO should present an extreme edge case scenario with multiple BAAs failing to pass the RSE.  Such a scenario would show how EDAM IFM trading and prices, including power balance constraint relaxations, would affect clearing prices and how BAAs may meet their demand if unable to participate in the IFM.[6]

The EDAM’s current design allows EDAM BAAs to trade an amount of their RSE requirements.  RSE requirement trading would help BAAs to clear their deficiencies but may be of limited use when multiple BAAs are unable to pass the RSE.  The value of supply trading in such a scenario could lead to very high trade prices because deficient BAAs would bid against one another to pass the RSE and gain access to EDAM market products.  The EDAM Proposal states that the price of RSE requirement trading would be based on “prices agreed upon by both parties” but also that it would be a “[pre-set] price.”[7]  The price of trading RSE requirements cannot be determined at this stage of development because the value of access to the EDAM IFM and RSE requirement trading is unclear.  Rather, in the next draft proposal, the CAISO should identify how the RSE requirement trade price would be set before a reliability crisis occurs and whether the CAISO would set a price or if BAAs will bilaterally establish pre-set prices with each other.

 


[1] EDAM Revised Straw Proposal, p. 44-45.

[2] EDAM Revised Straw Proposal, p. 52.

[3] The EDAM IFM will still run for those BAAs who did pass the RSE.  EDAM Revised Straw Proposal, p. 53.

[4] The CAISO determined the August 2020 heat wave was a 1-in-30-year weather event, and a second in September 2020 was a 1-in-70-year weather event. CAISO, Final Root Cause Analysis, January 13, 2021, p. 40.

[5] On September 6, 2022, CAISO peak load reached 52,061 MW (https://www.caiso.com/documents/californiaisopeakloadhistory.pdf) which significantly exceeds the California Energy Commission’s (CEC) CAISO coincident 1-in-20 forecasted peak demand of 50,367 MW.  CEC, CED 2021 Mid Baseline Forecast – LSE and BA Tables Mid Demand Case Feb22, Form 1.5e. Accessed September 16, 2022, at: https://efiling.energy.ca.gov/GetDocument.aspx?tn=241383&DocumentContentId=75340

[6] The current draft proposal includes an edge case at the WEIM, but this does not demonstrate the impacts of multiple BAA failures to meet the RSE requirement at the EDAM IFM.  EDAM Revised Straw Proposal, p. 21.

[7] EDAM Revised Straw Proposal, p. 51.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

Cal Advocates does not have comments on this issue at this time.  

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Cal Advocates does not have comments on this issue at this time.  

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Cal Advocates does not have comments on this issue at this time.  

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Cal Advocates does not have comments on this issue at this time.  

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

Cal Advocates does not have comments on this issue at this time.  

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Cal Advocates does not have comments on this issue at this time.  

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Cal Advocates does not have comments on this issue at this time.  

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Cal Advocates does not have comments on this issue at this time.  

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

Cal Advocates does not have comments on this issue at this time.  

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

Cal Advocates does not have comments on this issue at this time.  

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

Cal Advocates does not have comments on this issue at this time.  

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

Cal Advocates does not have comments on this issue at this time.  

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

Cal Advocates does not have comments on this issue at this time.  

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

Cal Advocates does not have comments on this issue at this time.  

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Cal Advocates does not have comments on this issue at this time.  

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

Cal Advocates does not have comments on this issue at this time.  

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Cal Advocates does not have comments on this issue at this time.  

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Cal Advocates does not have comments on this issue at this time.  

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

The CAISO intends to add two new capacity products, Imbalance Reserves (IR) and Reliability Capacity (RC), that will be transacted at the EDAM and WEIM.[1]  IR would be an IFM capacity product that provides “flexible capacity to cover real-time ramping needs that are not covered by hourly day-ahead market schedules and to cover uncertainty in the net load forecast between day-ahead and real-time markets.”[2]  RC will be used in the EDAM “to ensure physical supply is committed to cover differences in cleared physical supply and each BAA’s net load forecast.”[3]  RC will be procured through the Residual Unit Commitment (RUC) process which the CAISO presently uses to procure capacity that functions similarly to RC.[4]  Awards of IR and RC would oblige a resource to respond to upward and downward dispatches in the Real-Time Market (RTM) processes.  Neither of these products are currently included in CAISO markets but both would create obligations for awarded resources to be ready to dispatch in real-time in the same manner as the Must Offer Obligations of the CPUC’s Resource Adequacy (RA) program.

IR and RC have been under ongoing development in the Day-Ahead Market Enhancements (DAME) initiative.  In the DAME initiative, Cal Advocates raised concerns that payments to resource owners for IR and RC would be duplicative of and in addition to contracted RA payments.[5]  Both IR and RC would provide services which the RA program already obliges RA resources to offer to the CAISO, namely requirements to offer bids to the RUC and to be subject to out-of-market commitments ordered by the CAISO.[6]  RA resources are required to offer RUC bids at $0/MWh and are not paid premiums to be available for dispatch if they are not awarded energy bids in the Day-Ahead Market (DAM).  The CAISO has not yet provided estimates of the cost or volumes of IR and RC.

RA contract rates account for the generator’s costs of having RA obligations, such as RUC and RTM bidding requirements.  Because IR and RC are designed to be bid at and paid a non-zero clearing price, those payments would be duplicative of the RA contract’s payments to provide the same services to the CAISO.  Re-negotiation of RA contracts would allow those contracts to be re-valued with respect to IR and RC payments, but the expected revenue from IR and RC is currently not known and parties are not typically required to conduct contract re-negotiations under such circumstances. 

Cal Advocates recognizes the DAME initiative is the appropriate venue for further development of IR and RC products. However, the CAISO should also consider this issue in EDAM because avoiding duplicative costs to the CPUC ratepayers who ultimately fund the CPUC’s RA program is a sufficient reason to delay EDAM’s implementation.  The CAISO recently recognized this double-payment issue and opened stakeholder discussions ahead of an October DAME proposal.[7]  The CAISO, in the DAME initiative, offered two options for discussion: expand inter-Scheduling Coordinator (inter-SC) trade functions to allow IR and RC revenue to flow back to the contract-holding Load Serving Entity (LSE) or claw-back IR and RC payments through the settlement process.  Cal Advocates appreciates the CAISO’s effort to develop solutions and looks forward to providing feedback on the next DAME proposal.  The EDAM and DAME initiatives should coordinate to ensure IR and RC products do not result in duplicative costs for CPUC ratepayers.

 


[1] EDAM Revised Straw Proposal, p. 7.

[2] CAISO, DAME Third Revised Straw Proposal, April 27, 2022, p. 5, 21.

[3] CAISO, DAME Third Revised Straw Proposal, April 27, 2022, p. 19, 21.

[4] CAISO, DAME Third Revised Straw Proposal, April 27, 2022, p. 19, 21.

[5] DAME, Comments of the Public Advocates Office on the Third Revised Straw Proposal, May 19, 2022.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/372995fa-30ec-4166-9bbc-f92619b8014f#org-de6910be-09c8-46da-acbe-40b199b248df

[6] RA resources are required to provide those services as a part of the RA Must Offer Obligation.  See CAISO Tariff 40.6.1 and 40.6.2.

[7] DAME, Stakeholder Workshop, September 14, 2022, p. 8.  Available at: http://www.caiso.com/InitiativeDocuments/Presentation-Day-AheadMarketEnhancements-Sep14-2022.pdf

Idaho Power Company
Submitted 09/26/2022, 04:18 pm

Contact

Kathy Anderson (kanderson2@idahopower.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

See attached comments

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See attached comments

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See attached comments

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See attached comments

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See attached comments

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See attached comments

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See attached comments

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See attached comments

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See attached comments

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See attached comments

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See attached comments

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See attached comments

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See attached comments

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See attached comments

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See attached comments

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See attached comments

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See attached comments

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See attached comments

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See attached comments

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See attached comments

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See attached comments

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See attached comments

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See attached comments

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See attached comments

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See attached comments

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See attached comments

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See attached comments

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See attached comments

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See attached comments

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See attached comments

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See attached comments

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See attached comments

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See attached comments

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See attached comments

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See attached comments

Joint Commenters
Submitted 09/27/2022, 05:00 am

Submitted on behalf of
Clean Energy Buyers Association (Transmission section)

Contact

Vijay Satyal (vijay.satyal@westernresources.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

 Western Resource Advocates (WRA) and Clean Energy Buyers Association (CEBA) submit these comments on transmission related aspects and WRA offers additional comments on greenhouse gas related aspects of EDAM. Therefore, we are identified as Joint Commenters as appropriate. We support the EDAM framework that maximizes use of transmission assets to the fullest and incentivizes clean energy generation and use with transparency in reporting GHG emissions. Western Resource Advocates (WRA) and Clean Energy Buyers Association (CEBA) submit these comments on transmission related aspects and WRA offers additional comments on greenhouse gas related aspects of EDAM. Therefore, we are identified as Joint Commenters as appropriate. We support the EDAM framework that maximizes use of transmission assets to the fullest and incentivizes clean energy generation and use with transparency in reporting GHG emissions. WRA supports all GHG acounting approaches but recommends CAISO staff partner with EDAM prospective entities to test out the zonal approach over next year or two.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.  

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Joint Commenters do not have any comments at this time.  

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.  

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.  

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Joint Commenters support the overall framework of the transmission “buckets” for transmission commitment as described in the EDAM Revised Straw Proposal, while acknowledging that there have been questions on the functional differentiation between Bucket 1 and Bucket 2. As a principle, Joint Commenters support the use of a simple and clear framework that maximizes the amount of transmission made available to the market to facilitate the optimized dispatch of renewable resources. We also maintain that any transmission commitment framework in EDAM should address the transmission revenue concerns and create equitable treatment for all entities donating transmission to the market.

Given the importance of getting these details right, both to achieve consensus and address the potential risks to market participants, we request CAISO focus further discussion on the treatment of transmission under Buckets 1 and 2 to provide additional clarification on any questions stakeholders may have. 

In addition, Joint Commenters recommend the Department of Market Monitoring (DMM) be required to review the efficiency of the bucket framework and provide a report after 3, 6, 9, and 12 months of operation. In creating that report, DMM should discuss the impacts of the buckets with Transmission Providers and Transmission Customers in order to recommend improvements to the transmission provision structure in EDAM.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

Broadly, Joint Commenters support the proposal for Bucket 2 transmission as we believe it strikes a good balance between making as much transmission available to EDAM and providing transmission customers options for the use of that transmission in the day-ahead timeframe. Joint Commenters supports the maximum amount of transmission being made available to the market, and the Bucket 2 transmission proposal to include all transmission rights that are not scheduled by the time of the day-ahead market.

However, while the three options, or “pathways”, that CAISO lays out provide some initial answers to the concerns of those who own the transmission rights that would be automatically provisioned to EDAM, there are still questions in regards to the details of how these pathways for using transmission rights would function. Due to the potential implications, this proposal may have on the value of transmission rights within EDAM BAAs, we suggest additional discussions on this topic to ensure that the Bucket 2 transmission proposal garners maximum support.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

Joint Commenters do not have any comments at this time.  

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

With respect to the TRR recovery framework outlined in the Revised Straw Proposal, Joint Commenters generally support the proposal to allow transmission providers to recover their historical revenue requirement and reiterate our opposition to the use of a hurdle rate to address transmission compensation concerns.

Joint Commenters appreciate CAISO’s continued efforts to create a forward-looking transmission commitment and compensation framework. However, the TRR proposal also includes the ability for new transmission upgrades to get a proportional percentage recovery, with the potential of further incentivizing transmission builds that increase transfer capability between EDAM BAAs. Joint Commenters want to flag this aspect of the TRR design, especially as it relates to the magnitude of revenues that must be collected through the recovery framework. While this may be important in the short-term, we believe over time participants will become more confident upgrading and committing greater transmission the market without relying on this framework to collect revenue. Our view is that EDAM is an incremental step towards an RTO and avoiding dependency on this revenue recovery framework is essential to ensuring a clear glide path from the EDAM to a full RTO in the West.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Joint Commenters do not have any comments at this time.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Joint Commenters do not have any comments at this time.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Joint Commenters do not have any comments at this time.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Joint Commenters do not have any comments at this time.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Joint Commenters do not have any comments at this time.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Joint Commenters do not have any comments at this time.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

Joint Commenters do not have any comments at this time.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

Joint Commenters do not have any comments at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Joint Commenters do not have any comments at this time.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Joint Commenters do not have any comments at this time.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Joint Commenters do not have any comments at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

WRA appreciates Table 10 that compares the GHG approaches (Resource specific, Zonal and LADWP hybrid) that lays out the nuances and differences. WRA is generally fine with any approach as long as it addresses issues of leakage and need for consistency in market performance to reflect GHG reduction or incentivizing clean energy generation. In recent past, Powerex has made it clear that the current WEIM approach to scheduling resources results in possibly, actual dispatch of energy resources that is not often clean energy resources. WRA is concerned with that reality. WRA also recommends reporting and compliance to consider WREGIS as an option as after all, Markets+ (SPP initiative) and EDAM (CAISO initiative) will be providing day-ahead market offerings in the West that would impact states and utilities. WRA also recognizes the use of geographic boundaries over BAAs. WRA is concerned about the lack of creative ways to use e-tags when the concerned WEIM participants have proficiency and familiarity with use of e-tags.

WRA is concerned about the issue raised by Powerex especially, of the current WEIM approach “resource specific” to scheduling resources that results in “deemed” delivered that doesn’t result in actual dispatch of clean energy resources, if they’re also lower costs. WRA is not clear in understanding the “first jurisdictional” deliverer definition that would involve a “resource scheduling coordinator” in lieu of the WEIM entity. Overall, WRA recommends CAISO staff partner with participating entities in EDAM to test out the EDAM structure through all 3 approaches and especially, the “resource specific” and “zonal.” WRA finally, also recommends CAISO staff to initiate conversations with WREGIS to explore ways for them to be a reporting entity for all EDAM transactions and related GHG post-dispatch emissions profile. WREIGS is ideally suited to be a reporting entity that can help the states’ follow up and get access to a one-stop inventory of post-dispatch emissions information for states’ compliance.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

WRA has no objections to the proposed counterfactual approach in regards to the “resource specific” approach and identified on Pages 76-77.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

WRA recognizes the CAISO staff proposal to start with the resource-specific approach as it’s known and implementable. However, WRA recommends transparency in reporting to factor in the EDM RSE test approved schedules for EDAM Entities and explicitly report net export levels of BAAs transacting (export or importation) in GHG regulation areas. WRA strongly recommends that CAISO align with the Department of Market Monitoring (DMM) to ensure WEIM and EDAM transfers are tracked and reported on a quarterly basis. WRA endorses the CAISO staff approach to also provide emissions intensity information for in-state generation and total MW of BAA-level transfers. This is especially critical in light of scalability and CAISO staff willingness to expand the framework.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

WRA at the outset, supports the zonal approach as well in terms of the concept, the use of “toll” and also the settlement process as paid out on Page 85.. It is intuitive and recognizes the explicit role of GHG regulation areas and recognize that the determination of the appropriate level of “toll” will be critical, in regards to the transfers. We support the informational requirements for a GHG pseudo-tie. WRA is concerned with the “static” nature of the “pre-defined” toll rate that air-regulators would identify, when we know that energy transfers vary in price by each hour, of a day that reflects grid conditions. WRA has no concerns with the “methodology” used to determine the toll rate (Page 83).The toll rate needs to be dynamic to reflect differing energy transfers and availability of transmission asset or congestion levels. August 2022 heat storm events demonstrated that energy transfers had significant changes in economic value based on the transmission path and time/day of transfers of clean energy resources. WRA recognizes the concerns CAISO staff raise about “dynamic tolling” however, we are preventing a solution to be developed in fear of it’s failure at the outset. Therefore, WRA recommends a simultaneous development and testing of the “zonal approach” in partnership with select WEIM Entities that are also going to participate in the EDAM. WRA also supports CAISO staff proposal to adapt to Oregon or other states’ carbon reduction requirements through carbon intensity related constraints. It is unclear why, CAISO staff would NOT be able to introduce a constraint to meet state requirements for resources subject to the toll.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

WRA supports the LADWP proposal that extends the CAISO staff proposal and extends the resource-specific approach. WRA strongly supports the load-based accounting approach as it would include GHG bid adders into the ISO optimization process. WRA supports the proposed method for accounting for carbon costs. WRA endorses the LADWP approach for the LSEs rather than the ISO, to be responsible for GHG emission reporting and compliance but only for California and Washington. We feel, as a centralized market operator, it’s within CAISO duties to be able to provide emission reporting service or coordinate with WREGIS for reporting the relevant information.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

 The proposal ignores the role and value of WREGIS for reporting and compliance assistance. WRA requests it be discussed explicitly in future stakeholder meetings.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Joint Commenters do not have any comments at this time.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

 The proposal ignores the role and value of WREGIS for reporting and compliance assistance. WRA requests it be discussed explicitly in future stakeholder meetings.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Joint Commenters do not have any comments at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Joint Commenters do not have any comments at this time.

K&L Gates LLP
Submitted 09/26/2022, 05:32 pm

Contact

Ruta K. Skucas (ruta.skucas@klgates.com) Maeve C. Tibbetts (maeve.tibbetts@klgates.com) 

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Please see attached file.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

N/A

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

N/A

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

N/A

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

N/A

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

N/A

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

N/A

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

N/A

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

N/A

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

N/A

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

N/A

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

N/A

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

N/A

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

N/A

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

N/A

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

N/A

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

N/A

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

N/A

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

N/A

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

N/A

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

N/A

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

N/A

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Please see attached file.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

N/A

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

N/A

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

N/A

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

N/A

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

N/A

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

N/A

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

N/A

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

N/A

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

N/A

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

N/A

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

N/A

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

N/A

Kathleen Staks, Western Freedom
Submitted 09/26/2022, 02:30 pm

Submitted on behalf of
Western Freedom

Contact

Kathleen Staks (kstaks@westernfreedom.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Western Freedom is pleased to submit these comments on the proposed EDAM market design. As an initial matter, Western Freedom is not taking a position about which entity should run region-wide markets over what footprint. As those questions are sorted out by various states, utilities, and other stakeholders, we believe that EDAM improves upon EIM and therefore should be pursued on a parallel track. 

About Western Freedom

Western Freedom is a non-profit entity with the mission of enabling the delivery of low-cost electricity and energy freedom to the West through an efficient and integrated grid system. Western Freedom is focused on developing and executing a campaign to support the development of a western regional transmission organization (“RTO”) on behalf of a coalition of large energy customers across the region. Western Freedom is focused on eleven western states including Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. 

General Comments

We strongly support the development of organized markets in the West, and urge CAISO to design EDAM such that it can be seamlessly expanded into a West-wide RTO. 

The development of a day-ahead market for the West should create value and efficiencies for all customers, including:

  • Reducing friction for generators to serve load. 

  • Enabling greater access to the lowest-cost resources and the cleanest resources, for those utilities and retail customers that have climate goals. 

  • Emissions accounting for customers and states to confidently track progress towards their goals.

  • Energy system oversight to ensure efficiency and equity. This should include transparent, equitable and independent governance, aligned with principles from western regulators detailed in Multi-state Electric Organization Principles, and effective market monitoring.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

II.A - Threshold Issues

Western Freedom supports onboarding measures that encourage maximum participation in the EDAM while protecting market performance.

Western Freedom supports economic bidding and self-scheduling instead of base scheduling to prevent cost-shifting and ensure the lowest cost resources are deployed first.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comments.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

No comment.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comment.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Western Freedom supports transmission rights not scheduled in the day-ahead market to be available for EDAM transfers, and for unsold transmission to be made available to the market hurdle-free. These are the kinds of friction-reducing market services that will lead to customer savings.

It is fair for transmission owners to be able to recover foregone transmission revenues based on EDAM participation. Market designs that protect participants from losing value by joining the EDAM should maximize participation, and therefore customer savings.

In the longer term, substantial additional customer savings should come from moving away from physical transmission rights to allow flow-based scheduling. We support incremental progress towards that goal through EDAM as long as the transition is steady and deliberate.

Western Freedom is concerned that the transmission commitment process may be opaque. We believe that a market monitor should investigate the operation of this system for inefficiencies, the potential for market power to disrupt optimal transmission commitment, and opportunities for greater transparency. The market monitor should produce a report evaluating options and potential further value to be achieved through further design changes.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

No comment.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comment.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

No comment.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comment.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Western Freedom supports requirements that prevent participants from leaning on the system, but at the same time enable the efficiencies of regional coordination. 

CAISO should work on the seamless handoff between long-term RA (WRAP and CPUC) and the EDAM RSE test. Further explanation of the intersection (or isolation) of these processes would be of interest, as well as an evaluation of customer benefits that come from various approaches. We recognize that the significant consumer cost savings that come from regional resource adequacy constructs are not being included in EDAM, and encourage evaluation of the missing value and pursuit of a wider regional resource adequacy program.

We ask CAISO to evaluate whether resources used for RSE should have a must-offer obligation and whether that would improve market operations.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

No comment.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comment.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Customer demand response programs should also be integrated into day-ahead markets. Western Freedom would like to see more details on demand response integration and hopes that EDAM will be responsive to innovation in load flexibility paradigms as electrification accelerates.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comment.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

No comment.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

 No comment.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

No comment.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

No comment.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comment.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Western Freedom supports the inclusion of generation market power mitigation. The approach in the Revised Straw Proposal makes sense based on the reported success in the WEIM framework. In addition, we support broader market monitoring.

CAISO should ensure that there is a market monitor (MM) overseeing EDAM, and the MM should evaluate physical and economic withholding. If there are EDAM-specific issues that CAISO’s Market Surveillance Committee does not currently monitor, their scope should be expanded or another MM should be engaged.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

We support convergence bidding since it increases market efficiency. CAISO should do all it can to ensure the lowest possible customer rates while maintaining reliability and ensuring that all resources are appropriately valued.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Western Freedom supports CAISO’s proposed External Resource Participation model as an interim step before future improvements can be made. 

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

Western Freedom believes EDAM could do more to help customers meet their climate goals. Customers need visibility into GHG impacts of energy on an hourly basis and by location to meet their ESG goals, and CAISO should ensure that it reports on the emissions of the resource mix that is committed to serving load in the day-ahead market.

We support GHG accounting methodologies that lead to appropriate dispatch of resources, incentivizing clean energy and serving load in line with state policy.

However, our customer coalition supports EDAM implementation as expeditiously as possible by expanding the WEIM approach for GHG accounting as an initial methodology. We appreciate CAISO’s commitment to continue work to refine GHG accounting methodologies in response to changing needs. Western Freedom urges CAISO to engage customers on their GHG accounting needs.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comment.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Western Freedom supports mechanisms that hold utilities harmless from the transition to EDAM, in order to minimize barriers to participation. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

Western Freedom supports the 15-minute settlement periods. Frequent resettlement is better for system balancing and enables more variable resource integration.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Western Freedom supports CAISO’s goal to limit the cost of the EDAM program and keep onboarding fees as low as possible. We agree that having more participants in EDAM will benefit more customers, and increase benefits to all customers.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Western Freedom supports the joint authority approach for the time being, as longer-term RTO formation is being considered. The Multi-State Electric Organization Principles (https://gridstrategiesllc-my.sharepoint.com/:b:/p/jselker/EYxHoFpGaWpItF14DoS13qsBzOE-qIiDiSLvl2QdVKNXMQ?e=t3rE9t) created by Western energy regulators should be guidelines for CAISO.

While broad regional representation in governance will support equitable market operations, we caution against any design decisions that put responsibilities close to policy-making into EDAM governance. EDAM governance should be focused on accommodating state policy and must not overwrite it or inhibit state goals.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Western Freedom appreciates the opportunity to review the CAISO’s revised straw proposal, as well as CAISO’s continued engagement with stakeholders throughout the EDAM design process.

LADWP
Submitted 09/26/2022, 11:34 pm

Submitted on behalf of
LADWP

Contact

Stuart Kelly (skelly@utilicast.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

See attachment

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See attachment

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See attachment

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See attachment

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See attachment

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See attachment

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See attachment

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See attachment

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See attachment

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See attachment

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See attachment

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See attachment

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See attachment

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See attachment

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See attachment

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See attachment

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See attachment

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See attachment

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See attachment

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See attachment

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See attachment

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See attachment

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See attachment

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See attachment

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See attachment

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See attachment

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See attachment

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See attachment

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See attachment

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See attachment

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See attachment

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See attachment

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See attachment

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See attachment

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See attachment

Middle River Power, LLC
Submitted 09/26/2022, 04:31 pm

Contact

Brian Theaker (btheaker@mrpgenco.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Middle River Power LLC ("MRP") appreciates the considerable effort the CAISO has expended to work through very complicated but fundamental issues such as transmission allocation, resource sufficiency, greenhouse gas accounting, and revenue and cost allocation.  MRP also appreciates that the CAISO has engaged market participants in a very thoughtful, detailed and deliberate process on these complicated topics.  Nevertheless, at this point in the process, MRP’s perception is that the EDAM design is not only very complicated but also includes significant accommodations (as will be discussed in MRP’s sparse comments below) that may dilute EDAM’s effectiveness and introduce loopholes that can be exploited to the financial and reliability detriment of the EDAM participants.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

No comment.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comment.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

No comment.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

As noted below, MRP is not certain that giving certain transfers lower market priority or not allowing a EDAM BAA that has failed the RSE to participate in pooling benefits will prove a sufficient incentive – or deterrent – to promote the behavior that will make EDAM participation reliable and effective. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

No comment.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

No comment.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comment.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

No comment.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comment.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Not including transmission constraints in the RSE is an accommodation that dilutes the reliability and effectiveness of the RSE. It is an accommodation that assumes that all resources contributing to the RSE – a test that is intended to ensure that BAAs provide resources adequate to meet their load and reserve obligations – are, de facto, fully deliverable to that BAA, when that may or may not be true.  This accommodation colors the RSE as a “feel good” exercise that does not ensure that the resources serving load and meeting reserve obligations within that BAA are deliverable within that BAA.  Moreover, recent experience suggests that assuming deliverability may not lead to optimal outcomes.  Not ensuring that the flexible ramping product was deliverable led to the CAISO procuring large amounts of this product that could not, in reality, function as intended.   Given the purpose of the RSE – to ensure adequacy – MRP cannot support not including transmission constraints in the RSE.   

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

MRP supports the proposal to require, within three hours of receiving DA awards, e-tags for non-resource-specific supply schedules.  Still, MRP questions whether the proposed consequences – namely, the BAA failing to e-tag those schedules would not be allowed to participate in sharing the uncertainty requirement or imbalance reserves procured to meet the shared uncertainty requirement, but the market transfers to and from the failed BAA would still be supported by the optimization - will prove to be a sufficient incentive for market participants to submit DA e-tags.  While the CAISO notes that DMM will report monthly on these untagged volumes, MRP recommends the CAISO consider developing actionable penalties or triggers based on such reporting to ensure that these untagged imports are not speculative spot market supply, as such outcomes would be completely inconsistent with the purpose of the RSE. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comment.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comment.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comment.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

No comment.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comment.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

No comment.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Allowing LSEs to withhold RA capacity that is "excess to the need" raises the question of how the CAISO and/or LSE will determine what is “excess”.  Moreover, RA supply could be deemed excess under conditions that may not the conditions that ultimately materialize, e.g., if the DA load forecast is significantly lower that the load that materializes. 

Additionally, MRP requests the CAISO clarify its definition of “withholding RA capacity from the market”.  The RA program is intended to meet a 1-in-2 load forecast but the CAISO’s IFM and RUC must meet actual load which may be great than the RA program. Permissible withholding should be carefully discussed.  MRP would also appreciate a discussion of how the RA program would work in conjunction with EDAM after DAME is implemented.  It is not yet clear how the EDAM proposal aligns with, or doesn’t align with, California’s RA programs.    

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comment.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

No comment.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

MRP remains concerned that the CAISO continues to propose that convergence bidding, which the CAISO describes as “…a fundamental feature of day-ahead markets”[1] be delayed at least one, and possibly two, years after EDAM implementation.  The CAISO continues to improperly stigmatize this standard feature of two-settlement markets – like it did when it reflexively and unfortunately suspended convergence bidding in August 2020 - while purportedly professing to recognize convergence bidding’s benefits.  MRP respectfully urges the CAISO to articulate a compelling reason for not allowing convergence bidding upon EDAM implementation – a more compelling reason than the asserted need for market participants who are voluntarily joining EDAM to gain experience with this best practice before allowing it to be activated.    

 


[1] Revised Straw Proposal at p age 65. 

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

No comment.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

No comment.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comment.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

No comment.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comment.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comment.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comment.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

No comment.

NIPPC
Submitted 09/26/2022, 10:07 am

Contact

Henry Tilghman (hrt@tilghmanassociates.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

NIPPC is supportive, as a general matter, of efforts in the West, including EDAM, to expand regional organized competitive markets. But the evolutionary path of market development that Western transmission providers outside of California have elected over the past decade comes with its share of warts. NIPPC remains open to the proposition that a day-ahead market would at least not worsen the position of competitive generators who operate dispatchable and intermittent resources, developers of new resources, and competitive marketers across the Western Interconnection. But that value proposition is not evident. Across their business lines domestically and internationally, companies in the competitive segment of the power sector have deeper experience with day-ahead markets and regional transmission organizations (RTOs) than any of the transmission providers in the West outside of California. While not panaceas, centralized regional markets and independent system operators unlock the benefits of competition for consumers and overall system efficiency, especially in a context of increasing intermittent generation, better than bilateral markets. But EDAM (and any other market that leaves more fundamental transmission reform for another day or year or decade) is neither fish nor fowl: preserving dozens of separate transmission tariffs, balancing authorities, and associated points of friction in a contract-path-based system will shrink liquidity in the bilateral markets for energy and transmission, without providing independent generators with a system that resolves the challenges of delivering power regionally, upgrading the bulk power system, and interconnecting new projects. 

NIPPC therefore has concerns with the overall approach of a (potentially) West-wide day ahead market. As one of the panelists noted in the recent workshops, CAISO is creating a “half-way house” – a market model that optimizes day ahead dispatch of resources without being a full RTO. While CAISO and stakeholders are working diligently to minimize unintended consequences of a new, untested market concept, panelists acknowledge that after this market goes live, future adjustments will likely still be required. NIPPC cautions that moving away from the existing bilateral market to this proposed non-RTO day ahead market will inevitably lead to a period of increased uncertainty as buyers and sellers of capacity and energy adapt to the new paradigm. Given the length of the transition period contemplated in the straw proposal, this adaptation will likely take several years. NIPPC suggests that the CAISO and all stakeholders may want to consider once more whether it might be more prudent to pursue a full RTO model (acknowledging the related need for legislative reform of CAISO governance). Absent that reconsideration, competitive generators and marketers are left with a perhaps slim hope that the awkward fitting of EDAM on the OATT framework and existing bilateral markets remains supportive of competition and that experience in EDAM will, in fact, lead transmission providers to becoming comfortable more quickly with deeper reforms that include surrendering some control over how transmission is planned, paid for, and operated.

NIPPC also notes that in many of the specific proposals, there is an implicit assumption that all of the generation capacity in an EDAM BAA is owned or controlled by the EDAM BAA.  It is not. Some of the BAAs anticipating joining EDAM have significant independently owned generation located in their BAA; this independent generation is in direct competition with generation owned by the host BAA. Proposals consistently overlook the possibility that the generation resource which is providing a benefit to the market is not actually owned by the EDAM BAA yet provide that revenues or other benefits accrue to the EDAM BAA. NIPPC encourages the CAISO to revise its proposals to ensure that the market compensates resources which actually provide services, and does not simply compensate the BAA which hosts those generation resources.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

NIPPC supports broad participation in the market. Accordingly, one of NIPPC’s concerns with the proposed participation model relates to the requirement that in order participate in EDAM, a BA must be a participant in the EIM. This requirement leads to concerns that participation in the WEIM is limited to BAs with load. NIPPC members include owners of resources located in gen-only balancing areas.  NIPPC notes with approval that Avangrid – a gen-only BA – has begun the process of joining the WEIM but that its membership in the WEIM is still pending.  NIPPC also notes that the implementation agreement between CAISO and Avangrid contains specific provisions related to Avangrid’s status as a generation only BA. Other generation BAs may not be identical to Avangrid especially with respect to whether a gen-only BA is indirectly subject to FERC’s Standards of Conduct. So long as other gen-only BAs have a reasonable path to become WEIM participants – which then makes them eligible to join EDAM – then NIPPC has no concerns with that element of the participation model. NIPPC requests that future versions of the EDAM straw proposal briefly describe the eligibility requirements for participation in the WEIM with citations to the CAISO tariff or other documents setting forth the WEIM eligibility requirements.

NIPPC’s other concern with the participation model is that it requires all generation resources in the EDAM BA to participate in the market.  While participation is voluntary for BAs, once a generator’s host BA decides to join the EDAM, all of the generation within the BA will be forced to participate in EDAM with significant implications for transmission rights and exposure to EDAM prices in the course of its business. While generators may have tools to mitigate their exposure to EDAM pricing (such as “contracts for differences”), the proposed treatment of Bucket 2 transmission potentially jeopardizes the priority of customers’ transmission rights (discussed in more detail below).  

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comments

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

NIPPC supports the equal priority between market transfers and load in edge reliability scenarios. There should be no differentiation. What one BA sees as a mere market transfer may represent the delivery of a capacity resource that another BA is relying on to serve its own load.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comments

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

NIPPC remains disappointed in the mechanism to compensate transmission customers who donate transmission under Bucket 2. As proposed, the EDAM would allow market dispatch transmission rights that customers did not utilize prior to the Day Ahead market run. If a transmission customer subsequently schedules those transmission rights in real time, the EDAM proposal would allocate the redispatch costs - of unknown magnitude - to that transmission customer. Furthermore, these real time schedules would be allowed only when the EDAM could accommodate them; assigning real time schedules a lower priority than Day Ahead schedules regardless of the priority of the transmission customer’s service under the OATT.

The current proposal also continues to provide transmission customers only transfer revenues (to the extent they may accrue) as recompense for transmission they donate and for which they paid the full tariff rate.  Transmission owners, however, under this proposal will receive a market payment to make them whole for their historic transmission revenue recovery (TRR) to account for potentially forgone short-term firm and non-firm transmission sales under their OATT.  NIPPC suggests this may be discriminatory in that a transmission provider is able to recover guaranteed revenue from the market for hypothetical future sales of transmission based on historical sales, while transmission customers are able to recover only potential transfer revenues from transmission rights that they currently hold. 

NIPPC recognizes that paying a hurdle rate for a transmission donation may not be the most efficient market mechanism. But failing to compensate a transmission customer for the market’s use of transmission rights that they have paid for (while making whole transmission providers for their foregone sales of that same service) is discriminatory and inconsistent with FERC’s open access principles. NIPPC suggests that the path to fully compensating transmission providers for their foregone transmission sales and providing access to all of the transmission grid is to move to a full RTO model, rather than providing only one party (transmission providers) with such compensation. As noted above, CAISO, for reasons that NIPPC understands well, is developing a “halfway house” superimposing a day ahead market on top of OATT transmission service. CAISO and stakeholders must accept that honoring OATT rights is just as important in this hybrid as market efficiency. Again, if stakeholders want a fully efficient market, they should pursue an RTO. In pursuing this hybrid, stakeholders must acknowledge that in relying on OATT transmission rights, the market dispatches will not be as efficient as they would be in an RTO.

Regarding Bucket 3, EDAM’s design fails to recognize that the West’s real-time bilateral market exists, is operating today, and regularly utilizes firm available transfer capability (ATC) after 10:00 of the pre-schedule day.  The description of Bucket 3 at page 32 is fundamentally flawed by presuming that this ATC must remain unused, and therefore, EDAM can impose a stop to firm sales between 10:00 and 13:00 to vacuum up all the ATC it requires.  This is in direct conflict with FERC’s Open Access principles.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

NIPPC remains disappointed in the mechanism to compensate transmission customers who donate transmission under Bucket 2. As proposed, the EDAM would allow market dispatch transmission rights that customers did not utilize prior to the Day Ahead market run. If a transmission customer subsequently schedules those transmission rights in real time, the EDAM proposal would allocate the redispatch costs - of unknown magnitude - to that transmission customer. Furthermore, these real time schedules would be allowed only when the EDAM could accommodate them; assigning real time schedules a lower priority than Day Ahead schedules regardless of the priority of the transmission customer’s service under the OATT.

The current proposal continues to provide transmission customers only transfer revenues (to the extent they accrue) as recompense for transmission they donate and for which they paid the full tariff rate.  Transmission owners, however, under this proposal now receive a market payment to make them whole for their historic transmission revenue recovery (TRR) to account for potentially forgone short-term firm and non-firm transmission sales under their OATT.  NIPPC suggests this may be discriminatory in that a transmission provider is able to recover guaranteed revenue from the market for hypothetical future sales of transmission based on historical sales, while transmission customers are able to recover only potential transfer revenues from transmission rights that they currently hold.

NIPPC recognizes that paying a hurdle rate for a transmission donation may not be the most efficient market mechanism. But failing to compensate a transmission customer for the market’s use of transmission rights that they have paid for (while making whole transmission providers for their foregone sales of that same service) is discriminatory and inconsistent with FERC’s open access principles. NIPPC suggests that the path to fully compensating transmission providers for their foregone transmission sales and providing access to all of the transmission grid is to move to a full RTO model, rather than providing only one party (transmission providers) with such compensation. As noted above, CAISO, for reasons that NIPPC understands well, is developing a “halfway house” superimposing a day ahead market on top of OATT transmission service. CAISO and stakeholders must accept that honoring OATT rights is just as important in this hybrid as market efficiency. Again if stakeholders want a fully efficient market, they should pursue an RTO. In pursuing this hybrid, stakeholders must acknowledge that in relying on OATT transmission rights, the market dispatches may not be as efficient as they would in an RTO.

NIPPC also objects to Bucket 2 – Pathway 3.  The EDAM proposal would impose significant consequences on customers who do not schedule their transmission rights by the time of the day ahead market run at 10:00 a.m..  Currently, however, transmission customers’ OATT-based service allows them to submit schedules for their transmission reservations up to minutes prior to the operating hour. While the pro forma OATT would arguably enable the CAISO’s proposal, currently transmission providers in the non-RTO West do not include or enforce the cited provision of the OATT. Instead, transmission customers routinely use their existing transmission rights to enter new transactions and submit the related schedules right up to the WECC scheduling deadline. While the EDAM is potentially more “efficient” than this bilateral market, CAISO must acknowledge that transmission customers currently enjoy the right to schedule on their transmission service reservations after the close of pre-schedule. NIPPC encourages the CAISO to revise its EDAM proposal to preserve the existing flexibility that transmission customers have in using their OATT rights. NIPPC recognizes that the EDAM proposal permits transmission customers to schedule on their transmission rights after the day ahead market run – but only at the risk of additional uplift charges.  Furthermore, the straw proposal suggests that customers who submit schedules after the day ahead market run would have a lower priority than a day ahead schedule even if the customer’s transmission service has a 7F curtailment priority.  In short, NIPPC objects to the proposed Bucket 2 – Pathway 3 because of the changes it requires to customers’ existing transmission service. First, the straw proposal allows automatic market use of transmission customers’ existing transmission rights and then penalizes those customers financially for exercising their rights (when the customer schedules their capacity in real-time and is allocated uplift costs). 

In response to stakeholders who are concerned about the potential for customers to withhold transmission leading to congestion, inefficiencies and adverse price impacts, NIPPC notes that this risk of “withholding” – or failing to enter into a bilateral transaction to use those transmission rights, already exists in the current bilateral market paradigm. If that type of withholding is not occurring now, it is unlikely that adopting EDAM will provide any new incentive to withhold transmission. As noted above, if stakeholders wish to utilize all of the transmission network to support market transfers, then CAISO and stakeholders should shift their efforts to pursue an RTO. The benefits of a market should not accrue only to load at the risk of failing to compensate generators for the full value of their transmission rights.

Consider the following example: A load in an EDAM BAA (BA1) contracts with a generator in another EDAM BAA (BA2) to meet its resource adequacy requirements. The generator secures one year of short-term firm transmission to service this contract. When the load forecast is high enough, the load and generator self-schedule the resource under bucket 1. But for much of the time, the resource is not required under bucket 1 and the transmission would be available under bucket 2. In this case a different generator in BA2 could be dispatched for a different load in BA1 without any requirement to compensate the transmission rights holders for their use (short of contributing to a market wide uplift to compensate the transmission provider for foregone revenues from the sale of short-term firm service). 

As noted above, the Participation Model requires that all generation resources (and loads) within a BA that joins EDAM are now automatically subject to the EDAM rules (the voluntary nature of the EDAM applies only to the BA). If a transmission customer schedules its transmission rights after the Day Ahead market run, the customer is exposed to uplift or redispatch costs of unknown magnitude (assuming it is even allowed to submit the schedule). On the other hand, if the transmission customer voluntarily donates its transmission if may receive transfer or congestion revenues, but only if the host BA allows it; the EDAM straw proposal allows its member BAs the flexibility to specify the allocation of congestion revenues in its individual OATT. There is no assurance that the host BA will actually provide any congestion revenues to customers who donate transmission.

NIPPC recommends modifying the straw proposal to allow transmission customers to hold their transmission rights out of the market optimization for the Day Ahead market. While giving transmission customers this option may limit the efficiency of the market dispatch, it is the only way to ensure that transmission customers who do not wish to participate in EDAM are able to avoid  exposure to the EDAM pricing and retain the value of their transmission rights. NIPPC is concerned that a market design that allows EDAM to limit or abrogate transmission customers’ existing transmission rights and to withhold transmission capacity from the bilateral market will result in rates that are not just and reasonable for customers who choose not to participate in the EDAM.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comments

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

NIPPC objects to elements of the transmission revenue requirement recovery framework. As noted above NIPPC objects to a mechanism that compensates transmission providers for the full value of their foregone revenues from sales of short-term firm (weekly, daily, and hourly) and non-firm transmission service while not fully compensating transmission customers for the market’s use of customers’ transmission rights under Bucket 2.

NIPPC also objects to the proposal to recover TRR for new transmission construction. NIPPC recognizes the benefits of new transmission facilities that increase the transfer capability between balancing areas. NIPPC also notes, however, that the decision to build large new transmission facilities is complicated. Regardless of the specific regulatory approvals required, a major consideration is whether the facilities will be fully – or nearly fully – subscribed for long-term firm use to ensure sufficient additional revenues to mitigate the risk of upward rate pressure on existing customers. In some cases, a transmission provider may even require the transmission customers who seek to use those upgrades to pay an incremental rate – above the transmission providers’ current rates – in order to avoid increasing transmission rates for customers who do not use those facilities. In these cases, an additional TRR paid to the transmission would be a windfall to the transmission provider, who did not rely on those forecast revenues to make its investment in the new facilities. NIPPC might look more favorably on a model where any TRR revenues for new facilities were paid directly to the long-term firm customers who subscribed to service on those facilities instead of paid to the transmission owner.

NIPPC also has concerns regarding the proposed recovery of transmission costs associated with EDAM wheel-through volumes net of imports/exports. NIPPC does not object to the development of a mechanism to compensate a transmission owner who finds WEIM transactions wheeling across its system. NIPPC also does not object to the mechanism to calculate the payment to the EDAM entity (volume of net wheels, net of EDAM transfer imports/exports at the EDAM entity’s non-firm hourly point to point rate). But the proposal is silent on who pays this compensation to the EDAM entity and how the cost of that compensation is collected from the market as a whole or from the EDAM entities that specifically benefit from those transfers. Please provide more detail on who will be responsible for paying the various components of TRR and how those costs will be collected.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

NIPPC also objects to Bucket 3. In Bucket 3, the market takes all unsold transmission capacity from the bilateral market, as if it is useless after the day ahead market run.  Currently there is a functioning real-time bilateral market.  While much of the West may choose to join EDAM, participation is wholly voluntary.  There may well be balancing areas that would prefer not to join. The proposed Bucket 3, however, would scoop up all of the remaining unscheduled transmission across the EDAM footprint and reserve it for use by the EDAM – whether it was needed for market dispatches or not. There would be no mechanism for non-participants in EDAM to reserve new transmission service for bilateral transactions after EDAM’s day ahead market run. Essentially, it is the EDAM market that is hoarding transmission service, withholding it from the bilateral market, but compensating the transmission provider only when it is used.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

No comments

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

NIPPC supports the proposal to fully count WSPP Schedule-C supply contracts in the EDAM RSE. These contracts are widely used and considered reliable throughout the West. While NIPPC acknowledges the concerns of stakeholders that resources may be double-counted, NIPPC notes that these contracts have long formed the backbone of the bilateral energy market in the non-RTO West and are still used by loads in CAISO for resource sufficiency. NIPPC agrees that the proposals around the scheduling and tagging of non-resource specific contracts will be sufficient to ensure that the resources will be available to the market.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comments

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comments

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comments

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

NIPPC seeks more information regarding which entities will receive an allocation of surcharge revenue. The proposal seems to allocate surcharge revenues to “net-EDAM” exporters and entities that procure imbalance reserves beyond their obligation. It does not seem appropriate to allocate those revenues to EDAM participants (as transmission owners) or to entities that procure imbalance reserves beyond their obligation. CAISO seems to assume that all the generation resources in an EDAM BA are owned by that BA; they are not.*  NIPPC suggests it would be appropriate to award those surcharge revenues to the generation resources which actually supplied the capacity and flexibility and which ultimately cured the supply deficiency. These additional surcharge revenues would compensate those resources for being ready to provide reliability capacity without an obligation to do so. NIPPC suggests that there is no basis for awarding surcharge revenues to the BAs where the resources that actually provided the service happen to be located.  

*In addition to the proposal to allocate the administrative surcharge to a BAA, in the discussion of “Priority of Transfers to EDAM BAA not passing the RSE” at page 23, the proposal assumes that an EDAM is resource sufficient because of investments the EDAM BAA made to pass the RSE, overlooking the possibility that independent power made those investments in the BAA.  Especially because under the proposed participation model those independent resources have no way to opt out of the EDAM or force the host BA to compensate those resources for the benefits they provide.  Throughout the discussion of the RSE, resources under the control of the BA are not differentiated from independent resources.  

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

NIPPC supports the proposal.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

NIPPC supports the proposed hybrid diversity benefit and pooled WEIM RSE as it appears to strike an appropriate balance. NIPPC recognizes that this mechanism could be reconsidered once the EDAM footprint has more experience with how the mechanism functions.  NIPPC prefers the option where the pooled EDAM footprint remains responsible for curing shortfalls in the WEIM RSE. NIPPC does not support the option to dissolve the EDAM footprint following failure of the WEIM RSE.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

No comments

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

The straw proposal lays out two options to allow EDAM entities the ability to retain capacity above what is needed to pass the RSE for reliability management purposes.  Again, CAISO assumes that all generation in an EDAM BA is the BA's own – and not owned by the EDAM BA’s competitors. NIPPC supports only the option for LSEs to identify capacity to hold back from market dispatch.  NIPPC does not support the option that would allow an EDAM entity to impose a limit on the amount of EDAM exports in the day-ahead market. The export transfer limit would allow an EDAM entity the ability to strand generation (which it might not own) inside its own BA, potentially increasing revenues from its own generation at the expense of its competitors (especially if the generation resources under its control were cheaper than independent generation in its BA). If LSEs seek to hold back generation under their control to address reliability concerns, that is their decision; but EDAM entities should not be able to limit market access of other generation in their BA. If an EDAM entity needs to hold capacity back for reliability purposes then it should do so, but not through a mechanism that blocks other generation from the market.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

NIPPC supports the concept of an imbalance reserve product but is concerned with the specific proposal. In NIPPC’s experience, capacity for imbalance reserves is procured on a forward basis; imbalance reserves are not procured on a day-ahead basis. The calculation of a geographic diversity benefit for the EDAM footprint that allows EDAM BAAs to reduce their obligation to set aside imbalance reserves simply gives those EDAM BAAs the opportunity to bid into the market some of the capacity they would have set aside for imbalance reserves. These additional revenues from energy sales do not reduce the quantity of capacity that those BAAs use as the basis for the balancing reserve rates in their tariffs. The geographic diversity benefit that should reduce the costs of imbalance reserves across the footprint is simply a windfall for the host EDAM BAA. NIPPC encourages the CAISO to develop a formula which would calculate the geographic diversity benefit for the footprint on a forward-looking basis thereby allowing EDAM BAAs to reduce the quantity of imbalance reserves in the tariff rate calculations that transmission customers must pay.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

NIPPC supports the proposal to extend the WEIM market power mitigation framework to the EDAM. 

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

 NIPPC supports the proposal on convergence bidding including the proposed transition.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

NIPPC supports the proposal so long as external resources are allowed to self-schedule into the market at EDAM footprint interties. The resources located in generation-only balancing areas must have a reasonable opportunity to participate in the market. Ideally, those gen-only BAAs would be allowed to join EIM/EDAM; if not, then allowing that capacity to reach customers through a pseudo-tie, dynamic schedule or self-schedule is essential.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

No comments

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comments

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comments

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comments

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comments

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comments

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

In response to other topics, NIPPC has expressed concerns with the mechanism to compensate customers with Bucket 2 transmission. NIPPC would be more confident in EDAM mechanisms which allocated transfer revenue or congestion revenue to the generation that actually provided the benefit, not simply to the host EDAM BAA for those generators. With regard to the proposal to extend the transfer revenue distribution framework to imbalance energy transfer revenue, the proposal suggests that it recognizes the shared value that results when two EDAM entities bring transmission to the transfer location; this ignores the potential that it is not the EDAM entity bringing transmission, but bucket 2 transmission donated by the EDAM entity’s customer. Sharing the mutual benefit with the two EDAM BAAs does nothing to compensate the transmission customer who enabled those benefits.  

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comments

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comments

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

 NIPPC supports the proposal that the EDAM initiative fall under the joint authority of the WEIM Governing Body and the CAISO Board of Governors.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

No additional comments

Northern California Power Agency
Submitted 09/26/2022, 08:07 pm

Contact

Michael Whitney (mike.whitney@ncpa.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Please see comments below. 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

NCPA supports voluntary EDAM entry (with an integration fee), and voluntary EDAM exit, provided that such EDAM entity provides six months’ advanced notice of its request to exit (without fees).

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

NCPA understands the importance of having confidence in market transfers, but NCPA also believes that native load should have priority over market transfers during severe emergency conditions.  Presuming an EDAM BAA has met its RSE, in a situation where a market transfer is not maintained due to severe emergency conditions, the receiving EDAM BAA should have the ability to redispatch the resources it demonstrated as part of the RSE to replace lost transfers.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Please see NCPA’s response to question 3.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

Please see NCPA’s response to question 3.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

NCPA generally supports the framework of the transmission buckets concept as proposed.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

NCPA generally supports the Pathways compromise, but more specifically supports Pathways 1 and 2 in order to ensure that as much transmission is available in the Day Ahead Market to maximize market optimization as well as mitigate need for Real Time Market uplifts.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

This aspect of the initiative must be in alignment with the Transmission Services and Market Scheduling Priorities initiative. Please refer to NCPA’s comments therein.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

NCPA does not currently support the TRR recovery framework as proposed. The historical TRR perspective as it pertains to revenue received from bilateral sales will likely cease to exist in full at some point after EDAM implementation. CAISO’s bilateral markets became much less liquid almost immediately after MRTU was implemented in April 2009. The Western real time bilateral market became less liquid as more participants joined the WEIM. The Western day ahead bilateral market will likely become less liquid soon after EDAM implementation. Therefore, the bilateral opportunities to sell transmission will likely be reduced under EDAM, and it is likely that a transmission operators’ primary opportunity for revenue may become Transfer Revenues. Notwithstanding the aforementioned, NCPA understand the need to encourage as much participation from Transmission Operators as possible, and one way to do that is lower risk associated with EDAM participation. NCPA proposes to allow Transmission Operators to recover estimated lost bilateral market revenues averaged over three (3) years prior to BAA EDAM participation for three years after EDAM implementation. This will incentivize early adoption if the only chance to recover estimated historical lost revenues occurs in the first three years.

 

NCPA proposes the following TRR recovery concept: rolling year average less transfer revenues equals TRR recovery allocated to gross metered demand.

 

NCPA does not currently support recovery of New Transmission Build Revenue Requirements or recovery of Transmission Costs Associated with EDAM Wheeling through Volumes Net of Imports/Exports.

 

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comment at this time.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

NCPA generally supports the Revised Straw Proposal RSE elements.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

No comment at this time.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comment at this time.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comment at this time.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

NCPA generally supports this concept, but NCPA would like to learn more about how this concept may impact the EDAM implementation schedule.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

NCPA does not believe immediate penalties should be enforced in the event an EDAM entity fails the RSE during normal / non-stressed market conditions (subject to a persistence check).  Based on the principle of “no leaning”, NCPA believes that an EDAM entity that fails the RSE during a stressed system condition should be temporarily suspended from participating in the EDAM.  As an alternative, if an EDAM entity that fails the RSE during a stressed system condition is allowed to continue participating in the EDAM, that entity should be subject to certain penalties for such failure.  NCPA believes any penalties enforced should be charged after-the-fact, and not incorporated into the market optimization or price formation.

 

Regarding the definition of what constitutes a “stressed system condition”, NCPA believes such should be defined as the host EDAM BAA declaring Restricted Maintenance Operations, Flex Alert, Transmission Emergency, and or EEA watch, 1, 2, or 3.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comment at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

No comment at this time.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

No comment at this time.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comment at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

No comment at this time.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

No comment at this time.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

No comment at this time.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

No comment at this time.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comment at this time.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment at this time.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

NCPA generally supports 50/50 allocation of transfer revenues resulting from binding transmission constraints between two EDAM entities. NCPA supports allocating 100% of congestion revenues to the BAA that resolves the congestion.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comment at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comment at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comment at this time.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

No comment at this time.

NV Energy
Submitted 09/26/2022, 02:17 pm

Contact

Kiley Moore (kiley.moore@nvenergy.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

NV Energy appreciates the chance to provide comments on the Revised Straw Proposal. The document is a significant improvement from the April 28th Straw Proposal and represents a tremendous amount of work by CAISO Staff and stakeholders. With the myriad of other initiatives proceeding in parallel, NV Energy does not have time to provide detailed comments on all issues. We will try to highlight certain key areas and hope that these comments are of assistance in finalizing the EDAM design as reflected in the next iteration – the Draft Final Straw Proposal.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

The CAISO notes that in the EIM, resources can elect to be participating or non-participating.  In contrast,

 

in the EDAM, all resources within the associated BAA will participate in the market – both day-ahead and real-time – by submitting either economic bids or self-schedules. The EDAM will not support base scheduling of resources as in the WEIM today and all resources will be settled through the market.

These couple of sentences highlight a profound shift in responsibilities and potential contractual relationships between the EIM and EDAM. Currently, Section 1 of Attachment P of the NV Energy OATT states,

 

This Attachment P shall work in concert with the provisions of the [CAISO] Tariff implementing the EIM to support operation of the EIM. To the extent that this Attachment P is inconsistent with a provision in the remainder of this Tariff with regard to the NV Energy EIM Entity’s administration of the EIM, this Attachment P shall prevail. 

 

This Attachment P governs the relationship between the NV Energy EIM Entity and all Transmission Customers and Interconnection Customers subject to this Tariff. This Attachment P does not establish privity between Transmission Customers and the [CAISO] or make a Transmission Customer subject to the [CAISO] Tariff. Any Transmission Customer duties and obligations related to the EIM are those identified in this Tariff, unless the Transmission Customer voluntarily elects to participate directly in the EIM as an NV Energy EIM Participating Resource. In that case, the Transmission Customer shall also be subject to the [CAISO] Tariff provisions for EIM Participating Resources and EIM Participating Resource Scheduling Coordinators.

NV Energy understands that the other EIM Entities have a similar provision in their tariffs. As the CAISO recognizes in the Revised Straw Proposal, a non-participating EIM resource is one that has elected not to participate in the market. Such a resource does not execute an agreement with the CAISO and is not registered as available to the real-time market. The EIM Entity submits a base schedule that includes the non-participating resource so the real-time market can account for the resource in various aspects of EIM operation, including the overall market optimization and dispatch and considering the resource’s supply in the resource sufficiency evaluation (RSE). These base schedules for non-participating resources are not directly settled through the market. Rather the non-participating resources are settled for imbalances under the OATT for any deviations from their balanced generation and load schedules submitted at T-57.

This structure was developed, in part, due to a strong desire on the part of the OATT customers not to become CAISO scheduling coordinators. The CAISO must clarify if there is to be a shift in paradigms such that all OATT customers will need to enter into CAISO EDAM Participating Resource Agreements, EDAM Scheduling Coordinator Agreements and CAISO metering agreements.

During a recent stakeholder meeting, NV Energy inquired as to the metering and telemetry requirements that will be required of these new participating resources. The CAISO should clarify the contractual, metering, and telemetry requirements that will be expected of current OATT customers.

Additionally, it will be important to address the issue of sub-allocation of EDAM responsibilities to third-party OATT customers. The Imbalance reserve obligation and RSE will need to be allocated between the OATT transmission provider’s native load customers and third-party Network Integration Transmission Service customers and point-to-point customers. While this can be done as part of the OATT revision process by the “first movers” who may participate in a new EDAM market, this can lead to implementation delays if the relationship with OATT customers is not addressed up front in a feasible manner in the CAISO market timelines. 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

The CAISO proposes that each EDAM BAA meet an RSE to have sufficient supply to meet demand, ancillary services, and uncertainty requirements. Additionally, CAISO proposes to hold separate market optimization runs for the IFM and RUC process where the bids that are supplied in the IFM will also be required to offer in the RUC. The market design will achieve additional confidence and attempt to reduce resource redispatch through the transmission availability proposal to utilize all transmission in day ahead and real time. Moreover, the market will contain parameters that prevent a BAA from propagating shortfalls to other BAAs by preventing exports from a BAA experiencing a power balance constraint. CAISO’s final proposal to instill confidence in the market transfers is to include a day ahead imbalance reserve product that would procure nearly all uncertainty that occurs from the day ahead timeframe into the real-time fifteen-minute market. NV Energy supports all of the high-level proposed concepts to instill confidence in market transfers except the proposal for an imbalance reserve product. NV Energy is skeptical that this product is necessary in the day ahead market when it is essentially procuring capacity, i.e. changing the unit commitment level, while also being misaligned with the flexible ramping product design in real time. If the uncertainty products differ in design from day ahead to real time, then NV Energy is concerned that load is procuring capacity in day ahead that will later be decommitted in STUC.

To be clear, NV Energy is not advocating for the imbalance reserve design to change the current flexible ramping product. There are additional issues with the imbalance reserve product that need to be resolved before NV Energy would be able to support this product. Instead, NV Energy believes that the flexible ramping product design should be extended to the day ahead if it is determined that it is necessary to procure all uncertainty in the day ahead market. Additionally, NV Energy proposes that CAISO consider enhancements to STUC to provide more confidence in the market overall. Stated more clearly, we should be working back from the real time market flexible ramping product rather than designing an entirely new misaligned product that may provide little to no benefit to load. Finally, NV Energy is concerned about the timing of the CAISO’s Day-Ahead Initiative and its relationship to EDAM. To have such a controversial proposal be a foundational element of EDAM presents a significant risk to the EDAM design and timeline.

For additional detail into the additional issues regarding the imbalance reserve product NV Energy submitted comments on CAISO’s Third Revised Straw?Proposal for the Day-Ahead Market Enhancements on May 20, 2022. In those comments, NV?Energy noted:

  • CAISO has not stated specific reasons why the imbalance reserve product increases the benefits for all EDAM Entities or why it is necessary to include in the market design for EDAM given that the proposed EDAM market design incorporates an RSE that has the same requirements of the imbalance reserve in order for an entity to participate in the Day-Ahead Market. Therefore, it is unclear why it’s necessary to award this capacity when other markets have created must offer obligation rules that carry into real-time. 
  • NV Energy cannot support the level of uncertainty that CAISO has proposed to procure for this product. CAISO has proposed to procure the full imbalance reserve requirement with a biddable product rather than utilize a demand curve which would procure imbalance reserves based on the probability the capacity is needed in real-time. CAISO’s approach could have a significant impact on the day-ahead and real-time prices and may result in over-procurement of capacity for a large portion of the year.
  • CAISO has not provided any data analysis to stakeholders regarding the impact of this product to market participants and to market prices. An analysis of the quantity and cost of the imbalance reserve product will likely be an important factor in any EDAM participation decision.
  • For potential EIM Entities with a significant number of third-party OATT customers, the imbalance reserve requirement would need to be proportionally sub-allocated. In effect, the CAISO would be creating a new product that would be an addition to the existing OATT ancillary service reserve requirements. It is important to consider how this product would be sub-allocated and how an EIM Entity transmission customer could supply their share.?
4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

NV Energy continues to review and comment on the CAISO’s transmission service and market scheduling priorities (“Wheel through”) initiative to promote an outcome that holds California transmission to an equal standard as other entities in the West. CAISO has proposed that wheel throughs of sufficient duration, with market contracts, and prepayment will qualify for transfers that are equal to California load. It is unclear by the proposal how curtailments will be made. For example, if a CAISO LSE is short energy because it failed the RSE, will all California intertie transfers be cut pro rata? Under NV Energy’s OATT, if either native load or a network customer is short on energy, that specific customer will have its transmission reduction plan initiated, the other interchange customers will not be curtailed for one entity’s shortage. Another question is whether curtailments will be path specific when there is a reduction of transfer capacity on a path. Under NV Energy’s OATT, if an event occurs that is limited to a specific intertie, all transfers on that specific path/intertie that is reducing transfer capacity will be curtailed pro rata. NV Energy would request that the CAISO provide a table that outlines the various scenarios of curtailment and curtailment priorities to gain a better understanding of CAISO’s proposal. Only when the wheel through issue is resolved along with the continuation of EDAM market design will NV Energy be able to have confidence in market transfers. It would be useful for the CAISO to include a table that outlines curtailment priorities for all market scenarios so that stakeholders can see what is being proposed.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

NV Energy supports the constraints in EDAM that support a BAA first meeting its own requirements before it will export energy or capacity to other BAAs. However, CAISO also proposes that: (1) if an EDAM Entity fails the RSE but is able to cure the failure through a monetary penalty and (2) that if another EDAM Entity enters an EEA, the EDAM Entity who was short in the RSE will have its transfers cut to alleviate the EEA condition for the other EDAM Entity. NV Energy does not support this outcome. If an EDAM Entity bids more energy into the market than is required for the RSE, those transfers and energy bids should be deemed firm. CAISO allows the right for an EDAM Entity to hold back resources in excess of the RSE, so if the EDAM Entity bids more than is required, that it can be considered a willing market sale and the purchase at the high penalty price should deem the purchaser compliant with the RSE.

Only in the extreme “edge” case where there is insufficient supply should: (1) the purchase penalty not be applied and (2) the transfers be limited to ensure the shortfall is not exported to an EDAM Entity who passed the RSE.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

To date, EDAM transmission has been referred to as a series of “buckets” that could be utilized in a series of “pathways”. These nomenclatures may no longer serve a purpose and possibly should be dropped. NV Energy understands the breakdown of transmission as follows:

  1. Self-Scheduled transmission associated with the RSE. This would be schedules from both NITS and point-to-point customers to loads and exports. Examples would include a generator in Nevada exporting to California on firm point-to-point transmission or a NITS customer with import rights moving their WSPP Schedule C purchase from the Nevada border to their network load. This has been called Bucket 1 transmission.
  1. Self-Scheduled transmission not associated with the RSE. Another form of Self-Schedule transmission could be point-to-point transmission service that is reserved long term that doesn’t support a specific resource for an EDAM Entity’s RSE. This type of transmission usually supports bilateral daily transactions that may be out of the Market.  This has been called Bucket 2 transmission.
  1. Transmission associated with “bid range”. This is a significant change from OATT practice. NV Energy could sell the capacity from a gas unit to an external EDAM Entity along with the point-to-point export rights. Rather than self-schedule the resource, the purchaser would bid it into the EDAM and receive credit towards its own RSE obligation. This will allow the unit to be dispatched if needed, but to be displaced if a less expensive source of supply is identified in the market optimization to serve that load. While not discussed as often as the self-schedules, this would also have been part of the old Bucket 1.
  1. Assignment to CAISO. The CAISO proposes that a customer with a firm point-to-point reservation of a month or longer duration could make that transmission available to the CAISO (similar to the assignment process under the OATT) in exchange for potential congestion rent payments. Hopefully, this is a clearer articulation of what has been Bucket 2.
  1. Firm Available Transfer Capability – this is transmission capacity that has not been sold. This has been called Bucket 3 transmission.
  1. Unscheduled transmission (non-firm ATC) – this is transmission that has been set aside or reserved for both NITS and point-to-point customers but was not scheduled by 10 am day-ahead. For example, a NITS customer may have a peak forecast for the year of 50 MW, which requires NV Energy to hold that amount for a potential schedule, but the actual load that day is only 30 MW. CAISO’s proposal is that the 20 MW would be released to use in the optimization. If the customer comes back between day-ahead and real-time and increases the schedule to 35 MW, CAISO’s optimization software would redispatch to accommodate the additional demand.
  1. Transmission associated with Transmission Reserve Margins. NV Energy utilizes a TRM, to meet its obligations under the Western Power Pool Reserve Sharing Agreement. A total TRM of 375 MW is allocated 175 MW to the Sierra Pacific northern system and 200 MW to the Nevada Power southern system.

NV Energy can support the CAISO’s proposal to make transmission associated with (1) to (6) available to the market. NV Energy would propose that transmission associated with TRM not be included in EDAM to ensure there is transmission capacity available to meet system emergencies. Absent further developments to co-optimize ancillary services or to consolidate Balancing Authority functions, NV Energy must be able to access external supply to prevent or respond to system emergencies. While the focus has been on the interties, all of the EDAM Entity’s internal network would also be part of the optimization.

Transmission associated with pre-OATT existing contracts or point to point transmission service agreements that are not used as a part of an EDAM Entity’s RSE could be included or “carved out” depending on the underlying contract rights. If carved out, the transmission could be assigned a Contract Reference Number similar to the Transmission Rights and Curtailment Instruction process under Section 16 of the CAISO Tariff.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

CAISO has proposed three pathways for firm point-to-point transmission service of a month or longer duration: (1) self-schedule by 10 AM and use the previously-reserved transmission service, (2) assign the transmission capacity to the CAISO for EDAM use in exchange for potential congestion rent payments, or (3) the transmission will be released to the market to support optimized transfers if the transmission is not scheduled by 10 am.  If the point-to-point customer utilizes their OATT rights to schedule after the 10 am market deadline, the market will redispatch to accommodate the transfer, if feasible, however the schedule will have a lower priority. NV Energy can support this approach, provided point-to-point transmission of less than a month in duration and network customers are not eligible for direct assignment to CAISO.

NV Energy supports the requirement of firm transmission to be of one month or longer. The requirement for the transmission reservation to be a month or longer helps EDAM Entities have access to daily and weekly transmission to meet RSE requirements, without the transmission being “taken” from the bilateral market by an entity seeking to increase congestion costs. Under NV Energy’s OATT, a network customer cannot assign unused transmission to another customer. The transmission is specifically used to serve its load, no more, no less, if unused it is released as non-firm capacity for the Transmission Provider to sell.  If later scheduled by a network customer after the non-firm transmission was sold, the non-firm transmission reservation would be curtailed.

NV Energy would use congestion rent payments to hold our existing customers harmless as much as possible while allowing the market to optimize low-cost transfers.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

Please see response to question 6.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

In the Revised Straw Proposal, the CAISO moves away from charging the market at the OATT rate for any use of firm (unsold) ATC (also referred to as Bucket 3). While the firm ATC would be available to the market hurdle-free, the CAISO proposes a mechanism to keep participating transmission providers whole to their current rate structures by accounting for potential foregone revenues from short term firm and short term non-firm transmission sales resulting from their participation in the EDAM. In addition, CAISO proposes to establish a ratio of an EDAM Entity’s short-term firm and non-firm point to point transmission service revenue requirement and apply the ratio of revenue requirement on approved new transmission builds that increase transfer capability between EDAM BAAs and revenues for wheeling-through volumes for EDAM BAAs that exceed the total imports and exports from the EDAM Entity BAA. NV Energy supports these revenue protections.

  1. Transmission Revenue Credit Shortfall Recovery

Under the OATT today, network and firm point to point transmission that is unscheduled by noon is automatically released as non-firm transmission for sale by the transmission provider. These non-firm sales act as a credit to all OATT customers to keep rates just and reasonable. In the EDAM, this transmission capability is to be made available to the market. As EDAM expands, former transmission customers (for example the merchant of another EDAM Entity that does not have a direct intertie with CAISO) may simply bid at their locations rather than secure non-firm transmission to the CAISO border. Thus, the transmission provider may experience reduced non-firm transmission sales.

CAISO proposes to offer a form of revenue protection, at least for the first several years of EDAM participation. The proposal is that the EDAM recoverable revenues be those associated with historical transmission sales to third parties (not sales to the EDAM Entity’s merchant function) and cover the following products: (1) hourly non-firm and firm point-to-point; (2) daily non-firm and firm point-to-point; and (3) weekly non-firm and firm point-to-point. Each EDAM BAA transmission provider would calculate their EDAM recoverable TRR based on the transmission provider’s average FERC-approved (or applicable regulatory authority approved) transmission revenue requirement for non-firm and short-term firm point to point transmission services for the most recent three years. CAISO states that three years represents a reasonable time-period that should provide a more stable and reasonable representation of revenue requirement associated with the transmission products eligible for recovery through the EDAM. NV Energy can support the three-year average approach.

CAISO also proposes to review and update the EDAM recoverable TRR after two-years of participating in the EDAM. This period is too short, especially when combined with a three-year average that would incorporate the revenue credit reductions from two years of EDAM participation. NV Energy would suggest a minimum four-year period prior to any update to ensure predictability of EDAM-related transmission revenues for a transitional period. It may be appropriate to phase out the EDAM recoverable TRR over time, but two years is not reasonable.

The EDAM recoverable TRR represents the utmost upper bound of transmission revenue recovery associated with the transmission products identified. For purposes of establishing an initial rate, NV Energy would propose using 50%. This recovery level would be added to the transmission providers sales of short-term firm and non-firm products to determine any shortfall or over-recovery which would be applied to the following year’s target level.

  1. Percentage of New Transmission Build

EDAM customers get the benefit of the newly constructed transmission but are not making the contribution typically seen as a revenue credit under the OATT. In other words, the reduction in typical revenue credits would apply both to existing and new transmission facilities. To prevent this outcome and to avoid creating a situation where an EDAM Entity would not join until after a new line has been placed in service and developed a history of revenue credits, CAISO proposes an amount of new transmission upgrade revenue requirement would be recoverable to the EDAM based on the historical ratio of the non-firm and short-term firm point to point revenue requirement, associated with third-party sales on the new upgrade, to the total EDAM entity TRR.

For example, if NV Energy’s ratio of short-term firm and non-firm transmission revenue is approximately 5% of the Company’s overall transmission revenue requirement, that same 5% would be applied to the increased transmission revenue requirement associated with the Greenlink West and Greenlink North lines expected to come into service at the end of 2026 and 2028, respectively.

The CAISO’s proposal appropriately recognizes the value of these regional transmission system upgrades as well as keeping transmission provider’s whole. These high voltage facilities will bring additional transfer capabilities providing great market benefits.

  1. Wheeling Through Volumes In Excess of Net Imports Plus Exports

The third component that is eligible for transmission revenue recovery through the EDAM is associated with wheeling volumes through an EDAM Entity’s transmission system in excess of the total net imports/exports transfers of the EDAM entity.

Item 6.1.45 in the CAISO Policy Initiatives Catalogue is as follows:

This initiative would evaluate wheel-through transactions occurring throughout the WEIM area. A wheel through is a transaction in which a WEIM Entity facilitates a transfer without sourcing or sinking energy. When a wheel through occurs, the entity “in the middle” receives no direct financial benefit even though they facilitated the transfer. This initiative will also investigate the need for compensation when net wheeling occurs. This initiative was originally considered in 2017 but it was determined at the time that all WEIM Entities currently benefit more than they facilitate wheels. Therefore, because all entities receive direct financial benefit from the WEIM (in comparison to net wheeling), an ex-post settlement or hurdle rate to compensate for wheels was not favorable. This item will remain in the catalog and can be revisited if it is prioritized and deemed necessary. Wheeling data will be published quarterly in the WEIM Quarterly Benefits Report

The quarterly benefit reports have shown that certain EIM Entities have experienced months where wheels through have greatly exceeded the sum of imports and exports. This scenario could occur in the EDAM as well. As noted in the Revised Straw Proposal, wheeling through the EDAM entity system creates benefits for other EDAM BAAs but not for that middle entity. In those instances, the excess wheels through the system should be considered foregone transmission revenue for the EDAM Entity.

CAISO’s proposal is that in those periods where this net difference occurs, the EDAM Entity be compensated for the excess transmission use supporting net wheels through its system. The volume of net wheels through the EDAM entity transmission system, net of EDAM transfer imports and exports, would be compensated at the EDAM Entity’s filed and approved hourly point to point transmission rate.

NV Energy strongly supports this aspect of the Revised Straw Proposal. As shown in the tables below, applying this concept to the monthly EIM volumes, NV Energy would have added $2,250,496 for 2020, $1,191,441 for 2021 and $634,920 for the first 6 months of 2022.

EIM Transfers From, To, and Through NV Energy

From the CAISO Benefit Reports

2020 (Total = $2,250,496)

 

Jan

Feb

March

April

May

June

Oct

Nov

Wheel-Through

114,600

142,277

128,805

240,921

288,375

202,302

147,858

136,099

Import

37,207

25,773

26,500

41,601

90,764

41,719

33,930

79,183

Export

60,510

88,845

98,705

86,773

54,775

75,679

68,963

32,892

Wheel-Through less total import and export

16,883

27,659

3,600

112,547

142,836

84,904

44,965

24,024

 

 

 

 

 

 

 

 

 

NVE Non-firm rate

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

 

 

 

 

 

 

 

 

 

Net Wheel Through X Non-firm rate

$83,064

$136,082

$17,712

$553,731

$702,753

$417,728

$221,228

$118,198

 

2021 (Total= $1,191,441)

 

Jan

Feb

March

May

Sep

Oct

Nov

Dec

Wheel-Through (MWh)

147,621

214,638

167,054

138,716

175,577

131,593

114,634

133,784

Import

54,807

59,503

49,331

88,338

81,502

73,373

53,896

81,764

Export

69,470

42,591

59,497

40,133

68,565

51,791

55,859

51,034

Wheel-Through less total import and export

23,344

112,544

58,226

10,245

25,510

6,429

4,879

986

 

 

 

 

 

 

 

 

 

NVE Non-firm rate

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

 

 

 

 

 

 

 

 

 

Net Wheel Through X Non-firm rate

$114,852

$553,716

$286,472

$50,405

$125,509

$31,631

$24,005

$4,851

 

2022 ($634,920 through June)

 

 

Jan

Feb

March

April

May

June

Wheel-Through

123,661

128,992

212,265

84,004

138,445

108,608

Import

59,702

54,254

65,802

82,111

103,585

87,414

Export

50,033

45,735

60,343

55,128

59,358

68,899

Wheel-Through less total import and export

13,926

29,003

86,120

-53,235

-24,498

-18,512

 

 

 

 

 

 

 

NVE Non-firm rate

$4.92

$4.92

$4.92

$4.92

$4.92

$4.92

 

 

 

 

 

 

 

Net Wheel Through X Non-firm rate

$68,516

$142,694

$423,710

$0

$0

$0

 

  1. True-Up

CAISO’s proposal offers two options for addressing any surplus or shortfall for the EDAM TRR: (1) a year end true-up where the surpluses and shortfalls are settled; or (2) carrying over the shortfall or surplus into the following year’s calculation of the forecasted TRR requirement, which would affect the BAA specific rate calculated. NV Energy would recommend Option 2 as more consistent with the true-up mechanisms employed under formula rates.

  1. Allocation

With regard to allocation of the EDAM TRR uplift rate, the CAISO proposes two options: (1) to gross load across the footprint or (2) to demand plus supply across the footprint. NV Energy strongly supports Option 2 – assessing the charge to demand plus supply. Option 1 poses a significant free ridership problem of generation crossing the transmission providers’ transmission system with no corresponding contribution to the transmission cost recovery. Also, historically NV Energy has seen the short-term non-firm and firm transmission revenues that this rate would be seeking to recover has been a mix of requests from both generation and load. NV Energy finds it appropriate to apply the uplift to both generation and demand.  NV Energy does not oppose the proposal that in allocating this uplift charge, the CAISO would not allocate to an EDAM Entity its own TRR revenue shortfall so its metered demand does not have to pay for its TRR cost recovery.

In the next iteration of the Straw Proposal, the CAISO should provide additional detail on how the CAISO lost transmission revenues will be determined.

  1. Use of EDAM Transfer Revenues to Reduce Amount of TRR recovery

During the stakeholder discussions, a question was raised as to whether EDAM Transfer Revenues associated with firm ATC should be used to reduce the EDAM TRR, prior to assessing an uplift to other EDAM-participating BAAs. NV Energy could support using the EDAM Transfer revenues in this manner after the Transmission Providers’ OATT customers have been held harmless from EDAM-related transfer and congestion charges.

Today, OATT customers have the ability to modify their schedules between 10 am and T-57 without exposure to congestion costs. In order not to financially harm OATT customers, they must be protected from congestion and transfer charges arising from their permissible schedule changes to the extent possible. If there is a surplus of EDAM Transfer and congestion payments to the transmission provider after these hold harmless costs have been netted, that excess could be used to reduce the EDAM TRR as these costs should be considered in a manner similar to other short-term firm and non-firm transmission revenue credits.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

  Missing from the Revised Straw Proposal is any discussion of the interrelationship between EDAM and OATT non-firm transmission service. Today, non-firm transmission plays a vital role in:

  1. Providing transmission paths for reliability and economic procurement where the paths is fully utilized but is often not fully scheduled;
  2. Supporting off-system sales from Designated Network Resources when firm transmission is not available; and
  3. To provide for short-term hourly sales when the smallest firm product under some OATTs (including NV Energy’s tariff) is a daily product.

Non firm transmission can be reserved in advance of the day-ahead timeframe or intraday to respond to contingency events or bilateral sales opportunities. A key component of non-firm transmission is price certainty. If the transmission service cannot be accommodated it is curtailed. There is no exposure to uncertain congestion costs.

The Revised Straw proposal does not address this issue. Will non-firm transmission be addressed as a curtailment priority as done today or will the CAISO’s optimization engine redispatch to accommodate non-firm schedules, in effect converting them to a form of conditional firm product? The Draft Final Proposal should explain how non-firm transmission can continue to be used, how it will be scheduled, when it can be offered, and what price exposure would there be to congestion costs.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

In comments submitted on September 16, 2022, on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal, the Department of Market Monitoring states:

 

If the 97.5% threshold is not actually a meaningful uncertainty target, stakeholders may want to consider a more straightforward uncertainty adder. This is because the uncertainty adder produced by the quantile regression method is likely to fluctuate significantly interval by interval and could be very difficult for balancing areas to reproduce or predict in advance. A simpler adder, such as a fixed percentage of each interval’s net load, could result in much more transparent and easily predictable RSE test requirements, as well as significantly smoother transitions between RSE test requirements throughout the day. A simple percentage of load adder, such as a planning reserve margin, has a long history of being successfully utilized in the electricity industry for setting standards for forward procurement of capacity to meet uncertainty needs. It could be worth considering for the WEIM (and EDAM) as well.

NV Energy supports this reserve margin approach as a means of simplifying and enhancing the predictability of the EDAM RSE and the Imbalance Reserve product. It is important to remember that the EDAM RSE will need to be allocated not only to the EDAM Entity’s native load, but also must be sub-allocated to third party customers. This means the RSE must be predictable and know with enough certainty to enable these OATT customers to meet their respective targets.  A reserve margin would operate similar to an average system loss factor under the OATT today enabling appropriate attribution.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

WSPP Schedule C contracts will count toward the EDAM RSE. Recognizing that the source and transmission may be unknown when the day-ahead market run is executed, CAISO has introduced a tagging requirement to provide greater confidence in these arrangements. Intertie bids at the CAISO border that are under contract to an CAISO LSE or otherwise have a contract under the CAISO tariff will be eligible for the CAISO RSE and be subject to the same tagging requirement.

NV Energy seeks clarity as to the tagging requirement. Specifically, is it a timing requirement, a quality requirement, or both. If a timing requirement, the expectation is the transaction would be tagged by 3 pm. Only in unusual circumstances would the tagging be done after that timeframe. NV Energy seeks confirmation that the transmission arrangements associated with WSPP Schedule C agreements that are commonly utilized in the Western market today will be unchanged by EDAM. NV Energy also seeks confirmation that external resource-specific purchases must have firm or conditional firm transmission to the border of the EDAM Balancing Authority Area claiming the resource for RSE purposes. In other words, for a CAISO LSE to count a Nevada geothermal for their RSE that resource will continue to be required to purchase firm point-to-point transmission service under the NV Energy OATT to the Nevada border with California. Any other outcome would mean a significant loss of transmission revenue and jeopardize any EDAM value proposition.

For contracts that require wheeling through the CAISO system, NV Energy understands that the approach would be similar to that utilized for transmission across other systems a WSPP Schedule C transaction would count towards meeting the RSE if it was delivered across California using either HPT or LPT transmission but a resource specific arrangement would require HPT transmission through California. These requirements must be clear for Entities to be able to plan to meet their RSE obligations and to have collective confidence in transfers.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

 No Comment.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

 No Comment.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

The EDAM Straw proposal briefly mentions the issue of the different market timelines of the gas and CAISO Day-Ahead markets. Gas trading and power trading occur simultaneously in the current construct. This means the majority of day-ahead trading is completed between 5-7 am. After this time, the liquidity in the gas markets is drastically reduced. However, the results in the Day Ahead Market are posted at or after 1:00 PM.

CAISO has proposed to publish the Day Ahead preliminary results two days prior to the actual binding Day Ahead run as a solution to the gas and market timing misalignment issue. However, the preliminary market results are only reflective of the binding Day Ahead market awards if the inputs are fairly known prior to these market runs. Given the proposed uncertainty requirement within the RSE test and the resources needed in order to meet the uncertainty, there is the strong possibility that EDAM will significantly increase the redispatch of NV Energy’s system in comparison to the changes seen today from the EIM base schedules. Thus, the Company’s gas burn projections could be drastically shifted on the pipelines. This would require a true up of our gas nominations in the intraday markets which could come with significant negative financial impacts. CAISO states they expect market participants to meet the day-ahead and real-time schedules and that the current CAISO Day-Ahead Market participants have already “successfully navigated” this issue. NV Energy does not believe that the CAISO market participants are similarly situated with gas resources and the balancing pipeline requirements like some of the Desert Southwest Entities. Therefore, NV Energy supports conducting additional workshops on this issue. These should include not only existing gas generators in CAISO, but also representatives from the pertinent pipelines to review how a potential EDAM would affect current operations and to develop protections in the EDAM design against costs attributable to this re-optimization. This is a significant concern for NV Energy that could erode EDAM benefits when the company must purchase additional gas on one pipeline and sell gas on another. In NV Energy’s view, the most optimal outcome from a gas workshop would be to either better understand the gas nomogram tool if applicable to EIM, for CAISO to gain a better understanding of the gas management issues of the Desert Southwest, and/or potential additional pricing or constraint tools that could be utilized for gas management.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

NV Energy understands that EDAM RSE failures are determined based upon an individual Balancing Authority test where the bid-in fleet goes through an optimization to measure if there is enough bid-in energy to meet forecasted demand plus imbalance reserve. If there is a flexible ramping or imbalance reserve shortage that MW amount reflects the quantity of the failure. One challenge or concern with this test is that the Balancing Authority will be losing information on how much surplus is available for the individual participants BAA, which is an issue with the amount of redispatch that could occur with the internal resources. As currently proposed, the test will just tell the EDAM Entity if we are short. NV Energy proposes that the CAISO also report the surplus results for the RSE because the surplus can provide a gauge of how short the system is along with possibly understanding which Balancing Authorities have available capacity to trade.

NV Energy further understands that under the current policy proposal if there is a failure, no matter how large it is that it will be resolved by using the 16-hour block price at the maximum price for a bilateral trading hub. Additionally, if there is a failure in any hour then the EDAM Entity has failed the test for the whole day. NV Energy is still concerned with the proposed 16 hour block purchase as a financial penalty for failing an hour of the RSE. There is a strong possibility that the uncertainty may not materialize in Real Time. Currently within the EIM, there are BAAs that fail the RSE without any infeasibilities occurring. Therefore, NV Energy does not support a punitive financial penalty when a BAA fails the Day Ahead RSE within the uncertainty amount.

NV Energy offers the following comments with respect to the creation of penalty failure bands:

  • Types of failures in the market:
    1.  Forecast error (MAPE) – No penalty
    2.  Day Ahead Uncertainty - % of LMP
    3.  WEIM Uncertainty for each hour – 50% price cap
    4. Forecasted Load – Price cap

NV Energy does not support a penalty price for an organized market that is developed from using a trading hub price from the bilateral market. Stakeholders and CAISO should consider a price that uses a percent of the Day Ahead LMP, in order to avoid the consequences resulting in inaccurate assumptions about the liquidity of the bilateral market following the construction of a Day Ahead Market and the Western Resource Adequacy Program. To be clear, NV Energy does support the use of financial penalties if a BAA fails a RSE but does not support the current proposed design of this penalty.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

CAISO has proposed an hourly bid-range trading platform that would allow participants to trade RSE requirements prior to the RSE test. This functionality can provide a more efficient market outcome as entities could avoid large block purchases bilaterally that would be fixed interchange not optimized. NV Energy supports an hourly bid-range trading platform designed to help participants pass the RSE tests.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

 No Comment.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

NV Energy believes holding back supply in excess of RSE could be utilized as a good tool for an EDAM Entity to manage its uncertainty and events that may occur within its Balancing Authority Area. However, by holding back supply, there could be energy price convergence issues between the EDAM and EIM. 

 

In CAISO’s proposal, the net EDAM export transfer limit is a mechanism that would limit net export transfers out of an EDAM BAA to the difference between RSE countable capacity and the RSE requirement of an EDAM BAA. This would help ensure that an EDAM BAA is able to meet its own load requirements prior to facilitating any transfers between BAAs. NV Energy supports the consideration of a net EDAM transfer export limit constraint. As described in question 5 above, an EDAM BAA is able to hold back capacity in excess of its RSE, that ability coupled with the constraint to limit the net export to the RSE capacity and the EDAM BAA’s RSE requirement should provide confidence in EDAM transfers such that if uncertainty materializes that the EDAM transfers facilitated with these two constructs in mind should continue to be supported in EDAM and not curtailed. 

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

CAISO proposes a concept of a hybrid diversity benefit that would procure additional imbalance reserves within a portion of the footprints pooled diversity benefit to provide more confidence within the market. While NV Energy understands this additional procurement may have value at the onset of the EDAM market, NV Energy would not support the use of this product past the initial year of operation or some other near-term proposed timeframe. Specifically, NV Energy proposes that this additional procurement have a stated sunset date within the tariff. The additional uncertainty procurement will likely impact the unit commitments of resources in the Day Ahead Market which will significantly reduce the benefits achieved.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

The CAISO proposes that all resources must submit reliability capacity bids at the same quantity as their energy bid plus ancillary service self-provision in order to ensure all resources shown in the EDAM RSE are fully available for use in RUC. The requirement to bid in RUC only extends to capacity shown in the RSE (and by extension to IFM) and not to all resources in the EDAM BAA. NV Energy can support this element of the proposal.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

With respect to local market power mitigation in the EIM, the CAISO performs a dynamic competitive path assessment (DCPA) to determine if resources can exercise market power. If three or fewer generators can provide pivotal supply to a binding transmission constraint, the constraint is considered uncompetitive, and the CAISO mitigates energy bids to the lower of the submitted bid or the respective CAISO generated default energy bid. In the context of the EIM, the CAISO only performs the DCPA when there are binding transfer limits in the import direction to that BAA that restrict external resources from meeting internal demand. This method assumes that the CAISO BAA is competitive. When this test fails, the energy bids of all supply resources in the respective WEIM BAA are mitigated.

NV Energy supports the continuation of this approach and its extension to EDAM and agrees it would be an improvement to the pivotal supplier test to consider multiple EDAM Entities behind a transmission constraint to reduce potential over-conservativeness in the current application. We also support consideration of system-wide market power in the Price Formation initiative.

NV Energy notes that important issues related to price formation and system market power mitigation are being addressed in another stakeholder initiative but understands that there has been limited progress to date. In order to complete the EDAM design there needs to be resolution of the approaches to price formation and system market power. At some point the parallel paths must converge.

 

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

the CAISO does. Under the OATT, the issue of over or under scheduling can be addressed by requiring customers to come forward with resources to meet the forecast. This is what is done today in the EIM with the balanced schedule requirement that is then rolled into the EIM Entity base schedule. In order to appropriately allocate resource sufficiency and imbalance reserves, it is likely that OATT customers in EDAM will need to meet a planning reserve margin in addition to the forecasted amount.

 

The Revised Straw Proposal does not consider interim provisions to prevent load under-scheduling necessary for EDAM. NV Energy disagrees. These types of charges may be necessary to prevent third-party customers from leaning on the transmission provider’s capacity resources beyond the level or current ancillary service requirements.

 

The CAISO has stated that by using offsetting virtual supply and demand bids market participants can hedge congestion costs or earn revenues associated with differences in congestion between different points within the CAISO system by placing virtual demand and supply bids at different locations during the same hour.

 

In EDAM, however, transmission customers should receive the same or better protection if the EDAM transfer revenue and congestion revenue is used directly to hold OATT customer harmless and congestion associated with use of their OATT intra-day rights. In other words, the market design is addressing this needed protection for all OATT customers on an equal basis without the use of convergence bids that allow not only the OATT customers themselves, but also third parties to engaging in the virtual bidding activity. Simply stated, the OATT construct is not CAISO transmission service. The transmission provider is still providing the service of moving resources to loads at a Commission-approved fixed price.

 

In comments to the April 28th Straw Proposal, NV Energy noted that if there is a pattern of price differences, virtual bidders can reap substantial profits which are paid for as an uplift by loads, and that CAISO has had to suspend convergence bidding under stressed system conditions because, “when the system is as tight as it was during [the August 2020] heat wave, convergence bids can allow for a day-ahead market that is not supportable by actual available resources and system conditions.”[1] Of course, CAISO is both the market operator and the Balancing Authority and can take the market action to protect its own BAA. EIM Entities that choose to participate in EDAM would maintain their Balancing Authority responsibilities but would lack the ability to suspend convergence bidding if operational challenges arose unless that functionality was added to the CAISO Tariff.

 

Moreover, the CAISO does not offer convergence bidding at its interties. Based on data provided by CAISO, FERC found that “the overall impact of implementing the previously accepted tariff provisions establishing convergence bidding at the interties would result in decreased economic efficiency, and, therefore, would fail to provide the desired benefits of both price convergence and improved market efficiency.”[2] With no data on EDAM operations, with the potential for significant changes in new market designs and new market participants, it is unnecessary to make a commitment to  implement convergency bidding in a non-CAISO BAA participating in EDAM.

 

NV Energy maintains that whether to support convergence bidding should be an optional choice for the potential EDAM Entity. As an alternative, NV Energy could support initiating a stakeholder process to consider the specific issue of convergence bidding in the EDAM after two years of EDAM operation. That real-work experience and pricing data could better inform consideration of the issue rather than an unsupported assumption that it will be a benefit in a hybrid market with different footprints for day-ahead and real-time with the continuation of the EIM.

 


[1]           https://www.caiso.com/Documents/Aug14-15-StakeholderQandA.pdf. The CAISO determined that the presence of convergence bids contributed to supporting schedules that could not ultimately be honored in the real-time market. The CAISO determined that preventing the convergence bids from facilitating schedules that were not reliable provided the operators with fewer challenges in an already significantly constrained environment. The CAISO concluded it was better that the neighboring balancing authority areas know in advance instead of being in a challenging condition in real-time to serve their load having relied on unsupported exports, rather than first allowing the day-ahead market to schedule their export and then have to curtail it after it had been scheduled.

[2]              California. Indep. Sys. Operator Corp., 152 FERC ¶ 61,234, at P 43 (2015).

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

In the Revised Straw Proposal, the CAISO proposed to extend the WEIM model of external resource participation to the EDAM - non-source specific supply (non-pseudo, non-dynamic) located outside of the EDAM footprint that is contracted with the EDAM Entity (or a load serving entity located within the BAA) can continue to be self-scheduled at the EDAM footprint boundary interties. The framework does not permit non-specific resource supply to submit economic intertie bids.

NV Energy supports this general approach. As we noted in comments on the initial Straw Proposal, permitting participation of external resources: (1) may serve as a disincentive to expand participation, enabling the benefits of market access without an external entity bringing transmission and resources; (2) may reduce transmission revenues as external generators would not need to buy transmission across the EDAM Entity’s system but could simply bid at the border; and (3) could introduce operational challenges as unspecified external supply could displace internal generation rendering them unable to respond in real-time if the external supply fails to materialize.

If, however, an EDAM Entity expresses a willingness to support intertie bidding at its boundary, any resources bid in that EDAM Entity’s border should count toward that EDAM Entity’s RSE in a manner similar to resources bidding at CAISO’s boundary count towards CAISO’s RSE.

An issue that has received less attention in the stakeholder process is the participation requirements associated with a merchant generator, not associated with service to a specific load, either within an EDAM Entity’s Balancing Authority Area as a designated network resource or an external LSE through a point-to-point transmission reservation. NV Energy does not currently have any “stand-alone” merchant generators bidding into the EIM within Nevada. We have had, however, inquiries as to the potential for this activity as an intermediary step between bilateral agreements. This is an issue that could be developed in the Draft Final Proposal.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

NV Energy supports the resource specific approach as an extension of the EIM GHG design. Since EDAM does not include a base schedule like the EIM market, CAISO has proposed a GHG reference pass that will include transmission constraints to determine this GHG counterfactual for GHG attribution. The reference pass will run without GHG bids and will utilize a constraint to prevent net imports into the GHG zone. This optimized run will provide the baseline for how resources are dispatched outside of the GHG zone to determine the GHG awards. The GHG award or attribution will be limited to the GHG reference pass and its upper economic limit. NV Energy is supportive of this proposal because it is an extension of the EIM market, however, believes more discussion needs to occur on the limits that are used for the GHG attribution and issues mentioned by stakeholders on an EDAM call regarding the William Hogan paper.

One of the primary concerns that are mentioned by stakeholders is the secondary dispatch issue. One idea that has been mentioned in the past by a stakeholder was to limit the GHG award or attribution to the IFM resource dispatch instead of the upper economic limit. It would be helpful for stakeholders if CAISO could formally respond in the next paper why CAISO does not believe this would be the correct approach. NV Energy believes this idea has merit on the surface but cannot weigh in on these additional ideas unless more information and dialogue occur to gain a better understanding on the benefits and risks associated with such a change.

During an EDAM stakeholder call, a participant mentioned the issues that have been stated on the two-pass approach by William Hogan[1]. Specifically, Hogan mentions that non-emitting resources would have an incentive to avoid being dispatched in the first pass. As a solution to the secondary dispatch issue and potential resource gaming concerns, Hogan proposed a counterfactual that would utilize the same carbon price outside the GHG footprint to determine the baseline for GHG attribution. It would be useful to hear the CAISO’s response regarding the Hogan proposal to use GHG bids in the reference pass. Additionally, NV Energy requests that CAISO provide a matrix for each design option within the resource specific approach with an explanation of the benefits and risks of each option. This should significantly help stakeholders provide more informative feedback in the next round of comments.

As an additional resolution for the secondary dispatch issue, Hogan mentions other outside market mechanisms that could occur to account for the secondary dispatch issue without harming the market efficiency. It is important to note that CARB has developed such an out of market mechanism to address this secondary dispatch issue with respect to the EIM. Therefore, it might be appropriate for state commissions to weigh in whether or not this is possible for EDAM to preserve market efficiencies.

 

 


[1] Hogan, William W. January 8, 2018. “WESTERN ENERGY IMBALANCE MARKET: AN EFFICIENT MARKET WITH CONFLICTING CARBON POLICIES”. Microsoft Word - Hogan_EIM_010818.doc (harvard.edu)

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See comments in question 25.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See comments in question 25.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

NV Energy does not support the zonal proposal and will not support a proposal that incorporates a hurdle rate, “toll”, or adder into the market optimization that discriminates against resources located outside the GHG zone or zones. In December 2017, the Western Energy Imbalance Market (“EIM”) Body of State Regulators (“BOSR”) enunciated two key principles that should be applied to any option being considered for a market design change: (1) the market design must be non-discriminatory and (2) the market design must support economic dispatch. Beyond these sensible criteria are the requirements of the Federal Power Act that rates and tariffs be just and reasonable and not unduly discriminatory. The zonal proposal appears to not meet these tests and could set an unacceptable precedent in a multi-state, organized wholesale market by treating non-California or Washington, non-emitting resources differently than in-state, non-emitting resources. NV Energy is concerned that the proposal to apply an adder to non-emitting, non-California resources, only if they participate in the EIM, is unduly discriminatory.

As NV Energy discussed in its initial comments on the Straw Proposal, assume, for example, that California and Washington have linked GHG programs. Under the zonal approach, these states would set a non-specific emission factor (hurdle rate) applicable to solar generation in Nevada not under contract to either California or Washington. Assume further that NV Energy is trying to manage a solar overgeneration situation at the same time as California. Under the zonal approach, the California solar would have a potentially significant price advantage to be wheeled through Nevada for sale into Washington, leading to increased curtailments of Nevada’s equally low-emitting, solar generation. Disadvantaging Nevada solar being sold into Washington, Nevada solar-charged batteries being sold into California, Idaho hydro being sold into California, or wind competing with other non-emitting in-zone renewables is unjust and unreasonable.

By adding a toll (an apparent hurdle rate) to the unit if it is in the EDAM or EIM it creates the incorrect incentive for the potential EIM Entity to stay out of the market and simply bid the resource at the CAISO border as the GHG toll would not apply. According to the Proposal, “[w]hen dispatching resources to serve load outside the CAISO, the market optimization considers only the energy bid. When dispatching resources to serve load inside the CAISO, the market optimization considers the energy bid plus the unspecified GHG compliance cost toll.” Imposing a GHG compliance cost toll only on a subset of out-of-state non-emitting resources that don’t produce GHGs is unduly discriminatory. They should have the same ability to participate in the same market dispatch with similarly constituted California and Washington non-emitting resources. It is important to recognize that there are solutions available to the CAISO that do not discriminate against out-of-California non-emitting resources. NV Energy recommends that CAISO and stakeholders take additional time to consider these approaches.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

NV Energy is supportive of some of the aspects of the LADWP proposal but needs additional information on the proposal in order to provide more substantive comments. Since CAISO has decided to further develop a resource specific approach that is an extension of the current EIM GHG accounting process, NV Energy proposes that stakeholders consider this at a later date following the implementation of EDAM. This would allow more time for stakeholder involvement in developing the extending resource specific approach.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No Comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

CAISO defines “Transfer revenue” as the price difference between the marginal energy component of the LMP between BAAs. It occurs when the net transfer scheduling limit reached for an EDAM BAA at interfaces with other EDAM BAAs. “Congestion revenue” is the price difference in the marginal congestion component of the LMP that is triggered when internal system congestion materializes or intertie constraints are binding. CAISO proposes that there will be a generally applicable 50:50 sharing of transfer revenues across all interfaces between EDAM BAAs, subject to commercial arrangements that may require exceptions. In addition, in instances where congestion arises from an internal intertie constraint enforced within a BAA, CAISO will allocate the congestion revenue fully to the BAA where the constraint is modeled.

There has been a great deal of discussion about transactions to the interface, across the interface, and from the interface. NV Energy notes that the typical transaction may be a WSPP Schedule C that has point-to-point transmission to an interface and then the purchaser uses their network transmission rights either as firm transmission from a designated network resource or secondary network transmission from a non-designated network resource to bring the energy to their load.  NV Energy seeks confirmation that this typical arrangement would qualify for the 50/50 sharing of EIM Transfer revenue.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

NV Energy does not have any comments at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

NV Energy does not oppose the proposal regarding execution of an implementation agreement and the assessment of a reasonable implementation fee, similar to the approach utilized in the EIM. With respect to the allocation of the GMC revenue requirement, the CAISO should give examples of rages of GMC assessments to better enable EIM Entities to understand their potential cost responsibilities.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

The Revised Straw Proposal notes that this initiative involves creation of a new market paradigm, “a unique situation that the decisional classification rules were not designed to address” and states that the Board of Governors has proposed that the entire EDAM initiative fall under the joint authority of the WEIM Governing Body and the Board. NV Energy strongly supports applying joint authority to the EDAM initiative.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.
  1. Participation By Use-Limited Thermal Resources

The EDAM RSE, including the imbalance reserve product will require the participation of the Company’s entire fleet of resources. NV Energy, however, has had a longstanding complaint that it is unable to exercise sufficient control over its start-limited peaking units to enable their participation in the EIM market to-date and potentially the EDAM market in the future. NV Energy has 600 MW of gas-fired capacity that can be brought on-line in 10 minutes. These units are under permit restrictions that limit the amount of starts the resources have per year. During the summer months these units provide much needed support to meet Nevada’s peak load and to maintain a reliable BAA. The concern is that CAISO’s optimization can burn through the limited number of starts by excessively cycling the units without the consideration of the Balancing Authority’s reliance of these important resources.

This concern is heightened by the restrictions placed on commitment costs. The CAISO is the only ISO/RTO that does not allow market-based commitment costs bids subject to market power mitigation.[1] The existing commitment cost bid caps do not consider the value to the Balancing Authority which means that these valuable resources could be cycled at unacceptable rates depleting the allowed number of starts in a manner that would render the units unavailable for their primary purpose – to serve native load customers at critical times.

Currently, the use limited opportunity cost model utilizes the entire limitation for market use rather than removing a certain amount of the limitation to be utilized for Ancillary Services. The current design results in the lowest possible opportunity cost for the benefit of the market without considering the potential reliance of the resource to meet the balancing authority Ancillary Service needs. Therefore, the current market design is unworkable for the Energy Imbalance Market or Extended Day Ahead Market which do not have an Ancillary Service market. If a resource located outside of CAISO serving a different BAA runs into the permitted limitation, then the BAA has lost a resource that simply cannot be replaced. This “missing” value is not a lost opportunity cost to the resource. Instead, the market is missing the value that these limitations have for the BAA to maintain a certain amount of the limitation to be used later in the year for reliability.

This is not a new issue. It has been a longstanding concern that has gotten lost in the need to address other higher priority issues with a potentially broader market impact. Given the increased scope of EDAM from the EIM, this issue can no longer be ignored for NV Energy to consider participation. CAISO must develop a revised commitment cost methodology that permits NV Energy to properly value the limited starts of these important peaking gas units.

  1. Interdependencies

The Revised Straw Proposal correctly notes interdependencies with a number of critical, ongoing CAISO initiatives: (1) the Day-Ahead Market Enhancements (DAME) Initiative, (2) the Transmission Service and Market Scheduling Priorities Initiative, (3) EIM Resource Sufficiency Evaluation Enhancements, and (4) Price Formation Enhancements. To have one of these initiatives running in parallel with EDAM would be significant to have all four is a tremendous scope of work, especially with the time sensitivity involving the Transmission Service and Market Scheduling Priorities Initiative.

NV Energy hopes that the CAISO is mindful of its own resource limitations as well as those of stakeholders. No one wants unnecessary delays, but failure to converge these key components of the EDAM, may lead to regulatory delays later in the process.

  1. The Western Response Adequacy Program

Many of the potential EDAM Entities may also be participants in the Western Resource Adequacy Program (WRAP). Crucial to the success of both EDAM and WRAP is coordination between the two designs. NV Energy appreciates the attention paid to this issue at the recent stakeholder meeting in Sacramento. As part of the EDAM timeline and design, consideration must be paid to the WRAP operational program and the relationship between the holdback requirements and the RSE.

 


[1]           The CAISO’s survey of ISO/RTO bidding rules showed that all other ISO/RTOs support market-based bids for all components of the supply bid, including commitment costs, and apply mitigation to each component under various complex rules. PJM Interconnection, L.L.C. (PJM) uses a three-pivotal-supplier test to detect market power that is similar to the CAISO’s local market power mitigation test discussed below. However, PJM only limits commitment costs if a resource fails the test. PJM Open Access Transmission Tariff (OATT), Attachment K – Appendix, at section 6.4. The New York Independent System Operator, Inc. (NYISO), Midcontinent Independent System Operator, Inc. (MISO), ISO New England Inc. (ISO-NE), and Southwest Power Pool, Inc. (SPP) each use a conduct-and-impact market power test for commitment costs, and only potentially limit commitment costs if a supplier’s bids (i.e., its “conduct”) are above a certain cost threshold. ISONE Transmission, Markets and Services Tariff, Section III, Market Rule 1, at sections III.A.3- III.A.5; MISO Tariff, at sections 63-65; NYISO Market Administration and Control Area Services Tariff, at sections 23.1-23.3; SPP OATT, Attachment AF, at section 3.

Pacific Gas & Electric
Submitted 09/26/2022, 04:28 pm

Contact

Todd Ryan (tmrt@pge.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

PG&E would like to offer our appreciation to the CAISO for continuing to lead an open and collaborative stakeholder process. The engaging stakeholder discussions during the EDAM workshops held in August and September have been important forums to understanding the various positions and perspectives that will serve as critical input to developing a suitable market design. We believe the CAISO has displayed a willingness to reflect stakeholder input in the proposed enhancements that recognizes the evolving needs of the sophisticated programs that the various parties are responsible for adhering to. PG&E is confident that EDAM is moving in a direction that builds upon increasing regional coordination, supporting state policy goals, and meeting demand in a cost-effective manner.

PG&E would like to start by acknowledging areas of positive progress in the Revised Straw Proposal. These enhancements build upon the stakeholder input requesting additional detail and incorporating improvements proposed by the initiative stakeholders. The areas of improvement are summarized as follows:

  • Resource Counting for the Resource Sufficiency Evaluation. The original proposals for EDAM did not specify whether intertie bids into the CISO would count towards the Resource Sufficiency Evaluation; stakeholders discussed a range of options including none or all of the intertie bids. The Revised Straw Proposal suggests a fair compromise on which resources should count towards the Day-Ahead Resource Sufficiency Evaluation. PG&E is encouraged that WSPP Schedule C and certain types of intertie bids should count towards the evaluation while the tagging requirement helps to filter speculative supply and increases market confidence in these transactions.
  • Maximizing the Available Transmission in the Day-Ahead Market. The original proposals for the Extended Day-Ahead Market allowed for “Bucket 2” and “Bucket 3” transmission to be withheld from the market, decreasing benefits, and increasing the risk of strategic withholding. The Revised Straw Proposal clearly includes all Firm and Conditional-Firm transmission rights in the Day-Ahead Market, hurdle-free, to support EDAM transfers. This will maximize the transmission made available to support transfers and benefits between EDAM BAAs.
  • Management of Supply in Excess of RSE Requirements. The original EDAM proposals allowed all Balancing Areas, other than the CISO BAA, discretion whether to offer supply above the minimum set by the Resource Sufficiency Evaluation.  The Revised Straw Proposal represents a step-forward by providing the CISO BAA two potential mechanisms to manage California’s resource adequacy capacity comparably to all other BAAs. This is a necessary market design element to ensure a level playing field for all participating BAAs.

PG&E appreciates the positive progress that we have achieved, and we look forward to contributing to overall design.  

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See attached comments

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See attached comments

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See attached comments

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See attached comments

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See attached comments

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See attached comments

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See attached comments

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See attached comments

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See attached comments

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See attached comments

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See attached comments

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See attached comments

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See attached comments

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See attached comments

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See attached comments

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See attached comments

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See attached comments

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See attached comments

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See attached comments

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See attached comments

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See attached comments

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See attached comments

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See attached comments

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See attached comments

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See attached comments

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See attached comments

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See attached comments

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See attached comments

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See attached comments

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See attached comments

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See attached comments

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See attached comments

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See attached comments

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See attached comments

PacifiCorp
Submitted 09/27/2022, 12:34 pm

Contact

Nadia (Nadia.Wer@Pacificorp.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

PacifiCorp wants to thank the CAISO staff and the many interested parties and commentors for their continued engagement and thoughtful input into what has been a very robust stakeholder process. From the initial publication of the first straw proposal to this latest revised proposal, PacifiCorp notes the significant effort and progress being made towards a regional market design that can truly build on the proven success of the Western Energy Imbalance Market (WEIM).  The WEIM has become a vital tool within the West - to date resulting in more than $2.4b in benefits to customers across the region and avoiding over 760,000 metric tons of carbon-dioxide emissions through improved system optimization and reduced curtailment of renewable resources. The EDAM now offers the region the opportunity to expand on this track record of success and provide even more economic and environmental benefits to customers. PacifiCorp approaches this proposition as a valuable example of the collaboration and innovation our customers, regulators and other stakeholders expect to see as our system, and indeed the West, transitions toward a cleaner, more resilient future.    

PacifiCorp considers the revised straw proposal a meaningful step towards refining the final market design framework. This framework as currently proposed and subsequently discussed in stakeholder meetings represents a viable and balanced approach to developing a voluntary day ahead market in the West. Taking an incremental approach towards organized markets in the West is unique and PacifiCorp considers the process iterative and requiring active engagement. To help EDAM entities better evaluate, at least at a high level, the viability and level of effort potentially required to implement EDAM, PacifiCorp encourages the CAISO, whenever possible, to include guidance in its Draft Final Proposal regarding which systems or interfaces are necessary to implement the current market design, with the recognition that detailed gap, technical and cost analyses will be a focus in 2023. PacifiCorp strongly encourages the CAISO to minimize needed software and process changes while putting forth proposals for how best to model and implement the proposed market design features in a manner that supports the proposed implementation timeline and scalability of the EDAM footprint in the future. Lastly, PacifiCorp appreciates the CAISO hosting dedicated workshops in the next month focused on settlements and data topics.  

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

PacifiCorp supports the CAISO’s proposal on voluntary market participation, including the ability to exit EDAM without fees and six-months notice, and the ability to participate in WEIM without also participating in EDAM. PacifiCorp requests, however, that the CAISO consider some modifications to its proposed transitional protective measures. Additionally, PacifiCorp offers some modifications to the CAISO’s resource participation model.  

Extended Price Correction Authority: The transitional measure to extend price correction authority from five business days to 10 business days should be afforded to new EDAM entities for at least six months regardless of whether the entity is an existing WEIM entity. PacifiCorp disagrees that participating in WEIM will have captured all modeling inaccuracies, especially since the scope and complexity of EDAM is much larger than WEIM. Additionally, if a new EDAM entity is still encountering pricing issues after the six-month period, the Extended Price Correction Authority should be effective until the issue is resolved.      

Resource Participation Model: PacifiCorp appreciates the CAISO’s desire for all resources within the EDAM footprint to be participating resources.  PacifiCorp supports this requirement if generating resources are required to bring commensurate transmission to the market. The load in each BAA will have accompanying designated network resources and network transmission that will be optimized by EDAM.  To be able to bid into EDAM and be a participating resource, a non-designated network resource should also provide transmission to the border of the host BAA. This treatment ensures equity among generating resources, protects against potential cost shifts among different utility customer groups, and prevents free ridership on the transmission system.  

Lastly, while PacifiCorp understands that base schedules are not needed in EDAM, there are certain contractual obligations that are “must-take obligations,” such as qualifying facilities under PURPA, fixed power purchase agreements, and WSSP Schedule C transactions originating from outside the EDAM footprint.  This contracted supply needs to have priority in the market similar to what the base schedules currently provide in the WEIM. Additionally, the subject BAA needs to be the scheduling coordinator for this supply and receive all settlements. The concept of side payments as outlined in the EDAM straw proposal is unworkable.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Confidence in the EDAM market solution is critical to the success of EDAM. There will be significant changes in operations for an entity that traditionally transacts in the bilateral market to transition to EDAM. The overall market design is what will result in the confidence of transfers and PacifiCorp especially sees the RSE as key to establishing market confidence and trust. As each BAA will maintain its reliability obligation in EDAM, it is extremely important that shortfalls in a single BAA are not propagated to other participating BAAs.    

PacifiCorp generally understands the illustrated examples, however, questions remain regarding the third example provided. In this example, all participants passed the RSE, but the materialized uncertainty is greater than the planned day-ahead uncertainty. BAA B had the lowest day-ahead energy cost, which resulted in it being an exporter in the day-ahead market solution. Additionally, because of the materialized uncertainty, BAA C no longer has sufficient supply to meet its obligations (load plus the self-schedule export). However, the uncertainty materializes in BAA C and the power balance constraint is relaxed in BAA B to afford priority to its EDAM exports. PacifiCorp questions whether this result is appropriate. In this example, would BAA B be at risk of shedding load before BAA C? Does being an exporter in EDAM create the unintended consequence of potentially bearing the risk of the materialized uncertainty being greater than the day-ahead uncertainty for the EDAM footprint? If the core issue as identified in the revised straw proposal is the failure of the EDAM footprint to procure sufficient imbalance reserves, should the consequences be shared by the footprint?

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

PacifiCorp agrees with the concept of EDAM transfers having equal priority to load, and that during emergency conditions EDAM transfers would only be curtailed proportional to an EDAM entity’s load shed. As business practices are developed, it will be important to address the mechanics of how the market will interact with reserve sharing groups.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

PacifiCorp supports a tiered approach for transfer priority where participants that meet their RSE obligation have higher priority transfers versus participants who do not. Entities that fail their RSE who are then not in the pooled WEIM RSE should have the opportunity to meet their load by the amount of the failure through the market, with lower priority transfers if the market can supply for maintaining reliability. For example, if a BAA needs 100 MWs to meet their RSE obligation and is short 50 MWs, having the market cure the needed 50 MWs should be in the scope of this endeavor. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

An EDAM framework where all firm and conditional firm transmission can be used and optimized without a hurdle rate will increase the benefits of the market. PacifiCorp agrees with the concept of buckets in categorizing the various transmission rights but also realizes the proposal may evolve past the bucket nomenclature as the market design matures. PacifiCorp also supports the proposed pathways for Bucket 2 transmission use by OATT rights holders.

While these high-level concepts represent a positive position for continued development of the EDAM transmission framework, the details provided to date have focused on inter-BAA transfers.  Additional work remains to be completed on key transmission issues for PacifiCorp and other interested parties to fully evaluate the CAISO’s proposal for having a congestion-based model overlay an OATT platform based on physical rights, including internal network transmission service.   

In meetings, the CAISO has been helpful in addressing some of these issues, but the written proposals have not yet developed important details on several critical path issues related to how transmission internal to an EDAM BAA will be handled. PacifiCorp’s current understanding is that under EDAM, internal transmission will be used by the market for optimization purposes. BAAs will have the option to protect, or carve out, legacy rights and potentially other internal self-schedules. While transfer revenues, by definition, will only accrue on inter-BAA transfers, each BAA would also be eligible to receive congestion rent associated with its internal transmission resources. After receiving the congestion revenue payments from the CAISO, each BAA would then be responsible for determining the appropriate allocation methodology for the congestion rent within its BAA which would need to be integrated into the BAA’s OATT tariff.  

Currently, OATT customers rely on firm service with limited risk of curtailment. Since EDAM will ask those customers to accept risk of congestion costs, additional detail on how they will be able to manage that exposure is important.  PacifiCorp requests the CAISO provide more information and examples on how the different transmission charges or credits will occur from EDAM’s use and modeling of these internal transmission rights, including:

  • A detailed explanation about whether, and if so how, existing customers will be able to manage their schedules to limit their exposure to internal congestion costs. 

  • How and whether network customers can self-schedule, since the straw proposal adopts a resource-path pairing concept that is inconsistent with the nature of network service. 

  • Whether and how network rights will be registered in the Master File. 

Additionally, as network customers’ rights are limited to their need to serve load, and all unused transmission capacity in excess of load would return to the TSP in the form of ATC and be available to EDAM on a daily basis as part of Bucket 3, PacifiCorp requests that the CAISO specifically address the treatment of intra-BAA NITS transmission service (i.e., that transmission service that is not supporting an EDAM transfer between EDAM BAAs), as well as provide a framework of how to include it into the bucket framework (or, if the “bucket” terminology goes away, the CAISO should merely explain how NITS rights will be treated). PacifiCorp further requests that the CAISO provide more information regarding how the congestion revenues for a new EDAM entrant would be calculated, allocated and settled. 

Lastly, PacifiCorp supports the recovery of certain transmission revenues an EDAM entity may have foregone from participating in EDAM.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

PacifiCorp supports a framework where the maximum amount of available firm and conditional firm transmission rights, including those rights not scheduled by the time of the day-ahead market run at 10:00 a.m., are made available to the market. The proposed pathways 1, 2, and 3 allow for such an outcome. PacifiCorp requests that the CAISO consider moving the release timeline for bucket 2 pathway 2, from 6:00 a.m. to 9:00 a.m. to better align with the timing of bucket 1 transmission as there are instances when trading and scheduling are executed well after 6:00 a.m. leaving limited time for day-ahead planning. PacifiCorp supports the 10:00 a.m. timeline for bucket 2 pathways 1 and 3. PacifiCorp requests the CAISO provide additional information regarding how it intends to structure the needed information flows between the CAISO and the TSP regarding available unscheduled transmission.  

Regarding the proposed treatment of legacy rights holders, specifically the proposed treatment under bucket 2 pathways 1 and 2 transmission, PacifiCorp supports the proposal that legacy rights can be exercised under the terms of the agreements but that the CAISO should adjust the proposal to clarify that legacy rights holders cannot participate in EDAM unless the rights holder and the TSP have mutually agreed.  

PacifiCorp tentatively supports the transfer revenue allocation framework for all three pathways as described in the revised straw proposal, with the understanding that the complete economics of EDAM transmission for OATT customers is unknown at this time.  Additional information of the type described above will be necessary to ensure that the allocation framework fundamentally allocates the risk and/or reward of market participation.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

PacifiCorp supports the ISO’s outlined transmission mechanisms that are made available across interfaces to support the bucket framework as proposed in the revised straw proposal.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

PacifiCorp supports the concept of compensating EDAM entity transmission owners for the use of their systems using the most accurate means possible. For purposes of advancing the market design, PacifiCorp supports calculating each EDAM participant’s TRR shortfall as part of an entity’s historical recoverable TRR less its actual transmission revenues generated from the continuation of sales under the entity's OATT. PacifiCorp supports the framework proposed that provides some level of recovery of historical revenues associated with short-term and non-firm transmission service. The use of a 3-year average is a reasonable basis for determining the maximum amount that could be recovered. PacifiCorp further supports the development of a BAA-specific TRR rate. Regarding the allocation basis for TRR, PacifiCorp supports the allocation based on load, predicated on the assumption that all generators are either designated DNR or purchase transmission to facilitate. PacifiCorp would like to further explore implementation options including use of current volume short-fall and existing rate structure to minimize the calculations, if possible, which would combine historical, and the impacts of additional transmission investments added during the year as one calculation. PacifiCorp supports the general approach and formula using EDAM exports as a method to limit recovery based on the monthly transactions driven by EDAM dispatch instructions and will work with the CAISO to find the optimal implementation solution. At this time, PacifiCorp does not support consideration of any additional revenues than those currently proposed. 

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

The bilateral market in the West is currently a complex system of network, point-to-point, and legacy rights that reflect physical rights. Creating a market in which financial pricing models and physical OATT rights co-exist is a continuing challenge. Given the unique geography and topology of the PacifiCorp transmission system, EDAM will represent a significant change from current operations in how schedules are managed, and congestion is avoided. PacifiCorp respectfully suggests that further enhanced communication of transmission concepts be a top priority for the next iteration of the market design for potential EDAM entities to fully estimate and understand how their various OATT-based rights will be treated in the market.   

PacifiCorp anticipates the proposed EDAM construct will require enhancements to existing tools or development of new tools for day-ahead business units use and real time operations awareness. PacifiCorp requests more information regarding the CAISO’s plans for submission tools, and recommends an aggregation portal (EDAAP Extended Day-Ahead Aggregate Portal) for day-ahead scheduling groups in both transmission and for day-ahead set-up similar to BSAP in WEIM today. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

PacifiCorp agrees with the proposed ability to have two advisory runs prior to the binding RSE run at 10:00 a.m. and views the advisory runs, as well as the additional proposed ad hoc runs, as beneficial. PacifiCorp supports locking forecasts at 9:00 a.m. to limit the small variability that may occur for entities to balance and pass the RSE’s binding run. PacifiCorp requests the advisory test to be at 7:00 a.m. and 9:00 a.m. versus the aforementioned 6:00 a.m. proposed time. This will aid in a day-ahead set-up with optimal time to procure and balance before performing the first advisory run.  

Regarding the CAISO’s proposal to launch EDAM without a security constrained RSE, PacifiCorp is supportive but recommends that the CAISO consider parallel operations, monitoring and evaluation for at least 6 months to ensure the EDAM RSE performs as expected and intended. During the parallel operational period, the CAISO would not implement automatic passing of the RSE for WEIM until reliable performance of the EDAM RSE can be documented. More specifically, during the 6-month test period, EDAM RSE would be informational only while the WEIM RSE would continue to be used for operations. PacifiCorp would expect that beyond the initial test period, the Department of Market Monitoring (DMM) would evaluate the performance of the EDAM RSE on an ongoing basis.  

The accuracy of demand forecasts is paramount to ensure a reliable RSE. Consequently, PacifiCorp supports the CAISO in developing incentive mechanisms for accurate forecasts for those entities not choosing to use the CAISO-provided forecast. 

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

PacifiCorp agrees with the proposal to count firm energy contracts toward the EDAM RSE, including WSPP-C, CAISO resource adequacy imports, and similar forward contracted supply. While PacifiCorp agrees that not all sources will be known at the time of the binding run, the adjacent BAA can be inferred from those transactions.     

PacifiCorp agrees, to instill confidence in supply, that all non-source specific forward supply contracts must be e-tagged within three hours following publication of the day-ahead market results. Today, the market results are typically completed by 1:00 p.m. and WECC schedules are tagged by 3:00 p.m. Entities that fail to tag by the proposed timeframe must be monitored by the CAISO to ensure schedules are e-tagged by the STUC horizon. This exception should be used sparingly and repeat offenders who fail to provide e-tags by 3:00 p.m. should have some form of consequence. PacifiCorp strongly encourages the CAISO to clearly identify the 3:00 p.m. e-tagging requirement as an expectation of market participation where failure to comply should represent a rare occurrence. 

PacifiCorp proposes that the CAISO publish market awards in BSAP to allow real-time BA operations to see how load and total obligations will be satisfied by the market and if there are any deficiencies up to four and half hours ahead. This would align with the proposed RSE cure cutoff timeline. A mechanism is important as base schedules and hourly resource sufficiency tests will be changing from what they are currently in WEIM. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

PacifiCorp supports the proposal that intertie bidding counts towards the RSE if those supply offers are “associated with a forward contract.” The bulleted list of criteria in Section II.B.2.a(v) of the revised straw proposal appropriately identifies the intertie bids that should count towards the RSE. PacifiCorp does not support the catch all statement in the paragraph preceding the bulleted list stating “or otherwise have a reasonable expectation of delivery.”  

Additionally, if a specific resource in one EDAM BAA is being used in the RSE of another BAA, that specific resource should be required to provide the appropriate transmission to reach the border of the BAA to which it is counting in the RSE. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

PacifiCorp agrees with the proposal to use the demand response programs on an economic basis to limit the volume of load that can be bid into EDAM. PacifiCorp requests that the CAISO maintain the WEIM existing framework where an entity can inform the market operator that load is lower than forecasted due to the use of .a demand response program to pass the RSE. Many stakeholders use a range of demand response programs in various ways, and PacifiCorp currently does not have a program that meets the CAISO’s PDR registration criteria. Therefore, PacifiCorp requests that the CAISO consider adjusting the PDR rules to allow PacifiCorp programs to participate as part of a dedicated stakeholder process.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

PacifiCorp supports an advisory D+2 model run that begins to show the dispatch for various limited use requirement generators. Having this information will help gas traders prepare for their day-ahead needs economically as gas will need to be procured in the early morning, well before the final RSE and market results are published. This will aid in an entity being able to bid its natural gas resources much closer to the day-ahead index. Without such a tool, EDAM entities may be put in a position to buy intra-day gas after 1:00 p.m. with potential prices being vastly different than what was used in the binding RSE run. PacifiCorp requests that the CAISO provide additional information regarding the expected accuracy of the D+2 results, expected publication process of the D+2 results, and whether the CAISO anticipates EDAM entities submitting additional inputs to support the D+2 runs.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

The goal of the binding RSE should be to ensure all entities come to the market with sufficient resources to meet their obligations for every hour of the day, thus providing the market with firm supply. A robust RSE should result in participants having confidence in the market results. Therefore, the administrative charge for curing shortfalls with excess EDAM supply should strike the balance of not being overly punitive but should be severe enough to incentivize an entity to find the supply before the final RSE. PacifiCorp continues to support the administrative charge being based on the bilateral market 16-hour block product with some consideration for a credit against the administrative charge for the energy price in the hours which the entity was resource sufficient. 

In addition to ensuring the market has firm supply, all EDAM participants will receive a diversity benefit for being part of the pooled group in WEIM. In consideration of maintaining the diversity benefit in EDAM and striking a balance of not being overly punitive in the RSE failure consequences, PacifiCorp suggests the CAISO develop a tiered approach to the administrative change and physical consequences of failing the RSE. A tiered approach could possibly consist of three tiers where if an entity was within a very small tolerance of the RSE requirement there would be no consequence, a second tier where excess EDAM supply could be used to cure the limited amount of supply deficiency subject to the administrative charge, and a third tier that would include physical consequences to limit the potential exposure of RSE failure to that entity. Any physical consequences for failing the RSE should be addressed in the market and not left to the operators of the individual BAAs. 

Regardless of the RSE failure consequences, monitoring will be critical to prevent habitual failure.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

PacifiCorp supports the CAISO’s proposal to develop an hourly bid-range trading platform as it holds the potential to speed up the process of entities curing possible resource deficiencies. Providing entities that have excess capacity the option to offer that capacity to other market participants at a price of their choosing is reasonable, as the primary goal is to have all entities pass the binding RSE. While PacifiCorp is supportive of the CAISO developing such a platform, development should not impede the progress of other core elements of EDAM, thus delaying overall market implementation.? 

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

PacifiCorp supports the use of a pooled WEIM RSE for entities that pass the EDAM RSE. If a single BAA is responsible for the footprint’s failure in the WEIM RSE, that BAA should be tested alone and responsible for curing any deficiencies. Additionally, RSE failure should pertain to all products such as uncertainty.  

PacifiCorp supports an extended parallel operation of the pooled RSE for WEIM entities that pass the EDAM RSE with the current WEIM RSE. This will provide time to ensure that a security constrained RSE is not required. 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

PacifiCorp agrees with both proposed mechanisms to allow an entity the right to “hold back” supply in excess of their needs to pass the RSE, regardless of system conditions, as well as the implementation of a net EDAM export constraint. Both mechanisms would give some amount of control to EDAM entities over excess capacity for anticipated needs and changing system conditions. Regarding stressed situations, the footprint may benefit from a percentage of the transfer limit held back where the CAISO would be allowed to determine when these options would be available to participating entities. PacifiCorp requests more information on how the transfer export limit would work and whether the constraint should be set daily. 

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

PacifiCorp requests that the CAISO consider the following two topics in its next proposal:  

1. PacifiCorp recommends that the CAISO implement a practice of denying all CAISO export e-tags that are not associated with a firm market award or non-RA source specific resource. The purpose of this practice is to remove WSPP Schedule C transactions that are not linked to a firm source from meeting the e-tagging deadline. 

2. PacifiCorp requests additional detail regarding how the CAISO intends to treat VERs for the purposes of the RSE for entities engaging in convergence bidding and for those who choose not to during the initial onboarding period.  

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

PacifiCorp supports IFM and RUC as described in sections II.C.2 and II.C.3. as both processes play an integral role in procurement of energy and capacity. 

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

PacifiCorp supports the CAISO’s BAA grouping methodology as proposed in the Price Formation Enhancements Initiative and as discussed in the EDAM Initiative, where the CAISO will test in a hierarchy from the most constrained to the least constrained to perform the DCPA tests and by their power balance constraint shadow price. PacifiCorp requests that the CAISO include information on how it intends to monitor the performance of this new approach in contrast to the existing approach.  

Additionally, it remains PacifiCorp’s position that after the market run, the ability to adjust the default energy bid (DEB) is available to reflect accurate pricing. For example, if a resource is not committed in the IFM, but awarded in the RUC run, the price of procuring intra-day gas may be higher and therefore mitigating to the DEB may not reflect the correct cost of running the unit.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

PacifiCorp supports convergence bidding as a part of the market design and supports the proposal of providing a transition period for entities to become familiar with this functionality prior to having convergence bidding allowed in the BAA. PacifiCorp requests that the CAISO provide more information regarding any expected impacts related to offering convergence bidding in its BAA, while new EDAM entrants would not be participating during the transition period. As described in comments to question 20, PacifiCorp requests that the CAISO provide additional information regarding the treatment of VERS that count towards the RSE for entities who chose to allow convergence bidding and for those who do not.  

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

PacifiCorp supports the CAISO’s proposal for external resource participation. However, PacifiCorp considers it prudent for the CAISO to monitor and evaluate the proposed approach and amend it if necessary.   

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

PacifiCorp appreciates that stakeholders have respected the unique considerations of PacifiCorp, with two BAA footprints, as well as being a retail provider of load in six states with diverse and evolving clean energy policies. PacifiCorp continues to support the CAISO’s revised straw proposal to launch EDAM with the resource-specific methodology and that the inclusion of scheduling constraints and the net export constraint will improve secondary dispatch. PacifiCorp also supports the CAISO’s proposal to continue to evaluate options for evolving this approach without sacrificing expediency in the deployment of EDAM. 

One objection raised to the resource specific approach, particularly about known concerns with the deeming approach in the existing WEIM, suggests that resource assignments made to California are inaccurate.  While limitations to the deeming approach are known, this allegation is misleading and cannot be substantiated on a complex and multi-jurisdictional system, such as PacifiCorp’s, because deemed power flows are not actual power flows. PacifiCorp emphasizes that it remains accountable for emissions from net exports from PACE during times of high CAISO demand. PacifiCorp is subject to GHG accounting frameworks in Oregon, Washington and California that capture the loss of renewable claims from renewable resources if they are deemed to be exported from its system into California and is responsible for any gain of emissions to the extent there is increased generation from thermal resources.  

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

PacifiCorp supports the CAISO’s proposal to use a GHG Reference Pass as the GHG counterfactual for measuring secondary dispatch. PacifiCorp appreciates the revised straw proposal including analysis showing its proposed enhancements, the scheduling constraint and net export constraint, and their effects on total attributions. These enhancements will aid in improving known deeming concerns. PacifiCorp also supports the CAISO’s proposal to continue to evaluate options for evolving the approach without sacrificing expediency in the deployment of EDAM.   

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

PacifiCorp supports the CAISO’s proposal to make attribution data available on a resource-by-resource basis in the Customer Market Results Interface and through settlement statements. To improve transparency, PacifiCorp requests that the CAISO show if and how constraints in the GHG Reference Pass played a role in the allocation or prevention of the dispatch of resources.   

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

PacifiCorp continues to view the resource-specific approach as the preferred approach. The resource-specific approach is compatible with current laws and regulations in California and Washington and has the flexibility to meet future jurisdictional clean energy goals. The zonal approach leaves key policy questions unanswered, including questions on transmission constraints, demonstrating that more time and stakeholder discussion is needed for the proposal to be evaluated. As noted, PacifiCorp’s response to question 29, there are yet other GHG accounting approaches under development that may advance future approaches. Robust stakeholder discussion  will continue as states consider and align public policies and the West’s grid energy mix evolves. This policy evolution, however, should not hamper expeditious implementation of EDAM.    

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

PacifiCorp supports the further exploration of a load-based accounting approach for emissions for unspecified imports in principle, as it respects differing state policies and isolates the carbon burden to that jurisdiction. PacifiCorp is, however, primarily committed to the timely implementation of EDAM to deliver broad decarbonization benefits to the West. This is accomplished by the resource-specific approach.    

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

In the revised straw proposal, the CAISO states that the resource-specific model is flexible enough to include additional constraints to resource dispatch that are not based on price, to implement state climate goals. PacifiCorp encourages the CAISO to continue enhancing this capability of the resource-specific approach and is open to continued stakeholder discussion to fully vet this capability and understand stakeholder concerns. 

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

PacifiCorp tentatively supports the 50:50 allocation proposal for transfer revenue and the proposal to allocate congestion revenue to the EDAM BAA experiencing the congestion. PacifiCorp and other BAAs actively manage internal constraints. Under EDAM, where all resources and load will participate, participating BAAs may ultimately want to explore options going beyond manual management of each internal constraint (ITCs) and having those constraints be reflected in EDAM. This, in turn, would generate congestion revenue for each BAA when an ITC binds.    

PacifiCorp notes that these proposals will have to be reevaluated over time as the market design develops and the economic impact of internal and intertie congestion on current transmission rights holders becomes clearer. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

PacifiCorp appreciates the settlement details provided in the revised straw proposal, as well as the intent to offer a settlement workshop. PacifiCorp is keenly interested in understanding how the CAISO plans to accommodate the proposed market design elements for purposes of settlement. While PacifiCorp appreciates the CAISO’s stated position to complete its internal gap analysis and technical design specification, and by extension, the relevant system, data and process documents for prospective EDAM entities, PacifiCorp requests that the CAISO provide stakeholders with at least a high-level overview of the following: 1) which existing systems and processes currently used under WEIM will remain the same, 2) which of the systems currently used under WEIM may need to be updated or enhanced, 3) which of the systems currently used under WEIM will have to undergo a major re-design, testing and implementation and 4) which systems/interfaces may need to be developed from scratch. This information is critical for prospective entities to assess the technical viability of implementation as well as the estimation of company-internal implementation costs and rough timelines associated with implementing the proposed market design. PacifiCorp understands that the CAISO’s market design is likely to undergo some iterative changes over the next two versions. Notwithstanding, PacifiCorp strongly urges the CAISO to assess options for providing these overviews as part of the next proposal.  

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

PacifiCorp appreciates the information CAISO provided regarding the framework and generally considers it acceptable. PacifiCorp looks forward to receiving additional information regarding the various proposed fees.  

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Section III.B of the EDAM revised straw proposal states that the Board of Governors has proposed the entire EDAM initiative fall under the joint authority of the WEIM Governing Body and the Board. As discussed further in PacifiCorp’s August 15, 2022, comments in response to the WEIM GRC Phase Three Straw Proposal, the joint authority model strikes an appropriate balance, and should be routinely evaluated as the markets evolve.  

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

As discussed throughout the comments, EDAM will be a new market layered over multiple independent BAAs.  Because of this, it is likely that EDAM will continue to evolve even after implementation, making monitoring a critical component of the market design. 

Portland General Electric Company
Submitted 09/26/2022, 03:16 pm

Contact

Ryan Millard (ryan.millard@pgn.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Consistent with PGE’s previous comments, PGE is supportive of extending the WEIM voluntary participation model to the EDAM and the general ease of exit through a six-month notice period to cease participation in the EDAM with no exit fees.? Additionally, PGE is supportive of the proposal that participation in the WEIM remain a prerequisite of participating in EDAM and that exiting EDAM should not affect WEIM participation. 

PGE also appreciates the additional clarification that the CAISO provided regarding the temporary suspension of EDAM participation and the ability of the 60-day suspension period to be extended should a market, systems, or other operational issue not be resolved within the allotted timeframe.

However, PGE encourages the CAISO to consider reevaluating the proposed ISO’s day-ahead price correction authority from 10 business days for a three-month period following implementation to a 6-month period (or longer) given the volume of load and resources that are expected to be settled in the EDAM.  PGE agrees with the CAISO that extending the ISO’s price correction authority is an important transitional measure that provides critical protection for EDAM entities (and the ISO) and the current proposal may not be sufficiently long enough to help facilitate the solution of implementation-related issues associated with a new EDAM entity’s participation.   

 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

PGE supports the principle that the EDAM design should build confidence in EDAM transfer schedules and agrees that the design elements noted in the proposal contribute to the confidence that in stressed system conditions the market will be able to respond effectively by leveraging those design elements to avoid emergency conditions.  Moreover, PGE agrees with the inclusion of a BAA power balance constraint that will isolate a supply shortfall in the BAA that caused the shortfall without relaxing the constraint in other BAAs.  However, the topic of stressed system conditions introduces a level of complexity that the revised straw proposal (and subsequent stakeholder discussions) still hasn’t addressed in sufficient detail.  

PGE encourages the CAISO to consider additional enhancements to the EDAM design that would specifically target stressed system conditions.  PGE encourages CAISO to consider market design elements that would balance overall economic efficiency with the ability to limit the propagation of emergency conditions from one EDAM BAA to another. 

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

PGE supports the equal priority of load and EDAM transfers for EDAM BAAs that have passed the RSE evaluation. 

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

PGE conceptually agrees with the proposal that transfers to an EDAM BAA that has failed the day ahead RSE should be subject to a lower priority order than transfers among EDAM BAAs that have passed the day ahead RSE.  However, PGE has concerns about the ability to operationalize this design feature. 

While recognizing the need to develop appropriate consequences for RSE failure, PGE is concerned that EDAM BAA operators would lack the visibility into the origin BAA for EDAM transfers, especially if the EDAM transfer involves a wheel across an EDAM BAA.  Additionally, PGE has concerns that this approach does not provide the EDAM BAA operator with sufficient tools to manage, prioritize, and appropriately curtail in the correct order EDAM transfers when faced with managing an emergency contingency.  PGE encourages the CAISO to evaluate whether functionality to differentiate between “high priority” and “low priority” transfers can be built into the CAISO’s dispatch model, rather than relying on the EDAM operator’s actions.  PGE believes that because energy transfers frequently wheel across EDAM BAAs, EDAM Operators will lack the information necessary to curtail transactions that originate from an EDAM BAA that fails the RSE.  If the market is unable to perform this prioritization, PGE would recommend identifying an alternative consequence of RSE failure. 

Additionally, PGE does not believe that the comparison of EDAM products and OATT products is valid and that doing so introduces unnecessary confusion.  The OATT products “firm” “conditional firm” and “non-firm” refer to the curtailment priority of the transmission product that supports a market transaction.  The CAISO is using these terms to refer to the firmness of the energy product transacted in the EDAM market.  The level of ambiguity introduced by comparing EDAM energy products to conditional firm transmission products in the OATT overcomplicates EDAM transfer management.  PGE does not see lower-priority EDAM transfers and conditional firm as comparable products and encourages the CAISO to be explicit about the priorities (and their associated definitions) so that stakeholders understand the distinctions the CAISO intends to make between “low priority” and “high priority” energy. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

PGE is generally supportive of the transmission framework in the Straw Proposal; however, we have several points of clarification as described in the responses below. 

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

PGE supports the bucket two framework for transmission between EDAM Entity BAAs and within an EDAM Entity BAA.  However, PGE would like additional clarification on how Bucket 2 transmission will be implemented on the California-Oregon intertie (COI). 

Specifically, PGE notes that the COI can function as both an internal EDAM path (e.g., PGE ßàCAISO) and also as an intertie path directly into the CAISO’s day-ahead and hour ahead market (external CAISO supply).  PGE would appreciate additional explanation of how PGE’s transmission ownership share and the long-term firm rights associated with this transmission path will be treated in the EDAM.  Specifically:

  • Is all transmission on this path considered EDAM transmission?
  • How would a third-party long-term firm PTP rights holder access the CAISO’s day-ahead and hour ahead markets on this path?  Would this framework also apply to PGE’s merchant function?
  • Does the treatment of transmission rights on this path differ if the generation is sourced in EDAM BAA or an external BAA? 
8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

PGE has no additional comments.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

PGE believes that the TRR design and cost allocation is critical to ensuring that the EDAM does not produce cost shifting between transmission customers or enable certain market participants to “free ride” on EDAM transmission by avoiding the procurement of transmission rights to support their energy deliveries.

PGE does not forecast a material amount of TRR uplifts to be generated in the PGE BAA and is therefore likely to be allocated a larger TRR uplift cost than payment.  As a likely net payer, PGE encourages the CAISO to identify approaches that minimize the total uplift allocated to market participants via the TRR process while balancing the need for transmission providers to be confident that EDAM participation will not result in cost shifting or free ridership. 

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

PGE has no additional comments.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

PGE is supportive of the major design elements of the EDAM RSE, including the general timing of the RSE and ability for EDAM entities to conduct advisory RSE tests prior to the binding run.  Additionally, PGE recognizes the complexities that are created for the CAISO to include transmission constraints within the RSE at the onset of EDAM.  However, those noted complexities (while valid) should not obscure the value of identifying known (or likely) transmission constraints that can (and should) be accounted for in the RSE, especially when these transmission constraints involve an export from the CAISO BAA. 

While PGE supports and is appreciative of the CAISO’s willingness to conduct ongoing monitoring, a more deliberate commitment to after-the-fact reporting to ensure resources used in the RSE are deliverable would be appreciated.  Given the volume of offshore wind development that is expected in the CAISO BAA alone, transmission will remain a critical limiting factor in determining whether-or-not the resources being evaluated in an EDAM entity BAA’s RSE are feasible.  PGE would appreciate additional discussion about the type of reporting the CAISO could perform to help identify transmission constraint patterns and a reasonable estimation of when the CAISO could begin exploring how those constraints could be incorporated into the EDAM RSE in subsequent enhancements. 

Finally (and depending upon the outcome of the findings associated with the transmission constraints that are ultimately identified), PGE encourages the CAISO to improve upon the diversity benefit calculation so that transmission constraints associated with certain locations are factored into how the diversity benefit is allocated rather than simply basing the benefit on footprint size.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

As noted in PGE’s previous comments, PGE is supportive of the inclusion of WSPP Schedule C Energy contracts as these contracts are reliable sources of firm energy.  Additionally, PGE supports the CAISO’s proposal to implement an e-tagging requirement but notes that the CAISO has highlighted the need for all “non-source specific forward supply contracts” to be tagged within three hours following publication of the day-ahead market results. 

This requirement should apply to all schedules, as an entity may have a resource but not have the transmission (resulting in the same impact as an untagged non-source specific contract).  Furthermore, there could be times when entities leave deals untagged because they’re waiting for non-firm transmission to be released.  When this happens, the entity will delay tagging until just before the intra-day STUC or intraday RSE.  This only reinforces the importance for the CAISO’s proposed monitoring of tagging deficiencies to be regular, transparent, and build onto the existing reporting the Department of Market Monitoring already conducts for the WEIM. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

PGE continues to struggle with what seems like an inherent inequity in the way import bids made at the CAISO BAA boarder count toward meeting the CAISO BAA’s RSE obligations.  For instance, if PGE’s merchant function submitted an import bid of 100 MW and CAISO counts the entire 100 MW in their RSE, what happens if PGE (at the close of the DA market run at 1pm) is only awarded 30MW?  Would the 100 MW count against PGE’s BAA RS obligation?  Would these responses differ if the bid was from a third party sourced in a non-EDAM BAA? 

Since the binding RSE occurs at 10am (before the market run finishes) the CAISO will have overcounted that import in their RSE resulting in a significant inequity in the treatment between the CAISO BAA and other EDAM BAAs.  PGE would appreciate additional clarification and discussion around discrepancies that can occur in the volume of bids that the CAISO BAA is counting versus the volume of bids that are cleared as the current construct doesn’t appear to address the potential for persistent overcounting.     

Additionally, please see PGE’s comments in response to question 7 regarding the treatment of transmission pathways into the CAISO that are owned by EDAM Entity transmission providers.  PGE would appreciate clarification for how the transmission rights on these pathways are treated with respect to both the transmission buckets and the bids associated with the transmission rights in the RSE. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Consistent with PGE’s previous comments, PGE supports the CAISO’s proposal to allow EDAM BAAs to represent demand response programs through a demand forecast adjustment like that used in the WEIM.  PGE encourages the CAISO to continue to enhance the treatment of demand response resources in both the EDAM and the WEIM as part of future stakeholder initiatives. 

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

PGE is supportive of the CAISO’s proposal to make available advisory D+2 market results to help inform gas procurement and manage gas resource participation but recognizes that this proposal may still not be sufficient for EDAM BAAs that don’t have the access to the flexibility or storage that LSEs within the CAISO BAA have demonstrated in workshop discussions.   PGE supports continuing discussions to refine solutions but views the CAISO’s proposal as an acceptable starting point. 

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

While PGE is supportive of the administrative surcharge in principle, PGE maintains that the CAISO’s proposal to base the administrative surcharge on a 16-hour block product seems unnecessarily excessive.  While PGE recognizes that the intent of the proposal is to create a penalty large enough to incentivize entities to procure sufficient energy beforehand, PGE recommends that the CAISO establish a reasonable threshold for the surcharge that might apply to an entity that failed for multiple hours in a row but would avoid a scenario where an entity who failed for a single hour is penalized for sixteen.  Consensus for what a reasonable threshold looks like could easily be incorporated into a subsequent stakeholder workshop. 

Moreover, additional discussion and clarity is needed around what would happen if the anticipated uncertainty that an entity was facing never materialized in real time?  How would the CAISO reimburse an entity for the penalties it incurred in DA?  A more explicit accounting for this scenario in the proposal would be appreciated. 

Overall, PGE supports a robust RSE that encourages EDAM Entities to come to the market fully supplied but that recognizes the greater uncertainty of load and VER forecasts on the day ahead basis.  PGE recommends that the CAISO adopt a tied approach to resource sufficiency, where failures within a small dead band are acceptable.  PGE would also consider additional tiers that balance the benefits of EDAM with ensuring that EDAM BAAs do not lean on each other. 

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

PGE is supportive of the CAISO’s proposal to stand up an hourly bid-range trading platform but recognizes that the proposal requires additional detail.  For instance, it remains unclear to PGE how this platform would consider deliverability.  Has the CAISO envisioned a mechanism for how the market would ensure deliverability when that capacity is needed?  Additionally, the creation of a bid range platform also raises a more fundamental question; is it necessary to penalize entities for a 16-hour block knowing that there will be a platform to allow them to trade hourly to cure any deficiencies?  Additional discussion on this element of the proposal is needed.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

PGE is supportive of the CAISO’s proposal to test as a pool in the WEIM all parties who pass the EDAM RSE to allocate a diversity benefit on the uncertainty that may arise between the day ahead and real time and potentially enhance the reliability of the EDAM footprint in the real time market.

PGE also supports the first approach (approach “d” in the revised straw proposal) for the pooled EDAM footprint as a whole to remain responsible for curing any shortfall in the WEIM RSE so long as the power balance constraint in the BAA that caused the shortfall is isolated if/when the EDAM footprint finds itself unable to resolve the infeasibility.  While PGE recognizes that this approach does not result in the automatic failure of the WEIM RSE of the BAA that caused the insufficiency, PGE agrees with the CAISO that dissolving the EDAM footprint following failure of the WEIM RSE would introduce additional risk of failure to the remaining BAAs should high levels of uncertainty materialize in their respective BAAs. 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

PGE recognizes the incongruence that exists in the ISO processes that may make all resource adequacy supply, including supply in excess of the ISO’s RSE, automatically available to the market without the opportunity for a California LSE to consider whether to hold back some of the capacity to respond to reliability conditions that may materialize between day-ahead and real-time.  For EDAM entities, this is a critical function of BA reliability and PGE conceptually agrees with the CAISO’s proposal to consider how supply above what is needed to meet the ISO RSE could remain available to the ISO to help ensure the reliability of the ISO grid in stressed conditions.  However, additional discussion is needed as it relates to the options that the CAISO has identified in the proposal. 

While PGE recognizes the simplicity associated with Mechanism 2 (which would introduce a net EDAM export transfer limit as a constraint in the market), the CAISO’s explanation of the treatment of exports from an EDAM BAA to a non-EDAM BAA introduces confusion around export priority.  Outside of the CAISO BAA, exports between an EDAM BAA and a non-EDAM BAA aren’t subject to the high/low priority order that is relative to ISO load self-schedule or power balance priorities.  The CAISO’s proposal appears to either apply this treatment more broadly or inadvertently obscures this distinction.  PGE would appreciate additional clarification on what the CAISO is proposing under Mechanism 2 and what (if any) implications it would have to EDAM BAAs outside of the ISO.    

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

PGE has no additional comments.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

PGE has no additional comments.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

PGE is supportive of the CAISO’s proposal to apply the same approach used in the WEIM for market power mitigation in the EDAM but notes that the CAISO’s intention of exploring enhancements in the Price Formation Initiative (wherein it would group BAAs according to constraint impacts prior to applying the three-pivotal supplier tests) is another attempt to introduce a system market power mechanism without any evidence that uncompetitive conditions exist at the system level.  While PGE is not supportive of the current enhancement proposal under the Price Formation Initiative, PGE appreciates (and supports) the CAISO’s decision not to push through additional MPM enhancements (that are being explored concurrently) within the initial EDAM design.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Consistent with PGE’s previous comments, PGE is supportive of the CAISO’s proposal to maintain a one-year transition period to convergence bidding for EDAM entities and the option to extend that transition should any findings be identified, that would suggest the election of convergence bidding would pose adverse outcomes. 

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

PGE supports the CAISO’s proposal to extend the WEIM model of external resource participation to the EDAM but recognizes both the desire and need to evaluate broader external resource participation as the EDAM evolves. 

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

PGE appreciates the time and development provided by the CAISO and other stakeholders throughout this initiative process to provide thoughtful approaches to addressing GHG Accounting in the EDAM.  At present, PGE is supportive of the CAISO’s proposal to use the modified resource specific approach to GHG accounting as it will allow for the most efficient implementation of the EDAM in the short term.  PGE recommends a future re-evaluation of the GHG approach to ensure continued alignment as the region and market evolve and encourages the CAISO to commit to a firm timeline to evaluate and implement GHG enhancements in the EDAM. 

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

PGE has no additional comments.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

PGE has no additional comments.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

PGE has no additional comments.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

PGE has no additional comments.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

PGE has no additional comments.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

PGE supports the principle that equally sharing the (mutual) benefit of a transfer is a fair and equitable solution.  However, the CAISO’s proposal to adopt a congestion revenue allocation approach in the EDAM that is identical to the WEIM has introduced several questions about the equitability and accuracy of continuing to allocate 100% of the congestion revenue to the BAA in which the transmission constraint is modeled.  Of particular concern to PGE was the stakeholder discussion on September 14th that centered around the major AC and DC interties and the potential for the CAISO software to calculate an inflated congestion value at those interties because it lacks the ability to distinguish whether bids and schedules are deliverable (since it incorporates the bids and schedules of entities that have transmission rights to deliver to NOB with entities that don’t have those rights).  CAISO’s initial response to this concern seemed to be that the congestion calculated in the DA timeframe may never materialize in real time but given the potential volume of transactions and the potential financial implications it also does not seem prudent to assume that it couldn’t or wouldn’t.  Unfortunately, further discussion on this topic was limited as a disproportionate amount of time was devoted to the GHG section of the revised straw proposal.  As such, PGE strongly encourages the CAISO to devote more stakeholder time to discussing this design component of the EDAM. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

As previously noted, the CAISO devoted a significant amount of time to the GHG portion of the EDAM Revised Straw Proposal and never presented on the settlement components.  A separate settlements workshop has been tentatively scheduled for October, so PGE will reserve commenting at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

PGE generally supports the administrative fee structure as proposed, consistent with the principles established in the WEIM.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

PGE supports the CAISO’s proposal that the entire EDAM initiative fall under the joint authority of the WEIM Governing Body and the Board.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

PGE has no additional comments.

Powerex Corp.
Submitted 09/28/2022, 06:15 pm

Contact

Jeff Spires (jeff.spires@powerex.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Powerex appreciates the opportunity to provide comments on the CAISO’s August 16, 2022 Extended Day-Ahead Market (“EDAM”) Revised Straw Proposal, and the stakeholder meetings on August 29, September 7, September 8 and September 14 (“Revised Straw Proposal”).

Powerex continues to observe widespread and ever-growing interest in, and support for, increased regional wholesale electricity market coordination.  Entities across the west are moving forward with initiatives to develop regional frameworks to maintain reliability and keep electricity affordable as the region transitions to a lower-carbon grid.  This momentum is most evident in the recent FERC filing by the Western Power Pool for approval of its Western Resource Adequacy Program (WRAP).  It is also evident in the engagement and active participation in the two leading initiatives to establish day-ahead organized markets: CAISO’s EDAM, and SPP’s Markets+ initiatives. 

In the months ahead, entities will be making important choices regarding these two competing organized market initiatives, and will need to articulate to their customers, regulators, and stakeholders the rationale for their decision, including the expected costs and benefits.  There are well-known analytical approaches for quantifying the potential economic benefits of a day-ahead organized market as compared to the “business as usual” scenario of day-ahead bilateral trading and scheduling.  In particular, models can be configured to estimate the economic benefits associated with:

  • Hourly transaction granularity, as compared to transacting in 16-hour and 8-hour blocks;
  • Centralized unit commitment across a multi-BAA footprint, as compared to each BAA committing its own resources on a stand-alone basis; and
  • More efficient transmission utilization, both through the use of flow-based limits and the elimination of pancaked transmission “hurdle” rates.

These critical features are the primary drivers of production-cost savings.  But they are also standard components of any day-ahead and real-time organized market platform, and can therefore be expected to be found in both EDAM and in Markets+.  This means that any cost-benefit analysis that focuses on these characteristics, without more, will be of little value in comparing the potential benefits available to particular entities under EDAM as opposed to Markets+.

There also may be only limited differences in aggregate economic benefits resulting from differences in the assumed footprints for the two initiatives, particularly as it relates to assumptions regarding which entities participate outside of California under each market option.  The above is consistent with the results of the 2021 State-Led Study, which evaluated the potential production-cost savings for each state from a day-ahead market, under both a “One Market” scenario and a “Two Market” configuration.  Notably, states outside California realized greater production-cost savings under the “Two Market” footprint; whereas California realized substantially greater production-cost savings under a “One Market” scenario with a single market footprint.[1]

The State-Led Study also highlighted that a single west-wide market footprint would make a material difference in the context of capacity investment savings (as opposed to production-cost savings).[2]  Critically, however, capacity investment savings are largely unlocked in the forward resource planning timeframe, through regional resource adequacy programs such as WRAP, and not through day-ahead and real-time organized markets such as EDAM and Markets+.

The above means that entities seeking to compare the benefits available under EDAM and Markets+ will need to look beyond the common approach of examining production-cost savings arising from implementing a standard day-ahead organized market relative to a counter-factual with no day-ahead organized market at all.

Instead, entities will need to evaluate the benefits and costs stemming from the specific and material differences between the two day-ahead market proposals.  From Powerex’s own experience participating in all FERC-jurisdictional organized markets, as well as Alberta, the market design details can have a profound impact on both the total benefits that a market achieves, and on which entities and sub-regions receive those benefits.  The importance of market design is perhaps especially important where, as here, the day-ahead organized market will co-exist with existing frameworks for resource planning, funding and operating transmission systems, and maintaining reliability.  Accordingly, Powerex’s ongoing assessment of both the EDAM and Markets+ development processes is focused on where the proposed designs appear to have material differences in regards to the economic, environmental and reliability benefits that will accrue to California versus the aggregate external region, particularly with respect to the following questions:

  • Is the proposal compatible with forward resource planning programs, such as WRAP?
  • Will the design have a common resource adequacy requirement (i.e., WRAP), or will it require a day-ahead resource sufficiency test to reconcile different approaches to resource adequacy?  If it is the latter, will that resource sufficiency test enable systemic leaning by—and associated energy arbitrage profits for—entities in the CAISO BAA, as has been extensively experienced in the Western EIM?
  • Will the proposal maximize the transmission capability that will be available to support market transactions?  And will it do so while providing an equitable distribution of congestion rents to the entities that fund the transmission facilities that congest?  Will the approach to transmission availability, resource adequacy/sufficiency and GHG-pricing programs collectively continue to provide strong incentives for third parties to invest in longer term external transmission service under the OATT, or will it instead cause extensive free riding on the external transmission system, with resulting transmission cost shifts onto native load customers outside California?
  • Does the proposal provide for equitable pricing of energy transactions, favoring neither net sellers nor net buyers?  Or are the price formation practices likely to lead to inaccurately suppressed prices, particularly during the non-solar hours when California is a large importer from the rest of the west?
  • Does the proposal support accurate application of state GHG-pricing programs in the dispatch, pricing, and settlement of generation resources?
  • Does the proposal provide for broadly inclusive decision-making below the board or governing body level, both in the initial design and the ongoing evolution and oversight of the market?

In Powerex’s view, EDAM is currently on a path to proposing a market design that heavily favors California, both in terms of reliability and economic benefits, and would do so directly at the expense of entities outside of California.  In contrast, Markets+ appears to be developing the foundation for a market design that maximizes the economic, environmental and reliability benefits for the entire Markets+ footprint, leading to an equitable allocation of those benefits among all participants and sub-regions.  This contrast is most apparent in the following areas:

Resource Adequacy and Resource Sufficiency

  • EDAM will be at a disadvantage to Markets+, since EDAM is not proposing to require participants to meet a common resource adequacy standard.  In contrast, it appears Markets+ will require participants to participate in WRAP or meet a comparable reliability standard using the same metrics.
  • As a result, EDAM will need to perform a Resource Sufficiency Evaluation (“RSE”), applied each day and each hour, to bridge the gap between participants’ different resource adequacy frameworks.  For entities in the external footprint, this raises two particular concerns:
    • External entities will need to incur additional costs to meet the EDAM RSE on days they experience challenging conditions such as high load, outages or low forecast renewable output.  Markets+ would not impose such additional costs.
    • CAISO continues to resist adopting straightforward measures to ensure it brings its fair share of resources to EDAM, such as requiring a day-ahead e-Tag and requiring imports to be supported by identified resources.  This resistance, combined with experience with the Western EIM’s RSE, strongly indicates that the EDAM RSE may well perpetuate extensive and inequitable leaning by the CAISO BAA on supply procured by entities in the rest of the west.  Such leaning could socialize the reliability risk associated with the CAISO BAA’s chronic resource shortfalls, while enabling CAISO to enjoy “energy arbitrage profits” by buying the supply others brought to the table only in the hours it needs it, and at prices that are substantially less than the cost external entities incur to procure that supply.

Price Formation

  • There is both FERC policy and industry best practices in other organized markets on price formation choices that drive efficient markets and produce equitable outcomes for both buyers and sellers.
  • Markets+ appears to be on a path to adopting each of these best practices, including those related to fast-start pricing, robust but graduated scarcity pricing during tight system conditions, balanced approaches to market power mitigation through a conduct and impact framework, and accurate GHG pricing.
  • While dedicating a separate initiative on Price Formation, CAISO has made minimal progress on these issues to date: 
    • On fast-start pricing and scarcity pricing, it has only proposed to discuss the topics in the future.    
    • On market power mitigation, the CAISO is proposing to expand its current approach, including introducing a new variation of System Market Power Mitigation for the CAISO BAA, and has not been willing to consider implementing an alternative framework such as the conduct-and-impact test used in several other organized markets, and repeatedly suggested by CAISO’s external stakeholders. 
    • On GHG pricing, the CAISO is proposing to largely extend its flawed algorithmic “deeming” approach, which dispatches external coal and gas generation to support imports into California, but without recognizing the GHG costs of those resources and suppressing market prices when California is importing.
  • In summary, EDAM appears to extend the existing price formation practices of the CAISO markets, which collectively lead to suppressed pricing, particularly in hours that the CAISO BAA is importing from the rest of the west, and which cause significant value shifts from external ratepayers to California ratepayers as a result.

Transmission

  • Collectively, EDAM’s transmission-related proposals appear to undermine incentives for entities to invest in long-term external OATT transmission rights on paths to California, which can be expected to lead to reduced third-party revenues to external transmission providers and associated cost shifts to external native load.
    • Unlike the general principle for the broader EDAM footprint, CAISO is so far unwilling to propose an equitable 50/50 sharing of congestion value on the major CAISO interties, and particularly on the interties between the Northwest and California.
    • There is no requirement to procure external OATT transmission service in connection with imports for California’s RA Program (unlike WRAP), and it appears EDAM will not require external OATT transmission service for imports to count as supply in the EDAM RSE.
    • It appears EDAM will not require external transmission service, or perform any deliverability test, in connection with delivering clean supply to California.
    • In determining who will flow during critical conditions when transmission may limit the ability to serve all load in the footprint, EDAM has not provided any detail on whether or how it would respect OATT transmission priority.  EDAM will, however, enforce CAISO-determined priority on the CAISO transmission system under such conditions.  This is likely to cause adverse reliability implications for external entities, in addition to undermining investment incentives for securing high priority rights.

GHG Pricing

  • EDAM appears to largely adopt the Western EIM’s flawed algorithmic “deeming” approach to GHG-pricing programs.   
    • This approach dispatches external coal and gas resources to support imports into California, but without recognizing the GHG emissions of those resources.
    • It also leads to suppressed market prices when California is importing, increased use of external coal and gas units, and failure to encourage the use of clean and renewable supply.
  • The inaccuracies in this approach have been discussed repeatedly over the last several months, and Powerex has provided extensive analysis showing the extent of the problems.
    • At this point, it appears that the CAISO is unwilling to consider a different and more accurate approach, even though viable solutions are available.
  • EDAM is on path to providing greater benefits for:
    • California LSEs, which would pay market prices that do not reflect the full cost of GHG emissions associated with imports; and
    • External utilities with a generation fleet that includes coal and other high-GHG resources that may be sold to California in EDAM without being subject to the costs intended under California Cap & Trade Program.
  • EDAM is on a path to providing reduced benefits to clean resources, such as Northwest hydro but also to renewable and clean resources within and external to California, who will be undercompensated in EDAM.

Powerex has explained its concerns with these multiple elements of the EDAM Revised Straw Proposal in more detail in its prior comments and workshops.  Powerex also agrees with and supports the detailed comments on the Revised Straw Proposal submitted by Vistra Corp.

 


[1] https://www.energystrat.com/s/Final-Roadmap-Technical-Report-210730.pdf, page 40

[2] https://www.energystrat.com/s/Final-Roadmap-Technical-Report-210730.pdf, page 38

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See attached comments below.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See attached comments below.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See attached comments below.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See attached comments below.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See attached comments below.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See attached comments below.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See attached comments below.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See attached comments below.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See attached comments below.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See attached comments below.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See attached comments below.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See attached comments below.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See attached comments below.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See attached comments below.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See attached comments below.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See attached comments below.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See attached comments below.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See attached comments below.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See attached comments below.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See attached comments below.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See attached comments below.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See attached comments below.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See attached comments below.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See attached comments below.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See attached comments below.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See attached comments below.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See attached comments below.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See attached comments below.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See attached comments below.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See attached comments below.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See attached comments below.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See attached comments below.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See attached comments below.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See attached comments below.

Public Generating Pool
Submitted 09/26/2022, 04:56 pm

Contact

Sibyl Geiselman (sgeiselman@publicgeneratingpool.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Public Generating Pool (PGP) appreciates CAISO and stakeholder efforts to bring forward and refine this proposal and looks forward to continuing to engage in the process and related initiatives. The EDAM stakeholder initiative is a significant development that if implemented, will have a major impact on how nearly all generation transacted across the West and will impact those entities that choose to join EDAM and those that may not. Given the importance of this market evolution, PGP has partnered with other public power utilities in the Northwest “NW Public Power” to develop common interests on principles and elements that we believe should be applied to any centralized day-ahead market that develops in the Northwest, including EDAM. These principles can be found here
 
PGP views EDAM as both a significant opportunity and a potential risk for our members, depending on how the market is designed and the governance structure that accompanies it. In order for EDAM to be successful, CAISO will need to strike a careful balance between providing market features and elements that stakeholders desire, while preserving existing rights and minimizing complexity. In addition, EDAM must be able to successfully interface with the developing Western Power Pool resource adequacy program (WRAP), and be implemented on a timeline that balances the desire to move quickly with taking the time to develop an equitable and durable market. 
 
PGP also notes the careful coordination that will be required between the EDAM initiative and the day-ahead market enhancements (DAME) initiative, the upcoming price formation enhancements initiative and EDAM governance process that recently kicked off. All of these efforts are linked to EDAM and its success and PGP will be considering these together as we evaluate the EDAM proposal. 

While PGP is generally supportive of the progress made to date, further refinement the participation framework, and greater analysis of potential seams issues that may arise through a complex market footprint will improve the proposal. Furthermore, PGP requests a specific educational outreach and coordination effort to address the regional concerns around resource adequacy and RA program alignment.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

PGP supports the voluntary participation model proposed for EDAM and the stated transition measures. The market operator’s support for readiness and willingness to provide protective measures to reduce any adverse impacts to participating entities aligns with the level of caution indicated by such a significant market change.

PGP further supports CAISO’s proposal to allow aggregations of hydro resources to function as a single resource in the market, which should facilitate participation of hydro resources on the same river system whose operations are interrelated. Several PGP members are BPA Slice customers, meaning they are entitled to a percentage share of the Federal Columbia River Power System operated by BPA, or sell their own Slice of system contracts to third parties. The BPA Slice customers self-manage their share of the capacity, energy, and flexibility of BPA’s hydro projects and are consequently active participants in the bilateral markets including to sell any surplus Slice that is not needed for their own load service. CAISO should clarify that market participants with a slice-type contract can use these contracts as resources that may be bid flexibly into the market. PGP acknowledges that implementation details of such participation would need to be worked out between CAISO, the external BAAs that sell slice products and the purchasers of those products.

PGP also requests clarification of the participation model for LSEs within an EDAM Entity BAA. Will individual LSEs have the ability to settle directly with the market operator or will this continue to go through the EDAM entity as it does through the EIM Entity today?

Given the resource participation model presented, at minimum the onboarding process should include direct coordination, testing, training, etc. with 3rd party load and generation within prospective EDAM Entities’ BAAs (and not just EDAM entities).

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

For the most part, PGP supports the design elements discussed in Section II.A.2 of the revised straw proposal.  However, PGP is concerned that application of strict consequences of RSE failures in hours other than peak load hours may disadvantage participants with significant amount energy-limited resources (such as hydro).  This point will be further discussed in question 16.

Regarding transfers in support of RA programs, particularly the WPP’s WRAP, PGP recommends additional timeline graphics and materials be developed to highlight differences in the WRAP vs California entity RA programs, and to spotlight any areas that may require additional coordination or refinement to guarantee appropriate priority and confidence of transfers to support reliability programs. Given these programs may be more granular than the BAA level, careful consideration for how they may impact BA transfer capabilities will be an important component of any ultimate market design.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

PGP appreciates the further clarification in the Revised Straw Proposal regarding the mechanics and decision-making responsibility for curtailments made during stressed and emergency conditions.  PGP generally agrees with how the CAISO has laid out these responsibilities where tension exists between establishing a common approach across the EDAM footprint to how market transfers are prioritized with load with the continued reliability obligations of individual BAAs.

PGP supports the concept of cost causality, and the idea that in extreme conditions, the shortfall or financial repercussions should be limited to the participant that failed the RSE if possible. As noted in CAISO’s presentations on the topic, however, these conditions will be handled within RT by the corresponding market operators, and will require close coordination to maintain reliability for as many customers as possible. PGP recommends that if/when these events occur, they be carefully studied by the department of market monitoring, to highlight any areas of concern and to search for areas of continual improvement for any impacted operations programs.

Also as noted in CAISO’s workshop, more work is to be done to align operations program from WPP WRAP with the EDAM timeline and process. The ability for EDAM to honor any contractual agreements from associated reliability programs is critical to compatibility and success. PGP requests a joint analysis between WPP, CAISO, and the CPUC to better understand how uncertainty requirements driving the WRAP holdback, CAISO RA procurement requirements and qualifications, and the EDAM RSE align, and what conditions may lead to a misalignment. PGP supports the concept that the EDAM RSE should be the universal adapter of these external programs, and such an analysis may help to determine if the current alignment is consistent and equitable enough for stakeholders, or if more needs to be done. Uncertainty requirements and associated resource supply should align across programs if possible. Any sharing agreements or capacity transfers within WRAP must be able to be honored with appropriate priority in EDAM, and work effectively within the stated market timelines.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comment at this time.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

It is important to PGP members that the goal of maximizing transmission available to the market is appropriately balanced with the needs (1) of transmission owners and service providers to receive sufficient compensation to replace the expected loss of short-term transmission revenues, (2) to continue to encourage investment in long-term firm transmission rights for new and existing transmission infrastructure, and (3) for transmission customers to retain their current OATT scheduling rights and/or receive compensation for their purchased transmission rights commensurate with their value to the market. PGP members also have residual concerns regarding the ability to manage resources and potential uncertainty through the operational time frame once transmission is committed to the market. It is through this lens that PGP views the different options for transmission provision.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

PGP appreciates CAISO breaking down Bucket 2 into multiple pathways to help demonstrate how each of the three use cases for transmission customers’ rights would work within the proposed EDAM framework.

PGP would like to better understand how resales and redirects of transmission rights, which are widely used in BPA’s system today, would fit into the Bucket 2 framework.  We recommend that rights that have been resold or redirected be eligible for each of the three pathways, but request clarification on that point. We further recommend further discussion of the participation framework for load serving entities with transmission rights and generation assets within an EDAM BAA.

Pathway 1

Pathway 1 states that the transmission customer would exercise transmission rights in the market by submitting a self-schedule associated with the rights.  In the language provided, it is unclear if “self-schedule” is referring to the generation at the source or the transmission.  In other words, it is unclear if this pathway is available for economically bid-in resources or only self-scheduled resources. PGP also requests clarification of the duration of transmission rights that would fall under Pathway 1.

Pathway 2

Pg. 29 of the revised straw proposal discusses the rights eligible for Pathway 2, stating that initially onlyt monthly and longer-term duration rights would be eligible, but that shorter-term firm rights may be eligible in the future. PGP encourages CAISO to further consider making shorter-term rights eligible at the outset of EDAM. A more granular approach has the potential to help preserve incentives for shorter-term firm OATT sales by TSPs and resales by transmission customers, and to increase the Pathway 2 transmission available to the market. A later deadline to release Pathway 2 rights would also facilitate additional release to the market due to enhanced certainty at that time.

This section also references the potential for bucket 2 path 2 rights to be released shaped in hourly increments across the 24 hour period. PGP notes that this is a mechanism that has the potential to improve alignment with the WRAP operations program, and may help to encourage the continued provision and value of long-term transmission rights through improving their optimization for variable energy resources. This concept of releasing a portion of rights to the market in every hour is an innovative approach that should be explored further and will likely lead to enhanced value from the EDAM and improved convergence with RT to the extent that it is used.  This path would also reduce the need and likely use of pathway 3 in RT, so it is a valuable risk management tool. Given that this approach may help to alleviate concerns of the need for changes in transmission use between the DA and RT, PGP recommends the CAISO pursue this functionality as early as practicable, if not on Day 1.

Pathway 3

PGP recognizes that there is tension between the goal of maximizing the quantity of transmission available to the market and ensuring that existing transmission rights holders are able to continue to exercise their rights under an EDAM Entity’s tariff.  In prior comments, PGP has not supported the automatic provision of unscheduled transmission rights to the market on the basis that it could: 1) be seen as a violation of the Energy Policy Act of 2005 which precludes mandating that transmission customers convert their existing physical transmission rights to financial rights; and 2) inappropriately de-value existing firm transmission rights.  CAISO seems to emphasize language in the current pro forma OATT that allows transmission providers to accommodate schedules submitted after 10am only if practicable as a basis for concluding that existing rights will not be de-valued. To evaluate whether or not this is the case, it would be helpful to understand other contexts in which transmission providers do not accommodate transmission schedules due to impracticability and whether or not the automatic provision of unscheduled rights to a market optimization is a similar context. In the event of a continued diverse footprint that is a mix of EDAM entities and bilateral frameworks, PGP members have concerns that they may be missing residual bilateral flexibility with the release of transmission to the market.

PGP also requests additional discussion regarding the potential uplift that could occur as a result of transmission customers exercising firm rights after the day ahead market, and whether it is appropriate for EDAM entities to allocate such uplift to those customers.  PGP requests examples as to how any increased congestion prices would get converted to uplift, and the relationship to the current allocation of real-time transfer and congestion revenues in the WEIM.  This requested additional discussion and examples may help inform a consistent approach to allocation of Pathway 3 congestion rent, which may in turn allow settlement directly between CAISO and transmission customers.

PGP finds the priority implications of this scheduling path outlined on page 31 to be reasonable.

 

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

PGP appreciates CAISOs efforts to bring fair and equitable treatment to non-CAISO and CAISO EDAM entities. This approach seems reasonably consistent with surrounding OATT methodologies given the unique situation of an ISO nested within a less- centralized market. 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

PGP supports the optimization of unsold transmission hurdle free with an after the fact revenue recovery framework to replace foregone short term firm transmission sales, and appreciates CAISOs efforts to generate a revenue recovery mechanism in the initial design.

The proposal notes that this would not cover monthly or beyond, but that entities should continue to monitor monthly + in duration for lost sales. PGP supports the 2 year review provision and the proposed bounds and adjustments to limit the potential for over collection. For truing up the forecasted TRR shortfall with actual shortfall, PGP recommends the year-end true up, as it maintains better transparency for re-evaluation of the rates at a future time.

PGP appreciates the BAA specific allocation methodology and further supports the use of supply and demand for the charge distribution, noting that increasing the denominator will reduce the differences in rates paid by the different entities.

PGP supports the transmission cost allocation for external entities as proposed.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

PGP supports CAISO’s proposal to develop a registration system for shorter term transmission rights, given the current lengthy process to update the Masterfile. Further, CAISO states that the registration of transmission rights will support the accrual of transfer revenues and congestion revenues.  As described further in Q31, PGP recommends CAISO consider allocating internal congestion rent directly to transmission customers.  By requiring the registration of transmission rights, it appears that CAISO will have sufficient information to perform this function.

Furthermore, for entities that may prefer to opt-out of the market, PGP recommends use of the legacy contract path be an option for LT rights holders if desired. While recognizing that this could create issues around cost causation and benefits allocation for the impacted EDAM entity and customers, it may be a necessary approach to enable customer-centric BAAs to participate without the full support of their nested LREs.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

PGP appreciates the complexity of this effort and the tradeoff in this area of improved data access and visibility for a potential accuracy. PGP notes that it may be particularly challenging to model complex hydro systems in any generic RSE framework, and more detail is required on the uncertainty calculations that will be included in the DA RSE. To confirm that this is a reasonable approach, PGP recommends that more accuracy demonstrations including conditions with limited hydro generation or limited hydro flexibility be provided before use of this approach is confirmed.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

PGP supports the additional tagging requirements for Schedule C and continual monitoring to better understand any issues that may arise with lack of reliability of this supply.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

PGP believes the same questions around requirements/source specification for WSPP Schedule C resources are implicated for day-ahead intertie bids, however, the concerns around non-delivery for these imports are higher, given that there is a history of these imports not delivering energy during stressed conditions. PGP appreciates the added provisions for when an import bid may count towards the CAISO RSE, and requests clarification that resources with a forward contract not otherwise shown as part of a resource adequacy plan will require bucket 1 transmission to be deemed reliable supply. PGP further supports market monitoring and reporting consistent with the reporting added for WSPP Schedule C contracts to continue to try to align treatment of CAISO and non-CAISO EDAM entities.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

PGP recognizes Demand Response resources are a critical component of many RA programs, but notes that using DR as load modifications provides DR resources and the entity using them unique benefits that other “supply” does not receive. This includes direct impacts on any planning reserve margin assumed, and the stated impacts to any load-based requirements impacted by this calculation: the uncertainty requirements, imbalance reserves, and reliability capacity. As such, if these resources are going to count against load in the DA, they must be offered in the DA and ready to be used in RT to bring those benefits to the market, or should be considered only as any other supply, and not have the additional benefits on load calculation and RSE. PGP has concerns that a demand forecast adjustment has the potential to send false signals regarding how tight the system conditions are, and could lead to inconsistent price signals within EDAM.  PGP requests further articulation and discussion of these issue in the next draft of the proposal, including the potential differentiation of economic vs emergency DR resources, as they should be considered differently in any RSE evaluation, and potential changes to the DA participation model for DR resources if indicated. Notably, if DR resources are for emergency use only, they may be more appropriately reserved for emergency conditions rather than counted in any baseline. PGP supports finding the right balance for DR participation that considers DR in the appropriate market phase and conditions, depending on the parameters of the specific resource.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

PGP supports enhanced market visibility, to improve operations and reliability, but requests that any additional information that is provided to some entities be available to all market participants.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

CAISO’s revised EDAM straw proposal proposes a surcharge based on the maximum hourly deficiency determined by the EDAM RSE application.  CAISO proposes that this surcharge use the maximum of MidC or PV day-ahead on-peak prices, which will be reduced by the load weighted average LMP.  CAISO provided the following table to illustrate how this will work:

image-20220926162718-1.png

For market participants with energy-limited resources, there will be conditions (low flows or limited operational flexibility) when the participant has sufficient energy and capacity to meet demand on the highest demand hours, but not enough energy to meet demand on the lowest demand hours.  Current day-ahead bilateral marketing practices utilizing inefficient HLH/LLH blocks of energy may choose to take shortfalls on low-demand hours into the within day markets rather than buy a block of energy that would also cover hours when the energy was not needed.

The proposed surcharge appears to be based in the philosophy that a shortfall on any hour could have been cured by a HLH block purchase of energy.  For example, the 15 MW shortfall on hour 3 in the above example would be surcharged in the same manner regardless of whether hour 3 is a peak hour, a midday hour, or an hour in the middle of the night.  PGP views this approach as potentially harmful to utilities with hydro resources, inconsistent with current bilateral marketing practices, and inconsistent with existing and emerging resource adequacy programs.

PGP recommends that these surcharges only be applied on shortfall hours that are the highest demand hours of the day and that CAISO eliminate the LMP compensation component.  These highest demand hours could be the highest six demand hours of the day (“super-peak hours”) or aligned with the WRAP program’s “capacity critical hours”.  PGP believes that failure consequences in hours other than these highest demand hours should be much less or not applicable. Eliminating the reduction based on the Load Weighted LMP will strengthen this provision while not penalizing resources for bringing flexibility to the hours of highest need.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

PGP has historically supported the ability to trade sufficiency products, and other means to facilitate sharing of flexibility and use of any diversity benefit provided by a broader market footprint with enhanced coordination. PGP notes that this hourly bid-range trading platform concept may create some interesting opportunity for improved efficiency and pre-DA visibility, and could even be used bilaterally. This concept clearly enables an additional space for short-term deficiencies to be cured in advance of the DA market run, which is ideal for all participants. However, until binding RA programs are fully established for all participants, PGP has the concern that if entities can regularly rely on short term procurement to pass the RSE, they may not see the need or value in long-term procurement. Given this could create additional complication and may be difficult to implement, and alignment with RA programs leading to the operational timeframe needs to be further explored, PGP supports further refinement of this concept before it is included in any official EDAM market design. PGP believes more discussion should occur on whether the CAISO should be the host of such a platform as well as how the region could work together to identify appropriate products, requirements, and associated contracting language for participation on such a platform, and notes that coordination with neighboring markets may also be required to enable new product development.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

PGP supports the hybrid diversity benefit in the initial implementation phase of EDAM while the diversity benefit is being tested and refined. As entities become more comfortable relying on the diversity benefit, EDAM entities may ultimately decide it is no longer necessary and could move toward full allocation of the diversity if desired.

In the event of a pool failure in the WEIM, PGP supports option (d) of using the assistance energy provisions in the WEIM. Option e.) dissolving the footprint once a diversity benefit has been allocated has the potential to cause cascading impacts rather than maintaining the diversity benefit and mutual aid that is indicated by a pooling approach. If entities do not want to participate in the pooling approach at the EDAM level, PGP recommends an opt-out approach in the EDAM RSE pooling. Opted out entities would not benefit from the diversity, and if an entity does not opt out, the EDAM entity should be part of pooling through the operational time frame.

 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

PGP recognizes that while BAAs ultimately maintain the reliability responsibility in the EDAM construct, these sorts of provisions may feel necessary for active management of the system and risk management. PGP also notes that generally enabling regular withholding in the market may have unintended impacts on price formation and even reliability, and a well-designed market should not encourage this behavior from participants, but that these provisions may be necessary to enable co-participation between the WPP WRAP and the EDAM if the footprints do not align. PGP further supports the voluntary nature of the market, and equal treatment of all EDAM entities, and recognizes putting this mechanism within the market design may be a way to enable that equal treatment with appropriate ability to monitor the use of this function. Given the noted incentives to offer all supply into the market, this optionality as used outside of the CAISO seems like it would be most applicable in the case of fuel-limited resources, such as hydro, gas with supply at risk, demand response with limited calls, or BESS with a minimum state of charge, or for obligations of capacity to outside entities. The need for this additional hold back would also be most indicated in times that the uncertainty calculation is not sufficiently representing the DA to RT risk, and may be more appropriately addressed within the uncertainty calculation when that is further refined. PGP requests this concept and the conditions that may drive the need for it be further discussed at the RA educational session recommended in comment 20 below.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

As discussed in the EDAM meetings, PGP sees the goal of the EDAM RSE to be the universal adapter of RA programs to a sufficiency requirement. As such, PGP requests a specific session educating potential CAISO EDAM entities on the RA programs outside of the CAISO, notably WRAP, and a similar presentation reviewing CA RA programs with non-California entities. A mutual understanding for all parties would support final refinements of the RSE as the universal adapter of these programs. 

Such a workshop should cover the RA standard, operations and aid protocols and timelines, roles of different resource types including demand side resources, must-offer requirements, uncertainty requirements, and any recent policy updates indicating changes to the programs. This workshop should also compare and contrast the proposed EDAM RSE uncertainty requirement with the standards and considerations of these programs. 

PGP also recommends an ongoing joint task force between the CPUC, Western Power Pool, CAISO, and market participants from each of the three programs (EDAM, WRAP, California RA) to (1) ensure interoperability between EDAM/EIM and the two RA programs; and (2) align RA standards and RSE requirements to the extent possible. Well-designed and well-aligned RA standards have the potential to provide greater assurance that all parties are coming to the Day-Ahead market with sufficient resources and may have the potential to reduce RSE requirements, which may be very difficult to cure in an operational time frame.

With respect to treatment of hydro in the RSE test, it is important that the unique characteristics of hydro resources in the Pacific Northwest be considered. Some of these unique characteristics include:

  • Daily streamflow forecasts that can change dramatically from day-to-day
  • Conditions in which NW hydro is capacity sufficient, but energy-limited
  • Delivery of the BPA Canadian Entitlement Return, which may not be scheduled until 11:00 AM
  • Operational requirements at hydroelectric demands that are mandated by statute or court-ordered.

PGP recommends that additional discussions occur to determine if there are any ways to address these unique characteristics.

Additionally, PGP conditionally supports the use of the proposed optimization algorithm that will apply energy limits for hydro along with the hourly bids to test for RSE, however, we note that such optimization models are frequently non-intuitive and there are challenges in interpreting their results. PGP encourages CAISO to test this with BPA and other NW hydro resource operators to ensure that results for each EDAM entity can be transparently interpreted by that entity. 

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

PGP supports the IFM and RUC processes as described, and further supports continued refinement of these processes through market monitoring driven initiatives, and using market products to enhance convergence and reduce the need for RUCs such as the imbalance reserve product under discussion in the Day Ahead Market Enhancement initiative. Given that the accuracy of these processes and corresponding product procurement are based on the uncertainty evaluation, PGP recommends further analysis and detail around how the uncertainty requirement will be calculated in the EDAM, further refinement of the diversity benefit calculation and use, and analysis of how this may translate to an appropriate reliability standard. This analysis may require further refinement once the initial EDAM footprint is known, and will require re-evaluation upon new participant entry.

 

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

PGP supports continued refinement of the market power mitigation enhancements through the Price Formation Enhancements initiative.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

PGP supports the transition period approach with continued monitoring for convergence bidding as stated in the proposal.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

PGP has historically advocated for external resource participation to be permitted in both EIM and EDAM given the numerous benefits it can provide to market participants and the market as a whole:

  • Allowing external resources to economically bid into EDAM would enable increased bilateral trading opportunities for an EDAM entity and enhances its ability to be resource sufficient.
  • Some entities interested in joining EDAM may not be ready to do so at the initial outset of EDAM on-boarding. External resource participation will allow those entities to continue to trade with EDAM counterparties and serve as an important bridge to full participation in EDAM.
  • External resource participation increases liquidity and results in more efficient and effective dispatch of resources as it reduces self-schedules and allows CAISO to dispatch resources based on least-cost dispatch.
  • External resource participation allows more supply to made available to the market, reducing the risk of market power mitigation concerns.
  • External Resource Participation allows external entities to self-supply imbalance reserves to loads they may be serving in EDAM BAAs.

PGP also recognizes the concerns raised by some EIM entities regarding submission of economic bids at their interties. Because such supply is not under contract and the source and deliverability is unknown, EIM entities have raised concerns that economic bidding by external resources at their interties may affect their ability to manage reliability. PGP notes that the CAISO’s current proposal to allow day-ahead intertie bids and Schedule C resources where the source and transmission is not known at the time of the RS test to count toward the day-ahead resource sufficiency test would present similar questions around the reliability of allowing resources to participate without source specification and/or firm transmission. Notwithstanding this inconsistency, PGP believes the reliability concerns for external resource participation are valid, but there are potential solutions that could be devised to address this. For example, external resources could be required to economically bid with resource-specific or system-specific energy resources and could be required to procure transmission from the EDAM Entity. PGP also recommends consideration of the ability for resources located within BAAs that are WEIM Entities but are not yet EDAM Entities to bid at EDAM Entity interties, subject to appropriate requriements. This framework may be a reasonable middle ground by achieving many of the benefits noted above, while poentially mitigating some fo the reliability concerns raised around intertie bidding because the EIM Entity would be subject to the WEIM RSE test.

PGP also understands the concern with respect to free-ridership of allowing an entity to participate in EDAM without paying all of the associated costs of joining and participating in the market. We believe the benefits of external resource participation outweigh this concern, however, and we’re open to considering ways to address this concern such as a participation fee, etc.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

PGP appreciates the significant amount of effort and discussion from both CAISO staff and stakeholders that have gone into the development of an approach to GHG accounting that meets the principles originally developed by the GHG working group earlier in 2022.  PGP acknowledges the significant challenge to develop a solution that is implementable technically, furthers the articulated goals of state policies, and meets the requirements of state regulatory authorities. It is PGP’s hope that the work done in this context will continue to pay dividends as both markets and state policies evolve. 

Notwithstanding the enhancements proposed for the resource-specific approach, PGP continues to be concerned with the long-term viability of a solution that does not allow market participants to direct how and in what quantity the output of their resources is attributed to specific loads.  While there may be workarounds to this issue in the context of the WEIM or in the earlier years of EDAM implementation, PGP’s perspective is that putting in place a short-term solution that has known flaws without a specific plan to update it in the future will result in unintended consequences and significant future challenges. It will only become more difficult to make modifications in the future as market participants and state regulators adjust their processes and behaviors to adapt to existing mechanisms.  PGP’s comments on the resource-specific approach are offered in this context.

PGP understands that one option for entities to limit the attribution of their resources to a GHG regulation area is to flag a resource as unavailable for attribution.  One reason an entity may choose to do this is to avoid potentially de-valuing the non-power attributes associated with that resource.  Some states, notably Washington, have found that when energy is reported to California as zero-emitting, the associated non-power attribute is rendered unusable for purposes of compliance with Washington renewable and clean energy standards.  PGP also understands that if there is not sufficient energy flagged as attributable to the CAISO BAA in a given market interval, that the CAISO BAA would not be able to import above the attributable amount.  As more states and entities may be concerned about the disposition of their non-power attributes, and as hydroelectric resources beginning producing renewable energy credits for compliance with clean energy standards, less non-emitting energy may be available for attribution.  PGP requests that CAISO consider the potential ramifications of this issue in its next proposal. 

In its revised straw proposal, CAISO emphasizes that its market do not create a claim on a renewable energy credit (REC).  CAISO also notes that some states require deliverability to the service territory of the purchasing utility and that buyers and sellers should consider updating applicable contracts to unbundle RECs from energy deliveries to the service territory of the purchasing utility. Many states, including Oregon, have requirements for a minimum level of bundled RECs to meet renewable portfolio standard (RPS) compliance.  In that context, bundled generally means that the REC and the energy were procured and generated at the same time.  Generally, an unbundled REC is only a REC that is subsequently or separately sold from the original purchase of the energy.  It is not uncommon for utilities or states to consider some portion of RECs unbundled based on subsequent market activity i.e., when any underlying generation is sold but the REC is retained.  At first blush, PGP’s perspective is that the complexity of the claims on non-power attributes and their relation to GHG accounting, pricing proposals, attribution to load, and compliance with state clean energy policies will be a set of challenges that are not solved as easily by market participants by simply unbundling their REC contracts and gaining regulatory approval. While interested in further discussion on this topic, PGP suggests that it is out of the scope of EDAM.

PGP also has some concerns that the proposal to modify the geographic boundary of reporting to the geographic boundary of the state (as opposed to the BAA boundary) absent further clarification or direction to do so in state regulations.  Currently, the Washington Department of Ecology regulations differentiate reporting obligations between electricity importers who are identifiable on an e-tag and those that are multi-jurisdictional retail providers.  The regulation does not address the difference between how these two differently situated entities report in the context of the WEIM or EDAM.  The regulation also does not directly address treatment of the Bonneville Power Administration, which is a multi-state BA and has unique statutory obligations associated with its energy sales.  PGP is specifically concerned regarding issues related to how Bonneville will be treated and how that might impact reporting obligations in Washington.  A fuller articulation of these concerns can be found in the Washington Utilities” and Bonneville’s comments in CAISO’s recent policy initiative on Washington WEIM greenhouse gas enhancements.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

Within the context of the resource-specific approach, PGP supports the use of the GHG Reference Pass and appreciates the effort to create a more robust way to limit the amount of energy that can be attributed to the GHG regulation area to resources that were actually incrementally dispatched to economically serve load in the area.  The GHG Reference Pass is also an improvement to the use of a non-optimized solution as is currently in place in the WEIM.  Further improvements may be necessary to accurately reflect the load service arrangements of individual resources and loads within an EDAM Entity BAA. As PGP understands the GHG Reference Pass, it would effectively attribute resources internal to a BAA to native load internal to a BAA.  However, there may be circumstances where an individual resource inside of a BAA is contracted to deliver output to the GHG regulation area.  It would not be appropriate to limit the output of this resource to an incremental dispatch.  In addition, there may be circumstances where individual entities with loads and resources embedded inside a BAA may not want their resources attributed to a third-party load that is within the same BAA and effectively limit their ability to be attributed to the GHG regulation area. There may be a need to incorporate elements of the zonal approach, namely the GHG pseudo-tie concept and the ability of a market participant to have control over how its resources are attributed to load, into the resource-specific proposal.

PGP also has some concerns that the proposed limit on resource-specific attributions to the difference between the resource’s upper economic limit and its GHG Reference Pass will perpetuate inaccurate attributions and undermine state policy objectives to reduce emissions and send short- and long-term price signals that incentivize non-emitting resources. PGP requests that the next proposal further articulate the benefits and potential drawbacks to further limiting the amount of attributable energy to an individual resource or BAA’s incremental dispatch above the GHG Reference Pass.  The effect of this would be to limit the amount of attributable energy more fully to that which is surplus and incremented to serve demand in the GHG regulation area.  Through discussions in workshops, PGP understands that such a solution is technically implementable but that CAISO staff is concerned about potential price formation outcomes that could be caused with this approach.  PGP requests a further articulation of these concerns and how and why they outweigh more fully achieving the environmental objectives of California and Washington GHG pricing programs. 

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment at this time.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

PGP continues to support the zonal proposal and appreciates the continued willingness of CAISO and other stakeholders to engage in dialogue around different proposed approaches.  PGP is concerned, however, with conclusory statements in the straw proposal and by some stakeholders in workshops and comments that the zonal approach would result in discrimination. PGP recognizes that there are concerns with respect to the treatment of non-emitting resources outside of the GHG regulation area and is interested in working with the CAISO and other stakeholders to address some of these concerns.  However, what the zonal approach proposes to do is to set some criteria that must be met for resources to be eligible to be imported into the GHG regulation area.  There is a pathway for those resources to import if those criteria met.  This is functionally similar to the approach in the bilateral market, where an entity must demonstrate direct delivery to California to be able to claim a non-emitting import.  It is also functionally similar to the limitations CAISO is proposing as part of the resource-specific proposal to limit the quantity of energy eligible to be attributed to the GHG regulation area based on set criteria.  While there may be debate with respect to appropriateness of proposed criteria, the existence of eligibility criteria or requirements that are a perquisite to import to the GHG regulation area on a non-emitting basis is not in and of itself discriminatory. PGP encourages the CAISO to remove this statement from its proposal or at a minimum clarify this as a topic for further discussion and legal analysis. 

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

Because the economics and resource dispatch logic in this proposal appears to be indifferent as to whether regulated load served by emitting or non-emitting resources, PGP questions whether this proposal is aligned with the policy goals of the states of California and Washington to achieve actual emissions reductions.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

In the revised straw proposal, in response to some commenters, the CAISO notes that its resource-specific proposal is flexible enough to employ additional constraints at a GHG regulation area level such as not allowing resources above a certain threshold or to exclude certain resource types.  While perhaps technically implementable, PGP questions whether the resource-specific approach is truly scalable if a significant number of states and/or market participants choose to select only non-emitting resources as attributable to their load. While conceptually appealing, PGP expects that this approach would result in unintended consequences that exacerbate the very issues the CAISO is attempting to solve in terms of secondary dispatch and inaccurate attribution of resources to load.  Furthermore, these complexities are outside of the scope of EDAM; PGP recommends that the potential consequences of this concept be further fleshed out or removed from the proposal.

PGP notes that there are procedural and “chicken or the egg” challenges with the dynamic between CAISO’s posture and proposal and that of the California Air Resources Board (CARB).  In its proposal, the CAISO notes that until air regulators update their rules, it is premature to adopt either the zonal or LADWP proposal.  In its comments on the Revised Straw Proposal, CARB notes that it intends to focus solely on the resource-specific approach going forward because that is the approach that CAISO intends to adopt.  If the CAISO can only pursue technical solutions when regulations are updated, but regulators only focus on currently proposed technical solutions, new and potentially more effective approaches will never be adopted. In this context, a sequenced process is problematic when either: 1) a technical solution is developed first and then regulations are adopted to reflect that solution; or 2) where regulations are adopted and then a technical solution is developed to implement those regulations. Rather, the technical solution and associated regulation should be developed in concert to reflect one another such that both the market operator and regulator can be assured state policies are properly reflected in the market design and that unintended consequences are avoided. PGP continues to recommend a more iterative and collaborative process between the CAISO and CARB such that circular logic and “chicken or the egg” issues can be avoided. 

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

It appears that the methodology leaves the tradeoff of dispatch and path certainty vs congestion or transfer revenue allocation to the EDAM entity and transmission owners to optimize. PGP supports the proposed pricing component formulation and notes that it enables clearer differentiation between the congestion rents and transfer revenue for allocation purposes. Given the underlying ownership of transmission that may ultimately be participating in EDAM or entitled to congestion rents, PGP suggests that more granular data supporting a path-specific approach to congestion allocation within the BAAs may be necessary for participation. This is particularly relevant for BPA customers that have transmission rights and portfolios of resources within BPA’s BAA and for entities who have purchased transmission under various OAATs. PGP appreciates that this proposal provides the unique opportunity for BAAs to evaluate and allocate congestion in the way that is most appropriate for internal stakeholders, but requests that sufficient data to support such allocation may best be provided by CAISO, and generally prefers that transfer/congestion revenue occurs directly with the transmission customers rather than through the EDAM Entity to the extent possible.

In particular, PGP recommends that transfer revenue for all three Bucket 2 pathways and internal congestion revenue be allocated directly from CAISO to the extent possible, noting:

  • CAISO is better positioned than EDAM Entity and should have information needed and structure in place already to calculate congestion and transfer rents
  • Simpler structure more efficient for single entity to process and for transmission customers to validate
  • Consistency across EDAM Entities’ treatment of congestion rent
  • At a minimum CAISO must provide sufficient information to EDAM Entities to suballocate congestion and transfer rent by path and by customer – requires much greater granularity than allocating all congestion and transfer rent into a single Real-Time Congestion Offset charge code as in EIM

Regarding transfer revenue allocation, PGP notes that the default split may not compensate entities proportional to their prior investment in interties, and recommends a deeper analysis of potential default methodologies for allocation more closely aligned with cost recovery principals. Given the importance of transmission and the need for appropriate and ongoing mechanisms to encourage new large-scale transmission in the region, the implications of the default methodology need to be carefully considered in this context.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

 No comments at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

PGP supports the fees framework as presented in the proposal, but would support further analysis of potential fees and participation requirements for external resources.  

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

PGP strongly supports decisional classification for the entire EDAM initiative falling under joint Authority of the WEIM Governing Body and the Board.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Given that the proposed framework for pathway 2 and 3 would require OATT changes, PGP recommends further information regarding how OATT revision would need to fit into any implementation agreement and associated timeline, and consideration by stakeholders of any governance questions that this may raise.

PGP again thanks the CAISO for the proposal and engagement process to date.

Public Power Council
Submitted 09/26/2022, 06:17 pm

Contact

Lauren Tenney Denison (tenney@ppcpdx.org)

Mike Linn (mlinn@ppcpdx.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

The Public Power Council[1] (PPC) is optimistic and encouraged in the potential to develop a day-ahead market that creates benefits for end use customers across the West.  In order for any day-ahead market to achieve this goal, it must be well designed and broadly supported by a diverse set of Western stakeholders.  PPC members are seeking a market which will allow them to enhance the service they provide their customers through increased economic benefits (both through allowing utilities access to lower cost power supply and by providing an opportunity to capture additional value of existing assets), additional integration of carbon free resources, and more efficient use of the region’s transmission grid.  In seeking these opportunities, PPC members also acknowledge that there are certain parameters which must be met by any organized market.  It will be critical that any potential integrated market maintains reliability, facilitates BPA continuing to meet its statutory obligations, and is administered by a governance structure designed to treat all participants equitably.

PPC continues to appreciate the hard work of the CAISO staff and the level of engagement from other stakeholders in exploring the complex and challenging issues associated with pursuing a day-ahead market for the West.  We acknowledge the immense effort from CAISO staff to prepare materials, host workshops, and consider stakeholder feedback to improve proposals.  CAISO staff continues to engage in meaningful discussions with stakeholders, while balancing an aggressive timeline established to develop an EDAM proposal, detailed enough to result in tariff language, by the end of the year. 

Need for Additional Discussion and Clarification

While meaningful progress continues to be made, PPC still has outstanding questions in a number of areas and seeks additional clarification on aspects of the proposal.  We struggled to provide comments in some areas as the details of the proposal appear to have changed from what is in the latest draft during stakeholder meetings.  For some of these changes, there are not detailed explanations of the changes outside of workshop slides and workshop discussions.  We understand that CAISO staff will be using the comments submitted by stakeholders on September 26 to develop a draft final proposal.  PPC is concerned about the limited time to work out some of the remaining issues raised by stakeholders – particularly given the challenge stakeholders face in providing detailed comments on some aspects of the proposal due to lack of clarity.  Some of the areas in which we have the most questions center on the foundational elements of the market design – and they are interrelated – which makes it even more difficult to adequately evaluate the current proposal.  Specific questions are discussed in more detail in our following comments, but generally, we have outstanding questions related to:

    • Transmission availability
    • Resource Sufficiency Evaluation
    • GHG Accounting
    • Confidence in transfers
    • EDAM participation model

The current status of related initiatives has also created challenges to evaluating the comprehensive EDAM design.  We discuss this more below.

Holistic Day-Ahead Market Evaluation Includes Other Key Initiatives

As stated in previous comments, it is important for PPC and our members that any integrated market that may form in the Northwest must be evaluated as a package.  This includes market design, market oversight and market governance.  The EDAM straw proposal authored by CAISO is just one piece of this larger package, with EDAM governance, the Day-Ahead Market Enhancements (DAME) and price formation initiatives all among those which will shape the value proposition of this market for PPC members. 

Day-Ahead Market Enhancements

The modifications to the Day-Ahead market that are being developed in the DAME initiative are necessary components of a market that is capable of reliably and efficiently integrating a high level of renewable generation.  These changes are a foundational element of the EDAM design.  While PPC maintains the original DAME formulation that proposed to combine IFM and RUC into a single co-optimized market run was a superior foundation for EDAM, PPC still strongly supports the creation of Imbalance Reserves and the proposed modifications to RUC.  Beyond creating a standardized product and procurement levels for flexible capacity, the proposal will create benefits for both load and suppliers through increased market efficiency as well as by providing a market-based mechanism and market clearing price for providing flexible capacity.  Based on on-going stakeholder discussions, PPC remains concerned that the proposed expanded scope of market power mitigation creates serious concerns in the context of EDAM.  PPC believes that the market power mitigation approach that is developed in DAME and the price formation initiative need to further progress to fully evaluate the potential aggregate benefits and risks of an entity joining the EDAM.

Transmission Service and Market Scheduling Priority

PPC remains concerned that the proposal continues to take a CAISO-centric approach to resolving competing needs for access to transmission and establishes burdensome criteria to access the limited amount of high-priority transmission on CAISO’s transmission system for external uses.  Further, the proposal continues to influence whose resources flow and what is eligible for EDAM Resource Sufficiency in a manner inconsistent between prospective EDAM entities and CAISO as described below.  Under the proposal, the determination of whose resources flow and whose load is ultimately served from exports over the jointly owned and operated Southern Intertie paths are effectively determined by the priority on the CAISO portion of the path.

Entities outside CAISO that require a “wheeling-through” leg of transmission on the CAISO system must have a power purchase agreement and at least monthly firm transmission to the CAISO border in order to be treated as “high-priority” wheels, and thus be included in the RSE.  CAISO, on the other hand, can count imports towards RSE that merely need to tag by the STUC horizon.  This will allow imports into the CAISO BAA which are awarded in the Day-Ahead to then be fulfilled through real-time market purchases and delivered into the CAISO BAA on an adjacent BAA’s non-firm transmission.  This policy, along with the proposed RSE, results in strict limits on what supply EDAM entities can count as supply towards passing the RSE, but guarantees virtually any supply - including speculative market bids - over the Southern Intertie can count towards CAISO’s RSE.  This results in inconsistent and inequitable requirements for meeting the RSE between CAISO and other EDAM entities.  This design appears to prioritize California LSEs’ use of the Southern Intertie in a manner that does not acknowledge the transmission priority on the Northern portion of the paths. 

In EDAM, transfers will likely rely on both CAISO and OATT transmission.  The prioritization of transfers based on the CAISO leg of transmission without jointly considering the priority of transmission on neighboring TSP’s systems is problematic and inequitable. Priority in EDAM should depend on the priority on all segments not just the CAISOs’ and rules towards counting supply towards the RSE should be applied uniformly. One step the CAISO can take in addressing this inequity is move the tagging deadline for supply to count towards the CAISO RSE from the STUC horizon back into the Day-Ahead timeframe.  This would help address concerns that the priority of OATT transmission of adjacent transmission is not undermined by the market design.

These concerns extend beyond what supply is eligible for meeting the RSE and extend to how transmission is allocated when the market cannot economically resolve congestion.  CAISO should clarify if it intends to develop penalty prices in its market that would respect the OATT priority of BAAs outside CAISO during stressed system conditions. The TSMSP proposal in conjunction with CAISO’s proposal to allocate 100% of congestion on paths into the CAISO may materially devalue the economic and reliability value of BPA transmission. PPC believes the resolution of this issue is an opportunity for CAISO to demonstrate their ability and willingness to develop a market design that does not disproportionately benefit one set of stakeholders.

Resource Sufficiency Evaluation Enhancements

While the EDAM discussion is focused on creation of a new day ahead RSE, the real-time RSE will continue to be an important mechanism in the CAISO market.  The real-time RSE will continue to be applied to both EDAM entities and EIM only participants in advance of the real-time market run.  Therefore, while outside the scope of EDAM, it is an important consideration in evaluating how the proposed market will perform – particularly in assessing whether the market incentivizes equitable contribution among participants towards maintaining regional reliability.  While recent initiatives have certainly improved the real-time RSE, the existing RSE applied in real-time continues to have issues with accuracy and with inequitable failure consequences for all WEIM participants.

Phase 1 of the RSE Enhancement initiative focused on improving the accuracy of the test and several improvements were adopted.  However, during the most recent CAISO EEA events in early September, the BAA continued to pass the RSE in most market intervals, raising questions around how a BAA in an emergency condition (particular EEA-2 and EEA-3) could possibly be demonstrating it has sufficient resources to meet its resource needs in that interval.  This suggests that additional discussion on the accuracy of the test is warranted.

Phase 2 of the RSE Enhancement initiative was intended to address concerns around the failure consequences of the RSE.  While creation of assistance energy transfers as advanced by the latest proposal is an improvement, it is an optional result of an RSE failure.  That means for any entity that does not select to participate in assistance energy transfers (and to be clear, PPC supports this being an optional tool) that entity will default to the same failure consequences that stakeholders, including PPC, have questioned as inequitable.  PPC looks forward to more discussion and exploration around the interaction of the day ahead and real time RSEs, but we are currently not convinced that the shortcomings in the current WEIM RSE will be addressed (and won’t potentially be exacerbated) through the WEIM RSE’s role in the EDAM market.

Price Formation

PPC is encouraged by CAISO opening this stakeholder initiative and is very supportive of CAISO exploring potential improvements to price formation in the ISO markets.  PPC appreciates CAISO’s willingness to reassess its original position on fast start pricing and strongly supports prioritizing both fast-start pricing and refinements to the CAISO’s scarcity pricing.

PPC believes accurate market prices are essential to maximize aggregate societal benefits.  Market prices send a strong signal to consumers and producers for optimal operational and investment decisions.  Accurate prices encourage efficiency through the installation and use of the lowest-cost resources, they facilitate reliability by incentivizing the right resources to be built in the first place – including sending signals about when and where they are needed and available after coming online, and they promote meeting clean energy goals through the “best fit” mix of non-emitting resources and storage.  Price formation practices that create efficient, fair, and equitable market prices are critical to individual participants, BAAs, and regions to benefit from market participation and attracting broad regional support for EDAM.

EDAM, or any other day-ahead market that emerges in the West, will replace the vast majority of bilateral transactions that occur today.  For individual entities, the price formation practices adopted could have financial impacts that can quickly outweigh the overall benefits that are expected to be achieved through a day-ahead market and discourage or prevent their participation. If a market results in prices that are too high will benefit net sellers at the expense of net purchasers and their rate payers.  Conversely if the market produces prices that are artificially low, it will benefit net purchasers at the expense of market participants that are net sellers.  This will harm rate payers in surplus regions.  For example, PPC members are consumer owned utilities with statutory preference to the output of the Federal Columbia River Power System (FCRPS).  These utilities purchase the output of the FCRPS at the cost of the system net of surplus sales that Bonneville Power Administration (BPA) can make.  These long-term contracts with BPA often make up the majority of costs that are passed onto the ratepayers of Northwest utilities.  Therefore, inaccurately low market prices harm Northwest rate payers by lowering the value of BPA surplus sales, which raises the cost of BPA long-term contracts. 

PPC strongly supports the adoption of Fast Start pricing and scarcity pricing refinements as critical components for EDAM.  Both are standard industry price formation practices and key areas of interest for PPC as we are seeking to ensure that BPA and our members who own firm, flexible resources are compensated for the value those resource attributes provide to the market.  An Energy GPS study[2] commissioned by PPC and Powerex indicates the lack of fast start pricing in CAISO’s market is already creating material harm to Northwest suppliers and the potential for inequitable compensation would only expand in EDAM. Transitioning to an expanded organized market without fast-start pricing would cause significant economic harm to ratepayers in the Northwest, and will fail to produce the accurate and efficient wholesale market prices necessary to support the deep decarbonization of the western grid while maintaining reliability and keeping electricity affordable for ratepayers. 

The price formation initiative has not progressed to the point it can help inform our evaluation of EDAM.  PPC looks forward to continuing to discuss these critical elements.

Governance

Extensive work has been done by the Governance Review Committee, CAISO staff, and stakeholders in exploring potential improvements to the current WEIM governance in order to support the EDAM.  PPC will not reiterate is governance comments here[3], but notes that market design and governance must be evaluated as a package.  The participation model of EDAM increases the importance of a governance structure that is independent from obligations to any subset of market participants.  As stated in our August 2022 comments on EDAM governance, “[u]nfortunately, the current law restricts the options available to the GRC and perpetuates a governance structure that, in perception if not in practice, is centered around a subset of the markets’ participants.”[4]  This will be a consideration for PPC and its members when evaluating EDAM.

Other Key Considerations for PPC: BPA’s Preference Obligations, WRAP Compatibility, Market Roles

In our previous comments on the CAISO EDAM Straw Proposal[5], PPC highlighted the importance of: 1) BPA being able to continue to meet its preference obligations as a potential market participant, 2) compatibility between any integrated day-ahead market that forms in the West and the Western Resource Adequacy Program (WRAP), and 3) adequately clarifying the roles and responsibilities within the market – particularly for the CAISO which will have a role of both market operator and market participant.  We will not repeat the entirety of those comments here but would like to remind CAISO that these will be key considerations for PPC and our members.

Enabling BPA’s Preference Obligations

PPC believes that the current market evolution in the West provides BPA with a unique opportunity to not only explore potential participation in new markets, but to help design them in ways that ensure these markets can become part of a sustainable future for BPA and its preference customers.  PPC is focused on developing a market design that is compatible with BPA’s unique obligations to its preference customers and enables BPA’s participation.  Per statute, in disposing of the Federal power, BPA shall “at all times” give preference and priority to public bodies and cooperatives.  In other words, if the energy generated by the Federal projects is delivered to other market participants while the preference customers have a competing need for that power, it may impair BPA’s ability to comply with its statutory obligations at all times. 

The current EDAM straw proposal does not appear to have a specific mechanism which would allow BPA customers to have priority access to Federal power “at all times.”  We are still working to understand the extent to which a specific mechanism may be needed to ensure this priority access.  PPC is considering the discussions associated with “confidence in transfers” as foundational to understanding impacts to BPA’s preference obligations.  The examples discussed to date are helpful, but as described in more detail below, we still have outstanding questions which prevent us from evaluating whether this current proposal would satisfactorily support BPA meeting its preference obligations, which will be required to enable BPA’s participation.

Compatibility with Western Resource Adequacy Program (WRAP)

BPA and several PPC members have invested significant resources in the development of the WRAP.  Participants and stakeholders have contributed to the development of this program with the objective of creating significant value for the region, both through enhancing reliability and realizing the benefits of regional diversity.  It will be critical that EDAM is compatible with the WRAP to protect and further enhance the investments that the West has already made in this program.

For the EDAM to be compatible with WRAP it must: 1) be interoperable from an implementation perspective, and 2) not undermine the objectives of the WRAP by allowing “leaning” by EDAM participants or external entities.  These challenges are unique in a footprint with participants who are complying with multiple (or no) RA program standards.  PPC greatly appreciated the examples developed by PacifiCorp explaining a potential approach for implementing WRAP interoperability.  A key component of this interoperability will need to be that WRAP participants have priority access to WRAP “holdout” capacity in the market.  The robust stakeholder discussion was a promising start, but additional work is needed.  We were pleased to see participation from WPP staff in that discussion and encourage CAISO to continue to work with WPP to learn more about the program and develop potential solutions.

The need to prevent “leaning” among EDAM participants continues to be a key consideration in the discussion, and as discussed during the presentation on WRAP interoperability, entities will need to have confidence in the Resource Sufficiency Evaluation (RSE) to support the interoperability of the two programs.  As discussed further below, PPC continues to have some questions about the RSE – both in the day ahead and real time.  Further discussion will help us better evaluate the potential compatibility between the EDAM and the WRAP.

Roles and Responsibilities of CAISO and Participants Should Be Further Clarified

The effort to develop a stand-alone integrated market is novel and it will be critical that it is clear what responsibilities belong to the market operator and what are the responsibilities of the participating EDAM entities.  It will be important that there be transparency into the actions CAISO takes as a market operator and what actions it takes as a BAA – this transparency will need to be both in plan and in practice (clear policies as well as transparency into CAISO’s actual actions).  This will be important in demonstrating how CAISO will implement both roles without any conflicts of interest. Aside from this broader context, PPC also has additional questions on the specifics of how roles and responsibilities will be implemented which are addressed in the “EDAM Participation Model” section of these comments.

 


[1] PPC, established in 1966, is an association that represents the vast majority of consumer-owned electric utilities across five states in the Pacific Northwest. PPC’s mission is to preserve and enhance the benefits of the Federal Columbia River Power System operated by BPA for consumer-owned utilities.  PPC’s members pay roughly 70% of BPA’s annual $3.9M revenue requirement, in addition to owning their own generation and transmission facilities in the Northwest.

[2] The Importance of Fast Start Pricing in Market Design – June 2022, Prepared by Powerex and the Public Power Council: https://www.ppcpdx.org/the-importance-of-fast-start-pricing-in-market-design-june-2022/

[3] PPC comments on EDAM & EIM Governance:

August 2022 https://stakeholdercenter.caiso.com/Comments/AllComments/98cd6610-81b4-4ba8-a4c6-a3afe372eecf#org-5b4cee7b-6b89-4b26-ac76-3d2fc2cc368a

March 2022 https://stakeholdercenter.caiso.com/Comments/AllComments/764e975c-6c26-4ff5-8447-89c9b548a1d3#org-f5a555f9-a973-4bbd-9aae-220d8c087dff

June 2021 https://stakeholdercenter.caiso.com/Comments/AllComments/b48a9f8b-a283-406c-bc3f-94e07b947b7f#org-5d10929b-4b5a-4ca7-bcc0-b1bbdd3dc623

December 2020 https://stakeholdercenter.caiso.com/Comments/AllComments/f6b52c90-63a6-4802-bc36-4c907ae22e5c#org-9d175506-6fd6-4aee-9ed9-c4919be970ff

August 2020 https://stakeholdercenter.caiso.com/Comments/AllComments/47b3dcc6-217f-4f72-9aad-bbb4cab7f30b#org-b80174af-b459-48d8-a9c2-fa4c4dc39b35

[4] PPC Comments on WEIM Governance Review Committee Straw Proposal on EDAM Governance,

https://stakeholdercenter.caiso.com/Comments/AllComments/98cd6610-81b4-4ba8-a4c6-a3afe372eecf#org-5b4cee7b-6b89-4b26-ac76-3d2fc2cc368a

[5] https://stakeholdercenter.caiso.com/Common/DownloadFile/332aab8a-b088-443d-a940-b9e6e17ee384 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

PPC is supportive of a mechanism for the participation of external participants in EDAM.  The current proposal to expand the EIM external participation structure (which would limit external participation to be pseudo-tied, dynamically scheduled or self-scheduled) limits the potential supply to the market unnecessarily.  Specific tagging requirements could be explored to allow a broader range of economic, external bids without impacting system reliability.  External bidding will be important to entities who may not be able to participate in EDAM on day one. 

It would be particularly unfortunate to disallow economic bids from entities who are EIM Entities, but not yet participating in EDAM.  Additional discussion is needed on how EIM entities would be treated in the participation model, as described below.  PPC recommends that resources located within BAAs that are WEIM Entities, but are not yet EDAM Entities, be able to bid at EDAM Entity interties, subject to appropriate requirements.  EIM Entity would be subject to the WEIM RSE which may address some of the concerns raised with allowing external bidding more generally.

PPC encourages CAISO staff to formulate a participation model that would allow the broadest participation from reliable sources.  Specifically, we request that CAISO work with entities that supply and purchase “slice of system” products to enable participation of those products in EDAM.

We also urge CAISO staff to consider that types of interactions that will occur between the CAISO and the third-party load serving entities (LSEs), generation owners and transmission owners within the prospective EDAM BAAs.  During the onboarding of EDAM participants, CAISO should directly coordinate, test, train, etc. with those the third parties.  This is particularly important in EDAM given the proposed participation structure, as we understand it, which would require that all generation, all transmission and all load within an EDAM BAA participate in the market.

PPC requests additional clarification on several aspects of the proposed participation model:

  • What, if any, option does the generation and load within an EDAM BAA have about whether they will participate in the EDAM? 
    • It is our understanding that all load and all generation in an EDAM BAA must be cleared in the market.  Is this understanding correct?
    • Will all third-party transmission capacity be utilized by the market?  Either through self-schedules or economic optimization?
  • Must generators bid in their full capacity?  What is the process to identify any capacity that would not need to be bid into the market?
    • PPC looks forward to additional discussion on the mechanisms for BAAs to hold back reserves beyond RSE needs to manage reliability.  Additional discussion on who is allowed to hold that capacity and the how much discretion the BAA has in identifying the amount of capacity to be held out is needed.
    • Will there be any options for entities to settle outside of the market, using TORs or other potential tools to avoid market exposure?
  • How will the market operator communicate directives to participating BAAs, including a draft timeline for those communications?
    • For example, if the power balance constraint cannot be solved due to limited supply, how will this be communicated to EDAM BAAs?  In such a scenario, what actions will be at the EDAM BAA’s discretion and what actions will be determined by CAISO as the market operator?
    • What is the proposed participation model for LSEs within an EDAM Entity BAA? 
      • In EIM, load base schedules are submitted by the EIM Entity and load imbalance is settled between the market operator and the EIM Entity (who may suballocate to EIM Entities). 
      • Will individual LSEs bid in and/or forecast their own load and settle directly with the market operator?  Or will this continue to go through EDAM Entity?
3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Confidence in transfers is critical to PPC members – particularly as it applies to BPA’s ability to meet its preference obligations and the WRAP’s ability to honor priority access to WRAP “holdout” capacity for WRAP participants.  Understanding the specifics around how transfers will be treated, is crucial to being able to evaluate whether the EDAM proposal would meet the objectives of PPC and our members.  Many of the discussions have been focused on “edge cases” which, while not be applicable in a large number of hours, are critical to understand.  It will be vital that the policies around treatment of transfers during times of tight supply be transparent to allow entities to accurately assess any potential risk of participating in EDAM.

PPC appreciates the example laid out in the straw proposal that works through outcomes if uncertainty materializes beyond the imbalance reserve quantities established in the day-ahead market.  In this example, the BAA that has a power balance constraint relaxation has uncertainty within their planned range (as established by the market operator), and a BAA with uncertainty beyond their planned quantities has a balanced supply and demand schedule.  PPC agrees with discussion at a subsequent workshop that this is a counterintuitive result and believes relaxing the power balance constraint of the BAA that passed the RSE and is within their range of expected uncertainty is inappropriate.  The market should be designed to meet this planned uncertainty.  PPC understands CAISO has begun discussing alternative approaches to determining which BAA(s) should experience the relaxation of the power balance constraint during times of scarce supply and we look forward to future discussions on that topic.

PPC has a several outstanding questions on the treatment of market transfers in EDAM:

  • In the case of a shortage, how will the CAISO determine which BAA among those without a positive export schedule relative to its base should relax the power balance constraint?
  • It appears to PPC that the relaxation of the power balance constraint could potentially impact whether the BAA is able to procure sufficient supply to meet its needs.  We would like to further discuss this.  For example, if the power balance constraint is relaxed by 10MW within a BAA, how does that BAA meet that 10MW of need.
  • What specific role will the CAISO take in implementing the “priority” of transfers between EDAM BAAs?  It is our understanding that the CAISO is not making cuts, so what actions is CAISO taking?
    • To what extent will CAISO as the market operator be offering guidance on the actions taken by the EDAM entity where the power balance constraint is relaxed?
    • How does that guidance comport with existing OATT rules on how transfers in the BAA should be treated (i.e. OATT priority vs. “low priority” in the CAISO market)?
  • How would the priority or treatment of capacity made available through the WRAP program be different from other capacity? 
    • Are there mechanisms to ensure this capacity is prioritized for WRAP participants? 
    • Would it essentially be treated as any other self-schedule?
4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See response to question 3.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See response to question 3.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Transmission Priority and Congestion Rent Allocation

PPC appreciates the addition of a proposal to keep transmission providers whole by creating a mechanism in EDAM to retain historical levels of transmission requirement recovery.  Beyond providing a mechanism to keep EDAM entities whole for potential lost short-term PTP sales, it is critical the EDAM model should strive to maintain the incentive structure for continued subscription of long-term OATT rights.  This is accomplished by preserving the economic value associated with congestion rent and maintaining reliability value through the preservation of priority.   PPC is concerned elements of the EDAM proposal undermine these values.

The proposal to allocate 100% of congestion revenue on a EDAM to CAISO intertie to CAISO is unjustified and inequitable.  The major interties that interconnect the Pacific Northwest and California are jointly owned and operated facilities with significant portions of the northern half owned and operated by the Bonneville Power Administration.  These facilities have created significant benefits for both regions by allowing California entities to purchase lower cost carbon free energy.  These revenues from the sales made from PNW entities are used to reduce consumer rates in the region.  The EDAM proposal reduces the economic value of these paths to PNW entities and additional proposed EDAM elements will likely exacerbate that outcome.  The erosion of the economic value, the TSMSP proposal which would essentially make OATT market priority irrelevant, and the lack of a deliverability requirement for GHG attribution all undermine the incentives for continued investment in long term OATT.  CAISO still has not sufficiently justified why this congestion revenue allocation is appropriate.  EDAM presents a unique opportunity to resolve long-standing market seams issues on the Southern Intertie in a manner that continues to equitably allocate the economic benefits of the Southern Intertie.  PPC recommends CAISO adopt a proposal to split the congestion revenue on the Pacific DC Intertie and California Oregon Intertie between Northwest and Southern entities.

PPC supports the requirement to purchase a respective EDAM entity’s OATT to export out of the EDAM.  Absent this requirement, there is potential that the lost transmission sales that would be eligible for recovery through the market are associated with schedules that would leave the EDAM footprint.  It may be appropriate to further refine data used to calculate the potential TRR shortfall.

PPC prefers the CAISO directly settle transfer and congestion rent with transmission customers rather than through the EDAM entity.  PPC encourages CAISO to pursue this approach for all Bucket 2 pathways for both transfer revenues and congestion from internal network constraints.  Without additional tools, CAISO is better positioned than the EDAM entity to allocate these revenues and can create a more consistent and efficient structure for transmission rights holders that may have rights on multiple transmission providers system.  At a minimum, CAISO must provide sufficient information to EDAM Entities to suballocate congestion and transfer rent by path and transmission rights holder.  This will require more granular data than the Rel-Time Congestion Offset charge code in the EIM.

Outstanding Questions:

  • PPC would like additional clarity on how OATT transmission priorities are considered in the market optimization.  The Transmission Service and Market Scheduling Priorities Straw Proposal appears to reinforce that the priority on CA’s transmission system will determine who flows and what supply is eligible to count for the RSE.  PPC believes any proposal needs consider both priority on both the transmission in CAISO’s BAA and OATT legs.  Is CAISO open to introducing new penalty prices to reflect OATT priorities?

Transmission Buckets

PPC generally supports the bucket approach but has remaining concerns about certain aspects of the proposal, particularly the treatment of bucket 2 transmission.  While using unscheduled firm transmission may increase the available transfer capability of the market optimization, the proposal may devalue the economic and reliability benefits of transmission rights.  The proposal to automatically use unscheduled firm transmission rights could violate the Energy Policy Act of 2005 which precludes the forced conversion of physical transmission rights into financial rights.  Establishing mechanisms that protects physical rights may be necessary for an BAA that chooses to participate in EDAM may be necessary if the BAA has transmission customers that wish to preserve their physical transmission rights.

In previous comments, PPC has highlighted that unscheduled firm transmission rights are inherently non-firm and a customer’s ability to use those rights through real-time it may undermine market participants desire for EDAM schedules to be “highly-reliable”.  The revised straw proposal addresses these concerns by limiting the ability of a transmission customer to utilize those rights in the operating day – if feasible within the market optimization - at a lower priority and settling congestion through the EDAM entity rather than directly through with the ISO.  PPC is concerned this approach appears designed to increase transmission available to the market by devaluing OATT rights that wish to remain outside the market.   Alternatively, if the market respected the OATT priority of these rights and directly and equitably settled congestion with the ISO, it would not only support continued subscription of OATT rights, but it would also encourage entities to make transmission available to the market. 

PPC has additional questions on the Bucket 2 transmission concept:

  • Transmission customers that wish to use their rights outside the market framework may need the flexibility to change their transmission schedules through real-time.  It may be necessary to allow a customer to submit a capacity schedule under “pathway 1”.  Does the “pathway 1” option include the ability to set aside capacity that can change energy schedules through the operating days?
  • If pathway 1 transmission counts towards meeting the resource sufficiency evaluation, how is it differentiated from bucket 1?
  • What durations of transmission rights are eligible for bucket 2 transmission?  CAISO states only monthly and longer-term duration rights would be eligible for pathway 2 and shorter-term firm rights may be eligible in the future.  PPC encourages CAISO to consider making shorter-term rights eligible from the on-set of EDAM.
  • PPC requests additional discussion regarding the potential uplift that could occur as a result of transmission customers exercising firm rights after the day ahead market.  PPC requests examples as to how any increased congestion prices would get converted to uplift, and the relationship to the current allocation of real-time transfer and congestion revenues in the WEIM.  This requested additional discussion and examples may help inform a consistent approach to allocation of Pathway 3 congestion rent, which may in turn allow settlement directly between CAISO and transmission customers.
7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See response to question 6.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See response to question 6.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See response to question 6.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See response to question 6.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

There are several aspects of the proposed day ahead RSE which PPC supports.  Currently, as a whole, we continue to have questions about whether the proposed RSE would adequately deter “leaning,” ensure that sufficient reliable supply is available to meet real-time need, and be equitably applied among participants. 

PPC appreciates the “on demand” aspect of the proposed RSE but would like more discussion on the trade-offs between this feature and evaluating deliverability with the test.  Deliverability is an important component to ensure that capacity can actually be relied upon to maintain reliability.  We are concerned that ignoring this evaluation completely undermines the value of the RSE.  For example, the lack of a deliverability test in the DA timeframe may result in diversity credits that may not be able to operationally manifest, thus leaving a portion of the system potentially under supplied. 

PPC supports the proposal to allow EDAM BAAs to manage their hydro resources through daily energy limits, which set a limitation on the total discharge of individual resources, and hourly energy bids, which inform minimum discharge obligations and availability to discharge.

We are supportive of the proposal to allow VER capacity up to the forecast to be used in the RSE.  While we understand why CAISO is drawing a distinction between participants which do and do not utilize convergence bidding in this proposal, PPC suggests that initially using the forecast for VERs in all BAAs is appropriate with additional studies to determine whether there is a distinction between the supply made available in real-time related VERs in EDAM BAAs which are using convergence bidding and those that aren’t.

PPC questions whether the current proposal would adequately ensure that all supply accounted for in the RSE has a high level of deliverability.  As we have stated in our previous comments[1], additional requirements for the inclusion of WSPP Schedule C contracts in the RSE would better ensure the reliability of this supply.  These additional requirements would include specifying the resource (or at least some level of additional specificity of the source of the supply) and demonstrating transmission associated with the delivery of the contract.  While we have questions around the inclusion of WSPP Schedule C supply without these additional requirements, we are even more unconvinced that it is appropriate to include intertie bids into the CAISO’s RSE supply without further demonstration that these bids are associated with reliable and deliverable capacity.  We are concerned that inclusion of intertie bids generally raises questions about the equity of the test, given the inclusion of bids for only the CAISO BAA when those bids have not demonstrated that they are associated with actual deliverable supply, making them of questionable reliability during highly stressed system conditions. 

We understand the concept behind charging an entity that fails the RSE for a block energy purchased at index and why the CAISO has proposed it.  PPC is still considering whether this penalty would be sufficient to deter leaning.  Our initial perspective is that the penalty itself may be effective, but if entities are then treated as if they have passed the RSE, the penalty is less of a penalty and more of a financial “option” to fail the RSE.  We look forward to hearing other entities’ perspectives and would encourage if CAISO does move forward with this proposal, that it provide regular studies to inform whether the failure consequences of the RSE are having their intended effect.  PPC also continues to have questions on how CAISO will stabilize the indices referenced in the penalty, given the impact the EDAM is likely to have on the liquidity of day-ahead bilateral markets.

As a concept, PPC is supportive of treating transfers with an EDAM BAA which fails the RSE test as lower priority.  Additional discussion is needed on what this means in practice.  We are also unconvinced that absolving a “lower priority” penalty if the market is able to “cure” an entities’ RSE shortfall would adequately deter leaning.  A potential “threshold” for market cures (either in number or capacity) could be established where an entity exceeding that threshold is no longer absolved of any of the RSE failure consequences.

PPC also supports the concept of applying the real-time RSE to a pooled group of EDAM entities that have based the day ahead RSE.  We look forward to continued discussion on how this would be implemented.  Additional evaluation will be needed post-go-live to assess whether this approach is effective and whether there are any unintended consequences.

Allowing entities who fail the RSE to be part of the pooled RSE and the maintain higher priority transfers may not effectively discourage entities from regularly relying on the market to cure their deficits (despite the associated cost).  CAISO should consider a cap on the number of times that entities can cure through the market without additional consequences.

Allowing entities to tag unspecified supply by the STUC timeline undermines the incentive to procure firm transmission on neighboring transmission systems.  This curing timeline is also inconsistent with the requirements placed on entities that need transmission across CAISO to deliver supply to meet RSE requirements.  PPC requests additional discussion on alternative approaches.

PPC is supportive of the concept of developing a “bid range trading platform” and looks forward to additional discussion about how the prioritization of this work compares with other aspects of implementing the RSE.

PPC requests additional clarification on a number of areas related to the RSE:

  • Is transmission required for supply to be included in the RSE?  We understand that deliverability isn’t assessed, but is there any transmission requirement?
    • Is the only true to transfers between EDAM entities or for generation within an EDAM BAA?
    • Can CAISO please crosswalk the relationship between generation contributing to the RSE and bucket 1 transmission?
    • Does the “pathway” through which transmission becomes available determine whether generation scheduled over that transmission is available to the RSE test?
  • How is the “lower priority” of transfers that results from failing the RSE test enforced?  Will it require participating BAAs to make curtailments based on this priority?

 


[1] PPC Comments on EDAM Straw Proposal, pg. 7 https://stakeholdercenter.caiso.com/Common/DownloadFile/332aab8a-b088-443d-a940-b9e6e17ee384

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See response to question 11.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See response to question 11.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See response to question 11.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See response to question 11.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See response to question 11.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See response to question 11.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See response to question 11.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See response to question 11.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See response to question 11.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No specific comments at this time not covered in other responses.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

PPC is supportive of exploring refinements of the current WEIM market power mitigation through the price formation initiative.  We will note that one key aspect of the market power mitigation approach from WEIM which must be extended to the day ahead market is the default energy bid methodology developed for hydro resources.  CAISO’s adoption of that methodology was critical for participation of NW hydro entities (BPA had identified this as a “must have” to support their participation in the EIM).  Inclusion of these types of policies will continue to be a crucial role of successfully implementing market power mitigation in EDAM for diverse resources in the market footprint.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

We continue to evaluate the benefits and risks of including convergence bidding in EDAM.  Whether or not convergence bidding is adopted, we encourage CAISO to study the outcomes of this choice and revisit the approach with customers after the market goes live.  PPC is initially concerned with the seams that would be created from a BAA-by-BAA option to include convergence bidding on an ongoing basis, without further discussion on the potential consequences of such seams and how any negative consequences from that approach may be mitigated. 

PPC requests additional discussion on convergence bidding:

  • What criteria is there to participate as a convergence bidder within a specific EDAM BAA?  Does CAISO plan to allow financial only participants to participate in convergence bidding in EDAM BAAs?  Could the criteria to participate in convergence bidding be different BAA to BAA? 
  • Could the CAISO provide examples of how including convergence bidding in some EDAM BAAs and not others may impact price discovery across the market footprint?
  • Could the CAISO describe some of the potential risks of including/not including convergence bidding in EDAM BAAs?  Are there past examples of convergence bidding (or absence of convergence bidding) in the CAISO footprint which would be informative to discuss?
24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

PPC is still considering the proposed approaches for GHG accounting.  We continue to have concerns about the degree of potential secondary dispatch under the current WEIM approach.  We appreciate CAISO’s acknowledgement of this issue and attempt to reduce the amount of secondary dispatch through the changes included in the revised straw proposal.  The data provided in the straw proposal demonstrates that these changes would curtail a significant amount of inappropriate “deeming” under the current methodology.  What is less clear to PPC is to what extent additional secondary, or even “primary,” dispatch issues remain impacting the accuracy of the accounting methodology and potentially distorting the price signal associated with the GHG shadow price.

We request additional information regarding the existing EIM GHG accounting methodology and the current proposal for GHG accounting in EDAM:

  • Could the CAISO run through specific examples of how its methodology “deems” what resources are delivered to California?
    • Specifically, can CAISO address whether the energy price and the GHG price from the same generator are evaluated in the model to determine what is dispatched?
    • Could a specific example be provided to demonstrate how the proposed enhancements to reduce secondary dispatch would impact which generators are “deemed” delivered to California?  We understand the concept advanced by CAISO but think that a numerical demonstration could be helpful to explore the extent to which this approach addresses concerns with secondary dispatch.
  • We request that CAISO make available additional detail about what resources are “deemed” into California today.  Without additional data, PPC and other stakeholders not participating in the market are limited in our ability to evaluate the accuracy of CAISO’s current GHG accounting methodology.
  • Can the CAISO please provide examples of how the current WEIM GHG shadow price is produced.  Specifically, when an additional MW is dispatched to meet GHG load, how does that specific generator’s GHG bid impact the GHG shadow price?
    • Would there be any changes to this methodology based on the enhancements included in the EDAM proposal?
  • CAISO staff has indicated that limiting GHG attributions to incremental dispatches creates issues with price formation and may benefit certain regions at the expense of others.  PPC believes CAISO should clearly articulate these concerns in writing so stakeholders can better understand why limiting GHG attribution to incremental dispatch may be problematic for EDAM.
25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See response to question 24.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See response to question 24.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See response to question 24.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See response to question 24.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See response to question 24.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See response to question 24.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See response to question 6.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comments at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comments at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comments at this time.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

PPC’s membership, made up of nearly ninety consumer owned utilities across the Northwest, will be evaluating the impacts of a potential day ahead market through several lenses.  Some PPC members will consider what it would mean to be an EDAM entity, some members have generating resources and they must evaluate how participation (either at their own discretion or as the result of a decision made by the BAA in which they reside) will impact them, and all of our members are load serving entities who must evaluate the implications of having load served through a the proposed day ahead market.  Additionally, all of our members are preference customers of the Bonneville Power Administration.  PPC’s members pay seventy percent of BPA’s annual operating costs and will therefore experience considerable impacts based on the Agency’s decisions regarding market participation.  We will continue to work closely with BPA as integrated market options are developed to ensure those options meet BPA’s needs and the needs of its preference customers.

PPC appreciates the opportunity to provide feedback on CAISO’s straw proposal for EDAM.  We appreciate all the efforts of CAISO staff to provide forums to discuss and vet these issues.  As stated in the sections above, PPC still has significant questions about CAISO’s proposal and looks forward to additional details on how these questions will be addressed within the aggressive development timeline.  We would like to again reiterate our appreciation of the work of CAISO staff and other stakeholders to develop a day ahead market that will work for the broader West.

Public Utilities Commission of Nevada
Submitted 09/26/2022, 03:08 pm

Contact

Connie Westadt (cwestadt@puc.nv.gov); Cameron Dyer (camerondyer@puc.nv.gov)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

The Public Utilities Commission of Nevada (“PUCN”) appreciates the opportunity to comment on the California Independent System Operator’s (“CAISO”) August 16, 2022, Revised Straw Proposal. The PUCN has and will continue to monitor the development of CAISO’s Extended Day-Ahead Market (“EDAM”) as EDAM is a potential incremental step towards a regional transmission organization (“RTO”) in the West that could fulfill Nevada’s SB448 (Senate Bill No. 448, 2021 Legislative Session) requirement that Nevada’s vertically integrated electric utilities, both of which do business as NV Energy, join an organized electricity market by 2030.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

The PUCN believes the proposed voluntary participation model is positive for the West. CAISO’s proposal to allow EDAM Entities to join EDAM voluntarily or to not join EDAM and stay in the Western Energy Imbalance Market (“WEIM”) only, ensures needed flexibility. The proposal to not impose exit fees but to instead require a six-month exit period upon request will also allow potential EDAM Entities to retain flexibility during this time of transition.

Implementing the Resource Participation Model, which requires all entities within a BAA footprint to participate in EDAM if the BA joins, requires more detailed negotiations and will require tariff changes. CAISO’s Straw Proposal assumes that each EDAM Entity/BA will manage participation in EDAM processes, such as the Resource Sufficiency Evaluation (“RSE”) showing, as well as allocating out to market participants within the footprint any financial penalties or awards. The CAISO Straw Proposal does not include a description of the EDAM Entity stakeholder process that can accomplish these interactions. In addition, the Straw Proposal is not clear whether CAISO believes that the BAs themselves will collect and/or disperse financial payments or impose scheduling deadlines on market participants within their BAA. For example, does CAISO expect the BA (as the EDAM Entity) to require small load serving entities (“LSEs”) within its BAA to report to the BA the LSEs’ load forecast and resources as well as the proposed source locations for any WSPP Schedule C contracts filling demand within the BAA before the day-ahead market run? Moreover, it is unclear whether the BA itself, as the EDAM Entity, would impose cost allocation on market participants within the footprint and how the BA’s corresponding Transmission Provider would impose EDAM participation requirements via the OATT on behalf of the EDAM Entity/BA. CAISO needs to provide additional information on how this stakeholder process will work and interface with CAISO markets as well as what standard OATT updates might be needed to implement the stakeholder process across the EDAM footprint, if the EDAM is implemented via the OATTs. CAISO should also address how LSEs serving non-FERC jurisdictional bundled retail transmission customers, who do not take service under the OATT, will factor into this process.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

The PUCN emphasizes that confidence in transfers is important, as acknowledged by CAISO. The Straw Proposal describes how to ensure participants are sure that transfers will occur. The CAISO needs to provide more detail on interactions between a BA’s reliability role and how any bilateral curtailments needed to maintain reliability might be affected as well as how reserve sharing groups’ operations impact EDAM transfers. The proposal granting equal priority to load and exports in an edge reliability scenario and allowing curtailments to be implemented more pro-rata, rather than imposed solely on one BAA, could improve market participants’ ability to relieve emergency conditions.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See response in question #3.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See response in question #3.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

NA

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

NA

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

NA

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

Stakeholders can better assess the cost of participating in EDAM with additional information on the scale of the proposed Historical Transmission Revenue Requirement (“TRR”) recovery. The Straw Proposal allows Transmission Providers to estimate and recover, subject to true-up, revenues associated with short-term firm, point-to-point transmission, foregone wheeling access charges, non-firm point-to-point service on approved new transmission, and wheeling revenues above imports/exports through the BAA. The magnitude of the potential TRR payable remains unclear. Either in its next Straw Proposal iteration or some other document, CAISO should provide estimates of how much money Transmission Providers would need to recover via the proposed TRR recovery mechanism in EDAM so that prospective participants can understand the scale of the potential transmission costs at stake.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See response in question #9.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See response in question #12.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

RSE is a necessary part of EDAM. However, it is crucial to determine how the Western Resource Adequacy Program (“WRAP”) offered by the Western Power Pool will interface with EDAM. In particular, the PUCN would like to see a process to report the transmission identified as supporting reserves sharing to CAISO or to determine how EDAM will incorporate WRAP resource sharing. Also, while the PUCN agrees that including WSPP Schedule C contracts in the RSE is appropriate, in future iterations of the Straw Proposal CAISO needs to address how e-tags will be reported to CAISO in time for the market run as part of the proposed EDAM Entity stakeholder process. CAISO should also incorporate more detail as to the proposed management of supply in excess of RSE requirements. It is important that EDAM Entities retain control over resources to meet real-time emergencies or reliability issues without causing concern over resource withholding due to the potential for reducing market efficiency. Should state commissions play a role as “the local regulatory authority” in determining what resources need to be considered in excess of RSE and held in case of emergency?

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

NA

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

NA

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

NA

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

The PUCN supports the proposal to allow financial failure consequences for RSE failures, which would allow failing EDAM Entities to continue to procure additional resources to fill the gap to maintain reliable service even after failing RSE, if resources are available. Imposing a financial penalty for RSE failures would incentivize EDAM Entities to procure sufficient resources rather than locking entities out of the market when they most need it.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

NA

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

NA

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See response in question #12.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See response in questions #12 and #16.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

NA

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

NA

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Implementing mandatory convergence bidding for non-EDAM Entity market participants may require new processes and education. Convergence bidding starting, as proposed, one year after EDAM accession, with the possibility for a one-year extension, may present challenges to prospective participants new to market dispatch, particularly smaller LSEs. Moreover, it is unclear from the Straw Proposal how many hours out from dispatch entities within an EDAM Entity will be required to participate in convergence bidding. It is important to ensure that one year is sufficient time for utilities, customers, and other potential EDAM participants to effectively implement virtual/convergence bidding.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

NA

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

CAISO proposes using the Resource Specific approach for accounting of GHG emissions. One of the hurdles to implementing the Resource Specific approach of tracking GHGs in EDAM is that this bid-based attribution explicitly does not attribute credits, e.g., PECs or RECs, to the dispatch of green resources. Unbundling resource dispatch from the attribute credits previously generated by purchasing and using green resources complicates GHG compliance tracking for states with Renewable Portfolio Standards (“RPSs”), like Nevada, and may require reporting changes, which will take time and potentially require statutory changes. The MOU States comments contain more details on CAISO’s Resource Specific Approach proposal.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See response in question #25.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See response in question #25.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

NA

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

NA

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

NA

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

NA

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

NA

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

NA

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

The proposed decisional classification granting joint authority over EDAM to both the WEIM Governing Body and the California Board of Governors is a positive incremental step towards regionalization. EDAM is a next step towards a multi-state regional electricity market, just as EIM was the first step. EIM participants and states within the EIM footprint will be impacted by EDAM functions and structure once EDAM is implemented. Joint authority over EDAM will work out the kinks of coordinating the creation of a complex new multi-state and multi-BAA market. Moreover, joint authority over EDAM allows regional stakeholders to begin to engage in the details of market design, which will lay the necessary groundwork for any future multi-state RTO administered by the CAISO.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

NA

Puget Sound Energy
Submitted 09/26/2022, 03:48 pm

Contact

Vincent Ching (vincent.ching@pse.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Puget Sound Energy (“PSE”) is cognizant of the California Independent System Operator’s (“CAISO's”) efforts to propose a thoughtful, thorough day-ahead market design that can accommodate the sundry needs of western Balancing Authority Areas (“BAAs”). There are still several issues that require further discussion: 

  • Resource adequacy program requirements and compatibility
  • Governance structure
  • Methods to address GHG
  • Ensuring sources for transactions are secured prior to the Day Ahead Market Clearing Process
  • Day-ahead resource sufficiency evaluation and interaction with gas nomination protocols
  • Configurations and treatment of multi-stage generators, energy limited resources, and resources with environmental constraints
2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

PSE recognizes the importance of full resource participation in the optimal functioning of an organized market. However, losing the ability to elect non-participating units - as in the Western Energy Imbalance Market (“WEIM”) - will create additional burden and loss of autonomy for each Extended Day-Ahead Market (“EDAM”) entity. The proposed method for creating a synthetic base schedule through utilizing self-schedules + transmission + contracts for differences is a feature that could facilitate the financial observation of existing contractual arrangements and provide some level of security from a resource and power cost management perspective, but may create other inadvertent issues associated with out-of-market settlements. It may also result in inaccurate deeming of GHG resource attribution. PSE does suggest that CAISO retain the distinction between participating and non- participating resources. PSE has a myriad of resources that are currently non-participating resources in the WEIM due to different constraints or contract restrictions. Retaining this flexibility provides for smoother transition, more optionality, and a more careful approach at the beginning of EDAM.  

 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

PSE believes that all entities should participate in a resource adequacy (“RA”) program and be held to a similar RA standard and efforts should be made to reconcile differences. Resource showing should be comparable across the footprint to ensure a similar level of confidence in all procured energy and transmission. Specifically, RA programs should be aligned on matters such as PRM calculation, capacity requirements, resource eligibility and transmission service requirements. This alignment is a necessary provision to prevent erosions of confidence stemming from actual or perceived program inadequacies and incompatibilities. 

PSE is primarily concerned with how RA priorities will be honored under stressed system conditions. For example, participants in the Western Resource Adequacy (“WRAP”) program will invest in supply and priority transmission services ahead of time to ensure priority access and the ability to deliver under tight supply conditions. Without full transparency and assurance of priority service, the benefit of such investments may be eroded. PSE requests additional details of the changes necessary to ensure RA program compatibility as it pertains to priority access. Additionally, CAISO should explain how the California-Oregon intertie would be curtailed and how pre-existing contractual obligations would be honored.  

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

PSE continues to have significant concerns about CAISO’s prioritization of internal CAISO transfers and devaluation of firm Open Access Transmission Tariff (“OATT”) transmission associated with external transfers and wheel-throughs. This proposal to curtail transfers in equal proportion to load shed during stressed and emergency conditions may be in violation of North American Electric Reliability (“NERC”) standards and Open Access Transmission Tariffs. While this design represents a reasonable approach to diffusing stress pockets on the footprint and minimizing the propagation of shortfalls it is not compatible with current NERC reliability standards and this element is unlikely to be supported. This conflict merits further research and discussion to ensure feasibility.  

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

EDAM BAAs who fail the resource sufficiency evaluation (“RSE”) but cure their insufficiency prior to the real-time timeframe should not be assigned a lower transfer priority. Entities that fail the RSE can do so to varying degrees and will endeavor to cure any insufficiencies prior to entering real-time. The proposed penalty pricing framework should act as a sufficient incentive for entities to pass the RSE in the first instance. It is unreasonable and detrimental to the market to limit that entity’s supply and subject that entity that failed the RSE by a few megawatts to lower priority transfers in addition to penalty pricing. The transfer priority optionality granted to the exporting BAA embeds additional instability - due to lack of ability to count on those transfers - in stressed market conditions. Reducing the priority of transfers in the RT market as a result of day-ahead RSE failure introduces additional levels of complexity during stressed market conditions. 

PSE recommends the penalty pricing framework be expanded to capture entities that fail the day-ahead RSE and either cure their insufficiency or do not cure their insufficiency. Additionally, the penalty price should be in proportion to the extent the entity failed the day-ahead RSE.  

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

PSE is generally supportive of the bucket framework for the purposes of distinguishing between transmission used for supporting the RSE, unscheduled firm/conditional firm, and unsold available transmission capacity (“ATC”). Bucket 1 transmission is a vital design element that ensures real-time deliverability of each participating entity’s forward showing. Bucket 2/3 represents residual transmission capacity - either unscheduled rights or unsold ATC - that facilitates the optimization of transfers between BAAs.  

PSE’s Transmission Provider has concerns regarding the consistent definition, treatment, and prioritization of conditional firm transmission across the EDAM footprint. Conditional firm transmission is not a product defined in the OATT and Transmission Providers use different approaches to offer a conditional firm option to their customers. If Conditional Firm is defined by EDAM as a transmission product, it needs to be recognized as a non-regulated product that should be treated uniformly across the footprint.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

PSE leans towards automatically making unscheduled Bucket 2 transmission available to support and optimize market transfers. It is PSE’s general understanding that this approach is likely to result in a reduction of short-term firm and non-firm transmission revenues. However, this is a compromise necessary to propel this market design, and the potential participating entities toward a more efficient and mutually beneficial outcome. The extent to which these forgone revenues will be recovered through transfer and congestion revenues is currently unknown. But PSE believes the benefits of making Bucket 2 transmission available are likely to outweigh the drawbacks.  

PSE does not believe that the proposed 6am timeline is reasonable or necessary. It is understandable that submitting transmission prior to the market run is a prerequisite for solving the market, but we do not find it necessary to submit this transmission capacity up to four hours in advance. PSE suggests consideration of a two-pathway approach in which entities schedule on their transmission rights by 10am, or they become available for market optimization with transfer revenues being allocated to the transmission customer or EDAM entity.  

PSE agrees that Bucket 3 transmission should be made available to the market, hurdle-free, to optimize market transfers and avoid rate pancaking. PSE has concerns regarding the mechanism that halts OATT transmission sales during the market run (10am-1pm). Although PSE recognizes this is an essential element of the transmission submission framework, it has questions regarding how this ‘blackout’ period would be enforced and what repercussions, if any, may result from failure to conform. Additionally, it is important to incorporate a mechanism to allow transmission customers to reserve some transmission rights from the market. 

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See PSE’s response to question 7 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

PSE is generally supportive of the transmission revenue recovery framework and believes this acts as a complimentary component to automatically submitting unscheduled and unsold transmission to the market for optimization. PSE agrees that calculating recoverable shortfalls based on the previous three years is a reasonable proxy. PSE agrees that this rate should be updated after two years, however PSE requests more detail on the method in which the recoverable amount would be calculated in future years. 

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comment 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

PSE supports on-demand RSE advisory runs at the proposed times prior to the binding test and agrees that consideration of transmission constraints should be omitted from this test for the sake of simplicity and reduction in run-time. While the inclusion of transmission constraints in the sufficiency test would result in a test for feasibility in addition to sufficiency, PSE does not perceive this as a necessary component.  PSE recognizes transmission limitations may surface in RT despite all entities passing the RSE.  

PSE appreciates the flexibility for each entity to utilize an ISO forecast or submit its own. Additional detail is needed and measures should be taken to ensure uniformity in forecasting methodology and to incentivize consistent and accurate forecast submission across the footprint. Administrative penalties should be considered for entities whose self-submitted forecasts persistently deviate from CAISO forecasts, for example.  

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

PSE recognizes the inherent modeling challenges that the Western Systems Power Pool Exhibit C (“WSPP-Schedule C”) contracts create in the context of day-ahead energy scheduling and appreciates the flexibility that CAISO has integrated in this design to accommodate these contracts. 

PSE agrees with the requirement to, at minimum, identify the source BAA prior to the market clearing process, we need more information on how submitting non-source specific contracts will affect the validity of the market run. Additionally, further discussion is needed to determine whether there will be a settlement process to true-up any differences that arise from these market source or transmission path assumptions. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

The proposal to include non-EDAM intertie bids that are associated with a forward contract, are source specific, or otherwise backed by an RA contract is reasonable and acts to constrain California RA supply eligible to count towards the RSE. Intertie bids that are not contractually backed, and often procured in real-time, would not represent an acceptable form of energy for passing the RSE.  

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

PSE supports load modification for Demand Response

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Inclusion of D+2 market results will be a beneficial source of information to aid the procurement and management of gas supply. It is well understood that the proposed day-ahead market and gas nomination timelines do not align, and PSE is receptive to any additional support provided to facilitate the integration of these two processes. PSE has concerns that a D+2 advisory will not provide the necessary information to successfully manage gas resources due to the potentially high variances experienced in the D+2 and day-ahead timeframes. PSE requests additional information on what ‘internal procedural adjustments’ have been made by other California load-serving entities to aid in gas procurement planning. PSE also has concerns with accuracy around weekend and holiday trading. The D+2 market results could potentially be based on 4-day prior or even a 5-day prior inputs depending on holiday schedules.  

Additionally, it is important to consider how gas pipelines in the Pacific Northwest do not offer the same level of flexibility in balancing supply that is available to California entities. For example, Many CA entities can make yesterday and yesterday -1 trades to clean up imbalances. PSE can only trade Next Day and Same Day, and we are limited in our changes with the Elapsed Pro Rata Scheduled Quantity calculation. Many entities can also make M-1 imbalances trades where they can get in tolerance for imbalance penalties by trading the previous months’ gas. Pacific Northwest pipelines do not offer anything of this nature. Additionally, PSE has limited storage capacity and cannot ‘roll up’ our plants into a single demand number.  

PSE appreciates the amount of thought and effort put into this subject; however, more time is needed to evaluate the RSE proposal and ensuring that the design sufficiently reduces the risk associated with gas management in the Pacific Northwest.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

PSE agrees with the administrative surcharge as an incentive to cure shortfalls prior to participating in the EDAM. There are concerns about whether a 16-hour block surcharge is necessary in cases where an EDAM entity fails within the light-load hours. In these instances, an 8-hour surcharge based on light-load hub prices should be considered instead.  

PSE agrees with allocating surcharge revenue to those offering imbalance reserves beyond their obligation. 

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

PSE is supportive of a bid-range trading platform. This platform seems advantageous for entities who need to meet certain hours of “up” requirements and serves to mitigate the number of instances where entities must cure insufficiencies through a penalty pricing framework. Additional details are needed on the structure and characteristics of this platform, whether prices will be shown on screen, and whether it operates anonymously, like the Intercontinental Exchange (“ICE”), or whether entities will know who is providing their RSE requirements in the transaction. Examples of this tool would be helpful.   

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

A pooled WEIM RSE seems beneficial to all entities involved unless PSE or the footprint is under a state of stressed system conditions. If CAISO moves forward with a pooled WEIM RSE entities must be confident in the assumption that uncertainty in the overall EDAM footprint will be less than the sum of individual BAA’s uncertainty. Failure of the WEIM RSE will more likely occur under emergency conditions due to lower procurement obligations such as lower imbalance reserves.  

With respect to approaches for treating the failure of the WEIM Pool RSE, PSE agrees with the approach of curing shortfalls through the WEIM at the bid-cap price as a last chance effort to receive emergency assistance.  PSE is not in favor of the second approach where the EDAM footprint would be dissolved. Under this method, there is the risk of a cascading effect causing additional BAAs to face WEIM RSE failure in addition to the BAA that caused the failure.  

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

PSE has no comment at this time.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

PSE has no additional comments at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

PSE supports a market model that includes integrated forward market and residual unit commitment (“RUC”) as both products are critical components of a successful market design. Additional discussion and work is needed to clarify how the RUC process results in a transition of multi-state generators into different configurations, and whether there will be proper constraint options to limit this. This transition poses a reliability risk for several multi-state generators which struggle to successfully make multiple intra-day configuration changes. 

Special consideration will be needed for energy limited resources and resources with environmental constraints. Additional information is requested regarding the possibility of reliability up/down awards resulting in a resource running outside of its day-ahead established Pmin or Pmax. Additionally, PSE requests clarity on whether the IMF and RUC processes will integrate the parameters of environmentally sensitive resources such as hydroelectric generation.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

PSE has no comment at this time. 

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

PSE is supportive of deferring convergence bidding for 1-2 years to allow ample time for entities to get comfortable with the market operations and processes. For the sake of market uniformity, convergence bidding should be required after a two-year period.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

PSE is supportive of pseudo-tied, dynamically scheduled, and contracted supply participation at the interties. PSE is concerned with the inequitable treatment of intertie bids for resources external to EDAM and resources external to the ISO and proposes the ISO consider permitting non-source/non-contract intertie bidding across the footprint, disallowing intertie bidding across the footprint, or provide a justification to necessitate asymmetric design in this instance.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

Entities evaluating the EDAM design sit within different jurisdictions and are subject to myriad, sometimes discordant, regulations regarding procurement of clean energy and emissions reduction. PSE appreciates CAISO's efforts to design a thorough framework but continues to have concerns about extending the WEIM greenhouse gas (“GHG”) deeming methodology to a larger day-ahead market. Furthermore, while CAISO has stated its approach could evolve to a zonal methodology, it has not demonstrated a path or plan for such a future evolution. It is essential for a GHG methodology to support the ability for entities to direct the use of their clean energy, as needed, for compliance, contractual arrangements, and other clean energy goals. PSE maintains that CAISO’s resource specific framework falls short of that requirement.  

PSE appreciates CAISO's proposals to mitigate secondary dispatch and improve upon the WEIM GHG design, including the import and export attribution constraints. However, this layering of fixes to reduce backfilling of clean resources is likely to result in unintended outcomes and indicates the need for an alternative GHG accounting framework that would better suit the complex task of equitable, accurate distribution of carbon costs. The resource-specific approach has sufficed for allocating carbon emissions in the WEIM, but the emergence of the Washington Climate Commitment Act program necessitates a structure which allows multiple zones to meet their compliance obligations.

PSE agrees with CAISO's proposal to limit net GHG transfers in the GHG zone import direction between GHG and non-GHG zones, but requests further discussion on the modelling of transfers between GHG zones in the Reference Pass. PSE agrees that the GHG Reference Pass should determine the optimal dispatch to serve native load within the GHG areas first, but should allow standard economic optimization between non-GHG zones. If the GHG Reference Pass limits transfers between non-GHG areas, it is no longer controlling only for the effect of GHG pricing in the market run. PSE also believes there is a separate question about limiting transfers between GHG zones that should be discussed further.  

PSE supports some element of a transmission deliverability requirement for supply to qualify as a specified resource transfer, but this element requires further discussion among stakeholders. The timeline for designating transmission for specified resource qualification also has multiple complexities that need careful consideration.  

 The absence of a mechanism for revenue transfers between GHG zones is problematic. The proposal indicates that state regulators should take the lead role in addressing this issue. PSE agrees that this issue necessitates collaboration with state air regulators to provide clarity by the time that EDAM goes live.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

The inclusion of transmission constraints in the GHG Reference Pass is a substantial improvement to the counterfactual concept.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

Washington entities will require emissions intensity information by resource to meet compliance obligations. The resource specific approach, as it is proposed creates a framework in which unspecified GHG rates are applied across the board to CAISO exports to non-California entities in the EDAM and into Washington. The unspecified rate does not accurately represent the resource mix and carbon intensity of intervals of solar oversupply when Washington entities are decrementing Pacific Northwest marginal thermal resources and importing California solar. This asymmetry results in disadvantages for Washington entities under the Clean Energy Transformation Act and the Climate Commitment Act regulations. Under this design, GHG-regulated entities have no ability to cap their exposure to unspecified emissions rates, given that all resources are committed under the EDAM.   

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

A zonal approach provides the ability for entities to direct the use of their clean energy, as needed, for compliance, contractual arrangements, and other clean energy goals. Additionally, it eliminates the "deeming” methodology that has historically resulted in inaccurate attribution, lacked sufficient transparency, and resulted in a favorable bias toward California entities and regulations.  PSE considers the zonal approach a more equitable starting point for EDAM than implementing an extension of the WEIM resource-specific approach. 

While CAISO has indicated it will not pursue the zonal approach at this time, PSE strongly recommends CAISO outline a potential path or plan for such a future evolution that involves coordination among the state air regulators and stakeholders. In the absence of CAISO pursuing the zonal approach at this time, PSE will not offer additional comments on this approach.  

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

PSE has no comment at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

PSE has no additional comments at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

PSE has no comment at this time. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

PSE is supportive of the settlements framework but has concerns regarding the utilization of bid cost recovery as it pertains to fast start units. In a move towards an organized market footprint, uniformity will be a key aspect to ensuring fair and equitable treatment of participating entities, therefore PSE requests that the CAISO expedite its reconsideration of the treatment of fast start units. Bid cost recovery should only be used as a backstop to ensure generators can recover operating costs, not as a mechanism to facilitate under bidding into the market. Lack of a fast-start pricing mechanism results in suppressed prices that undercompensate flexible resources essential for reliability.

 

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

PSE supports the fees proposed

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

PSE does not support CAISO’s proposal for the entire EDAM initiative to fall under the joint authority of the WEIM Governing Body and the CAISO Board of Governors. While PSE recognizes the need for decisional authority for the changes proposed for the EDAM, this decisional classification must be part of the broader governance design and considerations being addressed in the Governance Review Committee and must include independent stand-alone authority for non-California participants.  

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

PSE has no additional comments at this time.

San Diego Gas & Electric
Submitted 09/26/2022, 05:22 pm

Contact

Alan Meck (ameck@sdge.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

SDG&E is supportive of the CAISO’s revised EDAM straw proposal and recommends moving forward with CAISO Board and WEIM governing body approval, implementation details and the requisite FERC filing.

 

Bucket 3: Unsold Firm Transmission Made Available by Transmission Service Provider

SDG&E supports Approach 3 to enable hurdle-free transfers within EDAM. SDG&E further supports the proposed cost recovery mechanism, but there should be limits placed on it.

 

STUC tagging deadline

SDG&E supports the soft requirement to tag Day-Ahead (DA) schedules within 3 hours of the Day-Ahead Market (DAM) results being published.  If such schedules cannot be tagged by this deadline, it is critical that Scheduling Coordinators (SCs) be given until the Short-Term Unit Commitment (STUC) deadline to submit the appropriate tags.

 

Economic intertie bids

With respect to counting economic intertie bids as part of the Resource Sufficiency Evaluation (RSE), SDG&E supports either one of two packages of options.  A) Economic intertie bids do not count towards meeting CAISO’s EDAM RSE, and Low Price-Taker (LPT) exports do not count towards non-CAISO EDAM Balancing Authority Areas’ (BAAs) EDAM RSEs; or B) Economic intertie bids do count towards meeting CAISO’s EDAM RSE, and LPT exports do count towards non-CAISO EDAM BAAs’ RSEs.  SDG&E believes option A is preferable but is open to either one.  The most important issue is CAISO cannot be denied economic intertie bids counting towards its EDAM RSE whilst LPT exports are used to count towards non-CAISO BAAs’ EDAM RSEs.

 

If EDAM stakeholders agree on option A, then the next issue is how this impacts CAISO’s ability to pass the EDAM RSE.  SDG&E requests data from CAISO how frequently it estimates the CAISO might fail the RSE.  Additionally, SDG&E requests data specifically on the September 2022 heat wave and whether CAISO would have failed the RSE during these stressed system conditions.

 

If it turns out that CAISO is expected to fail the EDAM RSE frequently without use of these economic intertie bids, then CAISO needs to coordinate with the CPUC over what, if anything, needs to be done to bolster the RA program.

 

Consequences of RSE Failure

SDG&E disagrees with having any direct financial penalty for EDAM RSE failures.  Exclusion from the pooled WEIM RSE provides an adequate incentive to pass the EDAM RSE.  Alternatively, if stakeholders are adamant about RSE failure penalties, SDG&E believes that direct financial penalties are the next least desirable option, and physical penalties are the worst option.

 

CAISO BAA Curing of Advisory RSE Failure

SDG&E encourages CAISO to work with its LSEs to develop a solution to the collective action problem.

 

Management of Supply in Excess of RSE Requirements – Net EDAM Transfer Export Limit

SDG&E appreciates CAISO’s willingness to listen to California stakeholders and protect California Resource Adequacy (RA) resources.  SDG&E believes that the net export limit, with some modifications, best addresses our concerns. More explanation is provided below.

 

GHG Accounting and Reporting

SDG&E supports the LADWP approach and believes that CAISO should explore this option more vigorously. If a majority of stakeholders agree on the LADWP approach, then CAISO should strive to develop this aspect of the proposal in time for EDAM go-live.

 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

SDG&E is supportive of the voluntary participation model and believes this feature will increase initial participation.

 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Potential EDAM participants have made clear that confidence in market transfers between Balancing Authorities (BAs) is an essential element for their participation.  While SDG&E believes including non-firm transmission rights in the market solution would be beneficial, SDG&E understands that potential EDAM participants may feel that including such transmission introduces a level of uncertainty they would not be comfortable with at the outset of their participation and could cause some entities to decline participation.  SDG&E suggests that consideration of including non-firm transmission in the EDAM market solution be taken up at a later date after there is experience with the currently-proposed EDAM mechanics.   

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

It is important that all potential EDAM participants feel that EDAM will afford their respective native load customers a service priority that is substantially similar to that which their current tariffs provide.  As noted in SDG&E’s September 16, 2022 comments on the Transmission Service and Market Scheduling Priorities (TSMSP) initiative, SDG&E is concerned that the CAISO’s proposed TSMSP mechanism -- which will be incorporated in the EDAM proposal – effectively provides non-CAISO Load Serving Entities (LSEs) with superior access to CAISO transmission capacity during periods when there is high risk of involuntary load curtailment (“edge reliability scenarios”).  This is possible because the CAISO is proposing to identify the capability to provide priority wheeling-through transmission service (Available Transmission Capacity (ATC)) to non-CAISO LSEs outside of the CAISO’s established Maximum Import Capability (MIC) process, and it appears that the ATC calculation is less robust than the MIC allocation process.     

 

If the CAISO revises its TSMSP proposal to provide CAISO LSEs with the first opportunity to claim and use identified ATC to import incremental amounts of Resource Adequacy (RA) capacity (in addition to the RA capacity imported over allocated MIC), then CAISO LSEs’ native loads will be afforded a service priority substantially equal to non-CAISO LSEs.  With this revision, SDG&E is comfortable with the CAISO proposal for “’equal priority’ between load and transfers in stressed conditions.”[1]    

 


[1] CAISO revised straw proposal at p. 14.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

SDG&E supports the CAISO proposal as demonstrated by the example on Page 71 of the CAISO’s September 7, 2022 presentation entitled “EDAM, Extended Day-Ahead Market, EDAM Revised Straw Proposal – Stakeholder Meeting.”

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

SDG&E believes the transmission “buckets” concept is helpful in explaining (i) how transmission can be made available to the EDAM, and (ii) the mechanisms by which entities making transmission available to EDAM can earn revenues. 

 

SDG&E believes it is important to emphasize, however, that the primary benefit of making transmission available to EDAM is that it affords all participating entities enhanced opportunities for beneficial market transfers and allows for more comprehensive pre-positioning of resources that will better address regional reliability challenges (as compared to the current situation where each Balancing Authority’s day-ahead actions are essentially independent of one another).   

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

SDG&E believes the emphasis on the different “pathways” has created unnecessary confusion and unwarranted concern.  Suffice it to say, EDAM provides transmission providers and transmission customers equivalent or better opportunities to make beneficial use of the transmission they control or have rights to.  EDAM reflects that recognition that, in the final analysis, the most efficient use of transmission is achieved by allowing market participants to express their willingness to access transmission through economic offers/bids that reflect the value each supplier/Load Serving Entity places on that access.    

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

The proposed mechanisms for making CAISO transmission available to the EDAM[1] are acceptable provided the CAISO adopts the changes SDG&E recommends to the CAISO’s proposed Transmission Service and Market Scheduling Priorities (TSMSP) initiative.  SDG&E’s recommended changes will provide CAISO LSEs the opportunity to import RA capacity on ATC; consistent with intent of the CAISO’s existing MIC mechanism.  If SDG&E’s recommended changes are implemented, non-CAISO EDAM BAAs will have the ability to rely on wheeling-through transactions for purposes of meeting their respective RSE requirements without compromising the ability of the CAISO to meet its RSE requirement.

 


[1] CAISO proposal at p. 33-34.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

SDG&E supports Approach 3 in order to provide transmission access to EDAM hurdle free.  The alternative of having each EDAM BAA charge their own transmission costs results in rate-pancaking whereby power moving across multiple BAAs must pay the transmission costs of each BAA that it moves through.  The ISO software may often locate efficient transactions between buyers and sellers who are located more than 1 BAA away from one another, but rate-pancaking could easily make those transactions uneconomical.  Furthermore, transmission is a sunk-cost anyway and should not interfere with efficient market dispatch.

 

However, if for some reason Approach 3 turns out to be unworkable, then SDG&E supports Approach 1 to allow EDAM entities to charge their hurdle rates.

 

SDG&E understands and agrees that some level of transmission revenue certainty is necessary to induce transmission providers and transmission customers to make transmission available to EDAM.  SDG&E is, however, concerned that the current CAISO proposal creates incentives for indefinite reliance on the uplifts that are necessary to assure historical levels of transmission revenues for existing transmission and to account for the foregone transmission service revenues associated with “new” transmission. 

 

Uplifts are a drag on overall market efficiency and should be minimized where possible.[1]  Accordingly, SDG&E recommends that the CAISO consider modifying its proposal to (i) adopt a phase-out period for transmission service uplifts, and (ii) remove the ability to claim uplifts for “new” transmission where the planned transmission lacks key regulatory permits at the time the transmission provider elects to participate in EDAM.  A three to five year phase-out of the uplifts would provide transmission providers and transmission customers time in which to assess whether the overall benefits of EDAM offset the perceived loss of bilateral transmission service revenues.  Based on the results of the WEIM to date, SDG&E expects that most EDAM participants will conclude after a few years that the benefits of EDAM far out-weigh the perceived loss of transmission service revenues and therefore will elect to continue participating in the EDAM without the uplift. 

 

Additionally, such uplifts may be difficult to determine accurately. There may be various factors affecting what transmission goes unsold from year to year.  Estimating foregone transmission sales revenues for an entity’s first year in EDAM may be reasonably accurate.  But how accurate would that estimate be five years later?  Ten years later?  The further removed from the entity’s EDAM start date, the more uncertain the estimates of foregone transmission service revenues become.  By setting a sunset date for these uplifts, the impacts of this uncertainty are contained.

 

SDG&E also believes that a phase-out period will provide transmission providers an incentive to transition their transmission cost recovery mechanisms away from resource-based transmission service charges and towards load-based transmission cost recovery.  In the end, loads pay for the sunk costs of the transmission system; it is inefficient to assess those costs on generators who, in-turn, will reflect those unavoidable fixed costs in their centralized market offers.

 

SDG&E does not support allowing transmission providers that are planning to own and build transmission to claim an uplift for transmission service revenues that the transmission providers feel will be foregone if the associated transfer capability is made available to the EDAM.  In the first instance, such expectations are highly speculative.  More importantly, however, “new” transmission should be required to stand on its own feet; not subsidized through uplifts.    

 


[1] This concern was echoed by a number of stakeholders attending the September 7-8, 2022, stakeholder meeting.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No further comments. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

SDG&E agrees with the structure of the advisory and binding RSE runs.  SDG&E takes some issue with the testing inputs (more details below).  In a perfect world, transmission constraints would be in the EDAM RSE, but SDG&E understands CAISO’s concern that, at some point, it is re-running the market multiple times.  If some transmission constraints can be included, within reason, then CAISO should strive to include those.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Non-Resource Specific Firm Energy Contracts in the EDAM RSE

SDG&E supports the inclusion of non-resource specific firm energy contracts[1] in the EDAM RSE. 

 

Tagging Requirement

SDG&E believes the CAISO proposal reasonably balances the need for certainty of import resources with the practical realities of tagging.  There appears to be broad agreement that non-resource specific firm energy contracts are highly reliable.   

 

Moreover, SDG&E is concerned that a harder tagging requirement within 3 hours of publishing the DA schedules might eliminate a crucial market power mitigation mechanism.  Those entities who own large amounts of transmission may be able to economically withhold in the DA timeframe.  But by the STUC deadline, that transmission is released automatically.  A hard tagging requirement within 3 hours of publishing the DA schedules could give some the ability to exercise market power without providing any meaningful benefits to reliability.

 

On a related matter, SDG&E seeks clarification that the failure to tag by itself will not trigger an EDAM RSE failure.  One of CAISO’s recent slide presentations[2] was worded in a manner that was somewhat concerning. The flowchart says, “Non-resource specific supply 100% tagged by STUC, or otherwise replaced?” It seems like this is saying that 100% of all non-resource specific supply must be tagged by STUC or else the BAA fails the RSE.  A failure to tag could be entirely de minimus and should only result in RSE failure if the megawatts associated with the failure actually puts the BAA below the RSE requirement. SDG&E assumes this is what CAISO intended but would like clarification.

 


[1] By this we mean both non-resource specific RA imports as well as WSPP Schedule C

[2] At the August 29th, 2022 EDAM workshop, p. 29 http://www.caiso.com/InitiativeDocuments/Presentation-ExtendedDay-AheadMarket-Aug29-2022.pdf

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

SDG&E supports the CAISO’s proposal to count resource-specific import bids at the CAISO BAA border. towards the CAISO RSE  The CAISO proposal is conservative in that it would generally exclude non-resource specific intertie bids.  SDG&E suggests that after some experience with EDAM, the CAISO assess whether there is a basis for expanding the scope of intertie bids at the CAISO border that could be counted towards the CAISO’s RSE.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

SDG&E supports the CAISO proposal’s treatment of Demand Response (DR) as SDG&E understands it.  SDG&E seeks clarification, when CAISO writes: “if advisory EDAM RSE results indicate a potential inability for the ISO BAA to meet its next day obligations, the ISO could modify its forecast in the extended day-ahead market and the RUC.” SDG&E understands this to mean that the ISO will modify its forecast in the extended day-ahead market and the RUC using such DR programs as are available.  If this is CAISO’s intended meaning, then SDG&E is supportive.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

SDG&E does not object to providing “advisory” market results to provide information that market participants might find useful in making gas management decisions.  On the other hand, SDG&E questions whether market participants will actually make any financial commitments based on hypothetical market results that have absolutely no binding aspect. 

 

SDG&E does not believe it is feasible to design and implement market mechanisms that simultaneously optimize the scheduling of natural gas supplies and electric generating resources.  The two processes are obviously related but as a practical matter, necessarily independent.  As is the case today, the owners of gas-fired resources will have to continue internalizing gas supply risks in their day-ahead planning for EDAM participation.     

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

CAISO is already proposing to exclude BAAs who fail the EDAM RSE from the WEIM RSE pool.  SDG&E believes that should be enough and there should be no further penalties beyond that.

 

SDG&E sees only drawbacks and no benefits to financial penalties such as the administrative surcharge.  As we understand it, every BAA in the western interconnect utilizes some form of centralized planning.  Perhaps it would make sense to do some sort of “RA review” when a new entity is looking to join EDAM to ensure that everyone is bringing a roughly comparable quality of reliability.  Additionally, the CAISO’s Department of Market Monitoring (DMM) can do routine checks after the fact to test for BAAs who might be leaning.

 

But as for the administrative surcharge, SDG&E does not see that this provides any meaningful incentive to procure.  All California LSEs need to meet CPUC RA Requirements; including any additional procurement required to meet compliance thresholds.  The only way the surcharge could send a meaningful price signal to procure is if it were set astronomically high and it would be an   inefficient mechanism for accomplishing its ends because it is not designed to check whether each EDAM BAA has procured enough resources.  The sole function of the  RSE is to ensure that each EDAM BAA has procured enough resources, it is not a guarantee of market supply bid sufficiency. 

 

Additionally, if SDG&E were to procure additional resources to pass the EDAM RSE and it wasn’t properly synched with CPUC RA requirements, it would be running the risk of over procurement.   

 

But given that the surcharge is not set high enough to change behavior (which is good because it would be much worse if the surcharge was accomplishing something), then all it does is increase the cost of participation in EDAM.

 

However, SDG&E believes that financial penalties like the administrative surcharge are still preferable to physical penalties. 

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comments at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

SDG&E supports excluding BAAs that fail the EDAM RSE from the pooled WEIM RSE.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

SDG&E thanks CAISO for listening to stakeholder concerns and proposing interesting solutions.  SDG&E does not support reserving day-ahead supply in excess of the EDAM RSE requirement (mechanism 1).  Such reservations would reduce supply in the day-ahead market and increase costs for customers.  In addition, grid reliability could be compromised because the day-ahead market provides a critical resource pre-positioning function. 

 

There may be some value in allowing each BAA to voluntarily set a net EDAM export transfer limit (mechanism 2).  SDG&E would appreciate some further examples and discussion on how CAISO sees mechanism 2 working and how the CAISO would set such a limit for the CAISO BAA.  The way SDG&E understands it, CAISO may be calculating things correctly but is making things unnecessarily confusing by making it a net of EDAM transfers limit as opposed to a simple export limit.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Economic Intertie Bids

With respect to counting economic intertie bids as part of the Resource Sufficiency Evaluation (RSE), SDG&E supports either one of two packages of options.  A) Economic intertie bids do not count towards meeting CAISO’s EDAM RSE, and Low Price-Taker (LPT) exports do not count towards non-CAISO EDAM Balancing Authority Areas’ (BAAs) EDAM RSEs; or B) Economic intertie bids do count towards meeting CAISO’s EDAM RSE, and LPT exports do count towards non-CAISO EDAM BAAs’ RSEs.  SDG&E tends to support option A because some stakeholders have raised concerns, and SDG&E believes they have a point, that there is a leaning issue here.  If CAISO is able to count economic intertie bids then it is counting resources that are not under forward contract or otherwise tied to the ISO.  CAISO would be paying only the spot-market price for the energy whereas all other EDAM entities have to pay for capacity for every MW that counts towards their RSEs.

 

But the most important thing is to maintain uniformity between counting economic intertie bids (or not) towards meeting CAISO’s EDAM RSE requirement, and non-CAISO BAAs counting LPT exports (or not) towards meeting their EDAM RSE requirement.  The problem that arises is, in an optimized dispatch, those economic imports are likely going to enable the market to clear additional LPT exports to non-CAISO EDAM entities.  This creates what we call an “economic wheel.”  Unlike a true wheeling schedule, the export is not explicitly tied to the import.  But because the market is clearing imports and exports economically, it is likely that the imports will enable additional exports.  Thus there would be a fundamental incongruity if CAISO was not allowed to count economic imports towards its supply in the EDAM RSE, but then non-CAISO EDAM entities were allowed to count the LPT exports towards their supply in the EDAM RSE.  It is all the same power and stakeholders must decide if that power counts towards EDAM RSEs collectively, or not.

 

If EDAM stakeholders agree on option A, then the next issue is how this impacts CAISO’s ability to pass the EDAM RSE.  SDG&E requests data from CAISO how frequently it estimates we might fail the RSE.  Additionally, SDG&E requests data specifically on the September 2022 heat wave and whether CAISO would have failed the RSE during these stressed system conditions.

 

If it turns out that CAISO is expected to fail the EDAM RSE frequently without use of these economic intertie bids, then CAISO needs to coordinate with the CPUC over what, if anything, needs to be done to bolster the RA program.

 

ISO BAA Curing of Advisory RSE Failure

If/when the CAISO does fail the EDAM RSE, there is a problem with what should be done to cure it.  Because CAISO is made up of dozens of LSEs, there is a difficult collective action problem to overcome.  CAISO would need to decide which LSE(s) were responsible for the failure, the magnitude that each LSE contributed to that failure, and let each entity know ASAP.  Even if CAISO were able to assign the RSE failure to its component LSEs immediately at the 6am advisory run, it would still be very difficult for CAISO LSEs to procure additional resources on an emergency basis in time for the 10am DAM run, or even by the STUC deadline the following day.   

 

CAISO should work with its LSEs to come up with a more workable solution.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

SDG&E supports the proposed IFM and RUC designs. 

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

SDG&E supports extending the WEIM MPM framework to EDAM and considering MPM further within the Price Formation Enhancements initiative.  However, SDG&E remains concerned over the lack of a System Market Power Mitigation proposal.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

 SDG&E supports the CAISO’s proposed incremental approach to introducing convergence bidding.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

SDG&E supports the CAISO proposal to prohibit external resources from submitting offers at the boundaries of non-CAISO EDAM BAAs.  After experience with EDAM, this prohibition can be reassessed.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

SDG&E supports the LADWP approach and believes that CAISO should explore this option more vigorously. If a majority of stakeholders agree on the LADWP approach, then CAISO should strive to develop this aspect of the proposal in time for EDAM go-live.  As a second option SDG&E supports the resource-specific approach.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

SDG&E supports the use of the GHG Reference Pass as the GHG counterfactual.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

SDG&E appreciates CAISO’s effort to listen and respond to criticism of its first resource-specific proposal.   The current design is much improved from where it started out.  However, SDG&E does have one concern.  Suppose a highly efficient thermal unit that has a Pmax of 100 MWs.  In the GHG Reference Pass the unit is dispatched at 40 MWs.  In the DAM it gets dispatched at 55 MWs.  Our understanding is that the GHG attribution could choose to attribute 60 MWs to the unit (100 MWs Pmax less 40 MWs GHG Reference Pass).  If this is true, then this seems an erroneous result.  The full attribution available should be 15 MWs in this example, in SDG&E’s opinion.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

SDG&E currently supports the LADWP approach.  It seems to solve the secondary dispatch/backfilling problem better than the resource specific approach.  It sets the GHG cost much more accurately than the zonal approach proposes to.  It altogether avoids the zonal approach’s other major problem, being that it can mask high GHG-emitting resources under the shroud of “unspecified imports.”  It has the added benefit of not placing GHG compliance burdens on individual resources who might prefer not to deal with it.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

SDG&E supports the current proposal but would appreciate more examples illustrating how CAISO envisions this working.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

SDG&E has no comments at this time. 

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

 SDG&E has no comments at this time. 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

SDG&E agrees with the decision classification.  Both the day-ahead market and the WEIM will be affected by the CAISO EDAM proposal. 

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

SDG&E appreciates the tremendous effort the CAISO has expended to progress the EDAM proposal to its current state.  In particular, the CAISO’s efforts to solicit and address all stakeholder input is greatly appreciated. 

Shell Energy
Submitted 09/26/2022, 01:48 pm

Contact

Ian White (ian.d.white@shell.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Shell Energy is supportive of organized energy markets as these constructs increase economic efficiency through enhanced competition thereby lowering costs to consumers and the planet.  EDAM serves this end but employs an incremental “goldilocks” evolution from bilateral markets which utilize contract-path OATT transmission frameworks.  EDAM’s incremental approach is novel – it superimposes a Day Ahead (“DA”) energy market onto a contract path OATT transmission paradigm.  There are numerous reasons for EDAM’s incremental approach; not least of which is multiple previous attempts at organized markets in the West which were ultimately left in the rubbish bin. 

EDAM requires many of the same challenging conversations with diverse stakeholders, nuanced market designs and effective governance as does a regional transmission organization (“RTO”), yet EDAM is not an RTO.  Given effective and truly independent governance and market policies which do not advantage one market participant, stakeholder or State over others, an RTO or multiple RTOs remains Shell Energy’s preferred end state for the Western Interconnection.   

Shell Energy appreciates the robust engagement by stakeholders and the CAISO alike.  CAISO has offered access to market policy staff, held stakeholder sessions in person and on-line as well as generally been receptive to Shell Energy’s perspectives in a few areas of concern, which is most appreciated.  EDAM’s incremental approach to regional market integration certainly has widespread theoretical benefits, such as lower costs, increased dispatch, and optimization efficiencies along with GHG emissions reductions.  Shell Energy believes, ultimately, any market design which strives to be “least complex, best fit” will attract participants—thereby increasing total benefits to the marketplace. 

Shell Energy supports much of EDAM’s market design.  However, the participation model for EDAM and the treatment of transmission rights, as currently proffered would be discriminatory toward certain market participants.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Shell Energy supports a market design which is truly voluntary—currently, EDAM is not a voluntary participation model for all participants.  Instead, EDAM participation is the decision of a BAA alone.  It is unclear if a generation-only BAA or merchant BAA would be allowed to participate in EDAM (following entrance into WEIM).  This warrants additional clarification by the CAISO. Shell Energy requests a comparison of requirements of participation in WEIM versus EDAM. 

Shell Energy opposes EDAM’s participation model insofar as the EDAM participation decision by a BAA coopts all resources/participants in the BAA’s footprint to participate directly in EDAM’s energy market through bidding or self-scheduling, with no ability to select non-participating status (as is the case in the WEIM).  For BAAs which host merchant generation or have sold transmission rights to third parties, (such as BPA) EDAM directly implicates these participants with no ability to choose their own fate. 

While entities who control generation could employ new methods of contracting bilaterally under EDAM as proposed, (such as LDs or contracts for differences) layering in EDAM’s treatment of third-party transmission rights jeopardizes the entity’s ability to conduct firm bilateral sales using transmission rights to ensure firm delivery to the delivery point of generator’s transmission rights.  The generator would be exposed to unknown risks between the generator’s costs to run and the EDAM price node; as well as unknown costs for scheduling on their own transmission rights (post 10AM) – potentially leaving the entity with a lower priority schedule.  Due to these unknown risks, Shell Energy requests the CAISO retain the ability for resource non-participation under EDAM, similar to WEIM.  This would allow entities with resources within an EDAM BAA to continue to contract, schedule and utilize their generation and transmission rights in the manner which best befits the entity.  Resources at the SC level should be able to choose to be an EDAM participating or non-participating resource.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comment. 

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

No comment. 

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comment. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Shell Energy generally supports the bucketing approach to EDAM transmission; however, it is unclear how Bucket 1 is different than Bucket 2—these buckets should be combined accordingly.  It is also worthwhile to recognize EDAM as designed is an “all in” transmission market design.  This is uncontestable; unless transmission rights are scheduled before 10 AM on the preschedule day or are pre-OATT (legacy) transmission rights, the market optimizes all other transmission rights automatically.  This is a wholesale sea change of the contract path OATT framework which will require each EDAM transmission service provider (“TSP”) to run its own stakeholder process to amend their OATT. 

It should not be lost on stakeholders and the CAISO how under EDAM should strive to standardize certain elements related to participation in EDAM across all TSPs.  Shell Energy strongly prefers, where possible, EDAM participation agreements to standardize:

  1. allocation of transfer revenues to transmission rightsholder customers,
  2. allocation of congestion revenues to transmission rightsholder customers,
  3. scheduling timelines (buckets 1, 2 and 3 have different timelines which is poor policy)
  4. and settlements.

EDAM would significantly complicate ownership of long-term transmission rights.  Allowing each EDAM TSP to determine their own approach ensures an inefficient and untenable outcome for the CAISO, EDAM TSPs and transmission customers alike.  Additional conversation on these points is required. 

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

Shell Energy is extremely concerned the treatment of bucket 2 transmission rights under EDAM (as designed currently) is unduly discriminatory and thus could be subject to protest before FERC.  Treatment of transmission rights under EDAM need be a balance—EDAM is not an RTO so erecting structures which seek RTO-like efficiency gains is not a realistic endeavor without significant cost-shifts.  Extracting the absolute maximum efficiency of the transmission system is not compatible with the contract-path OATT framework.  Instead, if the CAISO and stakeholders are committed to this laudable end state, the means to this end can only be an RTO where all transmission rights are turned over to the market to dispatch while transmission rightsholders and TSPs receive other forms of compensation (e.g., congestion revenues). 

Shell Energy supports the concept of including as much transmission as equitably possible into the market design; however, EDAM’s design is clearly unbalanced—there is no ability to remove transmission rights from the market optimization under bucket two, EDAM undermines transmission rightsholders’ NERC priorities and value as well as treats bucket 2 and bucket 3 transmission rights differently.   

There are clearcut considerations in non-CAISO markets which may necessitate scheduling transmission rights after 10 AM on the preschedule day and outside EDAM market optimization.  A few reasons include (certainly not an exhaustive list):

  1. contracts which require scheduling of firm energy using firm transmission rights in real time,
  2. pseudo-tied or dynamic resources,
  3. off-system generation using transmission to wheel to load (often this off-system generation is utilized for reliability functions such as AGC or reserves), and
  4. need for transmission capacity for uncertainty from DA to RT.

In addition to the above, bucket two, pathway three as designed would subject transmission rightsholders, such as Shell Energy to unknown and unmitigable costs for scheduling transmission after 10 AM on the preschedule day.  Any transmission scheduled after this timeline would be subject to unknown redispatch costs of the market footprint.  Worse, due to the market participation model, a BAA’s decision to join EDAM imposes unknown financial implications of utilizing a long-term product held by the rightsholder with no input in the decision to join EDAM.  In other words, it imposes costs on the customer without consultation.

As such, Shell Energy requests CAISO reconsider the market design and allow for a pathway to hold rights out of market optimization (and foregoing any optimization revenues) under EDAM.  This is an area where it is important to get the market design right; a delay here for a workshop(s) to discuss this is prudent.  CAISO and stakeholders shouldn’t allow perfect to be the enemy of the good here. 

The current EDAM design also would undermine a rightsholders’ NERC priority of firm transmission due to use of rights after 10 AM being treated in a “less firm” than DA transfer basis.  This, along with the unknown costs associated with redispatch clearly undermines the value proposition of long-term firm transmission products by rightsholders.  In addition, hourly or short-term bilateral resales of transmission capacity to other market participants to utilize in realtime would certainly decrease from levels seen today.  This would further decrease revenues to the long-term firm rightsholders as well.   As the third-party transmission rights value are eroded, Shell Energy suggests bucket 3 will likely increase in proportion to buckets 1 and 2, along with more “uplift” TRR recovery outside the market to compensate TSPs for “missing money” as transmission capacity rightsholders do not renew long-term transmission rights. This is a poor outcome for markets; and an unintended consequence of the current market design.  

Shell Energy supports the concept of a direct settlement between the CAISO and transmission rightsholders as proposed under bucket 2, pathway 2 but suggests these customers must receive revenues from both transfers as well as congestion rents.  However, the 6AM timeline for this pathway is problematic.  CAISO explained the 6am deadline was primarily a settlement concern but as WPTF and others pointed out, this deadline is flexible as settlements are run after the fact.  The timelines for pathways 1 and 2 should be standardized across all EDAM TSPs as suggested in question #6.  

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comment. 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

No comment. 

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comment. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

No comment. 

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

No comment. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comment. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comment. 

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comment. 

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

No comment. 

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comment. 

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

No comment. 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

No comment. 

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment. 

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comment. 

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

No comment. 

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

No comment. 

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

No comment. 

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

No comment. 

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comment. 

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment. 

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment. 

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment. 

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment. 

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

No comment. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comment. 

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comment. 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Shell Energy suggests the entirety of EDAM must be reviewed and approved by both the CAISO Board of Governors as well as the WEIM Governing Body. 

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Shell Energy appreciates the opportunity to comment and looks forward with working with the CAISO on the revised iteration of EDAM.  

Six Cities
Submitted 09/26/2022, 05:50 pm

Submitted on behalf of
Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California

Contact

Margaret McNaul (mmcnaul@thompsoncoburn.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

          Based on information available to date and subject to evaluation of further discussions and comments by other stakeholders, the Six Cities’ comments below include detailed discussion addressing:

          With respect to the EDAM Participation Model (question no. 2) — The Six Cities generally support the proposed EDAM participation model.  Transitional protective measures should apply to the CAISO Balancing Authority Area (“BAA”) as well as to other BAAs electing to participate in the EDAM, and the voluntary participation construct should apply to the CAISO BAA as well as to other BAAs.

          With respect to Confidence in Market Transfers (question nos. 3 – 5) — In general, the Six Cities agree with the concept of affording equal priority for service to load within an EDAM BAA (including the CAISO) and EDAM transfers, and they also agree that operators will need to retain discretion to manage operations safely and reliably.  The Cities have previously expressed concerns regarding elements of the proposals in the Day Ahead Market Enhancements (“DAME”) and Resource Sufficiency Evaluation Enhancements (“RSEE”) initiatives that are not yet fully resolved and continue to have unresolved concerns regarding the interaction between requirements under the Western Resource Adequacy Program (“WRAP”), including its “holdback” requirement, and the EDAM rules.  There remains a need to assure that capacity within the CAISO BAA that has been procured for resource adequacy (“RA”) purposes remains available to support CAISO needs and is not exported to support low priority (“LPT”) exports or advisory timeframe wheels.  The Six Cities agree that it may not be possible to optimize for edge case scenarios and that operators will need to retain discretion to take actions that become necessary to manage emerging conditions.  In this regard, the formulation of curtailment priorities continues to be critical.  Implementing lower priorities for transfers sinking to a BAA that failed the day-ahead Resource Sufficiency Evaluation (“RSE”) appears to be reasonable.  But implementing this policy in a way that is fair and reasonable may be challenging, and the curtailment priorities topic requires further discussion among stakeholders.

With respect to Transmission Commitment (question nos. 6 – 10) — The Six Cities do not oppose the “bucket” structure in the Revised Straw Proposal and support the proposed framework for Bucket 2 transmission as representing a reasonable balance between maximizing rights available for the market and preserving rights holders’ ability to use their contracted-for transmission capacity, while avoiding the risks of transmission withholding and increased congestion that the CAISO has identified with a purely voluntary structure.  The Six Cities’ support for this approach is contingent upon the CAISO’s proposal for allocation of any uplift associated with Pathway 3.  When the Transmission Services and Market Scheduling Priorities (“TSMSP”) initiative is at a more advanced stage, it would be beneficial to have a more focused stakeholder workshop on the interaction between the forward reservation requirements and the EDAM structure.  The Six Cities take no position at this time on the CAISO’s statement that the “remaining transmission on the CAISO system” is “effectively Bucket 3.”  The Six Cities remain skeptical of the proposal for different forms of “make whole” payments to compensate EDAM entities for “lost” revenues associated with providing Bucket 3 transmission on a hurdle free basis.  It is still not clear why this category of costs is singled out for make whole compensation, as compared with other costs and benefits of EDAM.  In particular, the Six Cities do not support implementation of make whole compensation procedures for an undefined amount of time; rather, if such a compensation structure is adopted, it should serve as a temporary transition mechanism.

          With respect to Day-Ahead RSE (question nos. 11 – 20) — As a general matter, the Six Cities support the proposed treatment of WSPP Schedule C and comparable firm energy contracts.  The CAISO’s proposed measures to enable validation of the supply source and transmission for these arrangements appear to provide reasonable protections against double-counting and inaccurate results, while also not unduly disrupting the existing practices for use of these resources.  With respect to the CAISO’s proposal to adjust priorities for transfers based on supply that is not supported with a valid e-tag within 3 hours of publication of market results and/or by the Short Term Unit Commitment (“STUC”) horizon, the Six Cities suggest that the CAISO provide an additional example to demonstrate how this would work in practice.  The Six Cities support the CAISO’s proposal to continue to permit economic supply offers at CAISO interties that are associated with forward-procured resources to be included by the CAISO in the RSE.  The Six Cities do not oppose the CAISO’s proposal regarding the treatment of load modification and demand response programs and agree with the proposal to limit the volume of load that can be bid into the EDAM by entities that use load adjustments to their forecasts, minus the demand response adjustments.  In terms of the CAISO’s treatment of Reliability Demand Response Resources (“RDRRs”), the Six Cities support the CAISO’s proposed approach for including these in the RSE but request that the CAISO provide more information and an example of how this approach would be implemented.  The Six Cities support the availability of D+2 advisory information to aid in the management of natural gas scheduling associated with resources in the day-ahead market.  Six Cities continue to support, in concept, measures that would permit EDAM participants to access EDAM supply at a surcharge rate.  However, the surcharge should be more closely calibrated to the period during which the EDAM participant actually failed the RSE.  The Six Cities support limiting the application of the charges to only the quantity of capacity by which the entity failed.  In light of the Six Cities’ significant concerns regarding the CAISO’s proposals in the WEIM RSEE initiative, the Cities support the CAISO’s proposal to incent cure of RSE deficiencies on a day-ahead basis.  It will be critical to enable a cure process for the CAISO footprint to address EDAM RSE failures prior to the WEIM RSE, and the Cities urge the CAISO to continue discussing these options with the load-serving entities (“LSEs”) in its BAA.  The proposed approaches for implementation of a “pooled” WEIM RSE generally appear reasonable.  The Six Cities do not oppose the “Option 1” approach for addressing failures of the pool, but additional information is needed to evaluate Option 2.  The Six Cities also appreciate the CAISO’s development of options for ensuring that EDAM participants, including the CAISO, have the ability to retain access to or otherwise limit the amount of capacity that is transferred to other EDAM participants.  The Six Cities support further stakeholder discussions regarding both options and request clarification regarding the Mechanism 1 and Mechanism 2 proposals.

          With respect to Integrated Forward Market (“IFM”) and Residual Unit Commitment (“RUC”) (question no. 21) — Pending review and evaluation of the CAISO’s 4th Revised Straw Proposal in the DAME initiative, the Six Cities defer further comments on the IFM and RUC designs for the EDAM.

          With respect to Market Power Mitigation (question no. 22) — The Six Cities do not object to the CAISO’s proposal to extend the market power mitigation approach used for the WEIM to the EDAM nor object to further consideration of market power mitigation design in the context of the Price Formation Enhancements initiative.

          With respect to Convergence Bidding (question no. 23) — The Six Cities appreciate the CAISO’s commitments to seeking the advice of the Market Surveillance Committee with regard to the concerns raised by the Six Cities relating to convergence bidding and to monitoring closely for issues arising from differences in the availability of convergence bidding during the market simulation phase of EDAM implementation.  The Six Cities request that the CAISO confirm that it has authority under current tariff provisions to suspend convergence bidding in any portion of the EDAM, including the CAISO BAA, if necessary to address market dysfunctions.  If the CAISO cannot confirm that it has such authority under the existing tariff, the Six Cities ask that the CAISO request such authority as part of the tariff revisions to implement the EDAM.  The Six Cities support the CAISO’s proposal to prohibit convergence bidding at the interties between BAAs participating in the EDAM (including the CAISO BAA and adjacent BAAs) or at interties between BAAs participating in the EDAM and non-participating BAAs.

          With respect to External Resource Participation (question no. 24) — The Six Cities continue to support the CAISO’s proposal to extend the current framework for external resource participation in the WEIM to the EDAM.

          With respect to Greenhouse Gas Accounting (question nos. 25 – 30) — The Six Cities continue to support use of the resource-specific approach to greenhouse gas (“GHG”) accounting.  The Cities support the CAISO’s proposals to (1) limit resource-specific attributions for serving demand in a GHG regulation area to the difference between a resource’s upper economic limit and its GHG Reference Pass, and (2) to limit secondary dispatch to net export transfer schedules.  Use of the GHG Reference Pass as described in the Revised Straw Proposal, including consideration of transmission constraints, as the counter-factual for measuring secondary dispatch under the resource-specific approach appears to be reasonable.  The Six Cities continue to oppose implementation of the zonal approach to GHG accounting.  Implementation of the zonal approach would require determinations by regulators responsible for administering GHG programs that could not practicably be completed in time to initiate the EDAM in 2024.  Further, application of a hurdle rate to non-emitting resources that do not qualify for Path 1 or Path 2 status seems unreasonable and contrary to GHG policy objectives, would reduce pricing flexibility for such resources, and would reduce the granularity of the optimization process.  The Six Cities do not support additional efforts to develop the LADWP proposal at this time.  It does not seem possible to resolve the policy issues and implementation challenges raised by the LADWP proposal in time to implement the EDAM by the 2024 target date.  While the Six Cities strongly oppose efforts to apply either the zonal approach or the LADWP proposal at the inception of the EDAM, the Cities remain open to consideration of further enhancements to the resource-specific approach to GHG accounting, including the possibility of combining some elements of the resource-specific, zonal, and LADWP proposals following initial implementation of the EDAM. 

          With respect to Transfer Revenue and Congestion Revenue Allocation (question no. 31) — The Six Cities support the CAISO’s proposal regarding the allocation of transfer and congestion revenues.

          With respect to Settlements (question no. 32) — The Six Cities do not have detailed comments regarding settlements for most elements of the EDAM design at this time.  Further evaluation of settlement processes will be necessary when the EDAM design is closer to completion.  It also will be critical to include settlement processes in the market simulation stage of EDAM development.

          With respect to the EDAM Fees Framework (question no. 33) — The Six Cities have not identified any concerns with respect to the EDAM fees framework

          With respect to General Comments (question nos. 34 – 35) — In light of the unique nature of the EDAM initiative, the Six Cities support application of the joint authority decisional approach requiring approval of both the WEIM Governing Body and the CAISO Board of Governors for the EDAM design.  The Six Cities urge the CAISO to conduct as detailed an analysis as possible of how the proposed EDAM design would have functioned during the extreme heat emergency experienced in early September of 2022, before presenting a Final Proposal to the WEIM Governing Body and the Board of Governors, and to include in the market simulations for the proposed EDAM design one or more scenarios involving conditions similar to those that occurred during the heat emergency.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

The Six Cities generally support the EDAM participation model as described in Section II.A.1 of the Revised Straw Proposal.  In particular, the Cities support the proposed requirements that a BAA participating in the EDAM also must participate in the WEIM and that all resources and loads within a BAA participating in the EDAM must be scheduled and settled through the EDAM for day-ahead transactions.

The Six Cities also generally support the concept of voluntary participation in the EDAM, including the proposals for a six month notice for withdrawal from participation in the EDAM with no exit fee.  However, because the CAISO market structure has applied for many years to all loads and resources located within the CAISO BAA (since 2009, when the CAISO’s MRTU market model became effective), LSEs within the CAISO BAA have no realistic alternative to participating in the CAISO’s day-ahead markets.  Both at its inception and going forward, the EDAM market design should attempt to minimize disadvantages imposed on LSEs within the CAISO BAA as a result of their captive status.  Transitional protective measures should apply to the CAISO BAA as well as to other BAAs electing to participate in the EDAM. 

In addition, the voluntary participation construct should apply to the CAISO BAA as well as to other BAAs.  Specifically, the CAISO BAA should retain the right to discontinue providing EDAM services on six months’ notice, either entirely or to specified BAAs, if such action would be in the best interests of market participants within the CAISO BAA.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

In general, the Six Cities agree with the concept of affording equal priority for service to load within an EDAM BAA (including the CAISO) and EDAM transfers, and they also agree that operators will need to retain discretion to manage operations safely and reliably.  (See Revised Straw Proposal at 14.)  The design elements outlined in the Revised Straw Proposal at page 15 generally appear to represent reasonable confidence measures, although the Six Cities note that the CAISO has listed both the RSE process and the imbalance reserve (“IR”) and reliability capacity (“RC”) products as among the measures for maintaining confidence in transfers.  The Six Cities have previously expressed concerns regarding elements of the proposals in the DAME and RSEE initiatives that are not yet fully resolved.  In particular, the Six Cities reiterate the need to ensure that RA resources remain available for use by CAISO LSEs, particularly during stressed conditions.  At this time, it is not clear that appropriate measures are in place to assure that capacity procured to meet CAISO reliability needs will remain available for use by the CAISO if and when needed under the modifications being proposed in the DAME initiative.  Additionally, it is critical to resolve concerns related to the advisory WEIM transfers supporting firm exports from the CAISO and the prioritization of LPT transactions, as are being discussed in the RSEE initiative.  Finally, the Six Cities continue to have unresolved concerns regarding the interaction between requirements under the WRAP, including its “holdback” requirement, and the EDAM rules.  Absent resolution of the foregoing concerns, the confidence of CAISO LSEs in the EDAM structures may be significantly undermined. 

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Given the occurrence of “edge” scenarios as a consequence of the extreme heat events of earlier this month, it will be important for the CAISO to evaluate its proposals in this initiative in light of this recent operational experience.  Application of the constraints described in the Revised Straw Proposal at page 16 should be tested against these scenarios to evaluate if the constraints would have worked as intended. 

The Six Cities agree with the CAISO’s observation on page 22, following discussion of its examples, that the final example – which produces the result where the power balance constraint is relaxed in BAAs in response to uncertainty that arose in another BAA—does not “seem intuitive.”  The results of this scenario reinforce the need to assure that capacity within the CAISO BAA that has been procured for RA purposes remains available to support CAISO needs, and is not exported to support LPT exports or advisory timeframe wheels.  The Six Cities urge the CAISO to evaluate carefully the interaction between the policies under consideration in the RSEE initiative and the EDAM initiative. 

As a general matter, the Six Cities agree that it may not be possible to optimize for edge case scenarios and that operators will need to retain discretion to take actions that become necessary to manage emerging conditions.  In this regard, the formulation of curtailment priorities continues to be critical.  If the expectation is that certain transactions will be subject to manual curtailment, then adequate time should be dedicated to discussion of the curtailment priorities in the various applicable timeframes within this initiative.  Moreover, operators need to be very clear on the priorities so that they can be implemented through out-of-market actions if that is the expectation.  (See Revised Straw Proposal at 22-23, observing that an EDAM BAA may need to resort to “operational tools” and “manual actions” and describing coordination that would take place prior to load shedding).

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

In concept, implementing lower priorities for transfers sinking to a BAA that failed the day-ahead RSE appears to be reasonable.  In practice, implementing this policy in a way that is fair and reasonable may be challenging.  De-prioritizing transfers due to a day-ahead RSE insufficiency is a failure consequence, and allowing this to occur on an ad hoc basis does not seem to provide necessary transparency.  The Six Cities are concerned that leaving this decision to “operational discretion” will not provide EDAM BAAs or market participants with clarity regarding the applicable policy or expectations, which would appear to undermine confidence in the market.  And the Six Cities are concerned with de-prioritizing transfers during conditions that are not stressed or in response to a de minimis or inadvertent failure of the RSE.  It is also unclear if this result is necessary or appropriate if a day-ahead insufficiency is cured, either through an emergency assistance program or otherwise, ahead of the WEIM RSE.  This topic represents an area whether further discussion among stakeholders is likely needed. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

As noted previously, the Six Cities do not oppose the “bucket” structure in the Revised Straw Proposal, and the additional detail that the CAISO has provided regarding this structure is noted and appreciated. 

As discussed in response to question no. 7, the Six Cities support the CAISO’s proposal regarding transmission Bucket 2 and agree with the CAISO’s concerns regarding the potential for adverse consequences, such as transmission withholding and increased congestion costs, under a purely voluntary Bucket 2 structure. 

As discussed in response to question no. 9, the Six Cities support the CAISO’s proposal regarding Bucket 3 transmission and, in particular, making Bucket 3 transmission available to the market on a hurdle free basis.  However, the Six Cities continue to question the need for an uplift payment structure to make transmission providers “whole” for purportedly lost transmission revenues associated with Bucket 3. 

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

The Six Cities support the CAISO’s proposed framework for Bucket 2 transmission.  Under this approach, transmission customers may choose pathways to either use their contract rights (Pathway 1) or make such rights available to the market ahead of the day-ahead market timeframe (Pathway 2), while rights that remain unused as of 10 am on a day-ahead basis are included in the optimization (Pathway 3).  Rights holders that elect not to use or make their transmission capacity available prior to the day-ahead market may exercise their rights after the day-ahead market has run, but they will be responsible for any resulting uplift charges.  This approach represents a reasonable balance between maximizing rights available for the market and preserving rights holders’ ability to use their contracted-for transmission capacity, and it avoids the risks of transmission withholding and increased congestion that the CAISO has identified with a purely voluntary structure.  The Six Cities’ support for this approach is contingent upon the CAISO’s proposal for allocation of any uplift associated with Pathway 3.   

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

The Six Cities appreciate the clarifications as to how CAISO transmission will be addressed in the EDAM structure.  The proposal to categorize transmission associated with CAISO LSEs’ resource sufficiency showings as Bucket 1 appears to be reasonable.  (See Revised Straw Proposal at 33.)  Does the CAISO’s use of the term CAISO LSEs’ “resource sufficiency showings” refer to their RA showings?  If not, then the Six Cities request that the CAISO clarify this terminology. 

As to the use of the CAISO transmission system by EDAM BAAs via wheeling, the Six Cities understand the CAISO’s proposal to be that for resources wheeled across the CAISO system to be eligible for inclusion in an EDAM BAA’s RSE showing, the EDAM BAA must obtain a forward reservation of Available Transfer Capability as proposed in the TSMSP initiative, although the description in the Revised Straw Proposal of the required wheeling through priority is stated as a “priority (equal to load) across the CAISO system.”  (Id.)  Although the wording may reflect the ongoing status and the lack of a final proposal at this time in the TSMSP initiative, it would be beneficial for the CAISO to clarify its intent in the next EDAM proposal.  Relatedly, the Six Cities question whether the required forward reservation should be for a monthly duration or whether, if the CAISO proceeds with adoption of the TSMSP proposals as included in the TSMSP Straw Proposal, the reservation may be daily.  In this regard, the Six Cities note that hourly, daily, and weekly firm point to point transmission rights are not eligible to be released to the EDAM as Bucket 2 transmission at the onset (see Revised Straw Proposal at 29 n.27), but do not have sufficient information at this time to take a position on the duration of any forward reservation of ATC that should be required to support Bucket 1 transfers by wheeling customers.  When the TSMSP initiative is at a more advanced stage, it would be beneficial to have a more focused stakeholder workshop on the interaction between the forward reservation requirements and the EDAM structure.  The Six Cities concur in the CAISO’s proposed requirements (see id.) for exports from the CAISO system to be eligible for inclusion in an EDAM BAA’s RSE showing—namely, that the export must have high priority export status from non-RA supply under existing CAISO tariff provisions. 

With respect to Bucket 2, which includes legacy contracts associated with Existing Transmission Contracts and Transmission Ownership Rights, the Six Cities do not oppose the CAISO’s proposal. 

At this time, the Six Cities take no position on the CAISO’s statement that the “remaining transmission on the CAISO system”—and the Six Cities understand this to refer to transmission at the CAISO’s interties with neighbors—to be “effectively Bucket 3.”  (See Revised Straw Proposal at 34.)  The Six Cities’ comments below in response to question no. 9 address the historical TRR recovery proposal. 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

The Six Cities continue to view the use of hurdle rates for Bucket 3 transmission as sub-optimal.  At the same time, the Six Cities recognize that elimination of hurdle rates for EDAM transactions may result in a reduction in transmission revenue recovery, including for the CAISO region.  At this time, the Six Cities remain skeptical of the proposal for different forms of “make whole” payments to compensate EDAM entities for “lost” revenues associated with providing Bucket 3 transmission on a hurdle free basis.  It is still not clear why this category of costs is singled out for make whole compensation, as compared with other costs and benefits of EDAM.  And it appears that the CAISO’s proposal for make whole payments has expanded relative to the Straw Proposal, with the compensation structure now proposed to include special rules for new facilities and wheeling revenues, which may enable recoveries in excess of historical lost revenues.  The Six Cities urge the CAISO to narrow this element of the Revised Straw Proposal. 

In particular, the Six Cities do not support implementation of make whole compensation procedures for an undefined amount of time, apparently in perpetuity.  If such a compensation structure is adopted, it should not be in place indefinitely and should instead serve as a temporary transition mechanism.  The Six Cities request that the CAISO consider and propose phasing out this mechanism after a specified number of years.

Other questions and concerns regarding the proposed structure include:

  • Whether the CAISO will develop a template for EDAM entities to use to provide their annual forecasted “EDAM recoverable TRR” or whether EDAM entities will have discretion in determining the costs to include in this TRR. 
  • Whether each EDAM entity’s forecasted “EDAM recoverable TRR,” including for non-FERC jurisdictional EDAM participants, must be filed with and approved by FERC for the TRR to be recovered across the EDAM footprint.  (See Revised Straw Proposal at 34.)  When the Six Cities joined the CAISO as Participating Transmission Owners, their TRRs became subject to FERC review, as each is an input to FERC-jurisdictional rates (i.e., CAISO access charges).  Given the possibility of non-jurisdictional entities potentially joining EDAM, the CAISO may want to consider elevating any jurisdictional considerations for potential participants sooner rather than later. 
  • Is the CAISO’s proposal to exclude the EDAM entity’s own EDAM recoverable TRR from the allocation capable of implementation, or will this proposal introduce complexity into this element of the settlements process?  There was some discussion of this during the stakeholder meetings to discuss the Revised Straw Proposal.  If there are implementation constraints that need to be factored into the policy design process, the Six Cities ask the CAISO to address those with stakeholders sooner rather than later. 
  • The conceptual proposal to require an annual forecast of potentially lost revenues (see Revised Straw Proposal at 34) makes sense, as does the proposal for an annual true-up process to reflect the revenues that were received and credited; the Six Cities are unclear, however, about why the CAISO is asking about the applicable updating period and referencing a two year interval elsewhere in the proposal.  (Id. at 37.)  This element of the Revised Straw Proposal may need clarification as to what information the CAISO is seeking.  As a general matter, an annual update would seem to be appropriate, similar to an annual balancing account process such as the Transmission Revenue Balancing Account Adjustment applicable to Participating Transmission Owners in the CAISO. 
  • The Six Cities question whether it is appropriate to reflect an adjustment to historical lost revenues based on new transmission facilities, as proposed at pages 38-39 of the Revised Straw Proposal.  Given their position that this make whole payment structure should be a transition mechanism and not a permanent rate feature of the EDAM, the Six Cities are disinclined to support attributing any lost revenues to new facilities.  If the CAISO proceeds with inclusion of this feature, then the CAISO should clarify that lost revenues are associated with new facilities that increase transmission capacity at the interties with neighboring EDAM BAAs, and does not include all new facilities. 
  • During the September 7-8 stakeholder discussions, valid questions were raised regarding the interaction of transfer revenues with the make whole payment proposal, and whether transfer revenues should be credited in some way against the EDAM Recoverable TRR.  Some stakeholders appear to support crediting, while others question if the transfer revenues should more appropriately offset “other uplift.”  At a high level, the concerns expressed by stakeholders in favor of crediting align with the Six Cities’ view that singling out one element of costs under the EDAM for make whole compensation is generally not appropriate.  At this time, the Six Cities urge continued dialogue with stakeholders over whether and to what extent a portion of transfer revenues should offset the EDAM Recoverable TRR.
10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

The Six Cities do not have comments on other aspects of transmission commitment at this time. 

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

At this time, the Six Cities do not have comments on the CAISO’s proposed application that will be used to conduct the RSE.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

As a general matter, the Six Cities support the proposed treatment of WSPP Schedule C and comparable firm energy contracts as set forth in the Revised Straw Proposal. 

The CAISO’s acknowledgment of continuing concerns regarding the potential for double-counting and potential impacts to the market results due to non-resource-specific transactions associated with WSPP-C and other forms of contracted supply is noted, and the Six Cities appreciate the inclusion of additional details in the Revised Straw Proposal concerning how these risks may be managed.  At this time, the CAISO’s proposed measures to enable validation of the supply source and transmission for these arrangements appear to provide reasonable protections against double-counting and inaccurate results, while also not unduly disrupting the existing practices for use of these resources.

With respect to the CAISO’s proposal to adjust priorities for transfers based on supply that is not supported with a valid e-tag within 3 hours of publication of market results and/or by the STUC horizon, as discussed on page 49 of the Revised Straw Proposal, the Six Cities suggest that the CAISO provide an additional example in the next proposal to demonstrate how this would work in practice.  The Six Cities also support the proposal for the Department of Market Monitoring to report on the non-resource-specific schedules that do not timely tag prior to the conclusion of the WEIM RSE.  (See Revised Straw Proposal at 49.)

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

The Six Cities support the CAISO’s proposal to continue to permit economic supply offers at CAISO interties that are associated with forward-procured resources to be included by the CAISO in the Resource Sufficiency Evaluation.  With respect to intertie bids from non-dynamic, resource-specific system resources, the Six Cities understand that these resources will be eligible for inclusion in the CAISO’s RSE, provided that there is an executed agreement with the CAISO describing performance and operating requirements, which provides the CAISO with assurance that these resources are indeed available to the CAISO.  What is the necessary duration of the underlying supply contract?  Further discussion of this element of the Revised Straw Proposal would be helpful to ensure that CAISO LSEs with these types of supply resources are prepared to meet any documentation obligations to enable these to be included in the CAISO’s RSE.   

Finally, the Six Cities request that the CAISO provide a more detailed explanation of its reasons for not including intertie bids not associated with forward-procured supply in its RSE.  An economic bid into the day ahead market could also “indicate[] a supplier’s intent to sell energy to the ISO BAA in the day ahead market.”  (See Revised Straw Proposal at 50.)  If these resources are selected in the day ahead market and subsequently follow the same tagging requirements as set forth elsewhere in the Revised Straw Proposal for RSE resources (see id. at 49, 52-53), what would be the reasoning for excluding this category of resources from the RSE for the CAISO?  The Six Cities note the CAISO’s explanation that “stakeholders” believe that these bids might “inequitably advantage” the CAISO BAA and “potentially” are less reliable.”  (Id. at 49-50.)  If the CAISO agrees with these assertions, then the Six Cities request that the CAISO present data to support them.  In particular, the CAISO should have available data that would inform stakeholders regarding the reliability of these resources if selected for dispatch in the day ahead market. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

The Six Cities do not oppose the CAISO’s proposal regarding the treatment of load modification and demand response programs and agree with the proposal to limit the volume of load that can be bid into the EDAM by entities that use load adjustments to their forecasts, minus the demand response adjustments.

In terms of the CAISO’s treatment of RDRRs, the Six Cities support the CAISO’s proposed approach for including these in the RSE.  As the Six Cities understand the CAISO’s proposal, the CAISO would count RDRRs in the RSE as supply resources if, on a day-ahead basis, the CAISO determines (through its pre-RSE advisory runs), that these resources are needed to mitigate a potential inability for the CAISO to meet its supply obligations, in which case the CAISO would reduce its load based on the amount of RDRRs available.  It would be useful for the CAISO to provide more information and an example of how this approach would be implemented in the next proposal. 

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

The Six Cities support the availability of D+2 advisory information to aid in the management of natural gas scheduling associated with resources in the day-ahead market. 

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

The Six Cities continue to support, in concept, measures that would permit EDAM participants to access EDAM supply at a surcharge rate.  The CAISO’s proposal to enable a cure mechanism through the EDAM merits continuing discussion, but the Six Cities have several comments and concerns, including:

  • The proposal to base the administrative surcharge on a 16 hour block product may be excessive, particularly if the corresponding period of failure is a single hour or several hours.  The surcharge should be more closely calibrated to the period during which the EDAM participant actually failed the RSE.  The Six Cities do support limiting the application of the charges to only the quantity of capacity by which the entity failed.  For implementation of LPT status associated with transfers to BAAs that failed the RSE (and failed to timely cure), the Six Cities support application of this status only for the duration of the failed period and request that the CAISO clarify its proposal to confirm that this is the case. 
  • The Six Cities note concerns regarding the liquidity of the Mid-C and Palo Verde hubs.  (See Revised Straw Proposal at 53.)  Continued discussion of alternative pricing metrics to avoid the use of these hubs would be appropriate, including consideration of whether CAISO pricing may provide a useable proxy.  At a minimum, if the CAISO proceeds with reliance on these hubs, the Six Cities support the CAISO’s proposal to monitor the hubs for sustained liquidity following EDAM implementation.  (Id.) 
  • The CAISO’s proposal to allocate surcharge costs within the CAISO footprint to LSEs that were RA-deficient first and then pro rata to load appears to be reasonable.  (Id.) 
  • In terms of the linkages to the WEIM RSE, the Six Cities have significant concerns regarding the CAISO’s proposals in the RSEE initiative, as identified in their comments on the Revised Draft Final Proposal for Phase 2.  The Six Cities support the CAISO’s proposal to incent cure of RSE deficiencies on a DA basis, so as to minimize exposure to the more significant consequences of failing the WEIM RSE.  (Id. at 54.)  
  • Because the consequences of failure in the WEIM RSE are substantial, particularly if the CAISO proceeds with the proposals in the Revised Draft Final Proposal in the WEIM RSEE initiative, then it will be critical to enable a cure process for the CAISO footprint to address EDAM RSE failures prior to the WEIM RSE.  As outlined on page 54, the CAISO has identified mechanisms that, with appropriate modifications, could enable the CAISO to cure EDAM RSE deficiencies for its footprint.  The Six Cities urge the CAISO to continue discussing these options with the LSEs in its BAA. 
17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

The Six Cities do not oppose this proposal. 

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

The approaches outlined in the Revised Straw Proposal for implementation of a “pooled” WEIM RSE appear reasonable.  The Six Cities do not oppose the “Option 1” approach for addressing failures of the pool as discussed during the August 29th stakeholder meeting.  With respect to Option 2, is there data that might allow for an informed determination as to whether the allocation of the diversity benefit could cause spurious RSE failures in the event individual EDAM BAAs are tested individually following failure of the pool? 

In terms of administering the pooled approach, how will the CAISO address circumstances of de minimis RSE failures, or failures that are otherwise small or inadvertent?  It does not seem reasonable or practical to eliminate entities from the pool for, taking an example, failure by one resource to timely tag.  Please see the Six Cities’ comments below in response to question no. 20. 

Finally, the Six Cities request that the CAISO confirm the timing for elimination from the RSE pool.  Will this occur only for RSE failures that remain uncured as of the STUC horizon?  

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

The Six Cities appreciate the CAISO’s development of these options for ensuring that EDAM participants, including the CAISO, have the ability to retain access to or otherwise limit the amount of capacity that is transferred to other EDAM participants.  Both proposals have merit, and the Six Cities support further stakeholder discussions regarding both of them. 

Mechanism 1 (Reserving Day-Ahead Supply in Excess of RSE Requirements) appears to be predicated on retention of the existing must-offer obligation (“MOO”) for RA resources.  However, in the DAME initiative, the CAISO has proposed significant modifications to the current MOO.  How would the proposal here be impacted by the proposals in DAME? 

For Mechanism 2 (Net EDAM Export Transfer Limit), could this mechanism be implemented on a day-by-day basis, so that during periods where stressed conditions may be present, EDAM participants could opt into application of the limit, but in circumstances where it is not needed, it would not apply?  How would the CAISO determine when to apply the limit and to what extent within the CAISO BAA?  Finally, should there be consideration of whether this mechanism should be modified to reflect a “gross” export transfer limit?

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

The Six Cities request that the CAISO consider identification of a tolerance bandwidth or a threshold that would insulate BAAs from the consequences of an inadvertent or de minimis RSE failure.  The consequences of failing the RSE are potentially significant, and they may be inappropriate as applied in the context of a failure scenario that does not represent a material deficiency in procurement of capacity within a BAA, but instead may represent an error or a failure to timely tag, for example.  The need for a “safe harbor” or other criteria that would encompass these situations merits further discussion among stakeholders.   

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

In comments submitted on May 19, 2022 in the CAISO’s DAME initiative, the Six Cities expressed multiple concerns with the designs for IR and RC as proposed in the DAME initiative.  At its September 14, 2022 workshop on DAME issues and in the related presentation, the CAISO has indicated that it is considering potential approaches to address stakeholder concerns with the IR and RC proposals.  Similarly, page 62 of the Revised Straw Proposal for the EDAM expresses the CAISO’s intent to address issues with the IR design in the DAME initiative.  Pending review and evaluation of the CAISO’s 4th Revised Straw Proposal in the DAME initiative, targeted for October 6, 2022, the Six Cities defer further comments on the IFM and RUC designs for the EDAM.  But to the extent issues with the IR and RC products are not resolved in the DAME initiative and those products are incorporated in the EDAM design, on-going concerns with respect to the EDAM design will remain.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

At this time, the Six Cities do not object to the CAISO’s proposal to extend the market power mitigation approach used for the WEIM to the EDAM.  Likewise, the Six Cities do not object to further consideration of market power mitigation design in the context of the Price Formation Enhancements initiative.  Because the CAISO has not yet published a proposal in the Price Formation Enhancements initiative, the Six Cities take no position regarding revisions to market power mitigation policy that may or may not be considered in connection with that initiative beyond their preliminary comments on the scope of that initiative submitted on August 9, 2022.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

The Six Cities previously have expressed concerns that allowing convergence bidding in some BAAs participating in the EDAM but not in other participating BAAs may give rise to market distortions or other unintended consequences.  In the Revised Straw Proposal at page 67, note 74, the CAISO commits to seeking the advice of the Market Surveillance Committee with regard to the concerns raised by the Six Cities and to monitoring closely for issues arising from differences in the availability of convergence bidding during the market simulation phase of EDAM implementation.  The Six Cities appreciate and will rely on the CAISO’s assurances that it will carefully evaluate and address any indications of issues arising from variations in availability of convergence bidding.  With regard to potential measures for addressing any issues that may arise, the Six Cities request that the CAISO confirm that it has authority under current tariff provisions to suspend convergence bidding in any portion of the EDAM, including the CAISO BAA, if necessary to address market dysfunctions.  If the CAISO cannot confirm that it has such authority under the existing tariff, the Six Cities ask that the CAISO request such authority as part of the tariff revisions to implement the EDAM.

The Six Cities support the CAISO’s proposal to prohibit convergence bidding at the interties between BAAs participating in the EDAM (including the CAISO BAA and adjacent BAAs) or at interties between BAAs participating in the EDAM and non-participating BAAs, as noted at page 65 of the Revised Straw Proposal.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Based on the discussion to date regarding participation of external resources in the EDAM, the Six Cities continue to support the CAISO’s proposal to extend the current framework for external resource participation in the WEIM to the EDAM, subject to evaluation of considerations raised in subsequent discussions on this topic or in comments submitted by other stakeholders.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

The Six Cities continue to support use of the resource-specific approach to GHG accounting, with the enhancements discussed in the Revised Straw Proposal, at least for the initial implementation of the EDAM, for the following reasons:

  • Although modified from time-to-time, the overall resource-specific framework has been applied in the WEIM for a number of years.  It is, therefore, familiar to potential participants in the EDAM and can be implemented for the EDAM with enhancements that do not appear complex. 
  • Notably, the resource-specific approach for GHG accounting has been accepted by the California Air Resources Board (“CARB”), and compliance reporting procedures are in place and understood.
  • The voluntary bid adder approach for GHG emitting resources allows greater flexibility for such resources to recover their costs.
  • The resource-specific bid adder approach allows for a greater degree of granularity in the optimization process and, therefore, is likely to produce more efficient outcomes.
  • The bid adder approach appears to be compatible with implementation of GHG accounting programs by states other than California, although further details with respect to this topic remain to be developed.
  • The Six Cities support the CAISO’s proposals to (1) limit resource-specific attributions for serving demand in a GHG regulation area to the difference between a resource’s upper economic limit and its GHG Reference Pass, and (2) to limit secondary dispatch to net export transfer schedules.  
26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

Based on discussions to date, use of the GHG Reference Pass as described in the Revised Straw Proposal, including consideration of transmission constraints, as the counter-factual for measuring secondary dispatch under the resource-specific approach appears to be reasonable. 

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

The Six Cities have no comments on this topic at this time. 

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

The Six Cities continue to oppose implementation of the zonal approach to GHG accounting as proposed by some participants in Working Group 3 (at least at the inception of the EDAM) for the following reasons:

  • Whether the proposed zonal approach will be acceptable to regulators in states with GHG programs is unknown at this time and questionable.  In comments submitted on September 12, 2022, and available at this link: CARB_EDAM_second_comment_letter_signed_090922.pdf, the CARB raised multiple policy and implementation concerns with respect to both the zonal proposal and the LADWP proposal.
  • In part as a result of the absence of regulatory guidance or input on the proposed zonal approach, critical and complex elements of the approach remain unspecified, including (i) eligibility requirements for attribution of specific resources to a GHG zone under Path 1 or Path 2 classifications, (ii) nature of hurdle rates for resources that do not qualify for Path 1 or Path 2 status (e.g., static versus time-differentiated or dynamic), (iii) methodology for determining hurdle rates, and (iv) compliance requirements and assignment of responsibility for compliance obligations.  For a more detailed description of the many issues that would need to be addressed for implementation of the zonal approach, see the March 7, 2022 memorandum on “Open items and questions – Unspecified/zonal approach” prepared for Working Group 3 and available at this link:  https://www.caiso.com/InitiativeDocuments/UnspecifiedZonalApproach-OpenQuestionsandIssues.docx.
  • Many of the as yet unspecified elements of the zonal approach would require determinations by regulators responsible for administering GHG programs, and it seems unlikely that necessary regulatory proceedings could be completed in time to initiate the EDAM in 2024. 
  • Application of a hurdle rate to non-emitting resources that do not qualify for Path 1 or Path 2 status seems unreasonable and contrary to GHG policy objectives.
  • Application of the hurdle rate to all resources that do not qualify for Path 1 or Path 2 status reduces pricing flexibility for such resources as compared with the resource-specific approach.
  • Application of the hurdle rate to all resources that do not qualify for Path 1 or Path 2 status would reduce the granularity of the optimization process as compared with the resource-specific approach and potentially lead to inefficiencies.
  • Contrary to contentions by proponents of the proposed zonal approach, that approach would not eliminate secondary dispatch but would make it more difficult to estimate. 
  • As described at pages 85-86 of the Revised Straw Proposal, the CAISO would need to develop new settlement systems and business processes to support the first jurisdictional deliverer role, assuming that GHG regulators approved the CAISO’s assumption of that role. 
29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

The Six Cities do not support additional efforts to develop the LADWP proposal at this time.  As noted at page 88 of the Revised Straw Proposal, implementation of the LADWP proposal would require significant state regulatory changes, approvals, and inputs.  As noted above, the CARB’s September 12, 2022, comments raised multiple policy and implementation concerns with respect to the LADWP proposal as well as the zonal approach.  It does not seem possible to resolve the policy issues and implementation challenges raised by the LADWP proposal in time to implement the EDAM by the 2024 target date.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

For the reasons described in detail above, the Six Cities strongly oppose efforts to apply either the zonal approach or the LADWP proposal at the inception of the EDAM.  The Cities remain open, however, to consideration of further enhancements to the resource-specific approach to GHG accounting, including the possibility of combining some elements of the resource-specific, zonal, and LADWP proposals following initial implementation of the EDAM.  Substantial revisions to the resource-specific GHG accounting approach prior to implementation of the EDAM would risk significant delay in the target date for EDAM start-up.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

The Six Cities support the CAISO’s proposal regarding the allocation of transfer and congestion revenues. 

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

As discussed in response to previous topics, the Six Cities do not support the proposed approaches to settlement under the zonal approach for GHG accounting. 

The Six Cities take no position at this time with regard to proposed approaches to settlement for IR, convergence bidding, or RUC pending resolution of concerns relating to those elements of the Revised Straw Proposal as discussed in comments above.

At this time, the Six Cities have not identified concerns with the CAISO’s proposed approaches for settlement of other elements of the Revised Straw Proposal.  However, further evaluation of settlement processes will be necessary when the EDAM design is closer to completion.  It also will be critical to include settlement processes in the market simulation stage of EDAM development.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

At this time, the Six Cities have not identified any concerns with respect to the EDAM fees framework as described in Section II.D.3 of the Revised Straw Proposal. 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

For the reasons discussed in Section III.B of the Revised Straw Proposal, including the unique nature of the EDAM initiative, the Six Cities support application of the joint authority decisional approach requiring approval of both the WEIM Governing Body and the CAISO Board of Governors for the EDAM design.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Before presenting a Final Proposal to the WEIM Governing Body and the Board of Governors, the Six Cities urge the CAISO to conduct as detailed an analysis as possible of how the proposed EDAM design would have functioned during the extreme heat emergency experienced in early September of 2022.  Such an analysis could provide confidence to stakeholders and decision-makers regarding the anticipated benefits of the EDAM for reliability and efficiency, or it could identify elements of the proposed design that may require additional work, or both.  In addition, the market simulations for the proposed EDAM design should include one or more scenarios involving conditions similar to those that occurred during the heat emergency.

Southern California Edison
Submitted 09/26/2022, 04:24 pm

Contact

John Diep (John.diep@sce.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

SCE would like to thank the CAISO and the stakeholders for the robust process and the many forums to deep-dive and discuss the revised proposal.  These forums have been very helpful in understanding and clarifying items.  SCE encourages the CAISO to continue with robust stakeholder engagement moving forward.  

SCE generally supports the ISO’s proposal but has a few concerns that are identified under the proceeding questions.   

Specifically, SCE notes two issues that require additional refinement:   

  1. GHG treatment, and particularly what role the CAISO should play by making market changes to try and address so-called “Secondary Dispatch” as opposed to the role of CARB.  The current proposal seems to (overly) restrict generators and may prevent significant sales to CA in the name of addressing Secondary Dispatch.  While SCE supports the unit-specific bidding framework (that is currently used today in EIM), it is the proposals use of a counterfactual to then restrict generation from selling to CA based that causes concerns.   

  1. The CAISO is still refining proposals on how to make sure that CAISO doesn’t “over commit” to firming up market exports from the CAISO.  This is a work in progress, and the CAISO offers a couple of tools, but they both need a lot more discussion before this is resolved. The CAISO is uniquely situated since it will be – at least initially – the only EDAM BAA allowing market bids at its border, and thus supporting market exports.  Thus, additional tools are needed to ensure CAISO maintains reliability while supporting market transactions to the greatest degree reasonable.     

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

SCE continues to support the voluntary nature of the EDAM design as proposed. 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

SCE supports establishing confidence in market transfers and believes it is a fundamental principle of EDAM.  SCE generally supports the design elements included in the revised straw proposal and the idea of keeping EDAM transfers “firm”.  SCE is also supportive of the new measures ISO is taking to include a BAA power/capacity balancing constraint that will isolate a BAA (and help prevent it from experiencing a reliability event by providing capacity/energy it needs from other BAAs) which will ensure that the reliability issues do not get magnified and affect other BAAs. 

The CAISO needs to further explore both the “Net export limit” and the “Available Balancing Capacity” frameworks.  California is uniquely situated in the EDAM design, and in fact will be the only BAA that allows bids at the interties.  This, coupled with the desire to keep cleared EDAM transfers “firm”, requires the CAISO to design safeguards in the market so that 1) CAISO doesn’t over-extend its ability to keep transfers firm as the result of market actions, and 2) CAISO doesn’t become the de facto “firming agent” of the entire EDAM footprint.   SCE requests additional dialogue in this area.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

SCE supports the concept of EDAM transfers and load receiving equal priority.  The CAISO proposes this applies to EDAM BAAs that either pass or cure-to-pass the RSE.    SCE understands the proposal to be that BAAs that fail to pass/cure the RSE will receive lower priority (e.g., could have market transfers limited, and may require the failing BAA take actions to address such limitation) (see comments to Q5).  

SCE generally supports this framework, however, it is not clear how this will be achieved, and more detailed calculations are needed.  ISO is proposing that transfers be curtailed by the EDAM entity in proportion to its load.  Is the proportional amount, MW for MW or a percentage of load to MW?  ISO should provide more details on how this is calculated.  It is also not clear how this will be administered to ensure compliance.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

SCE agrees with ISO’s proposal that BAAs failing the RSE should have their transfers labelled as “lower priority”.  SCE also agrees that EDAM BAAs that pass the RSE should have operational discretion to honor or curtail the lower priority transfers (LPTs) to a failing BAA only in extreme situations where the sourcing BAA is also experiencing reliability issues. 

The proposal should include a formal emergency declaration (e.g., EEA3) that is needed before the sourcing BAA can use operational discretion.  This helps ensure that LPTs aren’t prematurely curtailed, and that sourcing BAAs will make best efforts to honor the transfer.  This also provides transparency to the market of when curtailments would most likely occur because reliance on coordinated efforts between multiple BAAs is not guaranteed. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

SCE is supportive of the three-bucket transmission commitment framework, as set forth in Section II.B.1.  To qualify for being considered for RSE, the Proposal states transmission supporting resources should be “firm or conditional firm”.  SCE requests the CAISO to further clarify which level(s) of NERC firmness product definition (e.g., level 1-7) would fall into the CAISO RSE criteria of “firm or conditional firm”.  In addition, the CAISO should clarify whether the transmission should be available for all hours of the day. 

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

SCE is generally supportive of the definition of Bucket 2 transmission. While the three proposed pathways for EDAM entities to make Bucket 2 transmission available to EDAM seem reasonable, the CAISO should monitor the effects. These proposed pathways apparently represent a novel approach to handle transmission availability and congestion revenue associated. As such, if any unexpected impacts to the reliability or the market should arise, the CAISO should adjust the proposal here accordingly.  As with Bucket 1, Bucket 2 transmission should meet the standards necessary for “firm or conditional firm”. 

 

With respect to the three pathways, SCE has the following comments: 

Pathway 1: The description of Pathway 1 indicates that the self-schedules submitted pursuant to Pathway 1 are not available for optimization by the EDAM.  Additionally, the customer would be eligible for an allocation of Transfer Revenue from the EDAM entity.  However, SCE questions whether such schedules should never be available for optimization, particularly assuming that the associated resource is in an EDAM BAA.   

Pathway 2: Pathway 2 Bucket 2 transmission is released to the EDAM by 6 am of the day-ahead, with the CAISO able to optimize the schedule, and would directly compensate the customer for Transfer Revenue. The CAISO should provide rationale of the 6 am deadline. Releasing the transmission by 6 am would certainly help the EDAM with advance certainty of transmission rights quantities, however, it is a question whether this deadline should be aligned with that of Bucket 1 transmission which is not required to be made available until 9 am.   

Pathway 3: Pathway 3 provides a means for transmission customers that do not choose either Pathway 1 or 2 to exercise their rights in real time.  Additionally, it allows the EDAM to make use of. As the Proposal notes, such ability may create uplifts. Any uplifts generated by Pathway 3 should be allocated to the EDAM entity associated with the transmission that caused the uplifts. 

Finally, SCE would appreciate more details on the process involved in Bucket 2 entities to choose one of the Pathways.  For example, if an entity does not choose either Pathway 1 or 2, is it automatically assigned to Pathway 3?  SCE believes that it should be, thus maximizing the potential use of Bucket 2 transmission.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

SCE understands that EDAM will make CAISO transmission available to the optimization effectively the same as it is made available in the current Day-ahead market.  SCE supports maintaining as much as the current market design as possible, and thus has no specific objections to the EDAM’s treatment of CAISO transmission.  We note that the issue of wheeling priority is being treated in a separate forum, and SCE has offered additional comments in that forum.  

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

SCE generally supports the “make-whole” TRR recovery framework set forth in Section II.B.1, part c, of the Proposal (“Providing for Historical Transmission Revenue Requirement Recovery Through EDAM”).  SCE believes that providing such a make-whole provision in EDAM for lost transmission revenue directly resulting from EDAM participation will help to eliminate transmission “hurdle rates” in the market optimization, and so increase overall EDAM benefits.  SCE supports the general cost allocation proposal BAAs customers will not pay any portion of their own uplift costs.  

SCE does have comments on some aspects of the proposed make-whole provision:

1.  Treatment of historic transmission revenue: Any “excess” ETSR revenue should be used to offset make-whole uplifts.  By “Excess ETSR revenue”, SCE means revenues to an EDAM entity is any Transfer Revenue that is in excess of costs incurred by the EDAM entity resulting from the ETSR (such as any payments made to an ETC holder or an allocation of redispatch costs to the EDAM entity).  Excess ETSR revenue would be a new source of revenue to an EDAM entity and is similar to a new transmission sale, directly attributable to EDAM, and so should be considered in any make-whole provision intended to reduce any transmission revenue reduction directly attributable to EDAM.

Example1 (Positive Excess ETSR Revenue):

Historic Transmission Revenue Make-Whole Amount without consideration of ETSR Revenue 

 

$100 

EDAM ETSR Revenue

$10 

Less Costs associated with ETSR

$3 

Excess ETSR Revenue

$7

Total Historic Transmission Revenue Make-Whole Amount

$93 

 

Example 2 (Zero Excess ETSR Revenue):

Historic Transmission Revenue Make-Whole Amount without consideration of ETSR Revenue 

 

$100 

EDAM ETSR Revenue 

$10 

Less Costs associated with ETSR

$15

Excess ETSR Revenue (Note: capped at $0)

$0 

Total Historic Transmission Revenue Make-Whole Amount 

$100 

 

2.  Treatment of new transmission in the make whole provision: 

SCE seeks clarification on the following aspects of the new transmission component of the make-whole provision. 

a.  That only transmission that directly increases ETSRs would be eligible for the new transmission provision. 

b.  As an alternative computation, the CAISO considers volumes of transactions multiplied by the transmission rates as opposed to percentages of new transmission costs. New transmission facilities might generate similar percentages of transmission sales (on a MW or capacity basis), but those sales will take place at existing rates, not at the cost of the new transmission.  Giving a percentage of new transmission costs, rather than a proxy for lost transmission sales, is more consistent with the “make whole” nature of the proposal.

3.  Wheel through payment: SCE does not support the proposal to make direct payments to the transmission owners under the conditions described by the ISO.  Instead, any consideration should be included in the amount of uplift such entities are potentially eligible to receive.  Specifically, there should be no payment if there are already sufficient alternative revenues that exceed the eligible uplift amount. 

 

Example 1 (no consideration of Wheeling Through component of EDAM Recoverable TRR):

EDAM Recoverable TRR without Wheeling Through Consideration 

$20 

Transmission Sales (NF and STF PTP) 

$15 

TRR Shortfall (component of make-whole payment mechanism) 

$5 

 

Example 2 (including consideration of Wheeling Through component of EDAM Recoverable TRR):

EDAM Recoverable TRR with Wheeling Through Consideration of $10 

$30 

Transmission Sales (NF and STF PTP)

$15 

TRR Shortfall (component of make-whole payment mechanism)

$15 

 

Example 3 (including consideration of Wheeling Through component of EDAM Recoverable TRR, but TRR Shortfall limited since there are already sufficient alternative revenues): 

EDAM Recoverable TRR with Wheeling Through Consideration of $10 

$12 

Transmission Sales (NF and STF PTP) 

$15 

TRR Shortfall (component of make-whole payment mechanism) 

$0 

Thus, rather than guaranteeing a direct payment for wheeling through of say $10 (as proposed by the CAISO), these examples show that the $10 should be included in the amount eligible for recovery, and an uplift payment will only be made if total costs (including wheeling through “costs) exceed total revenues.  

 

4.  SCE seeks confirmation that any make-whole amount received or paid would be considered Wheeling revenue (at least for CAISO TOs), and therefore appropriate to include in the TRBAA mechanism of CAISO PTOs.  Additionally, SCE seeks confirmation that any make whole payments paid to TOs within the CAISO would be distributed internally within the CAISO PTOs in a manner consistent with how Wheeling revenue is distributed pursuant to the existing CAISO tariff.  That is, this rebate would be calculated and distributed on a path-specific basis.  on a path-specific basis. 

 

5.  Will the make-whole provision expire, or be recalibrated, at some point in time?

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Removing both the hurdle rates from the EDAM optimization, as well as reducing transmission encumbrances and their associated impacts, are important to achieving efficiencies from the market.  SCE encourages the CAISO to continue moving the EDAM design in a direction that will reduce encumbrances, rather than creating new encumbrances, wherever possible.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

SCE is supportive and recognizes the benefit of conducting an advisory EDAM RSE test prior to the binding run.  However, SCE questions its usefulness for LSEs within the CAISO BAA. It is SCE’s understanding that the “pass” or “fail” status for the RSE will be provided at the BAA level and not the LSE level.  SCE questions how CAISO BAA LSEs will be able to utilize the tool to help identify who is deficient and how coordinating the curing of deficiencies would work among the multiple LSEs. SCE requests CAISO to provide more detail on this concern.       

Lastly, SCE requests CAISO to provide an after-the-fact analysis of what the results were from the most recent heat wave that occurred between 8/31/2022 - 9/9/2022, specifically the highest load day on 9/6/2022. It would be helpful if CAISO could provide 1) what would have been the CAISO’s Imbalance Reserve requirements each hour (detailing the calculation for each hour including the contribution from load uncertainty), 2) how much capacity would have been available to the RSE each hour, 3) the treatment and quantity of demand response and how it would have been used during the test (e.g., how much load modification on an hourly basis), 4) identify any deficiencies and improvements that could be made to the current proposal to reduce/eliminate those deficiencies.   

It is imperative that stakeholders understand the real-world implications of implementing a new capacity product to understand if the design is workable or requires modification.   

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

SCE supports the proposal and believes it is crucial to include firm energy contracts such as “WSPP Schedule-C" supply contracts or similar firm contracts in the RSE.  Securing transmission and finalizing e-tags may not always be achievable by the deadline for various reasons, so having an exception process or confirming in STUC is needed.  As noted in workshops, SCE achieves e-tagging 95+% of the time by 3:00 PM in the day ahead timeframe. 

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

The CAISO should expand the types of imports that count toward the RSE by also including bids at zero or below.  These are real bids that are guaranteed to clear the market except in negative price conditions when the power is not needed. They effectively have a contract with the CAISO when they submit these types of bids and thus should be counted as contracted resources for the RSE.

It is not clear in CAISO’s proposal what the implications or consequences of not tagging are.  For example,1 LSE fails to tag a 25 MW transaction does the CAISO BAA fail the RSE? Will they be kicked out of the diversity pool for the WEIM RSE?  SCE requests CAISO to provide more clarification.   

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

SCE requests more details on when and how RDRRs will be included in both the EDAM RSE and WEIM RSE.  It is SCE’s understanding that RDRRs are counted as a supply side resource in the WEIM RSE only when there’s anticipation that the resource will be utilized.  However, in the Day-Ahead timeframe, it is even more difficult to predict whether RDRR’s will be utilized given it’s a real-time emergency resource enabled only during an EEA2 declaration.  SCE requests CAISO to provide more clarity on the proposal of when RDRR gets credited towards the RSE. 

As a potential solution, to the extent the CAISO “fails” the final indicative RSE run (proposed for 9AM), RDRR should be included as a load modifier for the actual RSE test.  SCE would like to further add that under no circumstances should the CAISO fail the EDAM or WEIM RSE without first including available RDRRs in their RSE tests.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

SCE is indifferent to this proposal.  Currently, SCE does not require these results to effectively manage gas procurement and supply. Having an advisory D+2 would not provide enough confidence to make gas purchase or sales decisions that far in advance of the flow day. SCE appreciates that the ISO is proposing solutions to better align the gas and power markets, but the West has operated its market for decades without this and it seems there will be little value to implement it now.   

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

SCE supports the concept of applying an administrative surcharge to BAAs that want to utilize the EDAM market to cure RSE shortfalls. However, SCE does not agree with the mechanics of what is being proposed. It appears the intent of CAISO’s proposal is to charge a high administrative charge to discourage simply “leaning” on the EDAM market, rather than making bilateral arrangements prior to the market and bringing supply to pass the RSE.  SCE believes the surcharge should better reflect the cost of bilateral alternatives but should be inferior or a “worse deal” than handling the issue bilaterally.   This administrative charge isn’t intended to get anything built, but instead it’s to incentivize participants to cure through the bilateral market rather than lean on EDAM.

 

SCE suggests a different approach to calculating the administrative surcharge: 

Assume an entity is only “short” for a single hour.   Also assume their only mechanism to cure is to buy a 16-hour block of energy.  If they do this, they can keep the energy for the one hour they are short, and then sell the remaining 15 hours to the CAISO market.  

  

Their net cost would be:  

1) the price for the one hour (they were short) at the block price, and  

2) the difference between the price between what they paid for the block and the hourly energy prices in the CAISO (for the 15 hours they were not short).  

 

The CAISO should calculate this net cost, and then apply some administrative charge, such as 125% to the net cost, and use that as the administrative charge.   In addition, the CAISO may want to have a minimum charge, such as 125% of the LMP during short hours, just in case the first calculation shows the alternative transaction would have been low cost/profitable.  This mechanism ensures the entity is always better off going to the market rather than leaning on the EDAM.  

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

It is SCE’s understanding that the CAISO does not intend to create an integrated system but instead a bulletin board that allows BAAs to post BAA trade information.  While not opposed to the idea, SCE requests additional information on how it would work. 

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

SCE supports the proposal of pooling all BAAs that pass the EDAM RSE which increases the chances of passing the WEIM RSE.  However, SCE questions CAISO’s proposal of holding back the diversity benefits for the purpose of having additional imbalance reserves for the EDAM footprint. It is not clear what CAISO is trying to achieve (e.g., how much risk the CAISO is trying to reduce) by not giving the full benefits of diversity. SCE requests the CAISO clarify how much risk it intends to mitigate, and the basis for this risk management strategy.  This will come at a financial cost, and the benefits should justify the costs.  

SCE also requests additional information on how the real-time diversity benefits are calculated if a BAA fails the DA RSE and is kicked out of the pool. Is the real-time diversity calculation based on the smaller pool (excludes the failing BAA(s)) or the original pool (that includes the failing BAA(s))? 

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

SCE encourages CAISO to facilitate more discussions regarding both 1 and 2 described above.  Per comments in Q3, SCE agrees that the market needs a way to prevent over exporting which could then require California to replace.   And, like other BAAs, the CAISO needs tools to preserve capacity if unrestricted market activities could create reliability concerns for the CAISO. 

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

The CAISO should provide more information on the allocation of administrative surcharges/revenues as it relates to curing supply deficiencies for a BAA that is comprised of multiple LSEs.  How will CAISO identify the performance contribution of passing or failing the RSE for each LSE and how will the settlements work?  Does CAISO provide a mechanism that would allow some LSEs to opt-out of participating in the curing program? 

There is also a lack of detail on the tools to procure capacity to allow BAAs to pass the RSE.  What options are available when the pre-run shows the CAISO BAA needs to cure in order to pass the RSE?  And how will that cure happen?  

Lastly, CAISO should include the math formula for the Imbalance Reserve Product.  It is not clear how Imbalance Reserves are calculated, particularly on extreme weather days when load is high and supply is constrained. The upward load uncertainty should be much smaller than on lower load days. (e.g., If the CAISO forecast is 45,000 MW, we now know it could go as high as 52,000 MW- so the uncertainty could be 7,000 MW. If instead the forecast is 52,000 MW, there is no basis to assume the uncertainty could still be 7000 MW to realize a load of 52,000+7,000 = 59,000 MW. While load could still exceed the previous peak, it might be, for example, as high as 54,000 MW, or say 2,000 MW of uncertainty. Ergo, the higher the load forecast the lower the upward uncertainty.).  In addition, the CAISO should clarify under the proposed Imbalance Reserve Product, the high confidence load forecast would not be needed, or the high confidence load will not be as high as we’ve seen to date. (For instance, on Sept 6, 2022, the high confidence load adjustment in RUC was almost 8GW higher than the IFM forecast for HE19). The CAISO should clarify which forecast (IFM forecast vs. standard RUC forecast vs. high confidence RUC forecast) will be used in the RSE. 

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

SCE remains concerned that this design does not recognize RA, or align with the regulatory rules currently in place, and results in double payment.  Currently, RA units bid zero in RUC and are paid zero in RUC. The EDAM market design should continue to honor this in perpetuity.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

SCE believes that the CAISO BAA requires some form of system market power mitigation. This element should not be discussed here to maintain consistency in the treatment of system market power mitigation among all BAAs. 

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

SCE recommends that parties should have the option of choosing whether to virtually bid into the EDAM market or adopt a minimum scheduling requirement of at least 95% of the CAISO forecast clearing the market.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

SCE believes the proposal is feasible in the beginning of EDAM.  However, SCE is concerned that it will restrict access to supply as more parties join the EDAM.   SCE requests CAISO to address this issue in the near term.  For example, if the CAISO is completely “surrounded” by EDAM BAAs, will any resource outside of EDAM be allowed to bid into the market?   This could cause significant inefficiencies to EDAM and the issue requires additional discussion.   

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

SCE wants to ensure that the market is an efficient market that properly accounts for GHG costs and optimizes energy transactions. To get to that state, the proposal needs to clearly identify the obligations of who will get the allowances in a non-discriminatory fashion.  

It is not clear what role the CAISO should play in trying to minimize secondary dispatch and what role CARB should have in quantifying secondary dispatch.  The CAISO should provide further clarification.

The Hybrid approach seems to satisfy all these conditions and lets CARB know the GHG intensity of the fleets and quantities that support the imports.  This approach gives the most efficient market result and provides all the information CARB needs to determine the admission associated with the imports.  Of all the solutions proposed, the Hybrid Approach appears to be the best and we should be headed in that direction even if it can’t be implemented on day one. 

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

While SCE supports resource specific GHG treatment, SCE does not support the current proposal for limiting sales to California based on the results of the proposed “counter-factual” run. It is SCE’s understanding that the counterfactual is not just informational but may result in prohibiting units that desire to sell to California from selling to California.  SCE is very concerned about the CAISO designing the market that will prevent California from accessing supplies that are available to all other market participants.  We ask the CAISO to confirm this understanding and provide more examples on how supply will be restricted from making sales to California under the current proposal. 

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

SCE supports the idea of releasing information to provide more transparency to stakeholders including CARB. This would provide the ability for CARB to compare their secondary dispatch calculations.  SCE recommends that CAISO work with CARB to understand how they will be calculating secondary dispatch to be able to finalize the design and the information that’s going to be released.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

SCE does not support the zonal approach. The zonal approach does not encourage efficiency and the principles of optimization. It leads to an administrative charge (hurdle rate) that could inflate energy prices in the GHG zone and treats similar resources unfairly. SCE is concerned that the zonal approach will prevent out-of-state clean resources from participating in the CAISO energy market when the hurdle rate is not met.  Lastly, it appears that CARB does not support this approach stating that the zonal approach may result in emissions leakage caused by higher emitting out-of-state resources taking advantage of the hurdle rates.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

SCE requests CAISO to provide more details of how the current proposal will impact GHG accounting in the WEIM. CAISO should also provide more transparency of how approved proposals in the EDAM initiative could change existing designs in the WEIM.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

SCE requests CAISO to provide more details of how the current proposal will impact GHG accounting in the WEIM. CAISO should also provide more transparency of how approved proposals in the EDAM initiative could change existing designs in the WEIM.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

SCE generally supports the proposed framework, including the 50/50 split of transfer revenues.  This should be monitored to ensure the allocation produces reasonable results for all participants.  

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

SCE does not have comments 

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

SCE does not have comments 

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

SCE supports the EDAM initiative falling under joint authority.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

SCE does not have comments.

SRP and TEP
Submitted 09/26/2022, 04:09 pm

Submitted on behalf of
Salt River Project and Tucson Electric Power

Contact

Marcie Martin (marcie.martin@srpnet.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Salt River Project Agricultural Improvement and Power District (SRP) and Tucson Electric Power (TEP) appreciate the CAISO addressing stakeholder feedback received through previous written comments and stakeholder meetings in the Revised Straw Proposal. The following comments outline SRP and TEP’s remaining concerns and requests for clarification.

The Desert Southwest Western Energy Imbalance Market (WEIM) entities continue to be aligned on many aspects of EDAM. To highlight some important areas of alignment, SRP and TEP are referencing positions of other entities in this comment document.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

SRP and TEP support the CAISO’s proposed voluntary participation model and appreciate the incorporation of transitional protective measures. SRP and TEP request further discussion and clarification of two of the proposed transitional measures:

  • EDAM disruption and interruption of participation in the market: The CAISO has the authority to interrupt a WEIM Entity’s participation in the real-time market when operational circumstances have caused or are likely to cause abnormal system conditions that require immediate action to maintain system reliability or there is communication failure that prevents access to CAISO system. The CAISO proposes to extend this authority to temporarily suspend participation to EDAM. SRP and TEP understand that the CAISO would coordinate closely with the EDAM Entity in these situations; however, it is not clear from the proposal if an EDAM Entity would have a mechanism to suspend its own participation in EDAM due to abnormal system conditions that may be apparent to the EDAM Entity before the CAISO has visibility of such conditions. Because EDAM Entities will continue to maintain Balancing Authority (BA) responsibilities, it will be important for EDAM Entities to have a similar ability to suspend participation in the market.
  • Commitment to expedited changes where necessary: SRP and TEP appreciate the CAISO including this protective measure; however, based on experience in WEIM, SRP and TEP are concerned that the CAISO may not have the necessary resources to follow-through on this commitment. SRP and TEP request that the CAISO provide details on how it plans to support urgent and critical enhancements for EDAM and improve timeliness of enhancements and responses to software variances for WEIM.
3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

SRP and TEP support the CAISO’s proposal for EDAM transfer priority equal to load for an EDAM Balancing Area Authority (BAA) that passes the EDAM Resource Sufficiency Evaluation (RSE) during the normal, stressed, and edge conditions the CAISO described in the proposal. SRP and TEP also understand that during stressed or edge cases the EDAM BAAs should mutually work out any possible curtailment of an EDAM transfer.  SRP and TEP request that the CAISO provide a mechanism or tool through the market that assists the EDAM BAAs in identifying the most effective EDAM transfer curtailment in these situations.

SRP and TEP understand that the EDAM transfers scheduled in the Integrated Forward Market (IFM) and Residual Unit Commitment (RUC) will be treated as firm schedule to be tagged, and that treatment will impact the transmission availability offered in WEIM. SRP and TEP request clarification on how the CAISO expects the intertie transmission to be robust during the WEIM timeframe considering less transmission will be available during real time.

SRP and TEP support the inclusion of a BAA power balance constraint similar to what is in WEIM design to ensure the EDAM BAA net transfer export will be reduced to what can be exported on Bucket 1 transfers. SRP and TEP request that the CAISO include an illustrated example of this in the next proposal, similar to the illustration in the September 8 stakeholder presentation, which included an additional imbalance reserves and reliability capacity parameter in the power balance constraint.

SRP and TEP seek clarification on how the proposed power balance constraint and the CAISO proposed net EDAM export transfer limit tool will be utilized by the market. If these tools do not serve the same purpose, SRP and TEP request the CAISO clarify how the tools differ.

SRP and TEP request that the CAISO provide a platform for each EDAM Entity to ensure the tag attributes are communicated in a timely manner to each EDAM BAA for tagging purposes. Based on the proposal, the timeline for EDAM transfers needing to be tagged is not clear to SRP and TEP. SRP and TEP request that the CAISO provide a market mechanism (feedback/check) to ensure that the EDAM transfers are tagged with appropriate priority.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Please see response in comment 3

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

SRP and TEP continue to have concerns with the proposal to only tag the incremental EDAM transfers as lower priority for the EDAM BAA RSE. SRP and TEP suggest that after an EDAM BAA fails the RSE, any EDAM transfer that supports the failing EDAM BAA be labeled and tagged as lower priority. SRP and TEP do not feel that, during stressed conditions, an entity that failed RSE and relies on the market to cure should have the same priority for transfers as an entity that came into the market whole and passes RSE. Making only the shortfall amount lower priority than load would complicate implementation and place additional burden on the EDAM BAAs to determine which transfers would be low priority.

SRP and TEP request that the CAISO provide a market mechanism to distinguish between the high and low priority transfers for the EDAM BAA. Without such a mechanism, the EDAM BAAs will have a daily burden to distinguish between high and low priority transfers. SRP and TEP suggest that the CAISO facilitate a workshop to allow potential EDAM Entities to better understand what manual actions from system operators would be necessary to implement this aspect of EDAM. 

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

SRP and TEP support continued discussion of the overall framework for transmission commitment through the concept of buckets. This approach maintains continuity between various iterations of the proposal.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

SRP and TEP recognize the importance of maximizing the amount of transmission available to the market.  SRP and TEP prefer that Bucket 2 be made available to the market on a voluntary basis and prefer that the incentive be made more attractive.  SRP and TEP continue to have concerns with the method of automatically putting all unscheduled Bucket 2 transmission into the market due to:

  • Potential redispatch costs related to use of transmission by firm transmission customers after the market run, which creates increased costs for customers. 
  • Potential for transmission rights holders to over-utilize their transmission, then adjust in real time to reserve their transmission through the market run.
  • Reduction of transmission curtailment priority for firm rights holders utilizing their rights after the market run is completed. 

SRP and TEP also have concerns with the proposed timing for Pathway 2 transmission and recommend a voluntary release of transmission by 10:00 a.m. of the day-ahead to allow increased time to evaluate the market prior to making the decision.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

During recent stakeholder workshops, participants requested additional detail on Bucket 1 transmission within the CAISO system and its availability for external entities to use for the RSE. SRP and TEP strongly support the suggestion for a workshop to address this topic and walk-through examples of potential seams issues that may exist in cases of an entity having a firm transmission right outside of the CAISO BAA and not having a high priority (PT) wheel within the CAISO system. A similar concern may exist for California Resource Adequacy (RA) imports that do not have firm transmission outside of the CAISO system but do have priority on the CAISO system.

SRP and TEP understand that if an external BAA needs to wheel through CAISO, only PT wheels would count toward RSE. Based on CAISO’s recent Transmission Service and Market Scheduling Priorities (TSMSP) Phase 2 proposal, it is not clear how much transmission will be available to external entities for HPT wheels. As the TSMSP initiative continues to evolve, it will be important for the CAISO to revisit the EDAM transmission commitment design and ensure that there are no inconsistencies between the two initiatives.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

SRP and TEP agree with the proposed approach to the calculation of the TRR shortfall.  SRP and TEP request further details on the two proposed methods of allocation.  It would be helpful for the CAISO to include historical data to allow for a more effective evaluation.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comments at this time.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

SRP and TEP agree with the timing for conducting the EDAM RSE as described.  SRP and TEP are in favor of on-demand advisory RSE tests prior to the binding test at 10:00 a.m.  SRP and TEP appreciate the ability to run the on-demand application for the RSE.

SRP and TEP support the exclusion of transmission modeling for the RSE purpose because the RSE does not perform optimization across the EDAM footprint.

SRP and TEP support the proposal for the ability to use EDAM BAA or CAISO load and the VER forecast for the purpose of RSE and to lock these parameters including the imbalance reserve requirement by 9:00 a.m. This will provide a firm set of inputs for the on-demand RSE application for 9:00 a.m. onward.

SRP and TEP are still unsure of the intent of the language in the EDAM Proposal on page 45 under Ancillary Service Requirements quoted as:

“Each EDAM BAA will define its ancillary service requirements consistent with its reliability requirements. The EDAM RSE will then test and validate whether an EDAM BAA has self-provided sufficient capacity to meet its requirements that does not overlap with supply made available to the EDAM.”

What is the EDAM RSE validating with respect to Ancillary Service Requirement and how is the RSE performing this validation? Under EDAM, the BAA, not the market operator, will continue to be responsible for reliability requirements. Please provide clarification on this section.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

SRP and TEP have concerns with the proposal requiring an EDAM Entity to identify the source BAA of the firm energy contracts in advance of the market run. Depending on the volume of trading happening on a particular day, it may not be reasonable to have all the information on a given firm energy contract by 10:00 a.m.

SRP and TEP support the requirement for an e-tag three hours following the publication of market results.

SRP and TEP are concerned that WSPP Schedule-C supply contracts that wheel through the CAISO system may not have equitable treatment to similar contracts elsewhere within the EDAM footprint. Page 33 of the Revised Straw Proposal explains that entities that rely on resources that are wheeled through the CAISO BAA to meet RSE would need wheeling priority equal to CAISO load. Under the CAISO’s interim process for wheel-throughs, an entity must have a firm energy contract and firm transmission to the CAISO border in place 45 days in advance of the operating day. Page 49 of the Revised Straw Proposal states that schedules that lack a valid day-ahead e-tag by three hours following the publication of market results will have until the start of the short-term unit commitment (STUC) horizon to submit e-tags and/or replace the capacity with other firm schedules prior to the start of the STUC run. These requirements seem inconsistent; therefore, SRP and TEP request clarification on how the CAISO will apply this e-tagging requirement for WSPP Schedule-C supply contracts that wheel through the CAISO system. SRP and TEP also request that the CAISO reexamine these requirements as the TSMSP initiative evolves.

SRP and TEP recommend the CAISO provide a mechanism to account for all the firm energy contracts in the market run, regardless of the identification or lack of identification of a source BAA. These firm contracts are supported by physical supply and should have equal treatment to that proposed for intertie bidding for the RSE purpose.

SRP and TEP agree with the consequence of not including an EDAM BAA in WEIM Pooled RSE if the e-tag or supply is not in place to back a firm transaction by the STUC horizon.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

SRP and TEP support the proposal to count economic supply offers in the EDAM RSE at CAISO interties with non-EDAM BAAs (i.e., “intertie bidding”), if those supply offers are associated with a forward contract with a load serving entity within the CAISO BAA or otherwise have a reasonable expectation of delivery. SRP and TEP recommend the CAISO monitor the performance of intertie bidding and establishes consequences if the bids do not materialize in market.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

SRP and TEP support the proposal for treatment of demand response programs within the CAISO BAA for the purpose of passing RSE. For non-CAISO EDAM BAAs, SRP and TEP support the inclusion of the demand forecast to be reflected in load adjustment for RSE accounting. Many of the small demand response programs that do not meet the CAISO’s requirements are not firm until the operating day. SRP and TEP recommend the CAISO provide an opportunity to continue to communicate the viability of such demand response program through real time without imposing any adverse impact on EDAM RSE.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

SRP and TEP support the proposal to make advisory D+2 results available to EDAM Entities but remain concerned that the D+2 market results will not be a good proxy for gas procurement and managing gas resource participation in the day ahead market. If additional gas procurement needs to be done based on the day ahead market results, currently there is no reliable intraday mechanism for gas procurement for most of the potential EDAM BAAs.

Also, SRP and TEP suggest that the CAISO communicate D+2 market results to EDAM BAA regardless of a request being submitted by the EDAM BAA. The results should provide the approximated energy limit for all gas resources in the BAA instead of only providing the limit for specific generators. SRP and TEP request that the CAISO consider a gas nomogram for the entire fleet of gas resources to improve the operational flexibility of EDAM.

In addition, SRP and TEP recommend that the CAISO design daily energy limits for a group of gas resources similar to limits for hydrogeneration resources. NV Energy proposed an initiative to establish a use-limited gas resource default energy bid, which is listed as a discretionary initiative (Section 6.1.23) in the CAISO’s Draft 2023 Policy Initiatives Catalog. SRP and TEP request that the CAISO consider incorporating this initiative into EDAM. If it is not reasonable to add this within the scope of EDAM, SRP and TEP request that the CAISO add it to the scope of the Price Formation Enhancements initiative. The inclusion of daily energy limits would enable the market to provide results that can align with the capability of the gas resources, which would improve reliability over the EDAM footprint.

In addition, SRP and TEP support the suggestion made by APS in comment 15 to revise the reference level request to include the gas day hours, which do not coincide with a calendar day.

The treatment of hybrid, collocated, and standalone storage resources is not specified in the revised straw proposal. SRP and TEP seek clarification on the treatment of these resources in EDAM and request that the CAISO address this in the next iteration of the proposal.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

SRP and TEP support the proposal to cure resource insufficiencies through the EDAM with an administrative surcharge. The surcharge should provide incentive for EDAM BAAs to cure shortfalls prior to participating in the EDAM. The administrative surcharge should be the final mechanism for the market to cure the shortfall for the EDAM BAA.

SRP and TEP seek clarification on the reallocation/refund of such administrative charges back to the EDAM BAA for the hours the EDAM BAA did not fail RSE. SRP and TEP are concerned this may result in entities leaning on the market for stressed hours instead of performing adequate forward procurement to cure the shortfall.

SRP and TEP also request clarification on the proposed fee in instances the market is unable to cure the insufficiency. It is unclear if the entity would be required to pay the full fee for all hours it is insufficient or only the hours that the market cures the insufficiency.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

SRP and TEP support the proposal for the CAISO to host an hourly bid-range trading platform that will allow the EDAM BAAs to work together to cure deficiencies for a duration shorter than currently possible through existing bilateral market products.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

SRP and TEP support the utilization of a pooled WEIM RSE for entities that pass the EDAM RSE as described in the revised straw proposal. SRP also agrees with the methodology to use the hybrid diversity benefits for the WEIM pooled RSE.

SRP and TEP seek clarification on what mechanism the market is providing to dynamically adjust the imbalance reserve requirement and how it will be utilized in the WEIM pooled RSE.

SRP and TEP support the concept for an EDAM BAA to be removed from the WEIM pooled RSE when the failed BAA is not able to cure the shortfall at the beginning of the STUC horizon.

The proposal states that if the pooled EDAM footprint failed WEIM RSE and is unable to cure as a footprint, it will have the opportunity to cure the shortfall through the WEIM energy assistance program. SRP and TEP remain concerned about the integration of the WEIM energy assistance program because it is not yet implemented, therefore not proven to provide benefits. In addition, SRP and TEP understand that the WEIM energy assistance program will be a voluntary program; therefore, SRP and TEP seek clarification on how an EDAM BAA that is not participating in the WEIM assistance program but is in the pooled EDAM footprint for WEIM RSE would be treated.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

SRP and TEP support the mechanism introduced by the CAISO for holding excess capacity and adding confidence that EDAM transfers are supported by the RSE.  The first proposal to manage supply in excess of RSE, which can be implemented by the EDAM BAA prior to the RSE, enables the EDAM BAA to hold back the excess supply not needed to pass the RSE. SRP and TEP see this mechanism as an important precursor going into the market under stressed conditions.

SRP and TEP also support the second mechanism to have a net EDAM transfer limit constraint. SRP requests the CAISO make this functionality available on a voluntary basis.    

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

During the September 8 stakeholder workshop, CAISO staff commented that all transfers, including bilateral transactions, will be optimized by the market and could be re-dispatched. SRP and TEP seek clarification on market optimization of bilateral transactions and their interactions during the market run. These transactions are primarily self-schedules and should not be optimized by the market. Only EDAM transfers should be used to replace physical bid-in resources based on economics.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comments at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

SRP and TEP encourage the CAISO to consider alternative approaches similar to those used in other ISOs and Regional Transmission Organizations, such as the conduct-and-impact framework suggested by Powerex in its comments on the CAISO’s Price Formation Issue Paper.

SRP and TEP recognize that Price Formation Enhancements are part of a separate initiative but are concerned that the EDAM initiative is moving at a much faster pace than the Price Formation Enhancements initiative. Topics being considered under that initiative will be essential to EDAM.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

SRP and TEP support the CAISO’s proposal on convergence bidding and appreciate the incorporation of a specified transition period.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

SRP and TEP support the proposal for external resource participation to be done through dynamic schedules and pseudo-ties.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

The resource-specific approach challenges may discourage entities in some western states from participating in EDAM, which would undermine the goal of a western day-ahead market. Therefore, SRP and TEP encourage the CAISO to strongly consider other approaches, such as the zonal approach, the Los Angeles Department of Water and Power (LADWP) approach, or other alternatives that could be more favorable to all entities considering EDAM participation.

The CAISO states that it will continue to consider other approaches and that EDAM could evolve in the future to adopt a different approach to greenhouse gas (GHG) costs and accounting, but that current California regulations would need to be changed in order to adopt either the zonal or LADWP approach. Stakeholders outside the state of California have expressed significant concerns with the resource-specific approach related to the way it “deems” resources to serve California load and leads to secondary dispatch. The apparent disconnect between the way the market deems and dispatches resources may fundamentally undermine the program objective of optimizing dispatch for lower/non emitting sources where economically feasible. The CAISO even acknowledged the secondary dispatch issue within the market design and attempted to rectify this situation in 2018. Further research of this issue is necessary to ensure an equitable market and stakeholder confidence in the CAISO system.

Given that the volume of transactions would significantly increase in EDAM compared to WEIM, secondary dispatch would continue in EDAM and may increase. The CAISO suggests that regulatory agencies could address the emissions leakage with regulatory tools. SRP and TEP recommend that rather than expanding an approach with known flaws into EDAM, the CAISO either adopt a different approach to GHG costs and accounting or address the known issues with the resource-specific approach in WEIM so the issues do not become exacerbated in EDAM. SRP and TEP encourage the CAISO to look for opportunities to create a more equitable market solution for all interested parties.

An additional drawback for the resource-specific approach for SRP and TEP would be the requirement for SRP and TEP to possibly participate in two state GHG programs, California and Washington, for reporting and compliance. SRP and TEP would need to secure GHG allowances for both state programs if SRP or TEP generation served load in each respective state. SRP and TEP would also be required to prepare annual compliance reports for each program, incur costs to validate the information submitted in these reports is correct, and incur a cost of compliance fee to participate in each state program. In addition, as more state GHG programs emerge, unlinked GHG pricing programs will continue to complicate and overburden participating entities’ reporting and compliance cost obligations.

In its revised straw proposal, the CAISO describes how it reports total and WEIM-entity level attributions to the California Air Resources Board (CARB) pursuant to a subpoena. CARB also collects total MWh of tagged imports into California BAAs and uses that information to validate electricity imports reported to CARB under its mandatory reporting regulation (MRR). In EDAM, the CAISO indicates that it will explore how best to provide total WEIM and EDAM transfers to states with GHG pricing programs. This is problematic for SRP and TEP. Since SRP joined WEIM and began reporting its electricity imports to the CAISO under the MRR, SRP has had to vigorously defend its reporting of the compliance obligations associated with electricity imports from specified resources imported in WEIM even though SRP uses the same dataset CARB obtains through subpoena. SRP and TEP request that the CAISO clearly identify how it intends to provide total WEIM and EDAM transfers to states with GHG pricing programs so WEIM and EDAM Entities are not struggling with completing the verification for mandatory reporting.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comments at this time.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

In terms of transparency, it would be helpful if CARB provides to entities required to report exactly how it validates imports reported to CARB under its MRR. SRP and TEP request that the CAISO facilitate an informational workshop between EDAM stakeholders and CARB.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

SRP and TEP request the CAISO continue to pursue the zonal proposal as a potential GHG accounting approach that could be utilized in the future. The zonal approach is SRP and TEP’s preferred approach to GHG accounting. The zonal approach as proposed alleviates the compliance and reporting obligation for non-GHG regulation area resources.

To help provide worthwhile comments for bidding and optimization, SRP and TEP request that the CAISO clarify what it means by shorter- and longer-term commitments to help entities understand how the zonal approach impacts their resources.  In addition, if the CAISO were to consider the zonal approach in the future, SRP and TEP encourage more discussion and stakeholder engagement to better define the toll.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No additional comments.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No additional comments.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

No comments at this time.  

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

The EDAM stakeholder process has not included robust discussion on settlements. SRP and TEP plan to participate in upcoming settlements workshops.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comments at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

SRP and TEP support the Board of Governors’ proposal for the entire EDAM initiative to fall under the joint authority of the WEIM Governing Body and the Board of Governors.

Because the existing decisional classification rules were not designed to address an initiative such as EDAM that involves “creation of a new market paradigm,” SRP and TEP request that the Governance Review Committee present its proposal for expanding the joint authority model to apply more broadly to EDAM to the Board of Governors and the WEIM Governing Body for approval before the CAISO requests approval of EDAM. If the Board of Governors and WEIM Governing Body approve expanding the joint authority model, the EDAM initiative would clearly fall under the joint authority of both bodies.

SRP and TEP request that the scope of delegation of joint authority presented in the Governance Review Committee’s Phase 3 Straw Proposal be expanded beyond the “apply to” test to apply to any and all aspects of day-ahead and real-time market rules. 

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

As SRP and TEP evaluate day-ahead market opportunities, compatibility with the Western Resource Adequacy Program (WRAP) is a key consideration. SRP and TEP strongly encourage the CAISO to work with the Western Power Pool and WRAP participants. To achieve interoperability of WRAP and western organized markets, such markets should:

  • Be designed such that they do not interfere with or preclude participation in the WRAP. 
  • Respect the governance framework and decision-making of the WRAP.  
  • Preserve the diversity and investment cost savings derived from participation in the WRAP.  
  • Preserve the supply priority and Open Access Transmission Tariff (OATT) transmission priority of WRAP forward showing supply to meet WRAP obligations.  
  • Preserve the delivery of diversity benefits (holdback and energy) in the operational timeframe from one WRAP participant to another, including from WRAP participants in one organized market to WRAP participants in another or no organized market.   
  • Seek to collaborate with WRAP to ensure compatibility and to achieve potential operational efficiencies and reliability benefits. 

SRP and TEP are concerned that EDAM will not require a common or equivalent Resource Adequacy (RA) framework for all participating entities, including CAISO and other California entities.  SRP and TEP do not believe a daily RSE program will resolve the issue of different RA programs having different criteria for what counts as an RA resource. WEIM experience has demonstrated that entities may pass RSE while being in an Energy Emergency.

State PUC MOU Group
Submitted 09/26/2022, 04:10 pm

Submitted on behalf of
Undersigned Commissioners of the Western Public Utility Commissions’ Joint Action Framework on Climate Change - Eric Blank, Chair, Colorado Public Utility Commission; Hayley Williamson, Chair, Public Utility Commission of Nevada; Tammy Cordova, Commissioner, Public Utility Commission of Nevada; CJ Manthe, Commissioner, Public Utility Commission of Nevada; Letha Tawney, Commissioner, Oregon Public Utility Commission.

Contact

Douglas Howe (Douglas.howe@icloud.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

We recognize that CAISO has selected the resource specific approach for EDAM and that this choice was directed, at least in part, to provide the affected air regulator(s) with continuity of their protocols regarding electricity imports into the affected GHG regions.  This is understandable and we will continue to work collaboratively with our air regulators to achieve the best approach for our states and the west generally.  

We also understand that none of the identified approaches is perfect.  By incorporating GHG pricing into a market footprint that covers both GHG regions and non-GHG regions, EDAM and EIM are doing something that no other electricity market in North America has done.  There will be a need to clarify and modify GHG pricing and tracking mechanisms along the way to ensure accuracy, compliance, and ease of administration.  The goal, therefore, should be a solution that produces credible results which can be supported by a consensus of stakeholders.  Consensus in this context would mean enough participants to establish a market that has a large enough geography, diversity, and scale to produce meaningful savings for consumers while preserving state autonomy over energy policy.  Our concern is that, at present, there may not be a strong consensus among stakeholders that the resource specific approach meets this goal. 

We believe that CAISO has applied serious efforts to address criticisms of the resource specific approach, but in several instances has been met with the technical limitations of the approach.  We also appreciate the efforts of CAISO to address the needs of our some of our states’ non-priced GHG programs.  We address these issues in our further comments.

We recommend that CAISO not delay the implementation of EDAM for a perceived lack of consensus on the GHG approach. CAISO should implement the resource specific approach, at least initially, if it believes that this is the only approach it can implement now that will meet the needs of the directly impacted air regulators.  EDAM entities which cannot support the resource specific approach could opt out of allowing their resources to be attributed to a GHG region.  This may not be optimal for the market, especially for GHG regions, but it will move us forward to capture the other economic benefits of EDAM while iterative work to address concerns on GHG attribution progresses across our states.

We strongly urge the stakeholders, air regulators and CAISO to continue to strive for a stronger consensus among all stakeholders on an acceptable approach.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

We understand the GHG Reference Pass methodology constructs the Reference Pass by simulating a dispatch in which no attribution occurs.  This then creates a counterfactual dispatch in which the GHG zones meet their load with their internal resources and an optimized dispatch for the aggregated non-GHG part of the market. 

The Reference Pass is then used in the second pass to limit total attribution from a specific generator to be no more than the difference between its upper economic limit (UEL) and the reference pass scheduled energy for the resource.  However, it appears this does not mean that the total attribution will be from the surplus, i.e., the amount more than the reference pass, but less than the UEL, but rather that the amount is numerically limited to the difference between the UEL and the reference pass.  We understand this to mean, for example, that for a specific resource if the UEL were 500 MWH and the reference pass scheduled 300 MWH, then the attribution would be limited to 200 MWH, but not to the 200 MWH above the 300 MWH scheduled in the reference pass.  In the second pass dispatch, a total of 200 MWH could be scheduled for dispatch and all of it attributed to a GHG region.  

We understand that there are technical reasons that this implementation was chosen although it is not entirely clear what those technical limitations are.  However, the approach described above does not seem to solve the problem that we believed it was initially intended to solve, namely, that “base scheduled” generation could be deemed away from the resource owner and attributed to a GHG region and then be backfilled with other GHG-emitting resources.  

If we misunderstand this constraint, we would appreciate a clarification from CAISO with examples.  If we do understand this constraint correctly, we recommend that the CAISO provide more explanation for why this constraint was interpreted this way and if CAISO believes it adequately addresses the problem of deeming “base scheduled” generation.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

The criticisms directed toward the resource specific approach focus principally on which and what types of resources are being deemed to the GHG regions and which and what types of resources are being secondarily dispatched to fill in for the attributed generation.  This information is not readily available, or available at all, to many stakeholders including state regulators.

This would be an area where enhanced reporting would help to identify problem areas, allow all stakeholders to be informed by the same data, and ultimately build stakeholder confidence in the GHG approach.  We recommend regular reporting (e.g., monthly or quarterly) of data on attribution:  BAA-specific attribution of resources and fuel type of those resources, and BAA-specific secondary-dispatch by resources and fuel type.  Proprietary information, e.g., pricing, would not be included in this reporting.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

The zonal proposal still lacks critical definitions which impede common understanding among stakeholders on how this approach would work.  Specifically, there needs to be a concrete proposal published that specifies: (1) the criteria that would determine eligibility for access through specified paths 1 and 2 and the entity that would control that access; (2) how the toll (formerly “hurdle”) would be determined in a way that overcomes concerns about high emission resources gaining preferable access to GHG regions at less than compliance cost; and (3) whether access to the GHG region will be optional for resources outside the GHG zone.

Further, the CAISO has indicated that it could, at some future point, include a constraint in the resource specific and LADWP approach that allows BAAs to restrict the emissions factor for resources bidding to serve their load.  We appreciate CAISO’s willingness to understand our concerns about how our states’ utilities will meet their GHG reduction targets within the market and to suggest this approach in response.   However, we do not see why this emissions factor constraint could only be implemented in the resource specific or LADWP approaches .  We recommend CAISO explain its statement that the constraint could not be implemented in the zonal approach, if that approach were to be selected in a future iteration of EDAM.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

Our understanding of the LADWP approach is that it uses the resource specific attribution methodology as a first step to compute the emissions attributed to imports into the GHG region, but then, unlike the resource specific approach, does not attribute those emissions to the resources, but rather to the load-serving-entities in the GHG region.

We believe the LADWP approach deserves serious consideration and should be pursued if there is a consensus to do so.  We observe, however, that since the LADWP approach is a combination of the resource specific approach and the zonal approach, it would also have to satisfactorily address some of the same criticisms that must be addressed for each of the two other approaches:  Can the attribution algorithm be modified to the point where it gains a consensus of support?  Can load-serving-entities be assigned as the First Jurisdictional Deliverer for market imports under the rules of California and Washington’s cap-and-trade programs?

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

We have previously commented that the GHG approaches for EDAM considered by the stakeholders only address the cap-and-trade programs of California and Washington.  They do not address other non-fee based GHG programs that are the law in Oregon, Nevada, Colorado and New Mexico.  We understand that because these programs are not fee-based, they are not readily accommodated in a price-based market.  Nevertheless, these programs directly impact the ability and way in which affected utilities can participate in the EDAM.  

We are appreciative of CAISO’s statement that it could consider an emissions-factor based constraint in the resource specific and LADWP approaches:

“…the proposed resource-specific model is flexible enough to employ additional constraints at a GHG regulation area level (i.e., not to allow resources with an emissions factor above a threshold or to exclude certain resource types).  This would allow states like Oregon to specify or purchase lower or zero-emitting resources.” (EDAM Revised Straw Proposal, p.82).

We strongly endorse this “emission-factor approach” and believe that a stakeholder process to further develop and implement this constraint commence as soon as practicable.  We would seek further clarification on why this concept depends upon the GHG approach that is adopted in the cap-and-trade states, while a state like Oregon which would benefit from this “emissions-factor approach”, is not a cap-and-trade state and none of the three cap-and-trade approaches would be implemented there.  Further clarification on the technical challenges and dependencies involved in implementing an “emissions-factor approach” would be helpful.

With respect to Renewable Portfolio Standards (RPS), there are concerns that arise as states outside of California understand the implications for imports and exports of the longstanding bifurcation of California’s RPS (counting RECs) from its carbon allowance system (counting carbon emitted including via electricity imports and attaching an allowance to each ton). Without legislated carbon constraints, many of our states have not focused on how REC ownership transfers might implicate imputed carbon in the remaining energy. As each state implements its own carbon regulation, sometimes described as clean energy standards, we face the learning curve and challenge that California addressed when it implemented its carbon market and chose to count carbon in one program and RECs in a different program. It is unclear how some states will manage through this integration challenge and is a moment of transition. Fundamentally this raises the need for continued dialogue and understanding so that our respective accounting systems mesh with environmental integrity and clarity. Particularly, the region may benefit from coming to a common understanding of how to count the various claims on the zero-carbon nature of the renewable energy under our legislated carbon goals. Differing views create complexity for the market that will be difficult to address.

Additionally, the implementation of EDAM may impact definitions of ‘bundled RECs’ that are too narrow to allow for security constrained, economic dispatch (SCED), focusing for example on physical delivery of power.   Other concerns will undoubtedly arise as we gain experience with a large western day-ahead market. Dialogue will be critical to enabling effective access to the benefits of SCED while complying with state requirements.  

We acknowledge that the burden of implementing clarifying rules to guide affected utilities in meeting RPS obligations in the context of the EDAM falls mainly on state regulatory bodies and, possibly, state legislatures.  It is our hope and intention that the affected state regulatory bodies, their affected utilities and other stakeholders can begin the work of collaboratively developing those rules before the EDAM begins actual operations.  This is work in which CAISO could assist state regulators as a convening agent for a stakeholder process focused on these non-fee based energy attribute programs.  

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

State PUC MOU Group has no comments on this question.  Please see our comments in the GHG section.

Tacoma Power
Submitted 09/26/2022, 04:48 pm

Contact

Rick Applegate (rapplegate@cityoftacoma.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Tacoma Power thanks the CAISO and its staff for conducting a series of workshops on its Extended Day-Ahead Market (EDAM), and for preparing this revised straw proposal.  We recognize those considerable efforts and commend CAISO for the work product.  

While Tacoma Power maintains many concerns about foundational premises of a potential EDAM, including on market governance, price formation, and resource adequacy, Tacoma Power generally accepts most, but not all elements of the EDAM framework as described in the Revised Straw Proposal. However, Tacoma Power still perceives considerable uncertainty about how the proposed EDAM would function at this juncture. Some of this uncertainty stems from Tacoma Power’s relatively new status as a WEIM entity, but also from EDAM’s interdependence on other concurrent policy initiatives such as CAISO’s Day-ahead market enhancements initiative. Finally, it should be noted that Tacoma Power still does not fully understand how the proposed EDAM as written will impact the transmission service provider (TSP) function of Tacoma Power. Additional detail about how TSPs are expected to function will be necessary, though we acknowledge that some of this work will likely occur as part of the system development and tariff revision processes. 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Tacoma Power appreciates the efforts of CAISO’s staff to draft an approach to market function that gives participant confidence in market outcomes, and to provide illustrative examples of how the approach would function under different scenarios. However, this is an area where we perceive significant reliance of the EDAM proposal on policy initiatives occurring outside of this policy initiative. The day-ahead market enhancements, WEIM resource sufficiency evaluation enhancements, and transmission service and market scheduling priorities phase 2, all appear to interact with the EDAM proposal.  As a result, it is difficult to evaluate this area of EDAM in the absence of resolution of those other key initiatives. Confidence in market transfers will remain a key item for Tacoma Power in order to move forward with a potential EDAM.  Of particular concern to us is the apparent potential for an entity come into EDAM resource sufficient in the day-ahead timeframe, but ultimately end up with insufficient supplies because EDAM committed the resources of the entity to serve load of the market footprint while simultaneously failing to procure sufficient supply to meet collective uncertainty, even though the uncertainty did not materialize within that entity. Regrettably we do not have a comprehensive prescription to resolve this concern. In the absence of a full RTO with the consolidation of reliability function, the effects of scarcity in EDAM may not be equitably distributed. As a result, CAISO should expect participating entities to take protective actions to assure available supply in each entity’s respective service territory.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

As noted above, Tacoma Power appreciates the effort of CAISO’s staff to explore edge case scenarios as part of the EDAM workshop process. However, given the activity in other policy initiatives as well as competing incentives for operator action, we still do not have complete confidence that a fully resource sufficient entity participating in EDAM will not find itself with a supply deficiency as the result of market outcomes and supply/demand uncertainty.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

Tacoma Power believes that if an entity fails the resource sufficiency evaluation its access to market supplies should be subordinate to that of other entities.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Apart from the major exception described in the response below, Tacoma Power generally accepts the CAISO’s transmission commitment proposal, though we still do not fully understand and/or appreciate the impact of the proposal on our utility’s TSP function. We require additional detail about how TSPs are expected to function as part of EDAM, but we acknowledge that some of this detail may only be available as part of the system development and tariff revision process.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

Tacoma Power supports TSPs that elect to make unscheduled transmission available to the market, especially for paths where the provider has confidence that available transfer capability (ATC) is unlikely to be fully scheduled and when making that transmission available does not result in cost uplift to EDAM footprint.  However, for three reasons described below, Tacoma Power opposes a market requirement to make unscheduled transmission available to the market by 10:00AM on the preschedule day.     

First, while it is textually accurate to say that under the pro-forma OATT framework, firm point-to-point transmission schedules are submitted no later than 10:00 a.m. the day prior to commencement of service, and transmission providers accommodate schedules submitted after 10:00 a.m. if practicable--actual scheduling practice in the Pacific Northwest is quite different.  In this region, a significant amount of energy that is transacted bilaterally on a day-ahead, monthly, or quarterly basis, is scheduled between the hours of 9:00 AM and 3:00 PM on the preschedule day. The main driver for this is that BPA opens the Reservation Window for Hourly Firm Transmission Service at 9:00 AM on the preschedule day (See BPA Transmission Business Practices, Requesting Transmission Service (https://www.bpa.gov/-/media/Aep/transmission/business-practices/tbp/requesting-transmission-service-bp.pdf), Version 42, page7.) While the considerations that have historically driven use of BPA Hourly Firm Service as compared to other service increments have waned in recent years, the custom of scheduling energy during late morning and early afternoon remains. If the CAISO were to move forward with the requirement to turn over all unscheduled transmission by 10AM, we foresee significant disruption and potential for double scheduling, especially for entities that do not join EDAM at launch.  If at some later date bilateral transactions become the exception and almost all regional load and generation is scheduled through EDAM, then the turning over of unscheduled at 10:00 AM can function without disruption, but we do not see this proposal working well on day-one of EDAM.   

Second, we question whether confidence in EDAM transfers is supported if EDAM transfer rely on unscheduled/non-firm transmission service made available to the transmission service provider during the preschedule day. If an existing long-term firm rights holder for any reason waits until after 10:00 AM to schedule energy using those rights and the path is congested, then pursuant to OATT curtailment priority, the EDAM transfer should be curtailed in its entirety before any curtailment is realized by the long-term firm rights holder. This would seemingly result in the market providing less reliable outcomes.  

Third, as BPA has pointed out in workshop comments, it may not be possible to distinguish between intertie and internal transmission when it comes to turning over unscheduled transmission.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

Aside from the exception described above, Tacoma Power generally accepts the approach CAISO has proposed for EDAM.

 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

Tacoma Power supports a third bucket transmission service product where, in exchange for a hurdle-rate payment, a TSP voluntarily makes available unscheduled transmission service to the market. While we acknowledge that hurdle rates introduce inefficiency into market dispatches, we believe that hurdle rates actually provide two useful benefits to EDAM. First, a hurdle rate relative to transmission cost uplift proposals discussed below could help to contain cost shifts between EDAM entities. Second, having a hurdle rate and presumably increased location market price separation helps incent the donation of Bucket 2 transmission for use by the market because it provides the transmission customer with greater opportunity to realize congestion revenues.

Generally, Tacoma Power disfavors transmission cost uplift as part of a potential EDAM design. We regard the broader sharing of transmission revenue requirement as being more appropriate for RTOs where reliability functions are consolidated, and where all market participants interact with the market according to the same rules.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Tacoma Power has no response to this prompt at this time.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Tacoma Power has no response to this prompt at this time.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Tacoma Power agrees with the proposal to count firm power contracts, including WSPP Schedule-C transactions, towards the resource sufficiency evaluation. We also applaud CAISO for proposing a day-ahead tagging requirement for those transactions within three hours of publication of market results and encourage CAISO to further develop an enforcement mechanism that supports this requirement.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Tacoma Power does not agree with the proposal but nonetheless accepts it given CAISO’s historical practices in this regard. 

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

As long as demand response is subject to on-going review of its performance relative to market expectations, Tacoma Power is supportive of it counting towards the resource sufficiency evaluation.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Tacoma Power has no response to this prompt at this time.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

Tacoma Power supports allowing resource insufficient entities to access supplies in the market following application of an administrative charge, so long as that access is infrequent, not systematic, and does not compromise the reliability and resource sufficiency of other entities.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

Tacoma Power has no response to this prompt at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Tacoma Power has no response to this prompt at this time.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Tacoma Power has no response to this prompt at this time.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Tacoma Power has no response to this prompt at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

CAISO’s revised straw proposal now includes three options for GHG accounting and reporting, reflecting the various approaches discussed in-depth during the working group meetings. Tacoma Power generally supports a zonal approach to GHG settlement and would encourage CAISO to continue to explore and consider the approach. As described below, Tacoma Power opposes load based methods of GHG accounting, such as the one proposed by LADWP as an alternative to resource specific accounting. 

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

Tacoma Power has no response to this prompt at this time.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

Tacoma Power has no response to this prompt at this time.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

Tacoma Power has no response to this prompt at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

While Tacoma Power is appreciative of LADWP’s contribution to the EDAM development process, Tacoma Power is concerned about the apparent effect the LADWP proposal appears to have on resource and load settlements in EDAM.  Based on explanatory slides comparing the proposal with the two other GHG accounting frameworks, we have noticed that the LADWP proposal does not offer a GHG settlement with resources seeking to serve load in a GHG regulation jurisdiction (see LADWP’S GHG ACCOUNTING PROPOSAL, JULY 26, 2022, http://www.caiso.com/InitiativeDocuments/Presentation-Extended-Day-Ahead-Market-LADWP-GHG-Approach-Jul-26-2022.pdf, page 20). Instead, all GHG related settlements under the proposal appear to be with load for costs and revenues associated with GHG compliance. This is troubling because unlike the resource specific and zonal approaches to GHG accounting which offer settlements with participating resources, we are unable to perceive any market opportunities for non-emitting resources to supply load that is subject to a GHG regulation regime. It is as though the proposal simply seeks revenue from load for compliance purposes, much in the way of carbon tax.  Because the economics and resource dispatch logic in this proposal appears to be indifferent as to whether regulated load is served by emitting or non-emitting resources, we question whether this proposal supports the policy aims of the states of California and Washington to achieve actual emissions reductions.       

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

Tacoma Power has no response to this prompt at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Tacoma Power has no response to this prompt at this time.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

Tacoma Power has no response to this prompt at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Tacoma Power has no response to this prompt at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Tacoma Power has no response to this prompt at this time.

The Bay Area Municipal Transmission group (BAMx)
Submitted 09/28/2022, 04:58 pm

Submitted on behalf of
City of Palo Alto Utilities and Silicon Valley Power (City of Santa Clara)

Contact

Paulo Apolinario (papolinario@svpower.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Bay Area Municipal Transmission Group (BAMx)[1] is pleased to submit these comments on the Extended Day-Ahead Market (EDAM) revised straw proposal.

BAMx generally supports the proposal, including for EDAM transfer revenue allocation, with a few areas of concern or that need clarification:

  1. The TRR recovery framework for compensating transmission providers for lost short-term revenues needs to be modified to account for the transfer revenues associated with Bucket 3 releases in determining the net keep-whole payments
  2. Compensation for “wheeling through” transmission should be based on the EDAM transfer revenue value and should not be based on the embedded cost of the transmission deemed to be supporting the transfers.
  3. CAISO should clarify the allocation of transfer revenues to rights holders (e.g., COTP rights holders and Southern Intertie rightsholders) in instances when multiple parties hold rights on each side of EDAM interties.
  4. CAISO should seek review by Market Surveillance Committee and Department of Market Monitoring to ensure that the ability to cure RSE deficiencies prior to running Short Term Unit Commitment will be sufficient to ensure entities that own or control firm transmission needed to reach a BAA boundary (e.g., BPA transmission rights to COB/NOB) will not be able to exercise transmission market power, or to identify whether alternative transmission market power mitigation measures need to be developed.
  5. CAISO should clarify that with WEIM and the future EDAM, there is no longer a need for the Integrated Balancing Authority Area (IBAA) treatment of any adjacent BAAs that participate in WEIM or EDAM, since the generation and transmission resources associated with these entities are appropriately valued in the WEIM and EDAM.

 


[1] BAMx comprises City of Palo Alto Utilities and City of Santa Clara, Silicon Valley Power.

 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

BAMx supports the proposed voluntary participation model, with a six-month notice period and no exit fees. This approach provides each EDAM entity the opportunity to assess the potential benefits and costs of EDAM participation before deciding to voluntarily join EDAM, without having to make a lengthy commitment once it decides to join. It is important that the participation decision remains at the EDAM BAA level, and not at the individual resource or transmission rights holder level. That is, if a BAA voluntarily decides to join EDAM, all resource owners and transmission rights holders within that BAA would be obligated to participate in the EDAM by submitting self-schedules or economic bids, since there will no longer be base schedules with EDAM. Self-scheduling will allow parties to exercise their rights similar to how they schedule under the OATT. Alternatively, they will have the option to realize greater value via economic bidding of generation and release of their transmission rights for optimization in EDAM in exchange for a share of transfer revenues.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comments at this time.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

No comments at this time.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comments at this time.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

BAMx supports the use of buckets to categorize the types of transmission made available under EDAM, with the transmission in all buckets being made available hurdle free:

  1. Bucket 1 – Firm or conditional firm transmission rights supporting delivery across EDAM interfaces for RSE purposes
  2. Bucket 2 – Firm or conditional firm transmission rights in excess of transmission needed to support RSE
  3. Bucket 3 – Unsold firm ATC (can include firm transmission that otherwise could have been sold as short-term firm or non-firm under the OATT)
7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

BAMx supports the automatic release of Bucket 2 transmission not scheduled by 10 am to be optimized in the EDAM, to prevent withholding, inappropriate day-ahead congestion, inefficiencies and adverse price impacts on the market. Transmission rights holders will have three options for utilizing their rights in the day-ahead timeframe:

  1. Pathway 1 – schedule the use of their rights by 10 am, and be eligible to receive an allocation of Transfer Revenue from the EDAM entity if the transfer constraint binds
  2. Pathway 2 – release the transmission rights before the day-ahead processes, and be eligible for an allocation of transfer revenue directly from the CAISO if a transfer constraint binds, giving up the right to use the transmission in real-time
  3. Pathway 3 – choose not to schedule or release the rights in the day-ahead, and retain the right to schedule in real-time, but potentially not be fully protected from real-time congestion depending on how the EDAM BAA chooses to allocate redispatch costs.
8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

BAMx supports the proposal to make Bucket 1 CAISO transmission available to parties that either reserve and pay for wheeling through priority, or that demonstrate high priority export status from non-resource adequacy resources within the CAISO and that pay the WAC charges for the entire period of the RSE showing. We note that this should include showings of RSE capacity, whether or not energy is scheduled from these resources. This may necessitate adjustments to CAISO settlements systems to assess WAC charges on RSE capacity schedules, and not just on energy schedules.

 

BAMx also supports the use of CAISO Bucket 2 legacy ETC/TOR transmission under Pathway 1 (rights holder scheduling) and Pathway 2 (rights holder release of rights for EDAM optimization in exchange for transfer revenues/congestion revenues).

 

The remaining transmission in the CAISO system would effectively be Bucket 3 transmission, subject to the historical TRR recovery mechanism described below.

           

 

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

BAMx cannot support the proposed “EDAM recoverable TRR” unless the determination of the EDAM recoverable TRR includes credits for the EDAM entity’s share of Transfer Revenues to offset any lost short-term firm and non-firm sales revenues. By releasing the unsold ATC for Bucket 3 transmission, the EDAM entity will be realizing something of value in exchange for making available the Bucket 3 transmission and in lieu of the short-term firm and non-firm sales. If the associated transfer revenue is not credited against the lost revenues, the EDAM recoverable TRR will grossly overstate the extent of lost revenues. Thus, in addition to crediting revenues for short-term firm and non-firm transmission sales in the determination of the EDAM recoverable TRR (including sales from new transmission builds that increase transfer capability between EDAM BAAs), the associated Bucket 3 transfer revenues also should be credited in the calculation.

 

BAMx agrees with the proposal to exclude from EDAM recoverable TRR revenues from transmission sales with a duration of one month or longer, and to exclude revenues from sales to affiliated entities.

 

BAMx is concerned about the proposal to allow recovery of transmission costs associated with wheeling through volumes net of imports/exports. One can imagine scenarios in which economic EDAM transfers between BAA1 and BAA2 are facilitated by transmission from BAA3, but the value of the transfer revenues could be far less than BAA3’s EDAM recoverable TRR. Further, imagine that BAA4 represents 50% of the total EDAM load. BAA4 could end up funding BAA3’s wheeling through shortfalls, without receiving any of the transfer revenue benefits. An alternative approach would be to allocate some of the transfer revenues from BAA1 and BAA2 to BAA3. This would avoid uplifts for all EDAM BAAs and avoid cost shifting among EDAM BAAs.

 

BAMx supports bounding the gross TRR recoverable through EDAM based upon the transfer flows as compared to the total EDAM and non-EDAM exports of each EDAM BAA. It is important to recognize that the transmission utilized for EDAM transfers is likely to have been approved and funded for purposes other than for facilitating short-term transfers between BAAs. However, the proposal is to collect the costs of the EDAM recoverable TRR only from entities other than the entity that approved the transmission whose costs are being recovered, so it is important to place limitations on the amount of recovery. Otherwise, EDAM participants that are not beneficiaries of the EDAM transfers could end up funding significant amounts of transmission without receiving benefits from that transmission.

 

BAMx supports allocating the TRR shortfall to gross demand, rather than to gross demand plus supply. While it appears appealing to allocate the uplifts to all users of the transmission system, the unintended consequence would be that supply resources would include the uplift charges in their energy bids, thereby potentially raising energy prices for all load.

 

BAMx supports the use of a balancing account to true up any differences between the forecast EDAM recoverable TRR and the actual EDAM recoverable TRR, with differences between forecast amounts and actual amounts rolled into the subsequent period’s TRR shortfall assessment. However, the balancing account should consider both short-term transmission revenues and EDAM transfer revenues. For example, if actual lost sales are lower or actual transfer revenues are higher than forecast, the subsequent period EDAM recoverable TRR would be credited with the difference, resulting in a lower EDAM recoverable TRR.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

No comments at this time.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

No comments at this time.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

BAMx supports the proposed RSE treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e., WSPP Schedule-C supply contracts. But BAMx has some concerns about the potential for parties holding significant amounts of transmission needed for parties to meet the RSE to potentially exercise market power. The proposal for parties to use day-ahead eTags to demonstrate the use of firm transmission to support claimed RSE could render meaningless the only transmission market power mitigation measure that exists in the OATT (i.e., automatic release of unscheduled transmission prior to real-time). Thus, BAMx requests that CAISO seeks review of this issue prior to implementation by the Market Surveillance Committee and Department of Market Monitoring to ensure that the ability to cure RSE deficiencies prior to running Short Term Unit Commitment will be sufficient to curb parties’ ability to exercise market power through their transmission rights to a BAA boundary (e.g., BPA transmission rights to COB/NOB). The MSC and DMM should be tasked with identifying if alternative transmission market power mitigation measures are needed.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See response to Item 13 re: concerns about the potential for parties holding significant amounts of transmission needed for parties to meet the RSE to potentially exercise market power.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

BAMx supports the proposed treatment of demand response for purposes of passing the RSE. Demand response programs have been shown to be effective mechanisms for reducing loads during critical periods. The performance of these programs should be reviewed periodically to determine if limitations should be placed on the amount of demand response that can be used for the RSE.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

BAMx supports the proposal for the ISO to make available advisory D+2 market results to help inform gas procurement and assist entities in managing gas resource participation in the day ahead market. D+2 information also could be beneficial for informing BESS charging/discharging bidding, particularly leading into expected extreme load conditions. This information could signal to participants to enter the initial stressed day with additional state of charge. Absent moving to a financially binding 2-day market, potential mechanisms for improving the accuracy of the D+2 results include:  

  1. Encouraging market participants to submit multi-day forward advisory bids on a routine basis
  2. For entities that do not elect to submit multi-day forward advisory bids, CAISO could substitute placeholder bids using the entities’ most recent “like” day bids (i.e., non-holiday weekday vs. holiday/weekend)

 

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

BAMx has several concerns about the proposed administrative surcharge equal to the higher of the Mid-C or Palo Verde bilateral 16-hour block price x 16 hours for EDAM Entities that elect the option to continue to participate in EDAM transfers following RSE failures. First, the proposal uses pricing for a 16-hour energy product to cure a capacity deficiency – such a product does not reflect the value of capacity, but rather reflects the value of energy. Second, the surcharge would effectively apply for 16 hours, even if the deficiency were only for a single hour. Third, no actual energy would be received by the deficient entity so the crediting mechanism for the EDAM transfer energy received will guarantee that the value of the transfer energy received will always be less than or equal to the surcharge; this calls into question why an EDAM Entity would elect to use this option, particularly during any but the most stressed system conditions, resulting in the potential loss of economic transfers for many intervals for which there will be ample capacity available to support transfers. Fourth, the mere existence of the surcharge could distort the bilateral markets, particularly during stressed system conditions, making it more costly, and potentially more difficult, for parties to obtain energy at the bilateral hubs, thereby defeating the intent of applying the surcharge. Lastly, the use of the higher-of pricing construct without consideration for whether power would be available from the lower priced hub is unreasonable.

 

For the above reasons, BAMx opposes the surcharge proposal. If the proposal is adopted, CAISO should elect not to use the option for the CAISO BAA and should undertake a stakeholder process for the CAISO participants that would be responsible for paying the costs to develop criteria for determining the limited circumstances under which CAISO could elect the option pay the administrative surcharge during RSE deficiencies.

 

We also ask for clarification on whether and how this concept would apply to resource sufficiency failures in both upward and downward capacity/flexibility. The concern here is that if it is only applied one way, the surcharges would be incongruous, resulting in some EDAM entities leaning on others for downward flexibility while benefiting from surcharge revenues for excess resources it has set aside.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comments at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

The proposal to allow parties to withhold a configurable quantity of imbalance reserves raises concern about potential abuse. It might be better to allow each BAA to identify the level of reserves it wishes to hold, and to incorporate those requirements into the DAM for that entity. If parties are still uncomfortable with not being able to withhold imbalance reserves, CAISO should explore creation of a contingent product, exports of which could be cut if/when certain criteria are met.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

No comments at this time.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comments at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comments at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

No comments at this time.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

No comments at this time.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

No comments at this time.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

BAMx supports the proposal to adopt the resource-specific approach at the outset of EDAM for the reasons cited in the proposal:

  1. It is an extension of the WEIM and is the most defined option, so it will require fewer regulatory changes compared to the other proposals.
  2. Stakeholders are familiar with the design, and it requires the least amount of implementation changes, making it less likely to delay EDAM implementation.
  3. It can evolve into a different approach (e.g., zonal or LADWP) if state regulatory programs change to be able to accommodate the zonal or LADWP approaches.

 

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comments at this time.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comments at this time.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comments at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comments at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comments at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

BAMx supports the Revised Proposal approach for sharing Transfer Revenues 50/50 between EDAM BAAs, while retaining 100% of the transmission constraint/intertie scheduling limit (ITC/ISL) congestion revenue within the EDAM BAA where the constraint is modeled. As noted in the Revised Proposal, this approach recognizes the shared value that results when two EDAM entities bring transmission to the transfer location. That is, it necessarily takes both EDAM entities’ transmission to support transfers, and equally sharing the mutual benefit of the transfer is a fair and equitable solution. During stakeholder meetings, some parties have argued that adjusting the transfer revenues for the impact of ITC/ISL congestion departs from the 50/50 sharing concept. Our expectation is that, as greater amounts of intertie transmission are included in EDAM, the levels of ITC/ISL congestion will decrease, since more resources will be bid at their actual locations. This will reduce the volume of intertie bidding and result in fewer instances of the ITC/ISL constraints binding, with reduced amounts of congestion.

 

We seek clarification, however, on the Revised Proposal statement that the ISO will allocate 100% of the full transfer revenues associated with transmission released by transmission customers in advance of the market run. In some circumstances, such as at COB, transmission rights north of COB (e.g., John Day – Malin and/or Captain Jack) may be held by different parties than those holding the rights south of COB (e.g., COTP rights from Captain Jack - Tracy), Western PACI rights from Malin-Tracy, Malin-Round Mountain rights). In those instances, BAMx believes that the 50/50 transfer revenue sharing approach would be applied, with CAISO crediting each of the rights holders north and south of COB with half of the transfer revenues, as would be the case between the EDAM BAAs if the transmission had not been voluntarily released by the rights holders.

BAMx supports the Revised Proposal approach for sharing Transfer Revenues 50/50 between EDAM BAAs, while retaining 100% of the transmission constraint/intertie scheduling limit (ITC/ISL) congestion revenue within the EDAM BAA where the constraint is modeled. As noted in the Revised Proposal, this approach recognizes the shared value that results when two EDAM entities bring transmission to the transfer location. That is, it necessarily takes both EDAM entities’ transmission to support transfers, and equally sharing the mutual benefit of the transfer is a fair and equitable solution. During stakeholder meetings, some parties have argued that adjusting the transfer revenues for the impact of ITC/ISL congestion departs from the 50/50 sharing concept. Our expectation is that, as greater amounts of intertie transmission are included in EDAM, the levels of ITC/ISL congestion will decrease, since more resources will be bid at their actual locations. This will reduce the volume of intertie bidding and result in fewer instances of the ITC/ISL constraints binding, with reduced amounts of congestion.

 

We seek clarification, however, on the Revised Proposal statement that the ISO will allocate 100% of the full transfer revenues associated with transmission released by transmission customers in advance of the market run. In some circumstances, such as at COB, transmission rights north of COB (e.g., John Day – Malin and/or Captain Jack) may be held by different parties than those holding the rights south of COB (e.g., COTP rights from Captain Jack - Tracy), Western PACI rights from Malin-Tracy, Malin-Round Mountain rights). In those instances, BAMx believes that the 50/50 transfer revenue sharing approach would be applied, with CAISO crediting each of the rights holders north and south of COB with half of the transfer revenues, as would be the case between the EDAM BAAs if the transmission had not been voluntarily released by the rights holders.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comments at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

BAMx supports the proposed implementation fee and administrative fee framework described in section II.D.3 of the proposal.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comments at this time.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

BAMX seeks clarification from CAISO that with WEIM and the future EDAM, there is no longer a need for the Integrated Balancing Authority Area (IBAA) treatment of any adjacent BAAs that participate in WEIM or EDAM, since the generation and transmission resources associated with these entities are appropriately valued in the WEIM and EDAM.

TransAlta
Submitted 09/26/2022, 04:46 pm

Contact

Denelle Peacey (denelle_peacey@transalta.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

TEMUS appreciates how the revisions have improved the proposal and offers the following feedback on most of the questions below.  We still have serious concerns with three aspects of the program that must undergo further revisions and therefore are worth highlighting here.

  1. The revised proposal does not explain how Independent Power Producers (“IPP”) participate in EDAM.  Instead, it incorrectly assumes that all generation resources will be in EDAM BAs, and that those BAs are already participating in the Western Energy Imbalance Market (“WEIM”).  See Section 2.
  2. As originally proposed and currently designed, EDAM takes away OATT-based rights that transmission customers use today.  We believe CAISO’s EDAM team has misunderstood when firm transmission service is typically scheduled and how transmission customers exercise their rights, particularly in Bonneville Power Administration’s widespread Pacific Northwest service territory.  A detailed explanation is in Section 7.
  3. In Bucket 3, the revision still does not recognize Open Access principles or negative impacts it causes to the bilateral market.  See Section 10.
2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

TEMUS is not opposed to EDAM, provided its design respects transmission customers’ OATT-based rights.  As revised, however, EDAM does not meet this threshold.

The EDAM participation model is only “voluntary” for BAAs and neglects to consider impacts to other market participants – including marketers, independent power producers, generation-only BAAs, and federal entities such as BPA.

This lack of choice is critical because EDAM would dramatically alter how transmission customers are able to exercise their scheduling rights, as described in detail in Section 7 below.  TEMUS recommends that the participation model include the ability for transmission customers such as TEMUS to “opt out” of EDAM and continue to transact and schedule as it does currently while their capacity held harmless from these impacts of EDAM.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

A foundational element of the proposed EDAM framework to provide confidence in market transfers is that flows must be tagged by 10AM to be included in the RSE. However, the CAISO is underestimating the amount of rescheduling that occurs between Day-Ahead (“DA”) and Real-Time (“RT”) in WECC. Therefore, to use this tagging deadline as a cornerstone for confidence in market transfers ignores how the bulk of transactions are scheduled in WECC, as described below in Section 7.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

While TransAlta agrees in principle with the proposal to give equal priority between market transfers and load in edge scenarios, the allowance for these transfers to be “informed by operator discretion and good utility practice” would leave a great deal of discretion to the ISO and could create opportunities for preferential treatment between market participants. TEMUS suggests that the CAISO widen its analysis of this and other design elements to consider the impacts on all market participants, not only BAs.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

While TransAlta understands the rationale for the lower priority market transfers in the proposed framework, contracted flows should be respected in all instances: for example, there are significant penalties under the WSPP Schedule C contract for not flowing. There can be very valid reasons for a contracted flow to NOT be tagged by 10:00 or to be re-scheduled between DA and RT to adjust to market conditions and transmission constraints. Transmission constraints out of the Pacific Northwest are frequent, causing rescheduling to occur right up to RT.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

The revised proposal at page 27 discusses whether transmission should voluntarily or automatically be made available to EDAM.  TEMUS contends that much more fundamental issues must be addressed first, such as whether EDAM’s use of unscheduled transmission capacity takes rights from transmission customers’ existing OATT-based service and whether doing so harms the bilateral market’s normal functioning.  As described more in Section 7, below, Bucket 2 Pathway 3 does both.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

In the Bucket 2 Pathway 3 discussion at page 30, the revised proposal concludes that firm point-to-point transmission schedules are submitted “no later than 10:00 a.m. the day prior to commencement of service”, which contradicts how it is typically scheduled, particularly on BPA’s system.

It is standard practice for transmission customers to exercise their transmission rights, and for providers to accommodate them, up to the traditional WECC scheduling deadline (xx:40).  To help illustrate this important point, the following describes common scheduling practices.  All times are Pacific Prevailing Time (“PPT”).

  1. Energy transactions in the day-ahead market are typically concluded by 9:00, however, CAISO market results, which inform day-ahead planning, are not published until at least 13:00 (occasionally later than that).
  2. Throughout the morning and into the afternoon, schedulers arrange for delivery, including determining counterparties that resulted from on-screen transactions on the Intercontinental Exchange (“ICE”).  Some transactions are tagged by 10:00, but the vast majority are scheduled between 10:00 and 15:00.
  3. 15:00 is critical to the EDAM straw proposal, because that is WECC’s preschedule practice[1] for when interchange schedules should be submitted prior to the day of implementation.  15:00 is when schedulers try to have all their day-ahead transactions wrapped up and tagged, not 10:00.  TEMUS strongly recommends that CAISO revisit this aspect of EDAM’s design.  The assumption that after 10:00, unscheduled firm transmission is generally “available” is fundamentally flawed.
  4. Further, scheduling on firm transmission does not end at 15:00 of the preschedule day.  It is routinely scheduled in RT because conditions change between day-ahead and real-time, due to unplanned generation and transmission outages, severe weather, river operations, and biological restrictions, etc.
  5. Transmission customers utilize unused firm transmission capacity right up to WECC’s traditional scheduling deadline (xx:40), because to do otherwise wastes a valuable resource.  TEMUS remains disappointed that the revised straw proposal misunderstands the value of scheduling firm transmission between DA and RT.  This is an important option inherent in firm service, which helps offset firm transmission costs, especially in the business case for buying long-term firm service.  Instead, the EDAM framework assumes firm transmission has little or no value after 10:00 of the preschedule day.

TEMUS requests that the Bucket 2 Pathway 3 be redesigned so transmission customers can opt their Point-to-Point transmission capacity out of EDAM for two reasons.

First, as illustrated above, automatically making unscheduled firm capacity available to EDAM at 10:00 is flawed and will lead to unnecessary redispatch for EDAM.  We know that capacity will continue to be scheduled up to 15:00 (for preschedules) and well into RT.

Second, the revised straw proposal warns that transmission customers, by exercising their transmission scheduling rights (detailed above) would somehow receive lower priority than firm’s 7F NERC priority and will be exposed to EDAM’s redispatch uplift charges.  This is entirely unjust.  In its pursuit of “efficiency”, EDAM cannot alter the characteristics of firm PTP or penalize transmission customers for exercising their current OATT-based transmission rights.  These fatal flaws can be fixed by allowing transmission customers to opt their transmission capacity out of EDAM.

 


[1] WECC Criterion INT-003-WECC-CRT-3

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

TEMUS is concerned that the revised straw proposal does not adequately address wheeling within WECC.  This is partly because of the unfinished nature of dependent initiatives, like Transmission Service and Market Scheduling Priorities Initiative.  TEMUS requests that CAISO consider how EDAM’s framework development is front-running related initiatives and discuss with stakeholders how their outcomes will be incorporated into EDAM’s final design.  The revised straw proposal is not clear how wheeling provisions will apply to market participants, as opposed to EDAM Entities, and TEMUS requests more information about this.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

TEMUS does not object to EDAM framework that recovers revenues to keep transmission providers whole, provided equal consideration is given to transmission customers who also need to be kept whole.  As currently designed, TEMUS suggests that EDAM will not compensate transmission customers for the full value of their transmission capacity used by the market.

For example, transmission customers who release transmission rights to the EDAM before the DA process may be compensated via an allocation of transfer revenue, but only if a transfer constraint binds.  For this potential revenue, the transmission customer must forfeit its accompanying RT scheduling rights.  As described in Section 7, firm transmission has RT value that transmission customers include when purchasing firm transmission.  This is how transmission is valued and used today.  For EDAM’s compensation design to be equitable for transmission customers, too, it should include some certain compensation for releasing transmission via Pathway 2 and potential revenue if the transfer constraint binds.

Failing to implement equitable compensation for transmission customers will negatively impact how customers incentives to invest in long-term firm transmission.  TEMUS recommends this be carefully considered by transmission providers (prospective EDAM Entities) and taken into account in EDAM’s final design.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Regarding Bucket 3, the revised straw proposal at page 32 describes how transmission providers (EDAM Entities) would “…make available all remaining unsold firm ATC at an intertie with an adjoining EDAM BAA by 10:00 a.m. in the day-ahead market and stop OATT sales of firm ATC at that intertie between 10:00 a.m. and 1:00 p.m., while the day-ahead market is running”.

EDAM’s design appears to consider firm available transfer capability (“ATC”) as an unused or unusable asset after 10:00, when in fact, the West’s real-time bilateral market makes regular use of the transmission, again, right up to WECC’s xx:40 scheduling deadline.

Firm ATC is often a scarce resource and EDAM is not the only use for this ATC as the revised straw proposal suggests.  It is a competing use.

TEMUS contends that EDAM cannot expect transmission providers to simply halt firm sales to transmission customers between 10:00 and 13:00 so EDAM can vacuum up ATC for its own uses.  How could a transmission provider do so without providing preferential treatment to EDAM and violating long-standing principles of Open Access?

TEMUS understands well that transmission availability is critical for a well-functioning day-ahead market, but it cannot be at the expense of existing transmission customers and OATT-based transmission service.  TEMUS underscores that the bilateral market and this firm transmission fulfills an important role today—such as filling in supply gaps that can occur between DA and RT—which the straw proposals fail to recognize.  Through continued stakeholder engagement, Bucket 3 must be significantly redesigned so EDAM coexists with the bilateral market and is consistent with Open Access principles.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

It would be helpful if a more detailed timeline could be provided so that it can be compared against transmission provider scheduling timelines (BPA’s in particular) for inconsistencies and inform the EDAM design as there are significant differences between the proposed scheduling timeline and the process elsewhere in WECC.

If transmission constraints have been removed from the EDAM RSE, it is not clear why the tagging deadline for DA schedules are still needed. This requirement removes the flexibility for the bilateral market to resolve shortfalls leaving the CAISO as the only entity with this ability.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

WSPP Schedule C supply contracts are an essential element supporting resource adequacy in WECC, and so the EDAM design should specifically accommodate it. TEMUS notes that it is standard practice in WECC for Schedule C supply to be delivered with firm or non-firm transmission, and that this optionality does not undermine confidence in the contract.  There are non-trivial penalties, as well as reputational damage, should the supply fail to materialize.  TEMUS suggests that the Bucket 1 tagging requirements do not recognize how the market supplies Schedule C transactions and does not appreciate their inherent reliability.  TEMUS agrees that Schedule C supply contracts should be included in RSE and Bucket 1, but we recommend revisiting the current tagging proposal so it aligns with how the contracts are supplied.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Imports and wheeling are essential elements of how the market in WECC operates today, and the interdependencies within WECC are intricate and important. Including import bids from outside the EDAM footprint would encourage external resources to participate and increase resource adequacy, but TEMUS requests further explanation of how this element of the design would work with the proposed GHG and Market Power Mitigation approaches, as well as with the Price Formation initiative, not only at the BA-level, but also for individual market participants such as IPPs.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comment.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

TEMUS suggests that any market information, including advisory D+2 advisories, should be made available equally to all market entities, not just BAAs, both inside and outside the EDAM footprint.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

TEMUS is concerned that EDAM’s proposed solution to cure shortfalls is unnecessary complex.  More information would be very helpful to understand why it is necessary, compared to those protections that are already built into the bilateral market.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See comment for question #16 above.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

TEMUS has several concerns about this element of the straw proposal, especially as to how it interacts with the other proposed elements. TEMUS would appreciate more detail as to how the export limits and external participation would be applied in a pooled vs. unpooled approach, both for WEIM and EDAM.  Further, TEMUS is very concerned with allowing BAAs to withhold imbalance reserves, which needs to be explored much more thoroughly than in the revised straw proposal.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

TEMUS is concerned, again, at how the straw proposal focuses on the BAA level and excludes consideration of impacts to other market participants. Market participants, such as IPPs, would have no control over how BAs would apply these mechanisms, possibly stranding committed supply like that contracted under Schedule C. The proposed mechanisms could create an incentive for BAAs to withhold a scarce resource - transmission – from other market participants.

TEMUS is also concerned that the imposition of export limits would significantly reduce or eliminate the ability of the bilateral market to cure shortfalls throughout the scheduling timeline as it does now. EDAM’s design must avoid reducing the bilateral market’s ability to respond to changing market conditions and not impair resource adequacy.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

TEMUS notes that it is unclear how the EDAM RSE mechanism would work with other Resource Adequacy frameworks such as the Western Power Pool’s Western Resource Adequacy Program (“WRAP”) or other state policy or regulatory requirements. Any pooling framework must be able to accommodate the autonomy of the various states and respond to the unique needs and directives of their jurisdiction.  The EDAM straw proposal takes a different approach.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See comments for Question #18 above.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

TEMUS seeks further explanation of the proposed MPM, as it is not clear how it would be applied to a BAA vs. individual market participants, nor is it clear whether MPM is impacted by the Price Formation Enhancements initiative.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

TEMUS supports convergence bidding as an important contributor to market efficiency, but we suggest that a specific deadline would help ensure a smooth transition across EDAM Entities.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

TEMUS strongly supports external resource participation, as self-scheduling and pseudo-ties at EDAM borders would increase resource adequacy.  All market entities should be permitted to participate in EDAM while having their transmission rights fully respected. 

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

TEMUS requests more detail as to how the preferred resource-specific approach is knitted to the zonal counterfactual modeling between GHG and non-GHG areas.  Overall, TEMUS prefers the zonal approach because it would create a more transparent and uniform price signal with EDAM since GHG policy will not be uniform within the EDAM footprint.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See comments for Question #25 above.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

A zonal approach would better accommodate the different state energy policies.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

TEMUS is concerned that transfer/congestion revenue should be allocated to the market participant providing the benefit.  For example, if the transmission rights owner provides this benefit, the transmission rights owner should receive the associated revenue.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

As a general principle, TEMUS strongly supports the standardization of settlements across CAISO, WEIM, and EDAM; the provision of supporting data and calculations to provide transparency and allow market participants to verify their billings; and most importantly, standardizing the application of settlement principles and requirements across all EDAM Entities (BAAs) in the EDAM footprint.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

TEMUS does question implementation costs given EDAM’s expected complexity and how BAAs (only) choose to participate.  Transmission customers and resources within those BAAs are simply swept into the program, and in some cases as the program is proposed today, could have their normal market activities negatively impacted when their BAAs join.  Because of this, TEMUS suggests that allocation of implementation and administration costs must be considered more carefully than in the revised straw proposal currently.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

TEMUS is concerned that EDAM’s proposed governance structure can be subject to potential political influence and it would be improved by requirements that prevent this possibility.  Like other market participants, TEMUS values governance free from political pressure, even though the program is a day-ahead market, instead of a full RTO.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

TEMUS request that CAISO make two important efforts.  First, step back and consider how all the different elements of the proposed EDAM framework work together and work with other initiatives that are under way today, such as DAME, Price Enhancements, and Transmission Service and Market Scheduling Priorities.  TEMUS suggests that EDAM’s rapid pace of development must be slowed to ensure it does not outrace synchronicity with these other important initiatives.

Second, CAISO staff must respond to stakeholder requests for a detailed review illustrating how EDAM’s design would be applied to different market participants (i.e. expanded beyond just BAAs) for typical transactions.  The sessions should provide time and resources to clarify the proposal, solicit constructive feedback, and pave the way for a successful launch should the opportunity arise.

Turlock Irrigation District
Submitted 09/26/2022, 04:50 pm

Contact

Colin Selby (cgselby@tid.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

See comment numbers 7 and 16.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See comment numbers 7 and 16.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See comment numbers 7 and 16.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

TID would like further detail on the potential uplifts if an entity takes Pathway 3 and exercises their rights. From the proposal: “…the EDAM entity may be allocated uplifts based upon the difference between real time and day ahead congestion/transfer prices.”

 

There are a lot of variables that could affect congestion and transfer prices between day-ahead and real-time. The proposal reads as if all of the variables and their effects on cost could be borne by an EDAM BAA exercising their transmission. TID believes the uplift should be more in line with uplifts caused by the use of transmission only, exclusive of other price forming variables.

 

TID would appreciate further clarity on how this could work in practice, and to get a feel for the scale of potential uplift charges.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See comment numbers 7 and 16.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See comment numbers 7 and 16.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See comment numbers 7 and 16.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See comment numbers 7 and 16.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See comment numbers 7 and 16.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See comment numbers 7 and 16.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See comment numbers 7 and 16.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See comment numbers 7 and 16.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

TID believes this topic fundamental to the success of EDAM. TID does support curing shortfalls through the EDAM market, assuming a feasible solution exists. However, TID has concerns with the RSE failure penalty methodology and the allocation of failure revenues.

 

As noted by the CAISO, there are potential issues with using index prices, such as liquidity in bilateral trading for price discovery. However, the size of the EDAM footprint can also result in significant basis between a local constraint and a distant bilateral hub making such pricing hub not representative of the true energy costs to address the shortfall. We would propose a fixed minimum charge in the place of the index price, with the potential to rise to some multiple (above 1.0) of the current market price. TID’s proposal would also do away with the concept of the “block surcharge”, since the surcharge would apply to all hours.

 

TID also has some concern about revenues collected only on a MWh basis and not inclusive of a $/MW charge. To put it simply, an entity coming 240 MW short in 1 hour has a different grid impact than if they were 10 MW short for all 24 hours.

 

TID also does not agree with the surcharge being reduced by the load weighted LMP for the hours short. This method can result in an entity coming to the market short, curing their shortfall through the EDAM solution and not having to pay any penalties. TID does not see the penalty surcharge as a double charge (unless they can cure outside of the market solution) since they are paying not just for the energy, but for their resource shortfall.

 

As for allocation of collected surcharge revenues, TID believes a more equitable solution would be distribution of revenues to entities pro-rata based on surplus supply bid into the market that can feasibly cure an entities shortfall.

 

TID welcomes further examples to clear up any confusion and address the concerns listed.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See comment numbers 7 and 16.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See comment numbers 7 and 16.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See comment numbers 7 and 16.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See comment numbers 7 and 16.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See comment numbers 7 and 16.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See comment numbers 7 and 16.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See comment numbers 7 and 16.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See comment numbers 7 and 16.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See comment numbers 7 and 16.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See comment numbers 7 and 16.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See comment numbers 7 and 16.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See comment numbers 7 and 16.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See comment numbers 7 and 16.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See comment numbers 7 and 16.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See comment numbers 7 and 16.

Vistra Corp.
Submitted 09/26/2022, 04:54 pm

Contact

Cathleen Colbert (cathleen.colbert@vistracorp.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Executive Summary

Vistra Corp. and Dynegy Marketing and Trade, LLC (together, “Vistra”) appreciate the opportunity to comment on the California Independent System Operator Corporation’s (“CAISO”) Extended Day Ahead Market (“EDAM”) Revised Straw Proposal (“Revised Straw Proposal”).  Vistra is committed to working with CAISO and other stakeholders to foster well-functioning competitive markets in California and the West.  Vistra has a vested interest in the development of a workable EDAM proposal.  While Balancing Authority Areas (“BAA”) considering EDAM participation will have a choice between the status quo, EDAM, and SPP Markets+, Vistra will necessarily be subject to the rules that govern EDAM because it operates assets located within the CAISO BAA that guarantee it will be an EDAM participant without any choice.

As a result, Vistra has endeavored to be a constructive participant in CAISO’s EDAM stakeholder process, sharing feedback both formally and informally throughout all stages of the EDAM Proposal development.  Despite Vistra’s active stakeholder engagement, Vistra continues to have core concerns regarding central features of the EDAM proposal, including CAISO’s proposed frameworks for transmission commitment, resource sufficiency evaluation (“RSE”), the role of residual unit commitment (“RUC”), and greenhouse gas (“GHG”) accounting and reporting. 

Vistra’s overarching concern is that the EDAM market design as currently proposed will result in discriminatory outcomes, and, for that reason, will fail to support continued investment in resource adequacy in the West.  State and federal policymakers are rightly focused on the challenge of procuring enough clean, reliable, and deliverable power on a forward basis to meet evolving resource needs.  Vistra is concerned that the EDAM could frustrate rather than advance that goal. 

The EDAM cannot achieve its stated purposes—which include delivering economic, environmental, and reliability benefits across the West—without significant design changes.  Such changes should ensure that the market design:

  • Complements rather than conflicts with the open access principles and the Open Access Transmission Tariff (“OATT”) framework that are central to bilateral market functioning in the West, to ensure continued availability of and investment in firm transmission service under the OATT framework;
  • Does not erode resource adequacy frameworks in the West by weakening commitment to engage in forward resource procurement, with a recognition that the diversity benefits created by the EDAM will not and cannot supplant the need to secure forward supply commitments that carry explicit must-offer requirements;
  • Ensures that carbon compliance costs accurately flow through the market design, such that market prices reflect actual compliance costs based on dispatched resources; and
  • Supports an even playing field for competitive generation resources that are not affiliated with load-serving entities.

Vistra supports steadfast progress to flesh out the EDAM market design so that stakeholders can develop informed decisions about the best paths forward in the West. However, Vistra opposes the rote extension of elements of CAISO’s current day-ahead market and/or the Western Energy Imbalance Market (“WEIM”) into the EDAM without consideration of EDAM-specific solutions.  That shortcut approach fails. In particular, the Straw Revised Proposal’s extension of the WEIM’s GHG accounting framework into the EDAM amplifies its market-distorting flaws. And the Revised Straw Proposal’s transmission commitment framework, which echoes CAISO transmission commitment shortcomings by disregarding OATT-derived rights, fails to incentivize deliverable forward capacity.

In these comments, Vistra seeks to identify the areas of the EDAM market design proposal that must be updated or overhauled to deliver a carefully designed day-ahead construct that remains laser-focused on delivering what organized markets are designed to achieve—greater diversity benefits through an optimal security constrained unit commitment and economic dispatch.  And CAISO must do so without muddying investment signals or harming forward progress toward market expansion in the West.  Vistra urges CAISO to heed the warnings of past transitional market proposals that ultimately failed because they stymied rather than advanced the broader goal of supporting regional organized markets.[1]

A.       Transmission Commitment

The Federal Energy Regulatory Commission (“FERC”) fundamentally changed the landscape when it established open access in 1996 through Order No. 888, which required transmission providers to offer service to third-party transmission customers on a comparable basis to what they provide themselves—and required them to do so under the rubric of the OATT, a non-discriminatory tariff with minimum terms of service.  This simple idea was a seismic shift with enormous implementation challenges.  Over the years, including through Order No. 890 and its progeny, FERC’s open access policies and OATT requirements have evolved.  But at their core they require transmission providers to strike a careful balance between preserving their ability to meet native load obligations, on the one hand, and affording third-party, non-Load Serving Entity (“LSE”) transmission customers the ability to access firm transmission rights with equivalent access and curtailment priority, on the other hand.  Maintaining this balance—which the OATT framework achieves by, among other things, defining available transmission services, establishing procedures for reserving and scheduling such services, and establishing prioritization and curtailment rules associated with them—has been central to the development of the competitive bilateral markets across the WECC. The EDAM market design as currently proposed will disturb this balance by subverting OATT rules, threatening the health of competition and resource adequacy in the West.   

Fidelity to open access principles and OATT rules is not an academic issue.  Concerns about open access have the very real potential to derail or delay approval of the EDAM proposal at FERC.  For instance, FERC deadlocked on a far less ambitious effort to expand regional markets in part due to concerns about open access.  FERC Commissioner Allison Clements observed, in her statement explaining why she did not support the proposal, that Order No. 888 “establishe[d] a firm requirement of open-access, not a demonstration that economic incentives might create conditions where utilities choose of their own accord to permit open competition.”[2]  It is unacceptable to side-step the requirements of open access by hand-wringing about complexity or dismissing open access as technically infeasible, especially where—as here—the proponents of the new market design have not designed it “in a manner that facilitates a workable solution, and have not invested in the software or other analytical capabilities necessary to facilitate access under their chosen design. Permitting transmission providers to evade open access requirements via their own market design choices and investment decisions would fundamentally undermine open access.”[3]

This is the central problem presented by the EDAM Revised Straw Proposal—the potential evasion and erosion of open access in the West.  Despite robust stakeholder discussion, in which Vistra has been a central voice, Vistra has deep concerns that the proposed market design does not adequately support resource scheduling and curtailment priority for market participants that have secured firm transmission service in advance.  EDAM transfers supported by high-quality transmission reservations (i.e., priority 7 transmission rights, which include primary network service or firm point-to-point, and conditional firm point-to-point) should be afforded the same scheduling and curtailment priority in EDAM as they are afforded under the current OATT framework. The Revised Straw Proposal continues to provide inadequate clarity and assurance that this will occur, as required under longstanding open-access principles.  Rather, the proposed EDAM market design appears to seize and transform third-party transmission holders’ rights, such that they can no longer reliably provide curtailment priority for off-EDAM system sales or for external sales into the EDAM. Further, the EDAM proposal appears to propose to inappropriately afford priority 6 secondary network service an equivalent priority to firm or conditional firm transmission service.  Vistra is concerned that the EDAM proposal will be unable to survive review by FERC and the courts without significant revisions to ensure that transmission commitments under EDAM rules will complement—not transplant—the OATT transmission scheduling and prioritization framework.

  1. The Value of Third-Party Transmission Rights is Eroded Under EDAM.

The Revised Straw Proposal is designed to respect the transmission rights of LSEs.  Specifically, transmission rights held by LSEs to serve their native load obligations—i.e., Bucket One transmission rights[4]—will, under the EDAM, be afforded priority equivalent to primary network service under the OATT.  The Revised Straw Proposal, however, does not similarly protect the value of high-quality transmission rights held by third-party, non-LSE transmission rights holders.  Indeed, the Revised Straw Proposal sharply compromises the value associated with Bucket Two transmission rights (i.e., firm and conditional firm point-to-point transmission rights held by third-party transmission customers). Under the proposal, the only way a third-party transmission customer can access an assured scheduling and curtailment priority to meet its commitments is to choose pathway one by using its rights to self-schedule a resource by 10:00 a.m. in the day-ahead timeframe.[5] Where a third-party holder of transmission rights does not choose pathway one but wants to retain the option to use its rights later in time, it is stuck on pathway three—a pathway of limbo. 

Specifically, under the Revised Straw Proposal, unless firm rights holders self-schedule a specific resource and corresponding transfer path using their rights through the EDAM framework (under pathway one) or relinquish their transfer rights (under pathway two), then the EDAM rules use pathway three to transform those rights into non-firm available transmission capacity that is used to support the EDAM. The Revised Straw Proposal sends unclear and sometimes conflicting messages regarding what, if any, curtailment prioritization pathway three retains for third-party transmission rights holders. The Revised Straw Proposal openly acknowledges that pathway three represents a departure from how unscheduled firm transmission is treated under the OATT framework.[6] The Revised Straw Proposal states that where a holder of firm transmission rights is on pathway three and seeks to exercise its rights (through a resource self-schedule) after the day-ahead window, that participant “would have a priority lower than a day-ahead schedule that rolls into real-time, but a priority higher than new real-time self-schedules not exercising existing transmission rights.”[7]  The proposal also explains that any such attempted exercise of transmission rights would be subject to “market infeasibility” and that all Bucket Two transmission will be dedicated to supporting market optimization and made “available to the market to maximize transfers."[8]

Pathway three thus raises myriad concerns.  As an initial matter, on its face, the proposal conflicts with the pro forma OATT, which requires transmission providers to accommodate schedules submitted after 10:00 a.m., “if practicable.”[9] More fundamentally, the Revised Straw Proposal turns the OATT framework on its head.  The relative priority of transmission rights secured under an OATT should not be eroded by EDAM market design choices.  Firm transmission rights holders should not be forced to self-schedule their energy or transfer paths in the day-ahead to retain the curtailment priority for which they have paid.  In real-time, self-schedules associated with firm rights holders should hold higher curtailment priority than schedules supported by non-firm transfer capability facilitated by EDAM.  Vistra acknowledges that this poses a challenge with regards to differentiating the curtailment priority of day-ahead awards.  However, as Commissioner Clements emphasized, it is unacceptable to side-step the requirements of open access simply because a market design problem is complex.

If the Revised Straw Proposal moves forward, transmission providers seeking to implement EDAM would be required to revise their OATTs to (1) remove the ability for firm rights holders to schedule on those rights if practicable after 10:00 a.m., effectively relinquishing their rights, and (2) require the release, for use by EDAM, of unscheduled firm rights to be scheduled under EDAM rules. These are not modest OATT changes; they would reduce the scheduling and curtailment priority of firm point-to-point transmission holders.  As such, they would have a difficult time surviving FERC and appellate scrutiny because they are not standard deviations that are “consistent with or superior to” the pro forma OATT.[10]  And recent FERC precedent affirms that the Commission’s open access requirements as reflected in the pro forma OATT do not support a market structure that automatically funnels all unused transmission rights—i.e., rights that are neither reserved nor voluntarily contributed—to the market to support least cost dispatch.[11] Beyond these legal durability issues, significant West-wide market-management challenges would arise, because the EDAM will not function like other areas of the West, in which schedules are afforded priority based on their relative quality of firmness.

To cure these infirmities, CAISO must propose market design changes that (1) enable third-party holders of transmission rights to submit day-ahead e-tags prior to the day-ahead market close, reflecting and reserving their high-quality transmission rights, and enabling resources utilizing such e-tags to be afforded commensurate curtailment priority in the operational timeframe; and (2) reflect that resources without associated transmission reservations would be afforded the lowest scheduling priority through EDAM and curtailment priority in the operational timeframe.  EDAM rules also could be revised to permit firm rights holders to exercise their transmission scheduling rights under the OATT directly with the transmission provider (i.e., not through EDAM where the entitlement would not be included in EDAM transfer capability) and make clear that they do not wish to schedule in EDAM and will engage in energy scheduling closer to real time. This would retain the flexibility that is in-place today.  In Vistra’s view, this is an implementation pathway that has not been provided sufficient consideration in the stakeholder process.

  1. EDAM Does Not Prevent Inappropriate Use of Network Service to Support Designated Network Resources’ Off-System Sales. 

CAISO in the stakeholder process has been reluctant to provide clarity about which specific types of transmission rights fall into which of the three “buckets” of transmission rights.  Based on stakeholder discussions, it is reasonably clear that Bucket One transmission rights—i.e., those held by LSEs to serve their native load obligations—include primary network service and firm or conditional firm point-to-point service; it is less clear whether Bucket One will include secondary network service (typically defined as network service from sources not designated as network resources). To the extent Bucket One includes secondary network service transmission rights, Vistra strongly opposes treating such rights on par with firm or conditional firm point-to-point transmission rights, as secondary network service is a form of non-firm service[12] and thus should receive a lower scheduling and curtailment priority.

And troublingly, the Revised Straw Proposal fails to address or acknowledge OATT limitations on the use of network service to make off-system sales by Designated Network Resources.  Specifically, the Revised Straw Proposal appears to assume that OATT transmission providers will be able to amend their tariffs to allow for an exception to the requirement to un-designate a Designated Network Resource to support off-system (i.e., market) sales prior to engaging in the transaction, similar to entities in the WEIM.[13] For purposes of participation in the WEIM, the Commission approved  such OATT revisions in light of the residual, just-in-time nature of the imbalance energy market (in which the freed-up transmission rights have limited value).[14] That is not the case in a day-ahead market timeframe, where freed-up transmission has considerable value. CAISO must address how the EDAM market design and market optimization will respect OATT limitations in the use of network service for off-system sales.

Again, Vistra’s concerns regarding whether transmission commitment in the EDAM will respect OATT-derived transmission rights are not merely academic.  Investment in generation and transmission to support forward supply arrangements lies at the heart of resource adequacy and system reliability. Eroding the value of open-access transmission service investments, including by subverting the scheduling and curtailment priority that those investments afford, directly undercuts resource adequacy and thwarts investments in the grid.  CAISO must squarely address these fundamental infirmities.

B.       Resource Sufficiency Evaluation

The Revised Straw Proposal states that the RSE is designed to support the EDAM’s ability to facilitate beneficial economic displacement, i.e., by allowing BAAs to access more economic energy than they otherwise could absent the EDAM.[15]  Vistra agrees that any “resource sufficiency” test in the day-ahead market context should be designed around a market-focused goal.  Vistra questions, however, what the EDAM RSE is designed to do, and whether the proposal is consistent with CAISO’s stated market-focused objectives. 

The RSE proposal on its face is a complex, difficult-to-unpack layer of regulatory rules that does not appear well-tailored for testing and assuring resource sufficiency.  A well-tailored RSE would be a market-focused assessment to ensure that day-ahead supply bids—taking into consideration supply bids internal to the BAA, supply bids from external resources with firm commitments to the BAA, and exports from the BAA—can support the market’s ability to feasibly solve economic scheduling and transfers of internal and external resources.  Yet, as CAISO acknowledges, the RSE does not model internal transmission constraints or external transmission capability and thus will not identify when resources dispatch would be limited by internal transmission or transfer capability to the BAA border.[16]    

At bottom, it is unclear to Vistra whether and how the RSE mechanism, as proposed, advances the functioning of the EDAM market.  Vistra specifically questions what value the mechanism brings to market functioning, given the facts that: (1) each BAA already is subject to forward-looking resource adequacy requirements, which could be subject to checks under the EDAM framework; (2) the WEIM RSE construct addresses resource sufficiency issues as they arise in the market operational timeframe. Vistra is also concerned that several elements of the proposed RSE will undermine its effectiveness, including concerns that: (1) bid-range trading dilutes the incentives for BAA to secure forward-looking resource adequacy requirements; and (2) the option to use utility owned resources to meet the test but then physically withhold them from the day-ahead market undermines the purpose of the test. 

Of specific concern is whether and how the RSE framework is designed to complement—rather than undermine or partially displace—existing resource adequacy constructs or the nascent Western Resource Adequacy Program (“WRAP”) construct.[17]  For example, the RSE design provides for a bid-range trading platform to enable EDAM BAAs to trade RSE requirements and “to work together to cure deficiencies,” with the “capacity offsets” at prices agreed-to by both parties.  Though details regarding this proposal are scant, it appears to be an ill-formed capacity substitution framework to meet expected energy shortfalls.  Vistra is concerned that this element, along with other elements of the RSE that are intended to “cure” supply deficiencies in the day-ahead timeframe, could be used to offset or undercut forward procurement in the EDAM footprint to the detriment of reliability, or alternatively conflict with procurement decisions under existing California Resource Adequacy (“RA”) program or the WRAP, if implemented. 

Additionally, Vistra is extremely concerned with the CAISO proposal that LSEs could offer resources into the RSE but opt-out of the day-ahead market. The purpose of the RSE is to identify if there are sufficient resources to solve the energy and uncertainty needs for the BAA to mitigate risks of “leaning” on other areas in the day-ahead market. Excluding resources would fly in the face of the purpose of the RSE test. It would also formalize a process to physically withhold resources out of the day-ahead market, which would have price formation concerns that FERC would struggle to accept as just and reasonable.

Vistra acknowledges there is significant room for resource adequacy improvement across the West and believes it is an appropriate focus for CAISO and other stakeholders.  Vistra supports efforts like the voluntary WRAP, which provides for the first non-RTO planning and compliance framework to maximize resource diversity across a multi-state footprint in support of reliability.  Indeed, the WRAP provides a novel approach for entities across the West to plan and arrange in the pre-scheduling windows for the option to sell or buy emergency energy in real-time. This strikes Vistra as a positive step forward in regional coordination. It also strikes Vistra that the Revised Straw Proposal is proposing mechanisms to perform eerily similar functionality through the centralized market. Serious questions regarding the proposal’s impact on, and relationship to, resource adequacy suggest that CAISO should proceed with caution, and should consider significant revisions before implementing the RSE as proposed. 

Beyond the fundamental structural concerns described above, Vistra is also concerned that there appears to be confusion regarding how the RSE test is designed, as reflected at the September 8, 2022 stakeholder meeting. Specifically, CAISO confirmed to Vistra on the August 29, 2022 EDAM stakeholder call that the RSE test would include all offers—both internal and external—regardless of the Scheduling Coordinator, meaning that generation resources scheduled by third parties would be included. However, at the September 8, 2022 stakeholder meeting, some BAAs expressed their understanding that resource offers would only be included if they are under contract to the LSE that is internal to the BAA. Depending on how this question is resolved, the nature of any gaps identified by the RSE could be vastly different.[18]

Vistra urges the CAISO to take a hard look at the RSE construct in light of these comments.

C.       Residual Unit Commitment

The Revised Straw Proposal’s proposed use of the residual unit commitment (“RUC”) process—which procures backstop California RA today—to identify backstop capacity needs across the EDAM footprint further muddies the distinction between resource adequacy and resource sufficiency.[19]  Today, RUC addresses two primary concerns.  First, the RUC addresses instances where virtual supply displaces physical RA resources in the Integrated Forward Market run or where there is lower bid-in demand relative to physical supply, such that a backstop capacity run is needed to award and compensate incremental must-offer obligations to non-RA resources internal to CAISO.  Second, the RUC addresses instances where virtual supply displaces long-start resources that are needed to meet forecast demand (whether from RA or non-RA resources), such that a binding start-up instruction needs to be sent in the day-ahead timeframe.  Under EDAM, the RUC run would enable transfers to step in and meet CAISO’s backstop needs.  This exacerbates “leaning concerns,” and runs counter to the goal of ensuring that there are sufficient resources internal to the CAISO BAA, or external RA, to meet CAISO reliability requirements.[20] If WRAP is implemented, the EDAM proposal for RUC will not only interfere with California’s RA program but is likely to interfere with the WRAP program as well.

These leaning concerns would be exacerbated in any timeframe in which only the CAISO BAA has virtual bidding.  This raises a broader concern: Is the EDAM market design being advanced to “cure” CAISO virtual bidding or to otherwise address CAISO concerns about having insufficient internal resources or import offers to meet its RUC requirements?  EDAM is an inappropriate mechanism by which to achieve these CAISO market objectives. 

D.       GHG Accounting

Vistra opposes the Revised Straw Proposal’s adoption of the WEIM’s resource-specific GHG accounting and compliance framework.  As Powerex and other stakeholders have detailed, the WEIM framework has created extraordinary market distortions that frustrate rather than advance carbon-reduction goals.[21] Even with the CAISO’s proposed WEIM enhancements, the GHG accounting framework falls far short of being sufficiently accurate to support well-functioning market.

Vistra echoes and supports the wide array of concerns stakeholders have expressed about the WEIM resource-specific GHG accounting framework.  Vistra urges CAISO to review the detailed report prepared by Powerex regarding the systematic pricing and dispatch failures caused by the current GHG framework and its false “deemed deliveries.”[22]  Vistra urges CAISO to commit to a new stakeholder process in which it would address these issues rather than dismissing them as unfixable.  In the meantime, Vistra submits that it is a non-starter to simply extend that flawed framework into the EDAM—even as just a “placeholder” framework that may eventually be replaced.[23]

As an owner and operator of diverse assets in California, Vistra brings a unique perspective on how flaws in the GHG accounting framework can distort market outcomes and skew supply incentives.  Vistra currently owns and operates 400 MW (1,600 MWh) of battery storage resources, with an additional 350 MW (1,400 MWh) on track to achieve commercial operation prior to the EDAM’s target implementation date of late 2023.[24]  In addition, Vistra is developing up to an additional 1,460 MW (5,860 MWh) of battery storage resources that will contribute to addressing CAISO’s supply challenges in the mid- to long-term.  Vistra also owns and operates an efficient natural gas fired generation fleet with competitive carbon compliance costs that provides important reliability value when supply and demand are tight.[25]  In sum, Vistra is an active supplier in CAISO and WEIM, seeking to bring new in-state capacity online as quickly as possible.  But where price signals are skewed due to GHG accounting flaws and the fleet is not operating economically, it is a much more difficult path.

As stakeholders have explained, the proposed GHG accounting framework based on “deemed deliveries” cannot accurately identify GHG compliance costs. It must be overhauled because it: (1) overcounts the availability of surplus clean energy outside of California that is actually available to serve California load; (2) undervalues the true cost of compliance, resulting in uneconomic resource displacement (for example, the displacement of efficient in-state natural gas by out-of-state coal or more inefficient out-of-state gas), and suppressed market prices; and (3) overcompensates external resources that clear the market and are dispatched to provide clean energy to California, but do not actually do so. As a result, the framework undermines the price signals that are needed to drive emissions reductions to meet public policy goals.  The significant risk that the “deemed deliveries” approach could undermine rather than advance California’s carbon-reduction objectives should prompt CAISO to re-evaluate its use in the WEIM rather than extend its use into the EDAM.    

To be clear, Vistra does not believe that a GHG accounting structure embedded in a FERC-approved market design should be a vehicle for imposing compliance requirements or achieving carbon reductions.  FERC is not an environmental regulator and has declined to place itself in the position of defining or establishing GHG reduction mechanisms.  For example, FERC has steadfastly refused to shape or influence renewable energy credit (“REC”) compliance mechanisms, instead focusing only on ensuring that FERC policies allow for proper accounting of state-established REC policies.[26]  Similarly, FERC has recently rejected a natural gas pipeline’s attempt to incorporate responsibly sourced gas (“RSG”) standards into its FERC-regulated tariff.[27]  In so doing, FERC underscored its role as an economic regulator and deferred to the market to allow “market-driven initiatives” to establish basic RSG standards instead of FERC attempting to doing so itself.[28]

Considering FERC’s role as an economic regulator, Vistra urges CAISO to pursue an EDAM GHG accounting framework that accurately and transparently reflects the costs of compliance (as imposed by environmental regulators, such as state agencies) with the goal that market optimization, and the resulting sharing of diversity benefits, works as intended.  Rules focused on compliance-cost accuracy within the market will enable an enforcement-based regime, with market participants’ accurately reflecting in their offers the costs of their compliance activities and obligations. Such a focus also would provide policymakers with clearer signals regarding the efficacy of their carbon-reduction regimes. 

Vistra believes that with this shared focus, stakeholders could coalesce around a path forward from a purely technical perspective.  However, despite statements in the Revised Straw Proposal that CAISO will “continue to vet and evaluate the alternate approaches,” to date CAISO has not facilitated meaningful discussion or evaluation of alternatives within the EDAM stakeholder process.  Should CAISO open the floor to a different path forward, as an alternative, Vistra directionally and conceptually could support a zonal approach to achieve the twin aims of accuracy and transparency. 

The resource-specific approach is fundamentally flawed because it does not restrict “deeming” to identifiable sources—e.g., surplus energy from a resource with excess output not needed to supply internal load or surplus energy from a BAA with excess internal supply not needed to serve its own load. This false “deeming” runs directly counter to the goals of state carbon-reduction regimes that are based on tracking and pricing the compliance costs of the energy that is serving load in the GHG regulation area. The zonal approach—while imperfect—acknowledges this disconnect and offers a rational way of differentiating instances where compliance costs can be accurately identified and reflected in the market price (i.e., resource-specific sales or transfers supported by a BAA surplus where the asset-controlling suppliers have expressed an intent to serve the GHG regulation area or by a resource under contract to serve the GHG area’s load) on the one hand, from instances where compliance costs cannot be accurately identified (i.e., excess unspecified supply in the EDAM footprint that is available to back a transfer into the GHG regulation area), on the other hand. Vistra could also conceptually support a hybrid of the resource-specific and zonal approaches, if any such hybrid approach addresses the “false deeming” problem (as Powerex has forcefully and persuasively explained).[29]

Closing

Vistra appreciates the opportunity to comment and supports continued progress toward developing a concrete EDAM market design proposal—shaped and improved by stakeholder feedback—so that stakeholders can develop informed decisions about the best paths forward in the West.  Vistra offers these comments in the spirit of collaboration and open dialogue, to help identify the areas of the EDAM market design proposal that CAISO can improve to deliver economic, environmental, and reliability benefits across the West.  We urge CAISO to use the coming months of stakeholder engagement to hone-in on market-design improvements geared toward respecting OATT frameworks, ensuring accurate price signals considering GHG compliance costs, complementing resource adequacy frameworks, and fostering an even playing field for competitive supply sources.


[1] See generally, e.g., Midwest Indep. Transmission Sys. Operator, Inc., 126 FERC ¶ 61,139, at PP 59-75 (2009) (rejecting a market proposal that “could cause adverse impacts on the efficiency of whole markets,” raising concerns that it could undercut the ability of an ISO to “address operational and reliability issues and to eliminate any residual discrimination in transmission services”).

[2] Fair Rates Act Statement of Commissioner Allison Clements, Docket No ER22-1111-002 (Oct. 21, 2021), https://www.ferc.gov/news-events/news/commissioner-clements-fair-rates-act-statement-southeast-eem-seem.

[3] Id.

[4] CAISO has described Bucket One transmission as priority 7 and priority 6; however, as explained below, priority 6 secondary network service should not be eligible to support “firm” EDAM transfers.

[5] Vistra is concerned about the lack of clarity that third-party resource schedulers would be able to submit transfer self-schedules under pathway one.  In other words, Vistra is concerned that pathway one may only be available for transfers if the EDAM entity separately agrees to self-schedule the transfer path.  We urge CAISO to clarify that third-party resource schedulers utilizing pathway one can submit transfer self-schedules on the paths associated with its rights.  Moreover, in stakeholder discussions, CAISO has suggested that third-party transmission holders will be required to register a resource’s associated transmission rights in the Master File. Vistra is concerned that doing so would be clunky and burdensome and further erode the value of procuring transmission rights in advance.  For example, this requirement may limit the ability to register short-term firm (e.g., firm weekly) transmission reservations and thus become a disincentive for doing so.

[6] Revised Straw Proposal at 31 & n.28. Confusingly, the proposal elsewhere concludes that pathway three does not “imping[e]” on the ability of firm-rights holders to exercise them. Id. at 31.

[7] Id.

[8] Id.

[9] Pro Forma OATT at Section 13.8, available at https://www.ferc.gov/media/pro-forma-oatt-effective-march-14-2022.

[10] See generally Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 118 FERC ¶ 61,119, order on reh’g, Order No. 890-A, 121 FERC ¶ 61,297 (2007), order on reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on reh’g, Order No. 890-C, 126 FERC ¶ 61,228, order on clarification, Order No. 890-D, 129 FERC ¶ 61,126 (2009).

[11] Sw. Power Pool, Inc., 172 FERC ¶ 61,115, at P 40 (2020).

[12] Order 890-A at P 556 (“Secondary network service, also called priority non-firm service, is a non-firm transmission right.”).

[13] See, e.g., PacifiCorp, 147 FERC ¶ 61,227, at P 148 (2014) (“The Commission does not agree that network resources should be required to undesignate to participate in the EIM. . . . [H]ere, the EIM will dispatch EIM resources based on a real-time model of the transmission system and will utilize any unused transmission, whether firm or non-firm, to allow EIM resources to provide imbalance energy. Therefore, there would not be a need for network resources to undesignate for the EIM to function properly.”).

[14] Id.

[15] Revised Straw Proposal at 42.

[16] Id. at 43-44. 

[17] Northwest Power Pool, Docket No. ER22-2762-000, Submission of Tariff to Establish Western Resource Adequacy Program (filed Aug. 31, 2022).

[18] Further, as part of this discussion, CAISO appeared to suggest that third-party transmission rights held by merchant generators outside the BAA would be turned over to the Load Serving Entity such that they would be reflected as Bucket One transmission rights. This is inconsistent with Vistra’s understanding of EDAM market functioning.  Specifically, Vistra understood that where a third-party would like to schedule a resource into the BAA through the EDAM, it would self-schedule a transfer path and resource (pathway one) to flow using its transmission rights to that BAA. However, the CAISO appears to be requiring the transmission information to be registered, but it is unclear whether the third party is incentivized to do so if it is not able to submit a transfer self-schedule. This highlights the excessive confusion over how the EDAM Market will function in practice, and the inputs to (and thus the purpose of) the RSE test.

[19] See generally Cal. Indep. Sys. Oper. Corp., 116 FERC ¶ 61,274, at P 129 (2006) (explaining that the RUC is “a reliability mechanism designed to procure capacity in advance of real time, making the energy from that capacity available to meet load in real time”).

[20] Further, under EDAM, it is unclear whether long-start resources will be committed by RUC across the footprint to meet CAISO BAA needs.

[21] Powerex Corp., Executive Summary: The Western EIM’s Approach to Applying California’s Cap and Trade Program to Imports Is Undermining the Program’s Core Objectives 2 (2022) (“By understating the GHG emissions of electricity imports, wholesale electricity market prices in California are suppressed—distorting the price signals necessary to drive GHG reductions, while reducing the compensation to both in-state and external clean resources that actually do produce clean electricity and deliver to California.”),         https://powerex.com/sites/default/files/2022-07/Examining%20the%20Western%20EIM’s%20Deeming%20Approach%20to%20GHG%20Pricing%20Programs%20%28Executive%20Summary%29.pdf

[22] Id.  Powerex’s full report details the price distortions caused by the WEIM framework.  Powerex, The Western EIM’s Approach to Applying California’s Cap and Trade Program to Imports Is Undermining the Program’s Core Objectives 7 (2022) (“It has long been understood by the California Air Resources Board (CARB), the [CAISO], and many of the stakeholders participating in western wholesale electricity market discussions that the Western EIM’s GHG deeming algorithm (for determining which external resources are the specified sources ‘deemed delivered’ to California) is imperfect.”), https://powerex.com/sites/default/files/2022-07/Examining%20the%20Western%20EIM’s%20Deeming%20Approach%20to%20GHG%20Pricing%20Programs%20%28Full%20Paper%29.pdf (“Powerex WEIM Report”). 

[23] See Revised Straw Proposal at 70 (claiming that the WEIM framework “can evolve into a different approach (e.g., zonal or LADWP) if state regulatory programs change”).

[24] See id. at 106 (providing an EDAM implementation date of Q4 2023 and a go-live date of 2024).

[25] Vistra owns a Reliability Must Run jet fuel unit that is not a market participating resource.

[26] “The Commission has recognized that RECs are state-created and -issued.”  Accounting and Reporting Treatment of Certain Renewable Energy Assets, 180 FERC ¶ 61,050, at P 54 (2022) (citing WSPP Inc., 139 FERC ¶ 61,0161, at P 21 (2012)).

[27] Tenn. Gas Pipeline Co., L.L.C., 179 FERC ¶ 61,076, at PP 1-2 (2022). 

[28] See id. P 19. 

[29] Powerex WEIM Report at 7. 

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

See above.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

See above.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

See above.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

See above.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

See above.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

See above.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

See above.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

See above.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

See above.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

See above.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

See above.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

See above.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

See above.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

See above.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

See above.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

See above.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

See above.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

See above.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

See above.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

See above.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

See above.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

See above.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

See above.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

See above.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

See above.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

See above.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

See above.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

See above.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

See above.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

See above.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

See above.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

See above.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

See above.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

See above.

Western Area Power Administration
Submitted 09/26/2022, 02:56 pm

Contact

Tong Wu (wu@wapa.gov)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Western Area Power Administration (WAPA) is a federal agency responsible for marketing hydropower to meet its statutory responsibilities to serve project-use energy pumping requirements and market available hydropower generation under its power marketing plans to preference power allottees.  In northern California, WAPA’s Sierra Nevada Region (SNR) serves load in both the Balancing Authority of Northern California and the CAISO.  WAPA SNR delivers its generation from many large and small hydro facilities of the Central Valley Project to its loads.  WAPA SNR owns, operates, and maintains an extensive high voltage transmission network extending to the load centers of Northern California. WAPA’s Desert Southwest Region (DSW) serves load throughout Arizona and in portions of California and Nevada. WAPA DSW delivers its generation from the Parker, Davis, and Hoover dams. WAPA DSW owns, operates, and maintains an extensive high voltage transmission network throughout Arizona extending into California and Nevada. WAPA appreciates the opportunity to provide comments on the CAISO’s Revised Straw Proposal. As part of the upcoming stakeholder processes, WAPA requests the ISO address the comments and questions herein.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

No comment.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

BAA power balance constraint as described during the 9/8/2022 stakeholder meeting seems to be a good addition in limiting propagation of shortfalls but needs clarification in the final straw proposal.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Our understanding from the stakeholder meeting on 9/8/2022 is that the equal priority between load and transfer provides information to BAAs and does not actually change interchange schedules. This needs to be clarified in the final straw proposal.

Schedule C self-schedules that have been used to demonstrate resource sufficiency should be given higher priority than load in EDAM. There are unintended financial consequences when Schedule C transfers are cut under conditions that cannot be declared as force majeure. The Schedule C self-schedules should only be cut in EDAM or WEIM due to transmission congestion according to transmission scheduling priorities.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

Such lower priority market transfers should be limited to the transfers optimally determined by EDAM, excluding the bilateral schedules such as Schedule C self-schedules that have been used to demonstrate RSE. Again, the Schedule C self-schedules should only be cut in EDAM or WEIM due to transmission congestion according to transmission scheduling priorities.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

No comment.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

The CAISO has made improvements in the revised straw proposal by giving the options of pathway 2 and pathway 3 for Bucket 2 transmission. Our understanding of pathway 2 is allowing transmission right holders to give their firm transmission to EDAM by 6 a.m. in exchange for “Transfer Revenue”. It is uncertain whether such “Transfer Revenue” would provide sufficient incentive for transmission customers to continue to acquire long-term transmission rights from the transmission owners. The proposed timing for pathway 2 notification (i.e., 6 a.m.) is too early for market participants, potentially causing more transmission to be left in pathway 3 due to uncertainty. Typically, WAPA’s pre-scheduling business unit does not begin transmission scheduling until 6 am. We believe an 8 a.m. deadline would be more practical from the viewpoint of participants. 

Our understanding of pathway 3 is that it allows EDAM to take unscheduled non-ETC/TOR transmission capacity as non-firm without consideration and that the transmission right holders can reclaim their firm transmission in real-time. It is not clear who will pay the re-optimization costs. WAPA is concerned that, as a TSP, WAPA may be allocated a portion of the re-optimization costs. Instead, WAPA believes that it is more appropriate that the parties who willingly and knowingly take the unscheduled transmission without compensating the transmission right holders should take on the risks of the lack of firmness of the transmission and pay the re-optimization costs.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comment.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

The CAISO has made improvements in the revised straw proposal by providing additional clarification and incentives for transmission providers to join the EDAM. WAPA is still concerned with uncertainties associated with transmission revenue recovery in the EDAM through uplifts. While WAPA is undergoing changes in legacy transmission arrangements, historical three-year transmission sales will not be a good basis for assessing future transmission revenue requirements and shortfalls. We also believe that by masking the true transmission costs in the market and socializing the costs after the market, the demand for long-term transmission contracts will decrease in EDAM over time. The subsequent updates after two years participation may not prevent the recoverable transmission revenue from going lower over time. It is important to have additional discussions to gain clarity and create win-win solutions before the final proposal.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

The goal of EDAM is to optimize generation and load resources in a broad geographic area to support renewable energy and reliability. Transmission resources will play a pivotal role in EDAM and should be fully compensated at the approved rates with certainty for the capacity utilized by the market. Obtaining access to transmission without reservation and paying for transmission usage at a discounted rate should not be an element of the EDAM design or transmission participation because doing so would unduly harm transmission providers. Although creation of the EDAM was not to incentivize long-term transmission investment, EDAM should not create detrimental side effects that deter long-term transmission investment.

WAPA is fundamentally a transmission asset heavy utility with limited load.  Transmission revenue recovery is vitally important to WAPA and clarity on transmission commitment and transmission revenue recovery is essential for evaluating the business case of EDAM.  Additional detailed examples and discussion is needed.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

It is important to enforce intertie constraints in RSE to ensure that the resource sufficiency showings for imports are deliverable. WAPA believes that “Bucket 1” transmission should be required for all transfers between EDAM BAAs to be counted for RSE. Enforcing all transmission constraints may not be necessary or feasible due to computational efforts. If the computational efforts for RSE is a concern, the integer variables for unit commitment can be fixed in “on” status with minimum generation limits relaxed to avoid over-generation. This treatment is possible because RSE only needs a feasible solution that does not have to be optimal. If including intertie constraint in the optimization is not possible due to software development efforts, a prescreen/validation of imports in resource sufficiency showing against “Bucket 1” transmission entitlement may address most of the transmission infeasibility concerns.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Schedule-C supply contracts used in RSE should be checked against “bucket 1” transmission. It is practical and important to require day-ahead e-tags by 3 p.m. for imports to complete EDAM RSE. There should not be any loopholes for imports to bypass this requirement. Only under rare conditions would marketers have difficulty in showing e-tags in the day-ahead and it is under the rare conditions that the RSE really matters.

It is reasonable to require showing of source BA in the day-ahead by 10 a.m. for Schedule-C supply contracts. It is reasonable because for Schedule-C supply contracts sourced from CAISO BAA, parties are already expected to submit Inter-SC Trade in the day-ahead market by 10 a.m. although exceptions are allowed due to technical glitches or human errors. Taking short positions in the day-ahead by marketers for load serving entities to pass RSE should be discouraged.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

WAPA in general supports the CAISO’s proposal to count ISO intertie supply for purposes of passing the EDAM RSE. For all BAs including the CAISO, all imports self-schedules or price-sensitive bids should show Bucket 1 transmission to be considered in RSE. For a price-sensitive import bid, the amount of Bucket 1 transmission capacity that is required must be greater than or equal to the maximum bid quantity.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

WAPA supports the use of demand response in RSE. WAPA encourages the CAISO to integrate provisions to ensure double counting of demand response resources does not occur.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comment.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

WAPA agrees with many others that EDAM should not serve as a mechanism for entities to avoid forward procurement of energy as well as the transmission that enables the energy delivery. WAPA reserves comments on the mechanisms for addressing resource insufficiencies.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

WAPA supports the CAISO’s proposal to stand up an hourly bid-range trading platform. Furthermore, we believe such a platform will also be beneficial in the 2-day ahead afternoon for entities to prepare for their last-minute day-ahead resource sufficiency showing. In other words, the platform can be used not only to cure the day-of RSE deficiency but also to prepare for the RSE for the upcoming day-ahead market.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Pooled WEIM RSE would generate benefit for all parties who pass the EDAM RSE in principle. However, without consideration of intertie constraints in EDAM RSE, sharing resources among different BAAs that are potentially limited by transmission capacity may lead to false perception of sufficiency. To address this concern, the day-ahead e-tagging requirement must be applied to determine eligibility for pooling. The various options for disposition of the diversity benefits need further elaboration and clarification by examples.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Resources that are not subject to must-offer obligation due to resource adequacy or other contracts should not be automatically considered having real-time must-offer obligation simply because they participated in EDAM RSE. The resources that participated in the EDAM RSE and awarded energy and/or capacity schedules in the EDAM should continue to offer the scheduled amounts for WEIM RSE. The resource owners should have the right to manage their entire excess supply in WEIM absent of any existing agreements. The resource owners can decide whether to bid the excess supply in WEIM and by how much. The CAISO should not have the authority to exceptionally dispatch non-CAISO BAA resource for the capacity that has not been bid into the EDAM or WEIM. EDAM entities should not have the authority either to decide whether the resource owners should offer their excess supply into EDAM absent of existing agreements.

Resource adequacy requirements are determined by monthly peak and annual peak (for local RA). It does not make sense to require hourly must-offer obligation to meet monthly peak or annual peak when the hourly load forecast is much less than the monthly/annual peak for most of the days and hours. Misapplication of planning concepts to operational practice inappropriately exacerbates the perception of tight supply and drives up the cost of RA capacity. The decoupling of resource sufficiency and RA in the original EDAM proposal provided a much needed and rational improvement over the legacy RA must-offer practice. We encourage the CAISO to stay on the right course and not to expand real-time must-offer obligation to meet monthly peak or annual peak when the load is not at monthly peak or annual peak. While entities under CPUC jurisdiction must comply with CPUC RA must-offer obligations, the CAISO should not attempt to enforce CPUC RA rules upon non-CPUC LRAs.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comments at this time. We understand the imbalance reserve topic will be discussed further in the DAME initiative.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

No comment.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

No comment.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

The CAISO’s proposal seems reasonable as a starting point when so much is still undetermined on other fundamental issues.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

No comment.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

No comment.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

No comment.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

The revised proposal and the explanation provided by the CAISO during the 9/14/22 stakeholder are inconsistent. According to the revised proposal, “where an EDAM BAA provides transmission to a scheduling point of another BAA, and transfer revenue accrues as a result of binding transfer scheduling limit, the straw proposed to allocate 100 percent of the transfer revenue to the EDAM BAA providing the transmission. In addition, when congestion revenue accrues as a result of a binding internal transmission constraint, the straw proposed to allocate 100 percent of the congestion revenues to the EDAM entity in whose BAA the constraint was modeled.” During the stakeholder meeting, the CAISO’s response to the Tesla-Tracy interface example where the transfer limit was on the Tracy side, was that BANC and CAISO would split the Transfer Revenue 50:50. There might be a misunderstanding during a short verbal conversation, but it highlights the need for further clarification. We encourage the CAISO to develop realistic examples to illustrate how the proposal would work for different scenarios. Due to specific and historical arrangements, all interties are not the same. Some good examples would be California-Oregon Transmission Project, Pacific AC intertie, Pacific DC intertie, CAISO to non-CAISO intertie, transfer limits due to intertie itself, transfer limits due to internal/external limits.

It is our understanding from the Revised Straw Proposal and the discussions during the stakeholder meeting on 9/14/22 that Bucket 2 and Bucket 3 transmission would only be compensated by the Transfer Revenue and uplifts. Since the Transfer Revenue is only a subset of all revenues resulting from congestions on the same interface, uplifts will become the dependable source of revenue for the transmission right holders and transmission owners. As stated in the previous sections, WAPA is concerned that the current proposal would put transmission right holders and transmission owners at risk for transmission revenue recovery.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

In many places, the revised proposal states that the CAISO charges will be distributed to the EDAM Entity for sub-allocation per its OATT. An EDAM entity may have several sub-entities. Each entity has their own OATT. The suballocation of CAISO settlement charges may impose a significant challenge to the EDAM entity. We encourage the CAISO to provide detailed information to the EDAM entity and sub-entities to allocate and verify CAISO’s settlement charges and the allocation of these charges based on how CAISO calculates these charges. For example, for DA marginal congestion offset allocation, the CAISO needs to provide marginal congestion offset by transmission provider.

We encourage the CAISO to continue developing and working towards full functionality of the EIM Sub-Entity Scheduling Coordinator. While the intent of the SESC is to support the continued independence of responsibility for utility companies within the BAA boundaries to control their own generation and serve their own metered loads, the CAISO should consider continued independence of a SESC in terms of utility-owned transmission and transfer revenue allocation. WAPA prefers transfer revenue be allocated to the transmission right holder or the transmission owner directly from the CAISO. If for some reason this cannot be done, at a minimum, the CAISO needs to provide sufficient level of details to allow the EDAM entity to allocate the transfer revenue to the TSP or the transmission right holders accurately. This means information that allows identification of specific intertie transmission branch group, direction of congestion, transmission users (such as SCID and Resource ID) and usage.

WAPA charges transmission losses to its transmission users based on fixed loss factors. The current CAISO DAM excludes from the LMPs the loss components contributed from IBAA (Integrated Balancing Authority Areas) transmissions. Please clarify how transmission losses in non-CAISO BAA will be treated in EDAM. In addition, WAPA would like clarification on how losses will be accounted for in EDAM for each BAA.

“This revised straw proposes to collect each BAA’s TRR recovery amount from EDAM footprint metered load less the recovering EDAM BAA’s metered load.” If a non-CAISO BAA exports from the CAISO BAA, would CAISO metered load be excluded from the allocation?  Some examples are requested to clarify the revised straw proposal language.

Stakeholders need clarification on whether AS self-provisioning in non-CAISO BAA will be settled. Will the CAISO check the AS obligations of non-CAISO BAAs against their AS self-provisions? On one hand the CAISO indicates that the CAISO will not take reliability compliance responsibility from other BAs. On the other hand, the Revised Proposed in the Settlement section makes reference to AS obligations and AS settlement.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

The Revised Proposal mentioned Entity Implementation Fee. The stakeholder meeting on 9/15/2022 mentioned fees by SC. Further clarification is needed for Stakeholder understanding and evaluation.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comment.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Greater transparency and access to EDAM entity level data will be helpful for sub-entities within an EDAM entity. This should apply for all data that is not subject to FERC Standards of Conduct requirements. Visibility of EDAM entity level data will be useful for sub-entities for operational awareness and analysis in EDAM participation, without having to wait for data to come through in the normal settlement timelines. The CAISO should provide all data elements that are used by the CAISO to calculate the settlement charges to allow EDAM entity and sub-entities to perform sub-allocation and validation.

Western Energy Imbalance Market Body of State Regulators
Submitted 09/26/2022, 03:26 pm

Submitted on behalf of
Western Energy Imbalance Market Body of State Regulators

Contact

Woori Lee (wlee@westernenergyboard.org)

Bonnie Lamond (blamond@westernenergyboard.org)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

Please see the WEIM BOSR's comments in the attached PDF below.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

Please see the WEIM BOSR's comments in the attached PDF below.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

Please see the WEIM BOSR's comments in the attached PDF below.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

Please see the WEIM BOSR's comments in the attached PDF below.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

Please see the WEIM BOSR's comments in the attached PDF below.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

Please see the WEIM BOSR's comments in the attached PDF below.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

Please see the WEIM BOSR's comments in the attached PDF below.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

Please see the WEIM BOSR's comments in the attached PDF below.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

Please see the WEIM BOSR's comments in the attached PDF below.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

Please see the WEIM BOSR's comments in the attached PDF below.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

Please see the WEIM BOSR's comments in the attached PDF below.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

Please see the WEIM BOSR's comments in the attached PDF below.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

Please see the WEIM BOSR's comments in the attached PDF below.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

Please see the WEIM BOSR's comments in the attached PDF below.

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

Please see the WEIM BOSR's comments in the attached PDF below.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

Please see the WEIM BOSR's comments in the attached PDF below.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

Please see the WEIM BOSR's comments in the attached PDF below.

28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

Please see the WEIM BOSR's comments in the attached PDF below.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

Please see the WEIM BOSR's comments in the attached PDF below.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

Please see the WEIM BOSR's comments in the attached PDF below.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

Please see the WEIM BOSR's comments in the attached PDF below.

WPTF
Submitted 09/26/2022, 10:35 pm

Submitted on behalf of
Western Power Trading Forum

Contact

Kallie Wells (kwells@gridwell.com)

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

WPTF supports full regionalization as there are market efficiencies that are naturally generated with increases in energy market diversity and the ability to plan for resource adequacy and transmission across a broader footprint. We commend the CAISO for their efforts in evolving the EDAM design from the last iteration of the proposal. There was clearly a significant amount of time, effort, and thought that went into trying to address the issues raised.

There are still several complex issues that need to be addressed and require significant discussions with stakeholders. Thus, WPTF respectfully requests that the CAISO hold workshops specifically on the following topics prior to the next iteration of the proposal:

  • CAISO BAA Specific Issues: This workshop would address several issues that have come up during previous discussions but deferred due to them being specific to CAISO. For example, any impacts the transmission requirements may have on the CAISO’s existing Maximum Import Capability (MIC) and current requirements for import RA as well as how the CAISO’s Capacity Procurement Mechanism (CPM) interacts with RSE. While we understand the tendency to keep discussions at the EDAM level and not go into any nuanced issues specific to CAISO, its imperative that these discussions are had so current CAISO participants can fully understand the impact and changes they will encounter.
  • Price Formation: This workshop would discuss holistically price formation under the EDAM paradigm. The CAISO is proposing several changes to current price formation through various aspects of the proposal and it’s imperative that stakeholders understand how all the elements will interact and ultimately impact price formation. This would include the CAISO’s proposal to have different system marginal energy costs (SMECs) for each BAA, including congestion on transfers between BAAs in the SMECs rather than congestion component, and changing the formulation of the GHG transfer constraint such that the GHG component is now additive to the SMEC for resources within GHG areas.   
  • Third Party Entities: This workshop would discuss how existing third parties with either transmission or generation located in a BAA that opts to join EDAM will (1) be impacted and (2) continue to participate in the energy market bilaterally and/or through EDAM. This would include discussions regarding their obligations to participate in EDAM, ability to continue doing business as usual (e.g., status quo), and how mechanically they would achieve either outcome given the responses to (1) and (2) above. For example, how a merchant generator within/outside an EDAM BAA would continue to sell its generation to load outside/in an EDAM BAA. The discussion would also include third party transmission owners and how they would be impacted by the EDAM design.

Lastly, WPTF strongly encourages the CAISO to try and simplify the EDAM design where possible. Clearly the market design will require several complex features to address all of the necessary issues to bring EIM entities into the day-ahead market. However, there is always a balance to be had between complex designs and simplified approaches. WPTF sees several elements of the current design that would benefit from being more streamlined and simplified, which in turn will provide the benefit of a more transparent market design. After gained experience the CAISO could then consider adding additional elements or making enhancements if needed, but starting with a more streamlined approach rather than complex design prone to unintended consequences is what WPTF believes would be the ideal starting point. For example, and as discussed in more detail in response to other questions, the CAISO has the opportunity to simplify the transmission element of the proposal by combining bucket #1 and #2 transmission.

2. EDAM PARTICIPATION MODEL: Please provide your organization’s comments on the proposed structure of the EDAM participation model as described in section II.A.1 of the EDAM revised straw proposal.

WPTF supports the CAISO’s perspective of having EDAM be a voluntary market. However, the CAISO’s perspective of what “voluntary” means may not align with how others would view a “voluntary” framework. Specifically, WPTF is concerned with the current proposal that requires all resources within a BAA to be participating in the EDAM if the BAA entity opts to join EDAM. The concern arises because its important we recognize the decision point for entry exists at the BAA level alone and there are third party entities within BAAs. Thus, one entity can make a decision (i.e., join EDAM) that will directly impact the other entity (e.g., merchant generator and/or 3rd party transmission is now forced into the market).

WPTF believes the CAISO and stakeholders should consider maintaining the construct of participating and non-participating resources such that each customer is able to make the decision to opt-in or not once the BAA has made the decision to opt-in. Additionally, and as discussed in more detail in response to question #7, the CAISO should also allow transmission customers the option of holding their transmission rights out of the market so they are not exposed to unknown cost risk that they cannot mitigate. 

 

3. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of confidence in market transfers design as discussed in section II.A.2 of the EDAM revised straw proposal. In particular, please provide comments regarding the different design elements supporting confidence in transfers including the application of the market parameters preventing the propagation of shortfalls and the associated outcomes illustrated in the examples.

No comment at this time.

4. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the topic of equal priority between market transfers and load in edge reliability scenarios, as effectuated in the operational timeframe, informed by operator discretion and good utility practice, as discussed in section II.A.2 of the EDAM revised straw proposal.

No comment at this time.

5. CONFIDENCE IN MARKET TRANSFERS: Please provide your organization’s comments on the proposal and effectuation of lower priority market transfers sinking in an EDAM BAA that has failed the day ahead RSE or otherwise is not part of the WEIM RSE pool as discussed in section II.A.2.d of the EDAM revised straw proposal.

No comment at this time.

6. TRANSMISSION COMMITMENT: Please provide your organization’s comments on the overall framework of transmission commitment in EDAM, including the framing of how transmission is made available through the concept of the transmission “buckets” as described in section II.B.1 of the EDAM revised straw proposal.

WPTF believes this is an area of the CAISO’s proposal that would benefit from simplification. As the discussions of EDAM have evolved, there are some elements of the transmission framework that are no longer relevant or necessary. As noted in response to question #1, the CAISO should strive to simplify the design where possible; this in turn will provide efficiencies not only from an implementation perspective but also a market perspective. Specifically, WPTF believes the transmission bucket framework can be simplified into two buckets by combining what is currently referred to as Bucket #1 and Bucket #2.

During the EDAM stakeholder meetings there was some discussion regarding when transmission is considered bucket #1 vs bucket #2 that further supports the concept of combining these two buckets. The only time transmission would be considered bucket #1 is if an EDAM BAA shows a resource on its RSE plan located in another EDAM BAA. On days when that resource is not shown on the RSE plan those same transmission rights would then be considered bucket #2. In other words, the same transmission rights may be considered bucket #1 one day but bucket #2 the next: its two sides of the same coin.

The only thing the CAISO needs to know is if there are transmission rights made available to the market to get the resource in the other EDAM BAA to the BAA for which its included on the RSE plan. This can be accomplished through a simple process-oriented check. There is no need to further complicate the transmission design if all that is really needed is a process check, especially since the market optimization itself will not see any difference between transmission capacity that is considered bucket #1 vs bucket #2.

WPTF does understand that previous iterations of the EDAM design had some distinctions between buckets #1 and #2 that warranted differentiating between them. However, those distinctions are no longer applicable. Transmission categorized as bucket #1 and bucket #2 receive the same compensation. The RSE is no longer modeling transfer capacity between EDAM BAAs and therefore there is no need to know what transmission rights are specifically being provided to get generation from a resource in one BAA to the load in the BAA for which that resource is part of its RSE plan; the CAISO just needs to know transmission rights are being made available between the two BAAs.

WPTF does see the need to ensure that, at a minimum, enough transmission is made available to the market under what is currently referred to as Bucket 2 pathway #1 and pathway #2 to support resources on an RSE plan that are physically located in another EDAM BAA. WPTF envisions that the CAISO can simply do a check that when an EDAM BAA includes a resource in another EDAM BAA on its RSE plan, it also has provided that amount of transmission rights between the two EDAM BAAs under pathway #1 or pathway #2. It essentially creates a minimum amount of transmission that is made available to the market via pathway #1 and pathway #2.

Additionally, WPTF would appreciate additional discussion around what scheduling options an entity that is providing transmission to support a resource on its RSE plan has with regards to its transmission rights. Its our understanding that they would have the same options as pathway #1 and #2 that is provided for what the CAISO is currently categorizing as bucket #2 transmission. We would appreciate the CAISO confirming our understanding.

7. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on Bucket 2 transmission and the pathways for how transmission customers can exercise their transmission rights, whether secured under the OATT or under legacy arrangements, or how otherwise those transmission rights are made available to the market as described in section II.B.1 of the revised straw proposal.

WPTF appreciates the additional details provided in this iteration of the proposal as it relates to transmission rights provided to the EDAM by transmission customers. Defining the various pathways – or ways transmission customers and rights will be seen and utilized by the market - was extremely helpful in understanding what the CAISO is proposing. That being said, WPTF is still extremely concerned with some of the elements as it relates to what the CAISO is currently considering bucket #2 transmission as listed here and discussed in more detail below.

  • There needs to be a way for transmission customers to hold transmission rights out of the market
  • Pathway #3 transmission needs to be recognized as non-firm transmission even through the real-time market
  • The CAISO should directly allocate transfer revenue and congestion revenues to the transmission customers who donate the rights (Pathway #2)

WPTF strongly believes there needs to be a way for entities to hold transmission rights out of the market optimization. We understand the CAISO’s desire to create a market design that includes as much transmission and resources as possible. However, the current design is obtaining that goal by forcing all resources, transmission rights/contracts, and load within a BAA for which the BAA decides to join EDAM to participate and be included in the market. The entity making the choice to join EDAM may not necessarily be the entities that own the resources and/or transmission rights which are now exposed to significant risk. Therefore, there must be a way for the entities that are forced to participate in the market to manage their own exposure to the risk.

Regarding entities with transmission rights in a BAA that chooses to join EDAM; these entities will be unable to mitigate cost risk absent the ability to hold their transmission rights out of the market. As currently contemplated, the market will use all unused transmission rights by 10am in the day-ahead market. If the entity holding those transmission rights wants to use them, per existing OATT rules, anytime between 10am and real-time, the entity is now exposed to uplift cost due to re-dispatching the system in real-time. This is an unknown cost that the entity cannot mitigate. Furthermore, in the event an entity opts to use the rights between 10am and real-time, those rights are now viewed as a lower priority than schedules that cleared the day-ahead market on non-firm transmission (bucket #2 pathway #3 transmission is considered non-firm per OATT). While we understand that the entity may receive transfer revenues, it will all depend on how each BAA determines how to allocate the transfer and congestion revenues per each individual OATT.

In the end, transmission rights holders will (1) now be exposed to additional uplift costs to use transmission rights as they currently use today, (2) receive lower scheduling priority on those rights, (3) may not receive adequate compensation through transfer/congestion revenues depending on how each BAA allocates per individual OATT, and (4) do not have any ability to mitigate or manage the risk exposure per the current proposal. Furthermore, as currently proposed, EDAM will erode third party transmission value which will in turn increase the amount of transmission revenue requirement that must be allocated and collected through the EDAM per the CAISO’s proposed TRR allocation mechanism.

The EDAM design must be able to recognize Pathway #3 transmission as non-firm. To the extent the CAISO continues to propose all unused transmission to be automatically included in the market optimization (bucket #2 pathway #3), the design must be able to recognize any schedules that utilize pathway #3 transmission is considered non-firm in the event the real-time market must adjust schedules. These schedules should be curtailed prior to any transmission customer that opts to use its rights between 10am and real-time. This aligns with how the current OATT framework treats transmission rights that are unscheduled (from the transmission service provider perspective) by 10am day-ahead.

The CAISO should directly allocate transfer revenue and congestion revenues to the transmission customers who donate the rights under pathway #2. WPTF appreciates the CAISO’s proposal to directly allocate transfer revenues to transmission customers that donate rights under pathway #2 but believes it should also include direct allocation of congestion revenues. As currently designed, transmission customers that donate their rights under pathway #2 may or may not receive congestion revenues – it’s all dependent on how each individual BAA decides to allocate the revenues within its BAA. By the CAISO directly allocating transfer and congestion revenues to transmission customers it will provide a more transparent allocation mechanism and will likely incentivize transmission to be provisioned this way.

Additionally, WPTF believes it would be very useful if the CAISO could walk the stakeholders through the steps an entity would take to exercise its transmission rights under pathway #1 vs pathway #2. For example, we would like to confirm our working assumption on what bids or self-schedules for generation and/load would be required by what entities when wanting to exercise transmission rights under pathway #1 versus what bids one may/can submit if simply donating transmission but still wanting to either economically offer or self-schedule generation and load.

8. TRANSMISSION COMMITMENT: Please provide your organization’s perspective on how ISO transmission is made available to the EDAM under the transmission commitment design.

No comment at this time.

9. TRANSMISSION COMMITMENT: Please provide your organization's comments on the transmission revenue requirement (TRR) recovery framework design which is intended to allow for recovery of certain transmission revenues to keep the transmission provider whole from a historical TRR perspective in the EDAM as described in section II.B.1 of the revised straw proposal.
Consider comments on the three different proposed components of the EDAM recoverable TRR and the proposed methods of allocating the TRR shortfall, along with other elements of the design.

No comment at this time.

10. TRANSMISSION COMMITMENT: Please provide your organization’s comments on any other aspects of the transmission commitment in EDAM topic.

WPTF believes that all transmission should be identified and made available to the CAISO by 10am. This is another element of the design that can benefit from simplifying as the differing deadlines do not seem to serve any purpose. Currently the CAISO’s proposal includes a 6am deadline for Bucket #2 Pathway #1 transmission, a 9am deadline for Bucket #1 transmission, and a 10am deadline for all other transmission. While we understand the desire to have as much information as soon as possible, especially as it relates to the RSE advisory runs, imposing staggering and unnecessary deadlines actually introduces adverse impacts.

Regarding the 6am deadline; the CAISO indicated during the meetings that the purpose of the 6am deadline was to ensure the settlement system knows what transmission receives the ETC/TOR treatment of a perfect hedge. That seems to be a settlements issue, which occurs after the market closes. Thus, WPTF does not see the need to have one subset of one bucket of transmission provided 4 hours before the start of the day-ahead market; it just needs to be known at the start of the day-ahead market and the settlement systems can identify which transmission rights and customers receive the ETC/TOR treatment any time after the market starts to run and before settlement statements are issued. Furthermore, the 6am deadline for a subset of bucket #2 transmission indirectly requires the participants to make decisions on how they will use all their transmission rights by 6am. There are several factors to consider that may change between 6am and when the market starts running at 10am; those factors may very well change the optimal use of the transmission rights from the transmission customers perspective, resulting in a suboptimal use of those rights simply due to an artificially imposed deadline.

Regarding the 9am deadline; the CAISO is no longer proposing to model the transfer capability between EDAM BAAs in the RSE so there is no need to know for an advisory RSE run the amount of bucket #1 transmission being made available. Furthermore, if the CAISO requires all bucket #1 transmission to be identified by 9am for the advisory RSE run, it prevents an entity that may be short in the advisory run to cure its deficiency in time for the binding run if it needs to show another resource that is located in another EDAM BAA. This is because, per the current proposal, for the EDAM BAA to add that resource to its RSE plan to cure the deficiency between the 9am advisory RES run and the 10am binding RSE run, it would also need to show more bucket #1 transmission. However, per the current proposal, the EDAM BAA cannot show anymore bucket #1 transmission because its past the 9am deadline. Thus, this unnecessary deadline could prevent EDAM BAAs from being able to pass the binding RSE run if it needs to show a resource in another EDAM BAA on its RSE plan to pass.

11. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the design of the proposed application that will be used to conduct the EDAM RSE as described in section II.B.2 of the EDAM revised straw proposal.
This includes comments on the ability to conduct advisory RSE tests prior to the binding run, the timing of the RSE, test inputs, test obligation, the decision not to include transmission constraints within the EDAM RSE as well as any other relevant elements.

No comment at this time.

12. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposed treatment of firm energy contracts where the source/transmission may not be known in advance of the market run (i.e. WSPP Schedule-C supply contracts) within the EDAM RSE.
Consider comments on if the proposed requirement for the submission of day-ahead e-tags, the potential to be removed from the pooled WEIM RSE, as well as monitoring to provide a sufficient level of confidence in these types of supply arrangements. Additionally, consider the proposed modeling of these arrangements as “bucket 1” transfers, along with the potential pricing impacts in the source BAA and the potential to utilize BAA-to-BAA transmission between the source and sink BAA.

No comment at this time.

13. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s perspective on the ISO proposal for counting in the EDAM RSE import bids made at the CAISO BAA boarder with a non-EDAM BAA.

No comment at this time.

14. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the treatment of demand response and its different types and functions for purposes of passing the RSE.

No comment at this time.

15. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to make available advisory D+2 market results (day ahead + 2 market run) to help inform gas procurement and manage gas resource participation in the day ahead market.
Consider commenting on any additional potential enhancements or changes to this market run which could increase its accuracy.

No comment at this time.

16. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on whether the proposal to cure resource insufficiencies through the EDAM market at an administrative surcharge provides incentive to cure shortfalls prior to participating in the EDAM.
Please comment on the proposed requirement to cure through the market, the block surcharge, as well as the potential to credit against the surcharge any market energy prices. In addition, please comment on the proposed revenue allocation, and CAISO BAA specific sub-allocation for this surcharge.

No comment at this time.

17. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the proposal to stand up an hourly bid-range trading platform.

No comment at this time.

18. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on the utilization of a pooled WEIM RSE for entities passing the EDAM RSE, as described in the revised straw proposal.
Please comment on the criteria for exclusion from the pooled WEIM RSE, the proposal to withhold a configurable quantity of imbalance reserves to be utilized for benefit of the EDAM footprint, and the preferred approach for the pooled WEIM RSE following a potential failure of the pool in the WEIM.

No comment at this time.

19. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on two introduced mechanisms for consideration that further allow a BAA to manage its resources: (1) mechanisms to manage supply in excess of RSE, and (2) consideration of a net EDAM transfer export limit constraint as described in the revised straw proposal.
Please consider commenting on the value and need for these mechanisms for individual BAAs along with other design elements that should be considered in enhancing or modifying these mechanisms to address the issues described.

WPTF appreciates the CAISO proposing a solution to address the concern raised regarding the use of capacity that is in excess of a BAA’s RSE obligation. However, WPTF is extremely concerned with the solution being proposed that would allow CAISO LSEs to withhold RA capacity from the day-ahead market if not needed to pass the RSE test. This proposal element essentially would memorialize the ability for participants to physically withhold capacity from the market – which raises significant issues regarding market power and introduces risk of passing at FERC.

This is another issue that highlights the need for workshops to discuss issues specific to the CAISO BAA, in this case how the CAISO RSE test interacts with the Capacity Procurement Mechanism (CPM).   

20. DAY-AHEAD RESOURCE SUFFICIENCY EVALUATION (RSE): Please provide your organization’s comments on any other elements of the EDAM RSE not raised by the questions above.

No comment at this time.

21. INTEGRATED FORWARD MARKET (IFM) AND RESIDUAL UNIT COMMITMENT (RUC): Please provide your organization’s comments on the IFM and RUC design as described in sections II.C.2 and II.C.3 of the EDAM revised straw proposal.

No comment at this time.

22. MARKET POWER MITIGATION (MPM): Please provide your organization’s comments on the proposal to extend the WEIM market power mitigation framework to the EDAM and the continued evaluation of potential market power mitigation enhancements within the Price Formation Enhancements initiative, which is currently ongoing, as described in section II.C.4 of the EDAM revised straw proposal.

WPTF would appreciate the CAISO clearly distinguishing between its proposal elements to apply local market power mitigation and system market power mitigation on all EDAM BAAs in both the day-ahead and real-time markets. To date the discussion has been somewhat vague and is unclear based on the proposal itself that the CAISO is proposing to also apply system market power mitigation.

As iterated in prior EDAM comments as well as comments submitted in the CAISO’s Price Formation initiative, WPTF strongly opposes mitigating for market power when the ability to exert market power does not exist. We respectfully request that the CAISO conduct structural competitiveness tests to first determine if the ability to exert market power is predictable, persistent, and profitable. Ideally the tests would be conducted using the expected amount of capacity on the system by the time EDAM goes live.

For more detailed discussion, please see prior comments submitted on this element of the straw proposal and through the CAISO’s Price Formation initiative.

23. CONVERGENCE BIDDING: Please provide your organization’s comments on the proposal on convergence bidding in the EDAM and the associated transition period approach being proposed as described in section II.C.5 of the EDAM revised straw proposal.

No comment at this time.

24. EXTERNAL RESOURCE PARTICIPATION: Please provide your organization’s comments on the proposal for external resource participation in the EDAM, as described in section II.C.6 of the EDAM revised straw proposal.

Please refer to prior comments submitted on this element of the proposal.

25. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the resource specific approach to GHG accounting as described in section II.C.7 of the EDAM revised straw proposal.

WPTF acknowledges that the CAISO is intending to move forward with the resource-specific approach at this time due to implementation ease. We appreciate the transparency provided but first ask the CAISO to formally commit in the FERC filing to review market performance as it relates to GHG after one year of EDAM go-live to evaluate the market performance and consider the need for enhancements to the design ultimately implemented.

Given that the CAISO is pursuing the resource-specific approach initially, our comments are focused only on the resource-specific approach at this time. As iterated throughout the entire EDAM process, there is no perfect solution when it comes to GHG accounting in the CAISO market optimization. Thus we as a stakeholder community are tasked with designing and implementing an approach that strikes an appropriate balance between least cost dispatch, price formation, and accurate accounting of GHG emissions to support implementation of state cap and trade programs. With this in mind, WPTF believes that with a few modifications (discussed below) to the existing proposal, we can achieve a design that from the onset of EDAM accomplishes the goal.

Generally speaking, the modifications will retain the resource-specific approach but allow for contracted resources to be considered “deemed delivered” to serve GHG load whenever dispatched by the market optimization, would accurately limit deeming to generation that is surplus to serving its native load, and would ensure the market doesn’t inappropriately run out of “deemable” MW.

Specifically, WPTF urges the CAISO to include the following enhancements to the resource-specific approach:

  • Resources that are in a non-GHG area but meet specific contractual requirements to serve load in an GHG area can have all of its generation deemed delivered up to the contracted amount. This can be accomplished simply by identifying those resources via a flag in the Masterfile and modeling them as if they were in the GHG area.
  • The GHG counterfactual run should restrict transfers between all BAAs – not just between the GHG and non-GHG areas. This will ensure that the GHG counterfactual schedule is only based on the economic dispatch of resources to serve load within that BAA such that any surplus generation can then be eligible to be deemed delivered to serve GHG load. We believe that a BAA by BAA counterfactual better approximates ‘native load’ for resources within each BAA. If the GHG counterfactual only restricts transfers between GHG and non-GHG areas, this then could result in surplus generation from clean resources being ineligible to serve GHG load because it was economic in the GHG counterfactual run to serve load in another non-GHG BAA area.
  • Deeming should be limited to each resource’s incremental dispatch above the GHG counterfactual run. WPTF understands there is significant resistance from the CAISO with regards to this change. However, as we have presented in March 2022 during an EDAM workshop meeting and reiterated in more detail below, we do not believe the same concerns hold under an EDAM paradigm. Thus, we respectfully request that the CAISO implement this enhancement with EDAM go-live. Additionally, limiting the deeming in this manner may alleviate the need to also limit deeming based on the export constraint, which also comes with problems.
  • Ensure that the market does not inadvertently reach infeasibilities due to not having sufficient MWs being willing and able to be deemed delivered. If the CAISO market runs out of deemable MWs from the non-GHG area, (a scenario that is more likely the better the market design is at limiting deeming) it will first dispatch up all internal resources before reaching an infeasibility of some manner. WPTF is concerned that the infeasibility would be a power balance constraint violation, or in the real-time, result in cutting schedules, to resolve the infeasibility that was generated due to not having sufficient deemable MWs in addition to internal generation to serve GHG load. This in turn would result in prices reflecting scarcity conditions when in reality there is no true scarcity. Thus, WPTF believes the market design should also include the ability to relax the GHG transfer constraint (or some other GHG constraint) such that the GHG shadow price will be set based on an unspecified emission rate rather than having prices reflect an infeasibility. In this case, the MW by which the GHG transfer constraint was short (or relaxed) would be set as a GHG compliance obligation on the CAISO (or CAISO LSEs). The CAISO would also receive the revenues associated with the transfers at the GHG shadow price to offset the cost of the GHG compliance obligation.

Regarding the CAISO’s resistance to limit deeming to incremental dispatch above the counterfactual GHG run, the CAISO did spend significant time considering this enhancement in EIM but ultimately abandoned the idea due to various concerns. Its important to note that while those concerns may have been valid in EIM, we do not believe they hold true in EDAM.  Thus, WPTF provides the following in response to the CAISO’s concerns with implementing this enhancement.

  • The additional processing time by introducing additional binary variables in the market optimization is not a concern in the day-ahead time frame. The CAISO has ample processing time in the day-ahead to run a market with additional binary variables. Additionally, we are certain that processing times are sure to be more efficient now than they were 6 years ago.
  • The gaming concern whereby entities can price themselves out of the counterfactual run but be economic in the IFM run is not a concern in the day-ahead timeframe. Market participants will have to be able to perfectly predict the GHG shadow price in each hour and ensure they shape their energy bids such that they are slightly over the marginal price of energy in their BAA for the counterfactual run but be economic when GHG costs are considered, and all EDAM transfers are allowed to occur. The risk of pricing themselves out of the market entirely naturally mitigates against this concern in addition to knowing that the CAISO’s Department of Market Monitoring (DMM) could be monitoring for this type of behavior.
  • The price formation concern expressed about the edge cases we presented in March is actually the correct price signal. We do agree that initially it may seem odd to have a resource have an energy price less than its energy offer even though its being dispatched up to serve GHG load. However, when one looks at both the energy and GHG revenues, the resource fully covers its bid costs. In all the case studies we evaluated, it was never the case that the resource did not fully cover its costs through energy and GHG revenues. Second, the “lower” energy price is the correct marginal price of energy in the non-GHG area. During the edge case the next MW of load in the non-GHG area will be met by a resource with a lower energy offer that was not available to serve GHG load. We have to keep in mind that the edge case exists primarily when resources do not have an optimal counterfactual schedule to begin with. Under the EDAM proposal, WPTF believes the counterfactual run that includes internal transmission and restricts transfers between BAAs will result in a more optimal counterfactual schedule. Thus the probability of these edge cases occurring in the first place are mitigated. If the CAISO has another pricing concern that has not been discussed to date, WPTF believes its imperative that those conversations take place and the CAISO brings forward its own case studies illustrating the concern.
  • The concern about higher prices in the GHG area if deeming is limited to incremental dispatch is not appropriate. One would naturally expect higher prices in the GHG area if the attribution of resources and associated emissions is done correctly. The inappropriate deeming that occurs under EIM today because the market tends to deem resources into their baseline schedules (e.g., not dispatched above baseline schedule) has suppressed prices in the GHG area.

Lastly, we do urge the CAISO to evaluate the impact on price formation if all resources within the GHG areas submit GHG bids separate from energy bids, similar to how the resources in non-GHG areas provide energy and GHG bids. We understand that the CAISO is having to flip the direction of the GHG transfer constraint in the market due to having multiple GHG areas. However, there has been minimal discussion as to the price formation impact that change may have. WPTF has had the ability to review the CAISO’s excel based solver and the various use-cases included in the file. We really appreciate the CAISO putting in the effort to create the solver and put together several scenarios for stakeholders to review. Through these case studies, we have observed a potential price impact that we believe warrants transparent discussions.

In one of the resource-specific scenarios (Scenario 3), the price inside and outside the GHG area are appropriate. However, when we view the decomposition of the LMP to the marginal cost of energy (SMEC) and GHG component, the decomposition seems to lose its meaning. The GHG component ends up being set by the difference between the energy offers of the resource inside the GHG area and the resource outside the GHG area - it has nothing to do with the GHG cost of any resource serving the GHG load. From a price formation and transparency perspective, this is concerning if the CAISO is proposing a design that undermines the intent of LMP pricing – the nodal components are no longer pure in the sense that the GHG component does not actually represent the marginal cost of GHG to serve load in the GHG area. Thus, we respectfully request that the CAISO discuss with stakeholders this price formation impact and evaluate if having all resources separate out the energy and GHG bids will result in more meaningful price formation.         

26. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the use of the GHG Reference Pass as the GHG counterfactual.

WPTF appreciates the CAISO proposing to include a GHG Reference Pass specifically for the purposes of setting the counterfactual schedules for resources in the non-GHG area. We also fully support the CAISO’s proposal to include internal transmission in the GHG Reference Pass for the reasons WPTF has commented on during stakeholder discussions and in prior comments on this effort.

However, we do believe that the GHG Reference Pass should prevent transfers between all BAAs, not just transfers between non-GHG areas and GHG areas. The goal of the GHG Reference Pass is to approximate the optimal dispatch of resources to serve native load such that the market can accurately identify what generation is truly surplus to this dispatch and thus available to serve load in other BAAs, including those within a GHG area. If the GHG Reference Pass allows transfers to occur between BAAs that are in the non-GHG area, this will allow what may be surplus generation to serve native load to serve load in another non-GHG BAA. It effectively prioritizes the surplus generation to first serve non-GHG load in another BAA and prevents it from being able to serve load in the GHG area. That decision as to the most optimal use of surplus generation – to serve load in another non-GHG BAA or a GHG BAA – should be made simultaneously rather than giving first opportunity to serve load in the non-GHG BAA. This is one of the enhancements WPTF strongly urges the CAISO to consider in the resource-specific approach on day one of EDAM.

WPTF also requests clarification of how CAISO proposes to apply a counterfactual for BAAs within the GHG areas for the purpose of limiting deeming of MW from resources in one GHG area to the other GHG area.

27. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s feedback on the attribution data reported as a part of the resource specific approach, and if or what additional information would provide transparency.

As for EIM, CAISO should provide data on the MW of GHG attribution to each resource scheduling coordinator receiving an attribution through CMRI. CAISO should also provide an annual report for each calendar year to the appropriate state regulator on the total MW of GHG attributed, aggregated by individual resource scheduling coordinator and resource.

Additionally, CAISO should publish the following data for each hour.

For each GHG area:

  • For resources dispatched within the GHG area, the generation-weighted average emission rate and the marginal emission rate of dispatched resources
  • For resources deemed delivered to the area, the deemed-weighted average emission rate
  • The GHG shadow price for each GHG area

For the non GHG area:

  • The generation-weighted average emission rate and marginal emission rate
  • The generation-weighted average residual emission rate (i.e., excluding emissions and MW or resources deemed delivered to the GHG areas)
28. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the zonal proposal.

No comment at this time.

29. GREENHOUSE GAS ACCOUNTING: Please provide your organization’s overall comments, including potential suggested enhancements, on the LADWP proposal.

No comment at this time.

30. GREENHOUSE GAS ACCOUNTING: Please provide any other feedback on GHG accounting not captured by the questions above.

No comment at this time.

31. TRANSFER REVENUE AND CONGESTION REVENUE ALLOCATION: Please provide your organization’s comments on the proposed transfer revenue and congestion revenue allocation approach as described in section II.D.1 of the straw proposal, along with any other aspects of the transfer revenue allocation discussion topic.

No comment at this time.

32. SETTLEMENTS: Please provide your organization’s comments on the settlements design described in section II.D.2 of the EDAM straw proposal.
Consider comments on the different aspects of settlement allocation among the different settlement components.

No comment at this time.

33. EDAM FEES FRAMEWORK: Please provide your organization’s comments on the EDAM fees framework, particularly the implementation fee and administrative fee framework, as described in section II.D.3 of the EDAM straw proposal.

No comment at this time.

34. GENERAL COMMENTS: Please provide your organization’s comments on the decisional classification for the EDAM initiative as described in section III.B of the EDAM revised straw proposal.

No comment at this time.

35. GENERAL COMMENTS: Please provide your organization’s comments on any other elements or aspects of the EDAM revised straw proposal.

No comment at this time.

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