Comments on 3/2/2026 RAMPD Track 2 RAAIM Reform Options - Stakeholder Meeting

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

ACP-California appreciates CAISO’s efforts to reform the Resource Adequacy Availability Incentive Mechanism (RAAIM). As discussed below, we urge CAISO to hold off on implementing significant changes to RA availability incentives until it determines whether performance incentive gaps remain under a future UCAP accreditation structure. Additionally, we urge CAISO to maintain the RAAIM exemption for wind and solar resources, and to recognize battery operating limitations such as dispatch compliance and foldback. We also highlight that additional information is needed before formally proposing a shift toward an RSE-focused mechanism and any shift to an RSE-focused framework should be accompanied by limitations on total penalty amounts to ensure the structure does not create unmanageable levels of risk for individual generators.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

ACP-California is concerned that the CAISO has not sufficiently developed the rationale for the continuation of performance incentives despite implementation of UCAP, which will strongly incentivize resources to be available during critical periods. We recommend the CAISO pause further deliberation of RAAIM reforms until after it has time to evaluate whether performance incentive gaps remain under a UCAP accreditation structure.

Separately, if CAISO nevertheless moves forward with performance incentive reforms, it should retain existing exemptions for Variable Energy Resources (VERs). CAISO staff indicated during the workshop a desire to apply RAAIM across “all generators”, which – if it were to move forward – could eliminate the current exemption for Variable Energy Resources. This is a significant policy shift which was not described specifically in the workshop slides.

VERs reliability contributions are complex and interactive as modeled through the ELCC and Slice of Day constructs. Historically, these resources have fulfilled their availability obligations by providing accurate forecasts rather than fixed-MW bids, a principle codified in CAISO Tariff Section 40.6.4. Because the capacity value of these resources is already significantly derated, applying additional financial non-availability penalties – when the resources are unavailable due to lack of fuel (i.e. wind or sun) – would effectively penalize them twice. CAISO confirmed this in its 2021 tariff change request for hybrid and co-located resources:[1]

Under the CAISO’s existing tariff, variable energy resources are exempt from RAAIM. One reason for the exemption is that their resource adequacy capacity value is based on analysis of their historical performance, which accounts for their variable nature. Thus, their resource adequacy capacity value can decrease based on poor historical performance. Applying RAAIM would double penalize these resources for their unavailability, once by discounting their capacity contribution based on their performance in serving electric demand and again through a RAAIM charge.

Additionally, most wind and solar resources operate in accordance with CAISO’s forecast (rather than their own). This makes the potential application of penalties when a resource does not generate to the CAISO forecast even more problematic. For these reasons, CAISO should not penalize wind and solar resources under RAAIM and, regardless of the availability incentive mechanism put in place, wind and solar resources should continue to be exempt from penalties associated with not generating to their forecasted value.

Very similar considerations are important for storage resources, which again should not be penalized if they are following CAISO dispatch instructions and, as a result of being dispatched by the market operator, are not available during another time period where performance is measured.  If a storage resource has followed a dispatch instruction, it should not be marked as "unavailable" during a RAAIM or RSE-based assessment period. We support the "Performance Benchmark MW" concept that accounts for a battery’s foldback. If the CAISO market model does not yet perfectly reflect these non-linearities, resources should be allowed to use specific "Technical Limitations Not in Market Model" outage cards to avoid inappropriate RAAIM penalties.

If the CAISO does retain a performance incentive structure, ACP-California notes that additional information would be needed before moving forward with a change to an RSE-focused structure. While it is valuable to plan and build resources for critical hours, as is the focus of the CPUC’s IRP framework, the specific critical hours which arise under the RSE analysis would not be predictable nor a function of individual resource operating decisions, making it difficult for generators to plan operationally or financially for such a penalty. Specifically, the proposed RSE-focused mechanism seems to introduce a high degree of financial unpredictability. Unlike RAAIM, which is tied to a resource’s own availability, an RSE-based penalty is effectively an unknown that depends on the performance of the entire Balancing Authority Area. Thus, additional information and assessment would be required before moving forward with this new structure. If CAISO does ultimately proceed with an RSE-based approach, it should build in measures to prevent disproportionate liability for individual generators during extreme market events, such as limits on penalties.

[1] See September 8, 2021 Filing Letter in FERC Docket ER21-2853 here: https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20210908-5103&optimized=false&sid=df5d8e02-51a9-4480-913a-9bdbba2f873c

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

Consistent with Tariff Section 40.6.1.1(b), the MOO for storage should remain tied to its shown RA capacity, not its PMAX. Forcing a resource to offer more than its contracted capacity creates uncompensated risk.

4. Please submit your organization’s comments on the proposed outage definition changes.

No comment at this time.

5. Please provide any additional feedback not already captured.

No additional comments at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

The Alliance for Retail Energy Markets (“AReM”)[1] appreciates CAISO’s efforts to continue Track 2 of this initiative. At this stage, AReM does not endorse any specific proposals, but provides feedback on principles that AReM recommends be included in CAISO’s final proposal.

[1] AReM represents three of the largest electric service providers (“ESP”) in California. ESPs are load-serving entities (“LSE”) under the jurisdiction of the California Public Utilities Commission (“CPUC”) and serve customers through California’s Direct Access program.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

CAISO presented two new policy options for Resource Adequacy Availability Incentive Mechanism (“RAAIM”) reform. One would reform the existing RAAIM process, while the other would replace RAAIM with an Extended Day Ahead Market (“EDAM”) resource sufficiency evaluation (“RSE”) surcharge. The first option would impose penalties on each resource that failed to meet its must-offer obligation (“MOO”), while the second would apply penalties only if the CAISO balancing authority area fails the EDAM RSE.

At this time, AReM does not have a specific preference for the approach to RAAIM reform/replacement. But AReM seeks the following for any successor to RAAIM:

• CAISO provides full transparency regarding RAAIM reform/replacement implementation. This would include documenting the goals CAISO is attempting to achieve through this reform, tracking relevant metrics to assess performance, and providing the results of this tracking to stakeholders for potential follow-up. This will help ensure any new framework is meeting relevant objectives and is not adding costs for inadequate benefit.
  • This transparency should include timely resource level reporting sufficient for LSEs to understand the performance of contracted RA resources, including availability, outages, and any penalties assessed. Such information should be provided in a timeframe that allows LSEs to effectively manage compliance and contractual obligations.
• Any penalties should be assessed on generators and not on LSE scheduling coordinators. LSEs contract with generation resources that supply RA-qualified capacity, which includes a MOO. Operational failures that result in less capacity being supplied than the MOO should be the financial responsibility of the generator operating the capacity, not the LSE. CAISO should explicitly state this as part of its final proposal for Track 2 of this proceeding.
  • AReM further emphasizes that LSEs should not be exposed to duplicative financial risk. If an LSE has satisfied CPUC resource adequacy procurement requirements and met all CAISO showing obligations, it should not be subject to additional financial exposure arising from generator non-performance or availability shortfalls. Any successor to RAAIM should explicitly avoid creating such duplicative cost exposure.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

CAISO presented options to implement unforced capacity (“UCAP”) resource-counting standards while still pegging the MOO to the resource Pmax value. AReM supports this concept, as it would align CAISO RA standards with the CPUC’s UCAP implementation and potentially prevent the need for two planning reserve margins (“PRM”): one for CAISO’s RA backstop and one for the CPUC slice-of-day RA program. However, it is not entirely clear from CAISO’s presentation whether this would be the result. For instance, the presentation discusses “RA counting.” It is not clear whether this means counting for backstop purposes and whether local RA would be included, and how local regulatory authorities that do not use UCAP resource counting would be impacted. AReM recommends CAISO continue to coordinate with the CPUC on UCAP implementation and take measures to maximize alignment between CAISO and CPUC standards. AReM recommends that LSEs not be subject to cost allocation for backstop purposes if they are compliant with the CPUC’s RA program standards.

AReM is concerned that misalignment between the CPUC RA requirement and CAISO operational framework could result in inconsistent obligations and duplicative cost exposure for LSEs. CAISO should ensure that any RAAIM successor mechanism is fully aligned with CPUC RA program structures to avoid conflicting standards or unintended cost shifts.

Regarding backstop procurement issues, CAISO has designated Track 3B of this initiative for such discussions. AReM recommends CAISO begin this Track as soon as possible to facilitate coordination with Track 2.

4. Please submit your organization’s comments on the proposed outage definition changes.

AReM has no comments on outage definition at this time. 

5. Please provide any additional feedback not already captured.

AReM has no further comment at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the Resource Adequacy (RA) Modeling and Program Design (RAMPD) working group meeting on RA Availability Incentive Mechanism (RAAIM) reform options. Availability incentives and must-offer obligations (MOO) are critically important elements of the RA program, ensuring RA capacity is available when and where needed for reliability. In summary, CalCCA recommends that the California Independent System Operator (CAISO):

• Continue to evaluate the merits of RAAIM reform and RAAIM replacement options;
• Adopt the CAISO’s proposed basis for the MOO and performance benchmark, subject to one clarification to ensure resources are not double penalized for not being able to bid the portion of their resource that is on ambient derate or subject to foldback; and
• Adopt the proposed outage definitions that align the outage types with their operational characteristics and timing of submittal.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

During the meeting, the CAISO presented two policy options for availability incentives: (1) “RAAIM reform” in which the CAISO would incent availability during critical conditions using a simplified RAAIM structure; and (2) “RAAIM replacement” in which the CAISO would incent availability during critical hours when capacity is needed for the CAISO to pass the Extended Day-Ahead Market (EDAM) resource sufficiency evaluation (RSE). CalCCA does not take a position on whether the CAISO should adopt RAAIM reform or RAAIM replacement at this time, as both options have potential but require additional details to ensure they are effective at incentivizing availability and fair in their assessment of penalties and rewards. Instead, CalCCA provides observations for the CAISO to consider when evaluating the merits of each approach.

RAAIM Reform

If designed correctly, RAAIM reform could provide a two-stage penalty that addresses two different needs depending upon the severity of system conditions during the outage. First, unforced capacity (UCAP) counting would provide an incentive for resources to conduct planned maintenance to be available as much as possible. Second, reforming RAAIM as the CAISO suggests would provide an incentive to be available specifically during the most extreme grid conditions if possible and provide an immediate financial incentive during those times.

If the CAISO moves forward with RAAIM reform, the CAISO should take caution to avoid setting the penalty price too high as to risk future availability of resources that receive a penalty. Experience with similar availability incentives in other markets has revealed that penalty prices that are too high can adversely impact future supply availability by bankrupting entities that are unavailable during the assessment hours. The CAISO should look to other markets with similar structures to inform its penalty values to ensure they strike the right balance between maintaining incentives without being adversely punitive and align with how market conditions evolve over time.

RAAIM Replacement

Replacing RAAIM with an EDAM RSE failure surcharge could, in theory, provide incentives for availability during critical hours when capacity is needed for the CAISO balancing authority area (BAA) to pass the RSE. However, ensuring the cost allocation methodology is fully consistent with cost causation will be very difficult and, if not done correctly, may weaken the availability incentives. There are a number of reasons why the CAISO BAA may fail the RSE beyond resources not meeting their must-offer obligation. These reasons can occur on the supply-side or the load-side. The CAISO’s proposal addresses supply-side drivers but not load-side drivers, such as actual load coming in higher than forecasted or different local regulatory authorities having different RA programs and planning reserve margins. The CAISO should consider whether, given the difficulty of establishing cost causation, the RAAIM Replacement option will provide adequate incentives.  

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

CalCCA generally supports the CAISO’s proposed basis for the MOO and performance benchmark, subject to one clarification. The CAISO correctly states, “UCAP reflects statistical availability across the year, not a daily operating limit.”[1] Resources should therefore be required to offer what they are physically capable of providing in real-time – in other words, its PMAX minus any ambient derates, foldback, or forced outages or a ratio thereof if not fully shown for RA. This is similar to how variable energy resources are shown, in which they are counted for RA using an exceedance or effective load carrying capability, but bid to their forecasted capability.

Clarification is needed to ensure resources are not double-penalized for not being able to bid the portion of their resource that is on ambient derate or subject to foldback. Those characteristics are either captured via the resource’s qualifying capacity (QC) value or outage cards since these portions of the resource are not within the resource’s capability. In the future, they should either be accounted for in the QC or UCAP value, but not both. Based upon the Workshop Presentation, the CAISO’s proposal appears to adhere to this principle. As proposals are finalized at the California Public Utilities Commission and CAISO, however, coordination is required to ensure this principle is maintained.

[1]            Workshop Presentation, at 18.

4. Please submit your organization’s comments on the proposed outage definition changes.

CalCCA supports the proposed definitions that align the outage types with their operational characteristics and timing of submittal. The proposed definitions of forced, urgent, and planned outages provide clear differentiations between outage types.   

5. Please provide any additional feedback not already captured.

CalCCA has no additional comments at this time.  

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

The Resource Adequacy Modeling & Program Design (RAMPD) Track 2 – discussions on March 2, 2026, were intended to be an input session ahead of straw proposal on options for Resource Adequacy Availability Incentive Mechanism (RAAIM) reform. Two options proposed by CAISO include completely different approaches, one with RA unavailability during critical condition hours and the other based on Extended Day Ahead market (EDAM) Resource Sufficiency Evaluation (RSE) failures combined with RA must offer obligation (MOO) failures. Assessment during critical conditions is common to both options, while the current RAAIM design is based on specified hours irrespective of critical conditions. Focusing on measuring availability of RA capacity during critical conditions may simplify the process of assessment and may incentivize more RA resources to be available that can mitigate the critical conditions in the grid without being penalized for being unavailable during non-critical hours.

As presented, Option 1 (assessment during critical conditions: e.g., EEA 1-3 and EEA watch once RDRR has been triggered) is a simplified structure, expected to lower complexity and compliance burden during non-critical hours, and allows for quick targeted improvements without overhauling RA rules. However, this option lacks details on penalty structure and the efficacy of this option over the current RAAIM design. CAISO’s analysis, based on historical data, may shed light on whether this option would be a better option compared to the existing RAAIM construct. The Data analysis should compare the existing RAAIM charges and RAAIM applied only to the critical condition hours in a month and estimate if this option would incentivize unavailable MWs during those critical condition hours in that month.

Option 1 also considers eliminating RAAIM exemption without further details. There are a set of resources that are exempt from RAAIM for valid reasons and those exemptions should continue, especially if RAAIM is only going to be assessed during critical hours. Participating load is one type of resource that should retain its RAAIM exemption because it can proactively drop load to avoid critical conditions altogether, but then it cannot further drop load if the critical conditions materialize anyway, at which point it would be subject to RAAIM penalties.   For example:

(a) Participating load that is subject to the operating procedure (OP) System Emergency 4420 could have been told to drop load through the OP 4420 and there would be no non-spin to offer without an underlying load of the PL.

(b) Participating load can also support grid stability by shifting its pumped load to non-critical hours or hours during which there is overgeneration. But if it does so, there may be no load to offer non-spin and load drop during stressed condition hours.

In both scenarios above, PL supports grid reliability and attempts to avoid critical conditions by proactively providing grid support services before critical conditions develop. Without the RAAIM exemption, PL will be perversely incentivized to retain load and non-spin capability until critical conditions materialize to avoid RAAIM penalties, even though dropping load could avoid those conditions entirely. Because RAAIM does not incentivize PL like it does other resources during critical periods, PL should remain exempt from RAAIM.

If PL resources are no longer exempt from RAAIM, then measurement of availability should be based on the underlying load (only if load is present).  As an example (in the scenario “a” above), on a critical condition day, CAISO contacts CDWR under OP4420 to reduce load and CDWR drops the load to zero prior to the critical condition hours (OP 4420 is to prevent critical condition proactively). In this situation during the actual critical condition hour there will be no load to offer non-spin and load drop for RA as part of RA MOO. Similarly in the scenario (“b”) above, if the PL voluntarily shifts load to consume during non-critical/overgeneration hours so that it does not have to pump at all during critical hours on the same day, there will be no non-spin / load to drop during critical hours as it maximized its pumping by shifting from critical hours to non-critical hours and helping manage overgeneration conditions for grid stability.

To address both scenarios and continue receiving grid support, for a PL, measurement of RA availability should be based on the RA capacity, corresponding RA MOO (non-spin in the DAM and load drop energy bid in the RTM), and the underlying load during the critical hours. For this exact reason, a PL resource is currently exempt from RAAIM to avoid complexity of assessing RAAIM[1]. If complexity is still a concern, then continuation of the current exemption would be a practical approach for a PL resource.

Option 2 (RAAIM Replacement with EDAM RSE Failure Surcharge) focuses on critical hours where capacity is required for the CAISO BA to pass the EDAM RSE (i.e., to formulate the CAISO BAA’s reliable day-ahead operating plan) with the incentive based on the EDAM failure costs. If Option 2 is the preferred path, PL should maintain its penalty exemptions for the reasons discussed above, or, in the alternative, the availability assessment methodology described above should be considered.

[1] https://www.caiso.com/documents/stakeholdercommentsmatrix-reliabilityservices-strawproposal-availabilityincentivemechanism.pdf; Page 6: ISO Response: The ISO agrees with CDWR’s assessment and will create a rule that says pumping load will only be evaluated for availability in real-time in the circumstance where the demand schedule is greater than zero;  https://www.caiso.com/documents/draftfinalproposaladdendum-reliabilityservices.pdf; Page 53: Section 6.14.5. Participating Load that is also pumping load

will be exempt from the availability incentive mechanism due to their unique must-offer requirement that requires real-time energy offers only if the resource receives a DA AS schedule. This cannot be accommodated in the availability incentive mechanism framework.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

On slide #24, CDWR prefers (for a non-UCAP based resource) calculation based on MOO and the bid / self-schedule.

Reward: (Bid minus MOO capacity); MOO capacity is the RA MW shown.

(110-100)=10 MW, Payment=10x6.1=$61.

Penalty: (Bid minus MOO capacity)

(88-100)= 12 (short MW)

Charge= 12 x 6.1 = $73.2

Feedback on some of the questions:

When should penalties apply? During critical condition hours (subject to RAAIM exemption to remove barriers from resource participation in RA).

How strong should penalties be? Enough to incentivize availability and may be related to the current soft offer cap.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

RAAIM should be based on the shown RA and the corresponding MOO with potential continued RAAIM exemptions to avoid complexities.

4. Please submit your organization’s comments on the proposed outage definition changes.

The addition of urgent outage may provide flexibility and support grid reliability.

On the unavailability of PL (due to no load situation) as described in the 2 scenarios above (bullet #1 specifically), when there is no underlying load, there is a need for clear direction that such instances of no load condition can be treated as being “dispatched already” (and hence no need to submit as an outage), and thus would align with supporting the reliability and stability of the grid as a significant flexible resource and remove barriers to continue providing such support.

5. Please provide any additional feedback not already captured.

No further comment.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

Comments on Resource Adequacy Modeling and Program Design

Track 2 – RAAIM Reform Presentation

Department of Market Monitoring

March 23, 2026

Overview

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform: Input Session Ahead of Straw Proposal dated March 2, 2026.[1] In these comments, DMM adds to our previous comments dated March 13, 2025,[2] and includes additional comments on the following six issues:

• Availability and performance incentive mechanism principles. DMM supports reform of availability incentives and recommends adding a performance incentive so that resources are both offered and delivered when needed.
• Temporal assessment to preserve reliability. Emergency events and resource sufficiency evaluation (RSE) failures are too infrequent to sustain baseline availability incentives. Assessments should occur regularly to maintain reliability. Aligning any performance incentive with existing policies (e.g., EDAM RSE) reduces policy complexity.
• Penalty incentive prices. Penalty prices should be calibrated with interrelated policies. Availability penalties should reference an RA price benchmark to prevent cross-market arbitrage, while performance prices should align with indicators of stressed conditions (e.g., EDAM RSE) to produce clear signals during tight grid conditions.
• Must-offer obligations. The must-offer obligation (MOO) should continue to ensure the resource’s shown RA is fully available to the market, and maintain alignment with availability and performance assessments to ensure consistent benchmarking. The MOO should ensure full market availability of expected capacity determined under unforced capacity (UCAP) and non-UCAP methodologies.
• Storage availability and discharge feasibility. Incentives should incorporate state-of-charge (SOC) by assessing either current SOC sufficiency or the feasibility of charging to meet discharge obligations during assessment periods.
• Outage definitions. DMM supports creating an “urgent but discretionary” outage category and requests clarification on removal of the short-notice opportunity outage to preserve reliable substitution pathways and avoid unnecessary penalties.

Comments

Design principles for performance and availability incentives

DMM supports reform of the resource adequacy availability incentive mechanism (RAAIM) and continues to recommend pairing an availability incentive with a performance incentive to better align incentives with system needs during stressed grid conditions. Availability incentives motivate offers into the market, while performance incentives motivate delivery to meet schedules. This combination is more likely to achieve the policy objective of ensuring RA is available, and performs when and where needed.

In March 2025, the ISO proposed a new mechanism called Measuring Unavailable RA (MURA) that would assess unavailability during stressed grid conditions and allocate penalties for under-performance to load. The proposal introduced new designs for the definition and periods of availability assessment, the must-offer obligation, penalty prices, and cost allocation.[3] At that time, DMM supported the development of a new incentive mechanism and reiterated its recommendation for a performance incentive in addition to an availability incentive.[4]

The ISO has since revised its straw proposals and, in March 2026, presented two bookends for RAAIM reform: (1) enhancing the existing incentive mechanism, or (2) applying EDAM RSE failure surcharges and payments from the day-ahead and real-time markets. These proposals highlight the need for RAAIM reform to incent availability for RA when and where it is needed, and to ensure incentive levels and measurement are aligned with policy goals.

Availability incentives provide financial motivation for resources to bid into the market, but do not provide a financial motivation to perform, i.e., meet the resource’s schedule. As a result, DMM continues to recommend that the ISO consider a performance incentive mechanism that measures a resource’s schedule against its metered contribution to the system. A performance mechanism and an availability incentive are complementary and can be considered as a package to meet the operational needs of the system.

Historical experience indicates that resource availability does not necessarily result in resource performance. DMM routinely publishes metrics on RA availability and performance during tight grid conditions. The most recent report found average availability of 92 percent and 91 percent of capacity bid in or self-scheduled in the day-ahead and real-time, respectively. For performance, in real-time an average of 71 percent of RA capacity was scheduled, but only 66 percent responded.[5] The difference in performance is approximately seven percent of resource schedules—about 2,600 MW—that did not perform during stressed grid conditions. On the margin, this amount of capacity can be critical under stressed conditions. With the current and proposed availability incentives, this non-performing RA capacity would not be assessed penalties.

Market design should create adequate incentives while avoiding over-penalization. It is important to ensure policy goals are met without over-penalizing resources for normal maintenance and unforeseen circumstances. Under the current RA paradigm, RA should be available to ensure reliability, however in cases of physical limitations, resources can derate availability or take an outage with replacement capacity. An availability incentive and a performance incentive could be assessed at different levels of grid stress, allowing increasing penalties commensurate with system needs while maintaining reasonable treatment of maintenance and unforeseen outages.

Temporal coverage of incentives

The ISO suggested aligning availability incentive assessments with tight grid conditions, such as restricted maintenance operations (RMO) and energy emergency alert (EEA) hours, or intervals when the CAISO balancing authority area (BAA) fails the resource sufficiency evaluation (RSE).[6] DMM has previously recommended assessing RAAIM daily, targeting days of tight grid conditions (or EDAM RSE failures). However, DMM has cautioned that this approach may create capacity shortfalls if non-penalized outages were to create tight system conditions.[7] Therefore, it may be more appropriate to continue assessing the potential application of any availability incentive mechanism more frequently than only during stressed system conditions.

Over the last six years, failures of the RSE in the Western Energy Imbalance Market (WEIM) by the CAISO balancing authority area have been increasingly rare, and the CAISO BAA has experienced fewer instances of grid tightness. Figure 1 shows data on the frequency of tight grid conditions and the percentage of intervals in which the CAISO BAA failed the WEIM RSE. The left side of Figure 1 presents the percentage of intervals the CAISO BAA failed the WEIM RSE. There were no test failures in 2023 and 2025, and for 2020–2022 and 2024, the percentage of intervals was a maximum of 0.5 percent, or around 44 hours in August 2020.

Under the current market design, this would be equivalent to assessing RAAIM for generic RA for roughly nine days. The right side of Figure 1 shows the number of hourly periods during the availability assessment hours where the ISO has had Flex Alerts, Restricted Maintenance Operations (RMO), or any Energy Emergency Alert (EEA)—called RMO+ intervals.[8] From 2023 to 2025, there were only 42–72 hourly intervals with RMO+ conditions in the CAISO BAA each year. Figure 1 illustrates the infrequency of tight grid conditions and supports DMM’s recommendation that the ISO assess the availability incentive mechanism(s) more frequently than only during stressed grid conditions.

Figure 1. RMO+ and RSE failures from 2020-2025

DMM continues to recommend both an availability and performance incentive. The limited number of WEIM RSE failures and RMO+ conditions is due to a variety of reasons. However, DMM notes that the current must-offer obligation and RAAIM structure have likely led to an endogenous process that yields relatively few tight grid conditions. Removing or weakening regular incentives for availability could increase the frequency of tight conditions. As a result, DMM recommends against an availability incentive design that substantially reduces current incentives to provide resource availability to the market.

The 24-hour must-offer obligation (MOO) for resource adequacy capacity already provides a tacit incentive for resource availability. DMM recommends a timing approach for the availability incentive mechanism that is regular and formalizes the requirement to provide RA capacity during crucial hours throughout the month beyond just RMO+ or EDAM RSE failure hours. For example, the availability mechanism could be assessed in a manner similar to the supply cushion UCAP proposal by the ISO, and could carry penalties and payments for the top 20 percent of tight hours during a month.[9]^,[10],[11]  The availability mechanism should ensure capacity is operationally capable throughout the market, and the incentive timing and price should reflect that in a manner commensurate with RA requirements and prices. A properly designed net qualifying capacity (NQC) accounting framework should make meeting resource availability requirements straightforward, and the availability incentive mechanism will not be unjust or punitive if the resource accurately reflects its true operational capability.

The assessment periods for availability and performance mechanisms do not need to be the same. As noted, regular availability incentives have likely contributed to the CAISO BAA avoiding tight grid conditions over the past few years. Further, resource availability does not ensure performance. DMM recommends the ISO consider a performance incentive that is assessed during tight grid conditions or EDAM RSE failures, and is aligned with current market policies, such as the EDAM RSE. Aligning a performance mechanism with existing policy reduces complexity and clarifies the incentive process.

Incentive prices

Availability and performance mechanisms should be designed to ensure that resources do not have an incentive to sell RA capacity beyond what they can reasonably expect to make available. To achieve this objective, the pricing of these mechanisms should be grounded in market conditions, such that expected penalties for non-availability exceed any potential gains from selling RA capacity that cannot reliably perform. This approach helps ensure that resources offer RA that is consistent with their expected operational capabilities, rather than making commitments that create reliability risks.

When RA capacity is shown but is unavailable or unable to perform, penalties should be sufficiently strong to discourage arbitraging the RA market and the ISO’s incentive mechanisms to promote an efficient RA market. Because load-serving entities bear the cost of RA procurement, it is reasonable that penalties collected under these mechanisms be returned to load. The incentive prices must therefore be calibrated to avoid creating opportunities for resources to benefit from RA sales in bilateral markets when they lack a credible expectation of availability and performance.

Several pricing methodologies have been discussed, including scaled real-time prices and RA price benchmarks.[12] Among these, DMM recommends the use of RA price benchmarks for the availability mechanism. RA price benchmarks reflect the value of bilateral RA transactions and therefore provide a penalty signal that is directly comparable to the market that the policy is designed to influence. Real-time energy prices, by contrast, reflect short-term energy market conditions and do not provide an accurate estimate of capacity value. As a result, they would not provide a stable or meaningful incentive for long-term RA availability.

DMM also supports a complementary performance incentive mechanism to ensure that resources perform when system conditions are stressed. While the availability incentive should be based on RA price benchmarks to align with bilateral RA market valuations, the performance incentive should reflect operational costs borne by the CAISO BAA during stressed grid conditions. These costs could include, for example, expenditures associated with the RSE or power balance constraints. Deriving performance incentive prices from CAISO BAA operational costs ensures that the mechanism reflects the actual system impacts of non-performance and provides a clear signal for resources to deliver capacity when it is most needed.

Taken together, the availability and performance mechanisms establish a consistent, transparent, and market-aligned incentive structure. Availability penalties based on RA price benchmarks discourage resources from offering RA capacity they cannot reliably provide, while performance incentives based on CAISO BAA costs ensure that resources are motivated to deliver operational capacity during critical system conditions. Although RA benchmark data may be available only with a lag, this issue can be addressed through stakeholder discussions to determine acceptable estimation procedures. When appropriately calibrated, both mechanisms will enhance RA market efficiency and support reliable system operations.

Lastly, DMM continues to recommend that incentive mechanisms not be netted across a month but instead be assessed on a daily basis.[13] Consider, for example, a resource that is completely unavailable for two extreme load days in a month but otherwise fully available. Under the current monthly RAAIM framework, this resource would face an approximately 1.2 percent penalty—an amount that provides little incentive to ensure availability on the most critical days. These are precisely the days when the system most needs RA capacity. A daily RAAIM assessment ensures that penalties are tied to performance on rare, stressed system-condition days, rather than being diluted through monthly averaging, thereby improving the alignment of incentives with system needs.

Must-offer obligations and performance benchmarks

Currently, ISO resources have a 24-hour MOO for RA resources up to their shown RA, or in the case of variable energy resources (VERs), the MOO matches their most recent forecast. The ISO is revisiting the MOO for a number of reasons, but importantly as it relates to RAAIM reform and the performance benchmark to assess an incentive mechanism. RAAIM is presently assessed against the RA supplied to the market, and the ISO seeks to ensure consistent treatment as these reforms progress.

DMM recommends that the ISO ensure the MOO and performance benchmark are not punitive and are aligned with the incentives built into related policies. Local regulatory authorities (LRAs) already define net qualifying capacity accounting frameworks (e.g., UCAP), and the ISO operationalizes RA obligations through the MOO and RAAIM. The MOO was originally established to ensure RA capacity is made available to the market up to the supplied RA of the resource, and DMM continues to view this as an important market design element.

The UCAP framework will establish RA capacity based on a statistical average of the availability of a resource after accounting for its forced outage rate. However, some resources under the jurisdiction of different LRAs will continue to have RA capacity determined using an installed capacity framework. The MOO should be compatible with both approaches to ensure the full expected value of RA capacity is available to the market regardless of the accounting framework used to determine capacity value.

The proposed performance benchmark would define the value against which resources are assessed under availability and performance mechanisms. DMM requests further clarity from the ISO regarding how this benchmark would be set and in what circumstances it might deviate from the current RAAIM assessment values based on supplied RA. If the benchmark simply reflects the supplied RA quantity, DMM does not see a need for changes. The existing market design already incentivizes resources to provide their supplied RA (or more) through avoided RAAIM penalties, potential over-performance payments, and opportunities to earn revenues in energy and ancillary service markets.

In reassessing the MOO, DMM also recommends that the ISO revisit the RAAIM exemption for small resources. Currently, resources below 1 MW are exempt from RAAIM. DMM recommends removing this exemption. Demand response (DR) is one of the primary categories where individual resources frequently fall below 1 MW. DMM’s regular reporting on DR performance has shown that, on average, DR resources would be subject to RAAIM during tight system conditions if they were not exempt. For example, in 2024, roughly 85 percent of DR resources bid in their RA obligation, while only 70 percent of total DR capacity performed as scheduled.[14] This disparity leads DMM to recommend eliminating exemptions from any availability or performance incentive mechanism.

Lastly, when considering the balance between availability and performance mechanisms, an additional option is to maintain the MOO while using bid insertion. DMM has previously noted that requiring all resources to bid into the market—either explicitly or through bid insertion—could effectively substitute for an availability incentive mechanism.[15] While DMM recommends continuing RAAIM reform, it also acknowledges the usefulness of bid insertion as a tool for ensuring availability when resources are not on outage or otherwise derated.

Battery must-offer obligations, charging, and incentive mechanisms

DMM continues to recommend that the ISO subject battery storage resources to RAAIM in a manner that reflects the state-of-charge (SOC) of the resource.[16] Some SOC-related limitations can be addressed through a UCAP accounting methodology by limiting storage resources to operational ranges that avoid reduced power output due to nonlinearities. However, there may remain cases in which a storage resource indicates availability to the market through discharge bids but lacks sufficient stored energy or charging capability to provide the offered capacity. Combined with the proposal to remove the flexible RA framework—which, in some cases, includes a charging MOO—it becomes increasingly important to determine an incentive mechanism and establish other market design elements that ensure storage resources’ ability to discharge when needed.[17]

DMM recommends that the ISO develop an availability mechanism that incorporates SOC to ensure storage resources can feasibly meet their discharging obligations during assessment periods. For RA, discharging capability is the relevant operational contribution needed for system reliability, and charging is the means through which that capability is maintained. DMM recommends that the ISO work with stakeholders to formulate an incentive mechanism that evaluates whether a storage resource either has sufficient SOC or has the ability to obtain the SOC necessary to meet its discharging obligation.

An incentive mechanism could use a two-step framework to determine whether a storage resource can meet its performance benchmark. First, the mechanism could determine whether the resource currently has the SOC needed to satisfy the obligation. If not, the mechanism could then determine whether the resource has feasible charging bids in place such that it could procure SOC if required. In advisory intervals, if the market identified a need for a depleted storage resource during stressed conditions, feasible charging bids would be required for the system to rely on that resource. If the resource had such bids, it would be considered available and therefore not subject to an availability or performance penalty.

This proposed approach would remove the need for a charging MOO, including for flexible RA. However, to the extent the ISO is not able to implement a more complex approach to determining storage availability based on SOC, a charging MOO could play a similar role in supporting availability of storage capacity. DMM recommends that the ISO continue stakeholder engagement to develop an availability incentive mechanism for storage that incorporates both the SOC during the assessment period and the potential ability of the resource to obtain SOC through feasible bids.

Outage types

DMM continues to recommend introducing an additional outage type that identifies outages that are urgently required but discretionary during stressed system conditions.[18] Forced outages, as currently defined, are requested within seven days of the start of the outage and may lead to local or system reliability concerns. Given these implications, DMM recommends that the ISO enhance outage reporting requirements so that scheduling coordinators clearly indicate whether a forced outage is immediately necessary for plant operation or is discretionary maintenance that could be postponed in the event of imminent system reliability concerns.

DMM also seeks further clarification regarding the proposed removal of short-notice opportunity outages. During the March 2026 workshop, the ISO indicated that substitution capacity is not being used and therefore may no longer be offered within the forced outage timeframe. Given the potential for increased penalties under revised incentive mechanisms, DMM finds it prudent to continue allowing resources to provide substitute capacity. Such a provision would support system reliability while allowing the outage and avoiding unnecessary penalties. DMM requests additional information from the ISO regarding this proposal, and the implications for outage management and substitute capacity provisions.

[1]  Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform, California ISO, March 2, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Track-2-Options-for-RAAIM-Reform-Mar-2-2026.pdf

[2]  Comments on Resource Adequacy Modeling and Program Design Working Group, Department of Market Monitoring, March 13, 2025: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-working-group-mar-13-2025.pdf

[3]  RA Modeling and Program Design Straw Proposal Options – Track 2: Availability and Incentive Mechanisms, California ISO, March 4, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Mar-03-2025.pdf

[4]  Comments on Resource Adequacy Modeling and Program Design Working Group, Department of Market Monitoring, March 13, 2025: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-working-group-mar-13-2025.pdf

[5]  2024 Annual Report on Market Issues and Performance, Department of Market Monitoring, August 7, 2025, p 300, table 15.6: https://www.caiso.com/documents/2024-annual-report-on-market-issues-and-performance-aug-07-2025.pdf

[6]  Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform, California ISO, March 2, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Track-2-Options-for-RAAIM-Reform-Mar-2-2026.pdf

[7]  Comments on Resource Adequacy Modeling and Program Design Issue Paper, Department of Market Monitoring, December 6, 2024: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-issue-paper-dec-06-2024.pdf

[8]  The definition of stressed grid conditions changed in April 2022, and the descriptions are presented in the Department of Market Monitoring 2022 Annual Report on Market Issues and Performance, July 11, 2023, pp 216-219: https://www.caiso.com/documents/2022-annual-report-on-market-issues-and-performance-jul-11-2023.pdf

[9]   Resource Adequacy Modeling and Program Design: Modeling Improvements and Straw Proposal Leanings and Options, California ISO, February 10-11, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Feb-10-2025.pdf

[10] Resource Adequacy Modeling and Program Design: Straw Proposal Options: Track 2 Availability and Incentive Mechanisms, California ISO, March 4, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Mar-03-2025.pdf

[11] Comments on Resource Adequacy Modeling and Program Design Working Group, Department of Market Monitoring, March 13, 2025: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-working-group-mar-13-2025.pdf

[12]  Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform, California ISO, March 2, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Resource-Adequacy-Modeling-and-Program-Design-Track-2-Options-for-RAAIM-Reform-Mar-2-2026.pdf

[13]  Comments on Resource Adequacy Modeling and Program Design Revised Discussion Paper and Final Recommendation Plan, Department of Market Monitoring, August 12, 2024: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-revised-discussion-paper-and-final-recommendation-plan-aug-12-2024.pdf

[14] Demand response issues and performance 2024, Department of Market Monitoring, March 14, 2025, p 4: https://www.caiso.com/documents/demand-response-issues-and-performance-2024-mar-14-2025.pdf

[15] Comments on Resource Adequacy Modeling and Program Design Working Group, Department of Market Monitoring, March 13, 2025: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-working-group-mar-13-2025.pdf

[16] Comments on Resource Adequacy Modeling and Program Design Revised Discussion Paper and Final Recommendation Plan, Department of Market Monitoring, August 12, 2024: https://www.caiso.com/documents/dmm-comments-on-resource-adequacy-modeling-and-program-design-revised-discussion-paper-and-final-recommendation-plan-aug-12-2024.pdf

[17] Regional Issues Forum, WEM Regional Issues Forum, March 16, 2026, p 40: https://www.westernenergymarkets.com/documents/presentation-wem-regional-issues-forum-mar-16-2026.pdf

[18] Comments on Resource Adequacy Modeling and Program Design January 16, 2024 Working Group, Department of Market Monitoring, January 30, 2024: https://www.caiso.com/documents/dmm-comments-on-the-resource-adequacy-modeling-and-program-design-jan-16-2024-working-group-jan-30-2024.pdf

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

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

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

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

4. Please submit your organization’s comments on the proposed outage definition changes.

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

5. Please provide any additional feedback not already captured.

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

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the independent ratepayer advocate at the California Public Utilities Commission.  Our goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.  Cal Advocates appreciates the opportunity to comment on the Resource Adequacy Modeling and Program Design (RAMPD) Track 2 meeting’s discussions around resource adequacy (RA) resource’s must-offer obligations (MOO) and associated resource adequacy availability incentive mechanism (RAAIM).[1]

CAISO should establish an RA availability policy that distinguishes between system planning policy – including RA programs and accreditation – and grid operations, through either modifications to RAAIM or a replacement mechanism.  Unforced capacity (UCAP) accreditation of resources belongs in system planning policy, whereas local regulatory authorities (LRAs) establish accreditation and other RA program details.  Grid operational issues include market dispatches, grid conditions, resources’ offers and outages, and any availability penalties managed by CAISO.  CAISO should design MOO and RAAIM policies that are as uniform as possible for grid operations, despite any differences in LRA rules.  The current RAAIM design incentivizes RA capacity to meet the MOO during the availability assessment hours.[2]  There are no other tools that directly enforce the MOO in operations, except the CAISO Tariff itself.[3]

CAISO should not provide additional incentive payments for RA resources to meet their MOO.[4]  Resources shown for RA on supply plans are already paid through their RA contracts and therefore have an obligation to be available to CAISO in accordance with the CAISO Tariff.[5]  CAISO should establish an appropriate penalty for resources that fail to make themselves available to CAISO markets in accordance with the MOO, given the lack of other market tools to ensure operational availability.

[1] CAISO, Initiative: Resource Adequacy Modeling and Program Design (RAMPD Initiative Website), March 2, 2026.  Available as “Presentation - Resource Adequacy Modeling and Program Design Track 2 - RAAIM Reform Options - Mar 02, 2026” (CAISO Slides) at https://stakeholdercenter.caiso.com/StakeholderInitiatives/Resource-adequacy-modeling-and-program-design.

[2] “RAAIM enhances grid reliability and market efficiency by providing an incentive for RA resources that meet their bidding obligation and provide energy bids to the market.”  CAISO, CAISO Settlements and Billing BPM Configuration Guide CC 8831 Version 5.3 at Section 2.1.  Available at: https://bpmcm.caiso.com/Pages/SnBBPMDetails.aspx?BPM=Settlements%20and%20Billing.

[3] The CAISO Tariff describes consequences of tariff violations and sanctions including for availability and outage reporting.  See CAISO Tariff Chapter 37 and Section 37.2.4.1.

[4] CAISO Slides at 24.

[5] CAISO Tariff Section 40.6 and its subsections.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

CAISO should consider the role of storage and energy used to charge storage when it decides which hours are covered by any modification or replacement of RAAIM.  As an example, consider a case where CAISO charges penalties only during energy emergency alert 3 (EEA3) conditions.[1]  On a stressed day during hours that aren’t EEA3, assume that some generators fail to meet their MOO early in the day, resulting in less energy available to charge storage than would have occurred with full MOO compliance.  Then, later in the day, the grid experiences EEA3 conditions and load shedding.  CAISO should appropriately penalize MOO violations that contribute to energy shortages, even when those violations occur in non-peak hours.

CAISO proposed an option where the MOO penalty would flow from resource sufficiency evaluation (RSE) surcharges.[2]  If CAISO chooses to further develop the RSE-based approach, CAISO should design the approach to first allocate the RSE surcharge to specific RA resources that were not available in the RSE, as proposed in CAISO’s slides.[3]

A CAISO policy that ties MOO penalties to RSE failures should account for the fact that non-RA resources also help avoid RSE failures.[4]  If CAISO continues to develop the RSE-based policy, it should address the ways RA resources that fail to meet their MOO may lean on non-RA resources in the RSE process, reducing the deficient RA resources’ penalties.[5]  Cal Advocates presents two questions that CAISO should consider and provide additional information on in future discussions of an RSE-based policy in this initiative:

• In scenario 2 on CAISO Slides at 26, the RSE failure quantity, and therefore the penalty assessed against RA resources that failed to meet their MOO, is decreased by the offers from non-RA resources.  Should the MOO policy account for non-RA resources filling in for RSE requirements when RA resources are offered at less than their RA obligations?
• A third scenario CAISO could consider: If the CAISO balancing authority area does not fail the RSE, but would have failed the RSE without the contribution of non-RA resources, should the MOO policy account for that near-failure?

[1] CAISO Slides at 11.

[2] CAISO Slides at 13.

[3] CAISO Slides at 26.

[4] CAISO Slides at 25.

[5] In the RSE process, Scheduling Coordinators submit bids of resources to the extended day-ahead market each day and the CAISO checks to make sure each hour’s showings are at least equal to forecasted hourly needs of the CAISO balancing authority area.  Both RA and non-RA resources are used to meet those hourly needs, so an RA-based penalty must be applied only to RA resources if the CAISO uses the RSE process to check for the availability of RA resources.  CAISO Slides at 25-28.  For more information on the RSE process, see: CAISO, Day-Ahead Sufficiency Issue Paper, December 5, 2023 at 3-5.  Available as “Issue Paper – Day Ahead Sufficiency” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Day-ahead-sufficiency.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

CAISO presented an example that distinguishes between a resource’s RA accreditation, its MOO, and a performance benchmark megawatt (PBMW) quantity, and CAISO proposes to use the PBMW to calculate any penalties.[1]  Separate from decisions around the capacity values that CAISO will include in the penalty calculation, CAISO should not create distinct MOO and PBMW quantities.  If CAISO finds that the current definition of the must-offer obligation is insufficient, it should plan a tariff revision to address the issue, rather than introduce another quantity into the policy that is used as the obligation amount.  Obligations should not be vacuous.

[1] CAISO Slides at 19-21.

4. Please submit your organization’s comments on the proposed outage definition changes.

Cal Advocates provides no comments at this time.

5. Please provide any additional feedback not already captured.

During the meeting, several stakeholders mentioned concerns about “double penalties,” where a resource’s forced outage creates immediate costs from MOO penalties and also reduces revenues for future UCAP-accredited RA revenues.[1]  In previous meetings, CAISO staff mentioned Federal Energy Regulatory Commission (FERC) precedent on a similar topic, where FERC found that it was just and reasonable for a resource to face both operations penalties and accreditation changes.[2]  Cal Advocates requests that CAISO provide a specific FERC citation for this reference.

Finally, CAISO should improve the meeting cadence and decision-making process for its RAAIM policy development.  If CAISO wishes to design and implement new RAAIM policy, CAISO should plan a regular meeting cadence that moves specific policies forward.

[1] See “Video - Resource Adequacy Modeling and Program Design (RAMPD) Track 2 - RAAIM Reform Options - Mar 02, 2026” beginning at 2:18:50.  Available at the RAMPD Initiative Website.

[2] CAISO, Resource Adequacy Modeling and Program Design Working Group - Track 3 & Track 2, February 11, 2025, posted February 19, 2025, beginning at 5:20:30.  Available at: the RAMPD Initiative Website.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

Calpine supports CAISO’s general inclination to strengthen RA availability incentives by focusing them on a narrower set of critical hours, eliminating exemptions, and adjusting penalty pricing.  In addition, Calpine agrees with the CAISO that once UCAP is implemented, a resource’s must-offer obligation could diverge from its committed UCAP. 

Calpine also encourages CAISO to keep RAAIM changes aligned with a review of outage policy, including planned outage substitution rules and options for forced outage replacement and substitution. RAAIM reforms are best considered with greater clarity about exactly what outages will be subject to RAAIM penalties.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

Both options proposed by CAISO seem promising and warrant further development.  Calpine does not have enough information to support either proposal currently.  Option 1 generally focuses on the right kinds of hours to measure performance, i.e., hours during emergency and near-emergency conditions.  Calpine is less clear on when RSE failures, the focus of Option 2, are likely to manifest.  In addition, as the CAISO has indicated, under option 2, it would be important to identify the portion of an RSE failure that is due to the unavailability of RA capacity before ascribing RSE penalties to unavailable RA capacity.

With respect to penalty levels, to encourage suppliers to perform or replace capacity, penalties should be tied to the cost of replacement capacity. Ideally, penalties would be tied to market prices, but such prices are not readily observable in California’s bilateral market. Based on the discussion at the March 3 stakeholder meeting, one appeal of the RSE based approach is that it incorporates market-based pricing because RSE penalties are based on the cost of curing deficiencies through purchases of firm energy.

In addition, better energy and AS scarcity pricing may also provide performance incentives.  To that end, Calpine supports CAISO’s work in the Price Formation Enhancements initiative and, as scarcity pricing improves, is open to relying more on scarcity pricing to incent performance and using a simpler capacity incentive structure.

Calpine notes that the examples in Section IV of the presentation for the March 3^rd stakeholder meeting were not discussed in any detail at the meeting and may not reflect CAISO’s full thinking.  Nevertheless, to the extent that they reflect possible implementation, Calpine does not support normalizing a monthly penalty price (in $/kW-month) by the number of hours in a month to calculate an hourly penalty price, as in the example for Option 1.  Penalties should be focused on hours of actual or potential capacity scarcity.  For example, it may be reasonable to assess a penalty of CAISO’s assumed penalty price of $4.40/kW-month in the example on slide 23, in a single hour ($4,400/MWh) if that is the only hour of capacity deficiency in a month.  (Both the New England Pay-for-Performance and PJM Capacity Performance designs use penalty prices of thousands of dollars per hour derived by dividing net CONE, an estimate of the cost of replacement capacity by the expected scarcity hours in a year.). At a minimum, CAISO should normalize by AAH or AAH on high net load days (the measurement window in CAISO’s UCAP proposal) rather than all hours to calculate an hourly penalty price.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

Calpine agrees that if QC is measured in UCAP, then the MOO must correspond to something like ICAP, i.e., UCAP is a measure of average availability.  To realize its UCAP on average, a resource must be fully available at its ICAP when it is not on forced outage.

4. Please submit your organization’s comments on the proposed outage definition changes.

Calpine recommends keeping the Short Notice Opportunity outage category and the associated RAAIM/substitution exemption.  These outages are reviewed by the Operations Engineering team and are only allowed in periods of low reliability risk. The new Urgent category functions like Short Notice Opportunity but carries RAAIM exposure. Adding Urgent may provide value as an additional tool, but removing Short Notice Opportunity at the same time creates unnecessary exposure and conflicts with the overall proposal’s notion that RA incentives should target performance during periods of risk.

5. Please provide any additional feedback not already captured.

Calpine has no additional feedback at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

Please see MRP's comments in the attached document.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

Please see MRP's comments in the attached document.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

Please see MRP's comments in the attached document.

4. Please submit your organization’s comments on the proposed outage definition changes.

Please see MRP's comments in the attached document.

5. Please provide any additional feedback not already captured.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

NCPA strongly questions the need for any material reform to RAAIM at this time.  Prior to engaging further in this effort, it will be critically important to determine if there is in fact a real problem that needs solved.

During the past few years, a significant amount of new generating unit and battery energy storage capacity has been interconnected to the CAISO BAA and is now available to support system reliability.  As described in the CAISO Key Statistics document posted on the CAISO website, the January 2026 report states that as of February 1, 2026 there is now over 15,000 MW of installed battery energy storage capacity available in the system and approximately 54,000 MW of Resource Adequacy Net Qualifying Capacity (NQC) available to support system reliability.  Also, in the CAISO Generator Interconnection clusters 14 and 15 alone, there are thousands of additional MWs of proposed new generating unit and battery energy storage capacity interconnection requests, which will further increase the amount of new capacity that will be added to the system throughout the balance of this decade and beyond to support reliability.

Developing and contracting for new capacity is a detailed, complex, and expensive process. Most of the business structures that have been put in place during the recent years have been designed around the current market rules, including RAAIM, and these recent investments amount to billions of dollars. Changes to market rules that could disrupt the balance of benefits and burdens in such contractual structures therefore cannot be taken lightly.  Negative impacts resulting from unnecessary market rule changes will ultimately be borne by the key beneficiary, the California ratepayer, and in the current environment where affordability is a key challenge, CAISO must be certain that any changes they may propose to market rules are indeed needed and justified.  As such, CAISO must demonstrate that the RAAIM structure that is in place today no longer serves the purpose for which it was adopted—namely incentivizing capacity that is committed as Resource Adequacy to be made available for CAISO dispatch.  

Based on these facts and the critical need to maintain a consistent business environment to encourage further investment in new capacity, NCPA believes RAAIM is achieving its intended purpose and providing a strong incentive for capacity that is committed as RA to be made available to support system reliability when needed.  NCPA could support select, targeted enhancements to RAAIM to refine the mechanism (e.g., with focus on the RAAIM penalty price), but NCPA does not believe that material reform to RAAIM is either needed or justified at this time.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

As further discussed in NCPA’s response to Question 1 above, NCPA does not support material reform to RAAIM at this time.  Rather, NCPA believes CAISO should focus its limited resources on discrete, surgical enhancements to “tune-up” the current RAAIM mechanism; namely the following:

• RAAIM penalty price – the RAAIM penalty prices should (i) be equal to the Cost of New Entry rate used for CPM procurement, and (ii) shaped to reflect a summer and non-summer period to align with the shaped profile of Resource Adequacy prices commonly transacted in the bilateral market.

• Performance measurement – retain the current measurement hours for both generic and flexible capacity commitments, but calculate and assess penalties based on daily performance as compared to monthly performance

NCPA also strongly opposes the following concept noted in the March 2, 2026 presentation titled “Input Session Ahead of Straw Proposal – Options for Reform”:

Exemptions – NCPA strongly opposes any proposal to eliminate the current RAAIM “exemptions” further described in Section 40.9.2 of the CAISO Tariff.  The current exemptions described in Section 40.9.2 of the CAISO Tariff were implemented for good cause, and have been found to be just and reasonable.  For example, Sections 40.9.2 (b)(2) and 40.9.2(c)(2) apply to a Load-Following MSS.  A Load-Following MSS operator is required by contract to balance its load and supply in real-time, every 5-minutes, to ensure it has sufficient energy committed to service its load.  To the extent a Load-Following MSS operator fails to balance its load and supply in real-time within a defined band, the Load-Following MSS operator is assessed material deviation penalties, and the deviation penalties are designed to incentivize a Load-Following MSS operator to comply with these existing contractual requirements.  As such, since a Load-Following MSS operator is contractually required to service its load in real-time, and incurs material penalties if it fails to do so, assessing RAAIM penalties to a Load-Following MSS operator would result in “double penalties.” Elimination of this exemption is therefore not needed to incentivize performance.  Sections 40.9.2 (b)(2) and 40.9.2(c)(2) of the CAISO Tariff were designed to account for and respect these unique operating requirements, and such treatment is still valid and applicable today.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

Under the current RAAIM structure, performance is measured at the resource level and is based on the actual amount of capacity that is committed to CAISO as shown Resource Adequacy capacity.  Performance is not measured based on a resource’s NQC.  NQC simply accounts for the amount of Resource Adequacy capacity that a resource could show as Resource Adequacy capacity.   Only the amount of capacity actually shown as Resource Adequacy capacity is subject to performance requirements under RAAIM.  This is a key distinction because notwithstanding an LRA’s accreditation rules, only the actual amount of capacity shown as Resource Adequacy capacity (not the NQC) is what is expected to be made available to the CAISO for dispatch.  The current RAAIM mechanism does exactly that, it measures the performance of the actual amount of shown Resource Adequacy capacity committed to the market irrespective of LRA-specific accreditation rules.  Therefore, even though LRAs may adopt different rules for resource accreditation, for RAAIM there is a common and consistent treatment for all capacity that is shown as Resource Adequacy. Because the LRAs’ specific accreditation rules do not affect the counting of shown Resource Adequacy capacity, NCPA believes that no adjustment to the RAAIM structure is required to account of differences in LRA accreditation rules.

Also, NCPA strongly believes that only the actual amount of capacity that is shown to the CAISO as Resource Adequacy capacity should be subject to a must offer obligation.  It is not appropriate for the CAISO to assess any must offer obligation on a resource for a greater amount of capacity than is shown on a Resource Adequacy plan.  Imposing a must-offer obligation on a resource for an amount of capacity that is greater than the amount of Resource Adequacy capacity that is shown on an RA Plan is, in effect, a “taking” without due compensation.  There are many reasons why a resource may elect not to commit capacity as Resource Adequacy, and unjustifiably taking such uncommitted capacity without due consideration or compensation is not commercially reasonable.  Also, a resource may have elected not to commit all of its available capacity as Resource Adequacy capacity because the resource owner knows that it may not be able to provide such capacity due to operational or economic considerations.  In either case, the CAISO should not have the right to claim title to or use uncommitted or unencumbered capacity that has not be explicitly shown to the CAISO on a Resource Adequacy supply plan.

4. Please submit your organization’s comments on the proposed outage definition changes.

NCPA partially supports the proposed new outage type, “Urgent Planned Outage.” NCPA agrees there is a need for generators to report what are essentially forced outages before the 7-day forced outage timeline. However, NCPA proposes that these outages also receive “opportunity” treatment similar to the current treatment accorded to off-peak opportunity RA outages. That is, they should not be subject to a substitution obligation if CAISO operators believe there is an adequate supply cushion. The process would be that an SC submits a request for an urgent outage, CAISO assesses system conditions for the duration of the proposed outage, and, if there is sufficient supply cushion, CAISO will approve the outage without substitution requirements. If conditions are tight, then CAISO will approve the outage, but include a substitution obligation. If the obligation is not met, then the outage will simply be subject to RAAIM rather than automatic denial.

NCPA supports retaining short notice opportunity RA outages. Those outage types are an essential tool in providing generators flexibility to perform routine maintenance in summer months when planning outages is typically difficult if not forbidden in contracts.

5. Please provide any additional feedback not already captured.

No additional comments at this time.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

PG&E appreciates the opportunity to provide comments on CAISO’s Resource Adequacy Modeling and Program Design (RAMPD) Track 2 initiative and the discussion of potential reforms to the Resource Adequacy Availability Incentive Mechanism (RAAIM). PG&E supports CAISO’s objective of strengthening incentives for resource availability and performance during periods of highest reliability risk. 

CAISO needs to demonstrate the ability to translate across LRA RA programs to ensure equitable application of the rules and a clear understanding of system reliability and resource needs.  

PG&E notes that several foundational elements remain under development, including Local Regulatory Authority (LRA) frameworks and their alignment with CAISO’s default counting rules, particularly the UCAP construct. These elements are highly interdependent and materially affect how availability incentives, must-offer obligations (MOO), and non-performance penalties will function in practice. Accordingly, PG&E’s views on certain design details—especially the operational definition of the MOO—are necessarily contingent on how these components ultimately align.  

To ensure alignment, the CAISO needs to demonstrate the ability to translate across LRA RA programs, especially between ICAP-based and UCAP-based accounting frameworks. This will ensure equitable application of the rules across LRAs and a clear understanding of CAISO system reliability in aggregate. PG&E recommends using the term ICAP equivalent capacity (ICAP_eq) to refer to the amount of undiscounted capacity that is needed to arrive at a given amount of UCAP.  For example, if an LRA shows their resources in terms of UCAP, then the CAISO can calculate the equivalent amount of ICAP (ICAP_eq = UCAP_Shown / (1-EFORd)) in the many rules and processes that use undiscounted capacity values.   

Further, PG&E and other stakeholders found CAISO’s examples confusing, in part, due to wording. Pmax and ICAP can often be considered synonymous. So stakeholders reflexively don’t agree that the must-offer obligation should be based on “ICAP” if they believe it to mean Pmax. The term ICAP equivalent more accurately reflects the amount of contracted or shown capacity regardless of whether a unit is partially or fully shown / contracted.   

A short-term availability incentive (e.g., RAAIM) is needed in addition to the long-term incentives provided by UCAP and the cost allocation of the RSE Failure Surcharge 

A key motivation for this initiative was to address high rate of forced outages, believed to be artificially high due to the current set of incentives.  UCAP provides a long-term incentive to decrease a unit’s forced outage rate (EFORd) while RAAIM is a short-term incentive to be available and provide substitution for forced outages.  

PG&E believes that a short-term incentive (e.g., RAAIM) and the RSE surcharge allocation are needed in addition to the long-term incentives provided by UCAP for two reasons.  

• Some LRAs won’t adopt UCAP and short-term incentive is still needed to encourage substitution. Even with the CAISO default program moving to UCAP, and if the CPUC moves to UCAP, there will be some LRAs within the CAISO that do not. A short-term incentive is still required to encourage availability and substitution. Unsubstituted forced outages are still a problem and need a stronger incentive (than RAAIM).  

• RSE failure surcharges are inconsistent and not a replacement for RAAIM / MURA. The RSE surcharges will only occur when the CAISO system (in aggregate) is short. This may lead to entities trying to avoid the cost of substitution should they think the CAISO system has sufficient capacity. The RSE surcharge costs need to be allocated regardless of RAAIM reform or UCAP. PG&E supports a more targeted allocation of these surcharges but does not believe it is a replacement for a short-term availability / substitution incentive.  

A MOO based only on UCAP is very likely insufficient to meet the needs of the CAISO grid and an ICAP equivalent capacity amount for UCAP programs is likely necessary to ensure effective, reliable systems operations. 

The must-offer obligation (MOO) is an operational need and identification tool facilitated by RA programs to ensure sufficient resources are obligated to serve CAISOs operational needs. Both UCAP and ICAP accounting programs must contribute to this operational need in an equitable manner.  

Using the ICAP equivalent capacity as the MOO is a logical starting point as it keeps the MOO consistent with what is done today. Currently the MOO for ICAP programs is the shown capacity (Tariff section §40.6.1). That same amount of capacity is equivalent to UCAP_Shown / (1-EFORd).

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

PG&E supports CAISO’s proposal to explore both RAAIM reform pathways discussed in Track 2: (1) replacing RAAIM with a Measured Unavailability Resource Availability (MURA) construct; and (2) implementing EDAM Resource Sufficiency Evaluation (RSE) failure surcharges. PG&E views these approaches as potentially complementary rather than mutually exclusive. 

• A MURA-style construct would directly incent availability at the individual resource level, aligning availability incentives with each resource’s accredited and operational reliability contribution.  

• EDAM RSE failure surcharges, by contrast, would apply at the Balancing Authority Area (BAA) level and could reinforce collective accountability for ensuring sufficient capacity is available to meet system needs.  

Together, these approaches could strengthen both individual and aggregate performance incentives, provided that compliance responsibilities and cost allocation are clearly defined. 

Availability Incentives Need to be Consistent and Strong 

PG&E agrees that penalties should be targeted to periods and conditions where resource non-availability poses a reliability risk. Penalties should be sufficiently strong to incent mitigation, substitution, or improved performance, but not so punitive that they create unnecessary risk premiums. Penalties should be aligned with the reliability value recognized through accreditation to avoid over- or under-incenting resources. 

Aligning Incentives and Penalties Requires Translating Across RA Programs 

PG&E emphasizes that availability incentives, MOOs, and penalties must be designed as an integrated framework. Misalignment between planning accreditation, operational obligations, and penalty exposure risks undermining both reliability outcomes and market efficiency. CAISO should clearly articulate how each element interacts, particularly in the context of differing LRA counting rules. 

In this respect, the CAISO should also clarify in the straw proposal the requirements for forced outage substitution for resources being under a UCAP or an ICAP accreditation framework. 

• With RAAIM being removed, what will be the substitution requirements for the forced outage type? At the stakeholder’s meeting of March 2nd, PG&E understands this requirement should be removed for LSEs subject to a UCAP counting rules. What will be the requirements for other LSEs under different counting rules? 

Penalty Price Should Reflect and Change with the RA Market 

PG&E supports revisiting the RAAIM penalty price so that it better reflects current RA market conditions. The existing penalty level no longer appears to provide a meaningful incentive for substitution or mitigation in the event of a forced outage. PG&E encourages CAISO to consider benchmark-based approaches tied to observable RA capacity prices or other relevant indicators that can be updated periodically. 

PG&E also emphasizes the need for further development of EDAM RSE-related cost allocation. Without clear and equitable allocation of costs and penalties, there is a risk that some LRAs or LSEs may under-procure or rely on others to support BAA-level reliability. 

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

A MOO based only on UCAP is very likely insufficient to meet the needs of the CAISO grid and an ICAP equivalent capacity amount for UCAP programs is likely necessary to ensure effective, reliable systems operations. 

The must-offer obligation (MOO) is an operational need and identification tool facilitated by RA programs to ensure sufficient resources are obligated to serve CAISOs operational needs. Both UCAP and ICAP accounting programs must contribute to this operational need in an equitable manner.  

Using the ICAP equivalent capacity as the MOO is a logical starting point as it keeps the MOO consistent with what is done today.  Currently the MOO for ICAP programs is the shown capacity (§40.6.1)3  That same amount of capacity is equivalent to UCAP_Shown / (1-EFORd).  

CAISO has indicated that it is considering defining the MOO in terms of a resource’s Pmax, minus ambient derates or foldbacks for storage resources. PG&E requests clarification on whether the MOO would be based on the Pmax, ICAP, the CAISO NQC or another metric. A clear and durable definition of the MOO is essential, as it directly affects bidding behavior, performance, and exposure to penalties. 

PG&E notes that in other ISO/RTO markets with UCAP-style frameworks, MOOs are often expressed in terms of ICAP or ICAP equivalent capacity. PG&E also acknowledges that UCAP is fundamentally a planning construct intended to reflect expected availability based on historical performance. As such, the MOO should not be assumed to be identical to UCAP by default. . 

If CAISO adopts a similar approach, it should clearly explain how ICAP-based MOOs are reconciled with UCAP-based accreditation to ensure consistency across planning and operations, especially to assess the performance through the MURA penalty type. 

CAISO should also explain the following principle developed in the presentation (slides 19 and 20) that “the CAISO Tariff obligates resources to offer all capacity available”. PG&E’s understanding is that the Tariff requires RA resources to offer “all their Resource Adequacy Capacity” under section 40.6.1 of the CAISO Tariff. We read that to be essentially the ICAP equivalent amount, but not necessarily Pmax. 

PG&E recommends that CAISO and the CPUC work together on how to translate that planning construct into an operational obligation that appropriately reflects real-time system needs without over- or under-incenting resources and without additional administrative burdens. CAISO should articulate principles to ensure that resources are not exposed to duplicative or misaligned penalties arising from differences between planning accreditation and operational obligations. 

Specific comments on the Performance Benchmark MW approach (PBMW) slides 19 and 20: 

PG&E supports exploring the Performance Benchmark MW approach which could define the MW value used to assess the resource’s performance. The PBMW approach should work for resources under UCAP or non-UCAP accreditation.  In the straw proposal, CAISO should provide the following clarifications:  

• For resources under UCAP accreditation, will the ICAP equivalent (ICAP_eq) be formulated as follows: ICAP_eq = UCAP_Shown / (1 – EFORd)?  

• The illustrated examples on slides 19 and 20 copied pasted below do not match the formula in the table. The graph shows that the ambient derate is deducted from the Pmax then the forced outage rate is applied.  However, in the formula, CAISO removes the ambient derate from the UCAP accreditation. (i.e., in the column “CPUC UCAP/ NQC RA show value (UCAP – ambient derate)”.

•  CAISO should provide PBMW examples for resources under a non-UCAP accreditation. 

4. Please submit your organization’s comments on the proposed outage definition changes.

Forced and Urgent outages need to be clearly differentiated, or the system will be gamed. 

PG&E does not see a way to consistently differentiate between a Forced Outage and an Urgent Outage. If a generator claims their unit’s outage is Urgent, how is CAISO to know whether it is being reported accurately or is truly a Forced (or vice versa)? 

So CAISO needs to figure out a way to make this distinction for the new definitions to be effective.  

PG&E requests additional detail and clarification regarding the proposed outage classifications, including the introduction of an “urgent” outage category. Specifically, PG&E seeks clarification on: 

• Whether the new “urgent” outage type modifies or supersedes CAISO’s current forced outage definition, under which maintenance outages submitted seven days or less prior to the start date are treated as forced outages. 

• The timing requirements and qualifying criteria associated with each outage type (i.e., urgent versus forced outage). PG&E is concerned that the current proposal leaves room for interpretation and may create implementation and incentive risks if criteria are not clearly defined. 

• The approval process for outages, including how CAISO will evaluate, approve urgent outage submission. 

• How urgent outages will be treated for UCAP purposes, including whether and how they will affect UCAP calculations and future accreditation. 

• What will be the requirements in terms of RA substitution for the urgent outage type? How will urgent outages be exposed to RAAIM (or RAAIM replacement)? 

PG&E emphasizes that clear, objective, and consistently applied outage definitions are critical to ensuring that availability incentives, accreditation outcomes, and operational expectations remain aligned. 

5. Please provide any additional feedback not already captured.

Not at this time. 

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

The Six Cities do not have a position in favor of or against the proposed options for incentive/penalty mechanisms discussed by the CAISO at this time.  As discussed below, any penalty/incentive mechanism should be based on the applicable Must Offer Obligation (“MOO”) for resource adequacy (“RA”) resources.  Finally, the Six Cities do not support elimination of the Short Term Opportunity Outage category as proposed by the CAISO. 

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

At this time, the Six Cities have not developed a position on either of the CAISO’s two proposed options for incenting availability and the redesign of the RA penalty structure.  However, several of the elements of the Option 1 – RAAIM Reform approach described during the March 2^nd stakeholder meeting reflect certain concepts for which the Six Cities expressed qualified support when the CAISO initially proposed the “Measuring Unavailable RA” (“MURA”) in 2025, including: 

• Use of critical hours, such as Energy Emergency Alert hours, as the assessment period.
• Use of a stop loss provision or a cap on penalty exposure. 

As noted by the CAISO, the proposed penalty levels merit further consideration.  Previously, the CAISO suggested that penalty options could include an administratively-set price (such as a price tied to the Capacity Procurement Mechanism), real-time prices with a scaling factor, or benchmarked to bilateral RA prices.  These could be further explored as possible options, but the Six Cities would not support penalties that are based on Value of Lost Load (“VOLL”) concepts, which was presented as an option in connection with the previous discussion of MURA. 

Relatedly, the Six Cities would be open to considering allocation of collected penalties to resources that have demonstrated their availability, although it would likewise be reasonable to allocate penalties to load based on load’s ultimate responsibility for funding the RA program. 

While the Six Cities do not oppose discrete elements of the MURA design, the Six Cities also generally agree with prior stakeholder feedback (see Mar. 2^nd presentation at 10) that the MURA assessment hours might be too narrow to drive compliance, could create duplicative penalties for resources that are using UCAP mechanisms for establishing their QC values, and might not provide sufficient compliance incentives.  In short, the MURA may suffer from the same deficiencies as the RAAIM.  If the CAISO, based on stakeholder feedback, advances the Option 1 proposal, then the Six Cities request that part of the CAISO’s policy design consider metrics for assessing the effectiveness of the redesigned program. 

The Six Cities are open to consideration of a structure based on the Option 2 concepts, but the elements and design of such a structure require further discussion.  In addition to the possible downside of complexity that the CAISO has identified, the Six Cities are concerned with misalignment between the RSE and the RA program.  If resources other than RA resources can be considered in the RSE, then a penalty structure for RA resources that is based on RSE costs may not make sense, and, as discussed during the March 2^nd stakeholder meeting, this type of design would need to consider the interaction between the EDAM RSE and the WEIM RSE.  Seeing several examples of how an RSE-based incentive/penalty approach may work in practice could help stakeholders evaluate this type of approach.  One question to consider is whether this structure would constitute more of a penalty than an incentive; the Six Cities surmise that the penalties for the CAISO failing the RSE could be outsized compared to any revenues that RA resources might recoup as compensation for supporting external BAAs that fail the RSE. 

If the CAISO decides to proceed with the Option 2 approach, it is critical that the CAISO and stakeholders take the time to carefully consider this program’s design.  Given the shortcomings of the current RAAIM program, which have been extensively discussed in this initiative, it would be appropriate for the CAISO to consider elimination of RAAIM pending adoption of a revised incentive/penalty structure. 

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

The Six Cities continue to evaluate this issue but observe that there should be alignment between the load serving entity’s shown RA (and the corresponding showing of a supplier), the resource’s Must Offer Obligation (considering use limitations and other pertinent operational restrictions), and any incentive/penalty structure that is developed.  In considering these values, the CAISO should continue to defer to the methodology established by local regulatory authorities for determining resources’ Qualifying Capacity.  Moreover, if a load serving entity elects to show less than a resource’s QC (or Net QC) on its RA showing, then the MOO should not exceed the amount shown. 

4. Please submit your organization’s comments on the proposed outage definition changes.

The Six Cities do not support the proposal to eliminate the Short Notice Opportunity Outages and replace this outage category with a new category for Urgent Outages.  While there may be reasons that the Urgent Outage category is needed, and the Six Cities acknowledge that the CAISO’s goal is to tighten outage management and reduce perceived misuse of short notice outage cards, the proposal to eliminate Short Notice Opportunity Outages will result in removal of a critical operational tool that certain resources rely on to address near-term maintenance needs.  For example, the short notice outage card may be used to perform important weekend maintenance activities that are necessary to maintain turbine efficiency, emissions compliance, and safe operations.  These outages cannot always be forecasted far—or even eight days—in advance, because they depend on ambient conditions and real time operational loading.  At the same time, they may not constitute an “Urgent” need under the proposed definition, because there may not necessarily be an increased risk of a forced outage, at least in the near term.  Rather, the maintenance activities could be required under prudent utility practice and to ensure optimal equipment operation.  It is in the interests of all parties for the CAISO to enable this type of maintenance to be performed at times when doing so will pose little to no risk to grid reliability.  If CAISO removes the Short Notice Opportunity Outage option, then resources may be forced to either (1) delay necessary maintenance or (2) take outages without an approved mechanism.  Either outcome increases reliability risk and could cause load serving entities and RA suppliers to fail in meeting their RA obligations for that month. 

5. Please provide any additional feedback not already captured.

The Six Cities request that the CAISO either publish a discussion paper or provide an overview during the next stakeholder meeting of the status and disposition of the various topics that have been slated for consideration in this stakeholder initiative and their respective phase or track assignments (and whether any such topics have been removed from scope and/or resolved).  Have their been any changes to the topics that will be considered in this Track 2 of the RAMPD initiative?  Given the long period of time that has passed since discussions of topics other than Track 1 and Track 3A have occurred, it would be helpful for stakeholders to review the intended scope of this initiative.  In particular, does the CAISO intend to address in this initiative issues related to the Maximum Import Capability tariff provisions? 

Additionally, the topic of RAAIM reform is closely tied to issues of substitution.  Does the CAISO intend for its discussion of RAAIM reform to consider substitution and related requirements?  The Six Cities have repeatedly requested that the CAISO consider permitting load serving entities to reflect on their RA showings varying levels of resource availability throughout the month, and this issue appears to relate to the issues of outages, substitution requirements, and RAAIM redesign. 

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

Vistra appreciates CAISO’s continued work on RAMPD Track 2 and the opportunity to comment on the March 2 discussion. The availability incentives proposals discussed on March 2 are not incremental adjustments to the current framework, and the outage discussion is premature until CAISO resolves whether it will take on a meaningful role in facilitating substitution RA. Both subject areas represent a fundamental redesign of RA availability incentives or RA substitution rules, and therefore require careful sequencing, additional stakeholder process, and clear coordination with Local Regulatory Authority (“LRA”) requirements. Foundational policy issues have not yet been clearly framed, and proposals are premature until CAISO addresses these open questions. Vistra does not take a position at this time on whether an EDAM-based framework is preferable and emphasizes that these foundational issues must be resolved before further design work proceeds.

On the resource availability scope, the meeting raised threshold questions that must be resolved before CAISO redesigns Resource Adequacy (RA) availability incentives. The March 2 discussion suggests a potential shift from an RA-based framework toward an operational sufficiency framework. The former would pursue enhancements to the existing RA Availability Incentive Mechanism (RAAIM) which applies across all LRAs despite differences in Qualifying Capacity (QC) methodologies and Planning Reserve Margins (PRM). The latter would shift toward an operational standard based on the Extended Day-Ahead Market (EDAM) Resource Sufficiency Evaluation (RSE). This shift raises additional questions regarding cost allocation and the appropriate benchmark for availability incentives. This policy also intersects with questions regarding the future of Flexible RA. If Flexible RA is modified or eliminated, CAISO must first determine whether availability incentives are intended to enforce hourly RSE sufficiency or assess deficiencies against generic RA requirements.[1] Stakeholders will be better positioned to evaluate whether a shift to an RSE standard is appropriate only after these structural questions are resolved.

On the outage scope, the meeting raised threshold questions regarding CAISO’s continued role in facilitating RA substitution. The CAISO’s Track 2 Straw Proposal recommends maintaining status quo where buyers and sellers would keep the role of substitution management for planned outages that occur between T-45 and T-8.[2] Vistra’s feedback on the March 2 discussion is based on the expectation that CAISO will continue with this approach. However, if the CAISO instead decides to shift and adopt one of the substitution pool options where it will take a more meaningful role and facilitate substitution for outages that occur between T-45 and T-8 then there may not be a need for an “urgent outage” category.

Advanced notice forced outages, referred to as urgent outages on March 2^nd, are a key issue for Vistra. Vistra has sought relief for narrow instances where a need for an outage materializes between T-45 and T-8 where the outage is outside the operator’s control, cannot be delayed, and substitution is unavailable. If the CAISO were to adopt substitution enhancements that mitigated the outage cancellation risks for these urgent outages (i.e., advanced notice forced outages) then Vistra will need to evaluate whether a new outage type adds value or only complexity. Conversely, if the CAISO maintains its position from its straw proposal, then a new outage type is needed to communicate to the CAISO when outages materialize between T-45 to T-8 that must be taken even in the absence of substitution. The addition of a new outage type to address the narrow use case should not result in reduced outage management tools. Both the Short Notice Opportunity Outages and the forced outage substitution flexibility should not be impacted by adding a new outage type for urgent outages that must be taken even without substitution that are known between T-45 to T-8. As the operational need is in the planned horizon for outages outside the operator’s control that cannot be delayed there should be no impact on the forced outage timeline.

Vistra recommends CAISO prioritize stakeholder engagement on the following questions:

1. Whether to eliminate Flexible RA,
2. Whether the CAISO is considering a more meaningful role in facilitating substitution RA or if it will maintain its straw proposal recommendation.

Following resolution of these questions – and after the CPUC LRA has addressed its ongoing RA proceeding – CAISO should revisit with stakeholders the central policy question raised on March 2: whether availability incentives should remain tied to the LRA’s RA framework or shift toward an EDAM RSE-based operational standard.

[1] Energy Only eligibility proposals being considered in CPUC Rulemaking 25-10-003.

[2] CAISO RAMPD Track 2 Straw Proposal at Page 7, available at https://stakeholdercenter.caiso.com/InitiativeDocuments/Track-2-Straw-Proposal-Resource-Adequacy-Modeling-and-Program-Design-Aug-26-2025.pdf.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

Vistra understands CAISO’s interest in an EDAM-based framework. Beginning May 1, 2026, CAISO must satisfy a BAA-level day-ahead RSE test under EDAM. That raises a threshold question: should resource availability incentives align with that operational standard, or should availability continue to be evaluated against LRA PRMs? Transitioning its incentive structure to an RSE approach is a significant structural reform – not an incremental improvement to RAAIM.

While Vistra maintains that CAISO should resolve the foundational questions first, we provide the following reflections on the two approaches under critical questions.

How to balance LSE procurement and RA availability incentives?

Under an RSE approach, the CAISO should send additional incentives to LSEs such that they will secure sufficient resources to meet each operating day’s forecast requirements for energy and uncertainty – even if that forecast exceeds their RA requirements. If an RSE deficiency reflects insufficient procurement, costs should be borne primarily by LSEs. If LSEs are collectively RSE sufficient but contracted resources are unavailable, then it may be fair that contracted resources share a limited portion of the resulting costs. The primary incentive, however, should remain on ensuring sufficient forward procurement. The specific calculations will need to be carefully designed to not dilute the procurement incentives by inadvertently transferring some costs to resources that result from LSE procurement behavior rather than its availability.

RAAIM is fundamentally different than the RSE assessment and its costs. The RAAIM design is to disincentivize poor performance and to incentivize bonus performance from the RA fleet. The underperformance penalties are collected from underperformers and distributed across overperformers to provide additional incentives for RA resources to provide more capacity than it had contracted. The penalty assessment and then re-allocation across the RA fleet is appropriately aligned with its intent to fairly compensate for overperforming RA resources while recovering that cost from the underperformers that effectively forfeit a share of their RA payments to cover additional RA performance that was uncontracted. The bonus performance incentives during in demand periods can be strengthened via stronger scarcity signals. RAAIM assumes that LSEs have collectively met their RA requirements on their annual plan and monthly plans because the CAISO has separate procedures for assessing collective deficiencies and curing those through its Capacity Procurement Mechanism (CPM). Because CAISO backstops collective deficiencies and allocates the cost of that backstop to LSEs, the incentives for LSEs to procure sufficient RA resources to meet their collective needs is met if CAISO is willing to use the CPM backstop to maintain that incentive. Consequently, CPM procedures incent sufficient LSE procurement behavior and then RAAIM incents overperformance covered by underperformance to maximize the output of the RA fleet assuming it is collectively sufficient when RAAIM is assessed.

As such, status quo is appropriately balanced. The core issue is whether the CAISO is beginning conversations raising the question of whether collective RA sufficiency is enough under EDAM where the collective resources are assessed against a higher RSE standard. If the answer is collective RA assessments is not strict enough that an operational standard is needed then the incentive alignments described above for RSE-based framework must be carefully established.

When should penalties apply?

If CAISO shifts towards an RSE-based standard, penalties should only occur on days when the BAA failed the DA RSE. Given the magnitude and volatility of the penalty that LSEs and resources would be exposed to the limited frequency is appropriate. Under RAAIM approach, there is yet insufficient information to answer whether changes to the RAAIM assessment hours are needed until the CAISO resolves whether Flexible RA will be eliminated or not. One potential option if eliminated could be to only assess during the Generic RA obligations across the pre-determined five consecutive hours on non-weekdays and non-holidays.

How strong should penalties be?

Unbounded penalty risks on resources will have a negative impact on forward procurements as an unbounded penalty risk could increase overall RA procurement costs. One challenge with shifting to RSE-based framework is that FERC rescinded the WECC soft offer cap[1] on bilateral electric index prices that apply to the EDAM Trade Location used in the RSE Failure Surcharge calculations[2] effectively unbounding penalty risks. While an extreme example, Vistra is concerned with penalty risks that could surface on days when the bilateral hubs are trading well above the CAISO’s Hard Energy Offer Cap. The RA resource could not replace its capacity via economy energy purchases in the day-ahead market and as such the cost causation principles that were used in developing the EDAM Failure Surcharge do not apply cleanly to sub-allocating to internal resources. To protect against these unbounded penalties and better respect the cost causation principles for RA resources, any RSE-based framework should apply a reasonable cap to the index prices used in calculating its share of an RSE Failure Surcharge. The resource penalty risks should be designed such that total exposure remains reasonably proportional to prevailing RA capacity values such that they are not overly punitive.

Under a RAAIM approach, existing RAAIM penalties at 60% of the Capacity Procurement Mechanism (CPM) soft offer cap are reasonable especially as the CAISO BAA is building and contracting for increasing levels of RA capacity. The weakness of RAAIM comes from RAAIM exemptions.

Which resources & amounts should be subject to the assessment?

All RA resources should be subject for their unavailable portions of their shown MW in terms of ICAP – no RSE or RAAIM exemptions.

[1] FERC Docket No. EL10-56-000, February 19, 2026, https://www.ferc.gov/media/e-2-el10-56-000.

[2] EDAM Tariff Sections 33.11.2.1 and 33.11.2.1.3.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

CAISO should define the objective of availability incentives before refining what portion of resources it will assess penalties or allocate costs.

The CPUC’s Rulemaking 25-10-003 may change the CPUC QC methodologies for purposes of determining the procurement PRM to which LSEs must procure while maintaining the existing ICAP QC for Net Qualifying Capacity, must-offer obligation, and backstop purposes. CAISO’s March 2 presentation introduced confusion into the discussion regarding CPUC Track 1 UCAP proposals. Under party proposals, Vistra’s Track 1 proposal and our understanding of Staff’s proposal is that under a comprehensive framework that the CAISO’s procedures will not be impacted. The underlying product being contracted will remain the monthly bundled attributes in terms of ICAP for the ICAP-equivalent of the portion of UCAP sold. The intent was not to impact CAISO procedures but instead to maintain RA contracting such that the CAISO can continue to assess collective deficiencies across LRAs with differing counting rules and PRMs based on standard ICAP methodology.

Each MW of capacity can be valued in terms of UCAP or in terms of ICAP. The procurement of RA can be performed in terms of UCAP or in terms of ICAP if the CPUC rules are clear that the RA contract is procuring an amount of ICAP MW that must be shown to CAISO for use in CAISO procedures. For example, a 100 MW resource with a 10% UCAP derate can sell 100% of its qualifying capacity up to 100 MW ICAP QC and up to 90 MW of UCAP QC. If the transaction is for 50 MW in terms of UCAP then the RA resource has been contracted for 55% of its UCAP QC where the contract requires it to show to the CAISO its ICAP-equivalent at 55 MW. If the transaction is for 50 MW in terms of ICAP then the RA resource has been contracted for 50% of its ICAP QC where the contract requires it to show to the CAISO its ICAP at 50 MW and the LSE shows to the CPUC the UCAP-equivalent at 45 MW. The former transaction has the seller bearing the UCAP risk where the latter has the buyer bearing that risk where the RA pricing would be discounted if the buyer had to absorb the risk.

To facilitate UCAP within a bilateral market, it is critical that the CPUC establishes a single PRM that may be valued in terms of UCAP for procurement and in terms of ICAP for CAISO backstop purposes based on RA accreditation that may be valued in terms of both UCAP QC or ICAP QC. The CPUC processes should value the single PRM in terms of UCAP and reflect the showings based on UCAP where the CAISO procedures should backstop against a collective system requirements valued in terms of ICAP where showings are based on ICAP.

The technical reason that the MOO must use capacity values in terms of ICAP is that the process of determining the UCAP-equivalent of the full ICAP of any resource is based on a formula that uses the full dependable ICAP. The MW valued in terms of UCAP is a function of an equivalent Forced Outage Rate on demand (eFORd) calculation that includes in its formulation the Net Maximum Capacity (NMC) value in ICAP terms. To be able to secure an amount of unforced capacity that can be reasonably expected to be available the NMC must be subject to the must-offer obligation. Vistra’s Track 1 proposal includes background on the eFORd calculation.[1]

The CAISO should defer discusses on whether special rules are needed for its availability incentive reform until after the foundational questions are resolved and a direction is chosen on (1) existence of Flex RA and (2) RSE versus RAAIM.

[1] Vistra Track 1 Proposal at Page 20.

4. Please submit your organization’s comments on the proposed outage definition changes.

Vistra supports an urgent outage category to be added only if it addresses a defined operational gap. In 2023, Vistra submitted a policy roadmap request seeking relief asking the CAISO to cure a known operational gap that occurs between T-45 to T-8 for advanced notice forced outages.[1] This support is based on our understanding that all outages known prior to T-8 will continue to have a 100% substitution obligation.

It is an unreasonable expectation that RA sellers may not take an outage that is outside its control and that cannot be delayed in the event it cannot find substitution. In practice, the CAISO allows the outage as a forced outage after CAISO initially denies it in the planning horizon. Vistra seeks this new outage type so that outages that materialize within the T-45 to T-8 window may be submitted reflecting their urgent nature where it cannot be delayed even in the absence of substitution. Vistra seeks an exemption from CAISO Tariff Section 9.3.1.3.3 for the new outage type.

On March 2^nd, the discussion regarding urgent outages and the presentation materials are not explicit enough to be clear that urgent outages are those that are known during T-45 to T-8 timeframe. CAISO must revise the timeline to clarify that the gap being addressed is due to the challenges with categorizing urgent outages submitted in the planned horizon inaccurately as being able to be delayed. The new outage type should capture non-optional outages that are not planned maintenance and that cannot be delayed. Vistra believes the purpose of these outages is to address the advanced notice forced outage problem statement. If the category overlaps with the existing forced outage window, it provides no value.

Vistra acknowledges that there may be various views on the need or value of adding the new outage type based on whether CAISO’s role in substitution will change. If CAISO adopts a more active role in facilitating substitution between T-45 and T-8, the need may diminish. If CAISO maintains its current approach, the new outage category is necessary to reflect outages that must be taken without substitution. The goal is for entities to report outages as soon as they are aware and to ensure procedures allow for outages that cannot be delayed for urgent reasons to be taken even without substitution.

While we support addressing this known issue, Vistra does not support reducing outage management tools. The CAISO should retain short-notice opportunity outages. They provide operational flexibility, and CAISO has not shown that equivalent functionality would remain if removed. Vistra also does not support eliminating forced outage substitution. Limited historical use does not justify removing necessary functionality that allows RA sellers to manage risks and provide additional capacity when unavailable.

[1] Vistra Comments on 2024 Policy Roadmap, Resource Adequacy Improvements #8-14, February 28, 2024, https://stakeholdercenter.caiso.com/Comments/AllComments/7229828e-d159-4450-b317-4026172a6b55#org-b7d9495f-ddbe-43fb-8e61-6bd585e36a9d.

5. Please provide any additional feedback not already captured.

None currently.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

Western Area Power Administration (WAPA) is a federal agency responsible for marketing hydropower generated by the federal Central Valley Project (CVP) to meet its statutory responsibilities to serve project-use energy pumping requirements and market available hydropower generation under its Power Marketing Plan to preference power allottees.  In Northern California, WAPA serves load in both the Balancing Authority of Northern California and the CAISO.  WAPA delivers its generation from many large and small hydro facilities of the CVP to its loads.  WAPA owns, operates and maintains an extensive high voltage transmission network extending to the load center of Northern California.

WAPA appreciates the opportunity to provide comments on the CAISO’s presentation on Resource Adequacy Modeling & Program Design Track 2 –RAAIM Reform. CVP generators will participate in the Extended Day-Ahead Market (EDAM) after Balancing Authority of Northern California (BANC) joins EDAM in October 2027. CVP generators will have to support generic Resource Adequacy (RA) imports to its power customers in the CAISO Balancing Authority Area. According to WAPA’s understanding of the current EDAM GAP-tie design, RA imports from an EDAM entity must be supported by physical generators. Therefore, CVP generators will be required to submit energy self-schedules or bids in EDAM to support the Resource Adequacy (RA) showing in the supply plan.

WAPA would like to ensure this Track 2 Resource Adequacy Availability Incentive Mechanism (RAAIM) Reform does not introduce design elements that would alter the current market rules, prevent CVP from providing RA to its customers in EDAM and, consequently, complicate WAPA’s implementation plan to join EDAM with BANC. According to the current market rules, we believe:

• CVP will qualify as a Use Limited Resource (ULR) and Conditional Available Resource (CAR) in EDAM. As such CVP will be exempt from bid generation.
• As a ULR, CVP will submit a daily energy limit in SIBR and CAISO will observe the daily energy limit in the market optimization; CVP will not incur RAAIM penalties if CVP provides energy according to the market awards.
• As a CAR, CVP will offer its “expected energy” into the market, eliminating RAAIM exposure according to CAISO Tariff section 40.9.3 and FERC order Docket No. ER20-1592-000.

Through various legislative acts implementing the CVP, CVP power generation has low priority among navigation, flood control, irrigation and protecting fish and wildlife. CVP cannot provide its full capacity for the market to dispatch. CVP will provide bids carefully to offer flexibility subject to its water management constraints. The market can only dispatch CVP according to CVP’s bids. CVP will only offer RA capacity to its customers to the extent that it can deliver; and the purpose of the RA is to meet its customers’ load under contract with WAPA. The customers’ load changes over the day and so does CVP’s energy delivery. A 24x7 must offer obligation regardless of CVP’s daily energy limit and its customers’ daily load shape will prevent CVP from providing RA.

Federal entities are exempt from penalties under the CAISO tariff due to principles of Federalism, Sovereign Immunity, and the Supremacy Clause of the Constitution.  Additionally, the Anti-Deficiency Act prohibits the government from entering agreements where the government’s liability is indefinite or undetermined. This reflected in the  CAISO tariff, Section 22.9(a), which states that "No person or federal entity shall incur any liability by failing to comply with a CAISO Tariff provision that is inapplicable to it by reason of being inconsistent with any federal statutes, regulations, or orders lawfully promulgated thereunder..." WAPA as a federal entity, is exempt from penalties under the CAISO tariff, including those related to RAAIM.

We truly appreciate CAISO’s willingness to hear WAPA’s concerns. We look forward to working with CAISO in the coming stakeholder processes to enable CVP generation to efficiently and effectively contribute to power system reliability through EDAM participation.

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

As described above in WAPA’s response to item 1, Federal entities are exempt from penalties under the CAISO tariff.  Accordingly, without a sufficient interest in the matter, WAPA respectfully declines to comment on the nature and character of CAISO’s penalty structure.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

WAPA believes the RA MOO quantity should be based on contracted capacity. The contracted capacity is limited by UCAP/NQC according to the LRA’s determination. CAISO should not demand MOO capacity to be the generators’ PMAX or Performance Benchmark MW. For example, CVP generators cannot offer the full capacity to CAISO because of water limitations.

4. Please submit your organization’s comments on the proposed outage definition changes.

Please confirm that the CAISO will continue to allow CAR resources subject to the expected energy must-offer obligation in section 40.6.4 of the CAISO Tariff to use the RAAIM-exempt “Ambient Not Due to Temp” outage type “to notify the CAISO that the resource’s expected available energy or expected as-available energy will be below the shown RA Capacity for the unit.

5. Please provide any additional feedback not already captured.

1. Please provide your organization’s overall feedback on the Resource Adequacy Modeling and Program Design Track 2 – RAAIM Reform Options meeting discussion on March 2, 2026.

The ISO’s objective of ensuring that resource adequacy (RA) capacity is available when needed is fundamental to maintaining reliability. However, the current RAAIM reform proposal is based on an unclear problem statement and risks undermining key elements of the existing RA framework.

The ISO has not demonstrated that there is a systemic deficiency in RA availability that warrants a fundamental redesign of RAAIM. The proposal assumes that additional penalties are necessary to ensure performance, but the record does not establish that existing incentives are insufficient. Resources already face strong market-based incentives to be available during tight system conditions, when energy prices are highest. The ISO has not provided evidence that incremental administrative penalties will materially improve availability beyond these existing incentives.

The proposal also represents a significant departure from the original purpose of RAAIM. RAAIM was designed as a bid availability incentive to ensure that RA resources participate in the market up to their obligations. Initially it was to ensure use-limited resource that do not have bid insertion offered in and then evolved to the modern RAAIM which was designed to ensure flexible resources economically offered rather than self-scheduled. The current proposal shifts RAAIM toward a broader non-performance penalty framework that appears to target forced outages and substitution outcomes. This approach conflates distinct policy objectives and risks transforming RAAIM into a general availability or capacity performance mechanism, which it was not designed to be.

WPTF supports moving forward with a performance based mechanism, but if that is what the CAISO wants to do, it must evaluate what is causing lack of performance and assess the effectiveness of each design in that light. It also must consider UCAP and the potential for double penalties and subsequent impact of raising prices unnecessarily in the RA market.

The proposal raises additional concerns with respect to the design and function of Flexible RA. Flexible RA is fundamentally premised on an economic must-offer obligation rather than a self-schedule requirement. Any framework that effectively requires self-scheduling or penalizes outcomes that result from economic dispatch is inconsistent with the design of Flexible RA and risks undermining its purpose. To be clear, WPTF strongly supports eliminating Flexible RA; however, this must be done first. This change must be addressed explicitly and prior to any reforms that rely on altering its operational characteristics. It is not appropriate to implicitly redefine Flexible RA through RAAIM reform.

The proposal also risks creating duplicative and potentially conflicting incentives in light of the CPUC’s ongoing development of a UCAP framework. UCAP is intended to address resource availability, including forced outage performance, through accreditation. Expanding RAAIM to also penalize availability-related outcomes raises the potential for overlapping penalties on the same underlying behavior. These frameworks should be clearly delineated rather than layered on top of one another.

Finally, the proposal appears to combine several distinct aspects of the RA framework, including market participation, outage treatment, and capacity substitution, into a single mechanism. Each of these serves a different purpose within the overall RA construct. Combining them risks reducing transparency, increasing complexity, and weakening the effectiveness of each individual tool.

For these reasons, the ISO should reconsider the scope of the proposed reforms and focus instead on targeted improvements that are consistent with the original purpose of RAAIM as a bid availability incentive, while preserving the integrity of the broader RA framework. 

2. Please submit your organization’s comments on the RAAIM reform policy options presented and examples in the presentation. The ISO welcomes feedback on the following questions from the meeting materials: When should penalties apply? How strong should penalties be? How to align incentives and penalties? How to derive the penalty value?

The ISO’s proposal to expand RAAIM as a performance penalty mechanism should be considered in the context of how similar constructs have been implemented in other organized markets. In both ISO New England (see attachment) and PJM, performance-based penalty frameworks were developed to address clearly identified reliability risks during system emergency conditions. These frameworks apply only during defined scarcity intervals and are designed to incent specific, controllable behaviors, such as securing firm fuel supply or improving operational readiness.

In those markets, the underlying reliability concern was the inability of resources, particularly gas-fired generation, to perform during extreme winter conditions due to fuel constraints. The resulting penalty structures were intended to incent investments in dual-fuel capability, firm gas procurement, and other actions within the control of resource operators. These designs are not applicable to CAISO’s summer peaking system with its unique resource mix.

The ISO has not demonstrated that a comparable reliability issue exists in the CAISO balancing authority area. The proposal does not identify a specific performance gap that can be addressed through additional penalties, nor does it establish that the targeted behaviors are within the control of resource operators. Unlike other markets, where performance incentives are tied to discrete and actionable operational decisions, the proposed framework risks penalizing outcomes that may not be fully controllable, including forced outages or non-dispatch resulting from market conditions.

If the ISO elects to move forward with modifications to RAAIM, any penalty construct should be narrowly tailored and aligned with actual system need. Penalties should be limited to clearly defined reliability-critical intervals, rather than applied more broadly to periods that do not reflect binding system conditions. Applying penalties outside of scarcity conditions risks weakening the link between the incentive and reliability outcomes.

Penalty design should also be bounded and predictable. Approaches that rely on volatile proxy price signals, including those tied to external market prices, may introduce disproportionate financial exposure that is not aligned with the operational characteristics of different resource types. This creates unnecessary risk and may discourage participation without improving performance. Penalties should be limited to a reasonable level so as to avoid overly punitive results and again, unnecessary increases in RA market prices.

3. Please submit your organization’s comments on the must-offer obligation concepts and key considerations in light of local regulatory authorities’ changing QC methodologies and potential changes to ISO tools to incentivize capacity resources being available. Against what value should availability incentives be assessed (shown RA, MOO, etc.)?

The ISO should clearly distinguish between the RA value used for procurement and planning purposes (capacity counting rules) and the operational obligation necessary to deliver that reliability value in the market (must offer rules). These concepts are related but are not always the same. For some resource types, the accredited RA quantity reflects a planning-based or derated value, while the operational must-offer obligation may appropriately extend to a higher level, such as forecasted output or available PMAX, in order to ensure the system can achieve the modeled reliability benefit.

The key issue is therefore not whether availability incentives should be assessed against shown RA, MOO, or another benchmark in the abstract. Rather, the ISO should first define the product that load-serving entities are procuring and paying for. If the RA construct is intended to procure a guaranteed planning value, then the operational obligation and any associated incentives should be designed to support that reliability outcome in a transparent manner.

To the extent the ISO expects resources to offer more than their accredited RA quantity, that expectation should be explicit and should be reflected in both compensation and penalty design. Market participants should not be subject to an expanded operational obligation through an availability incentive mechanism without corresponding clarity regarding the underlying product design and associated cost responsibility.

For Flexible RA resources in particular, this issue must be approached carefully. Flexible RA is based on an economic must-offer obligation, not a self-schedule requirement. Any availability framework should preserve that distinction and should not penalize resources for outcomes that result from economic dispatch rather than non-compliance with the applicable offer obligation.

4. Please submit your organization’s comments on the proposed outage definition changes.

The ISO’s proposed changes to outage definitions raise significant concerns regarding the alignment between outage treatment, operational practices, and the application of availability incentives. Outage classifications should provide clear operational distinctions and support reliability outcomes, rather than serve as a mechanism to expand exposure to performance penalties.

WPTF is concerned that the proposed Urgent Outage category, particularly in conjunction with the removal of the Short Notice Opportunity Outage (SNOO) category, may inappropriately shift outage conditions that have historically been treated as low reliability risk into categories that carry full UCAP and RAAIM exposure. Under the current framework, SNOO requests are subject to operational review and are approved in conditions where the system can accommodate the outage without material reliability impact. The proposed changes risk assigning forced outage-level consequences to these same conditions without a corresponding change in underlying system risk.

A balanced outage framework should distinguish between outages that have a material impact on system reliability and those that occur during periods of sufficient supply. Applying uniform penalty exposure across these conditions may weaken the connection between incentives and actual reliability outcomes and could discourage efficient maintenance and operational practices.

WPTF also encourages the ISO to clearly define and differentiate outage categories, including any distinction between Urgent Outages and Forced Outages, in a manner that is transparent and operationally meaningful. For example, they could be defined as less than 8 days or less than 3 days. Clear delineation of outage timing and classification criteria is important to ensure that outage treatment aligns with both system needs and resource operator expectations.

In addition, the proposal should be considered in the context of broader outage management tools. Rather than expanding penalty exposure, the ISO should evaluate whether improvements to planned outage substitution mechanisms or the development of more efficient substitution processes could better address reliability concerns associated with outages. Providing resources with the ability to mitigate outage impacts through substitution is more consistent with the existing RA framework than increasing penalty exposure for outage events.

Finally, the ISO should consider the interaction between outage definitions and other elements of the RA framework, including UCAP and RAAIM. Expanding the set of outage conditions that are subject to performance penalties raises concerns regarding overlapping incentives and the potential for multiple layers of financial exposure associated with a single outage event.

5. Please provide any additional feedback not already captured.