Comments on WEIM - AET (4/16)

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

Avangrid appreciates that CAISO staff has launched this initiative to provide guidance on AET design in advance of the December 2025 sunset date.  Avangrid joined the WEIM as a generation only balancing authority in April 2023 and has found the AET aspect of the WEIM useful because it provides participants who fail the resource sufficiency evaluation the ability to continue to transact and not perpetuate reliability problems that can be solved, while incentivizing resource self-sufficiency.  The AET program supports WEIM participants by beneficially leveraging the supply diversity brought by WEIM resources.

Avangrid supports both aspects of the proposal: the removal of the sunset date and crediting against the AET surcharge due to actions from a Reliability Coordinator.  While not feasible prior to current sunset date, Avangrid would also like CAISO staff to continue to “explore a more robust assistance energy solution that is priced through the market” as outlined in page 4 of the workshop presentation.  Instead of having the AET surcharge based on a fixed price, a surcharge that is more reflective of market prices during the usage period would be a more efficient approach.  Staff should consider committing to a broader AET reform initiative in 2026 after EDAM launch to refine this useful market component.      

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

Avangrid is supportive of the removal of the sunset date and would like consideration of a more robust AET design starting in 2026 after EDAM launch. 

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

Avangrid supports this revision.

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the WEIM AET meeting. As described below, CalCCA supports the CAISO’s proposed removal of the existing AET design’s sunset date. CAISO’s proposed removal of the existing AET design’s sunset date. The data presented by CAISO suggests that AET is being used as intended in small quantities and developing an “in-market” AET product does not appear to be a stakeholder priority at this time.  

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

CalCCA supports the CAISO’s proposed removal of the existing AET design’s sunset date. The data presented by CAISO suggests that AET is being used as intended in small quantities and developing an “in-market” AET product does not appear to be a stakeholder priority at this time.

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

CalCCA does not object to the CAISO’s proposed tariff revision. Balancing authority areas taking coordinated actions with the reliability coordinator without incurring additional failure surcharges is consistent with the AET’s intent of promoting reliability in the WEIM.

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

Comments on WEIM Assistance Energy Transfer Extension

Department of Market Monitoring

April 30, 2025

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Western Energy Imbalance Market (WEIM) Assistance Energy Transfer Extension meeting held on April 16, 2025. The ISO is proposing to extend the current Assistance Energy Transfer (AET) program by removing the December 31, 2025 sunset date. DMM’s monitoring of AET utilization has not yet revealed concerns of systematic leaning or extensive reliance on assistance energy transfers during tight conditions. Therefore, DMM supports the extension of the current AET functionality.

Comments

The current WEIM Assistance Energy Transfer (AET) program allows balancing areas that fail the upward resource sufficiency evaluation (RSE) to access additional supply through WEIM transfers that may not be available when the balancing area’s transfers are limited due to an RSE failure. When a balancing area fails an upward RSE, their WEIM transfers are limited by the greater of: (1) the base transfer or (2) the transfer from the last 15-minute market interval. However, the AET program allows balancing areas to avoid this transfer limitation and instead pay a surcharge to potentially access additional WEIM transfers.

DMM supported the current AET design as an approach that is more targeted than earlier proposals, but still discourages capacity leaning

Since freezing transfers to a balancing area that is short on capacity could be detrimental to western reliability, DMM supported the ISO and stakeholders considering alternative design options for failing the RSE in 2022.[1] In that stakeholder process, DMM emphasized the importance of striking a balance between allowing areas with excess capacity to provide assistance to other balancing areas, while still disincentivizing balancing areas from leaning on the WEIM footprint for capacity.

Under the current AET program, the surcharge associated with assistance energy transfers is calculated by multiplying the applicable energy bid cap, either $1,000/MWh or $2,000/MWh, by the lesser of: (1) the dynamic WEIM transfers or (2) the amount by which the balancing area failed the resource sufficiency evaluation. DMM supported this design, since it is more targeted than the ISO’s initial 2022 proposal of applying the surcharge to all of a balancing area’s real-time market imbalance transactions, but still discourages balancing areas from relying on other areas for capacity.[2]

The ISO has not identified an urgent need to address the issue of economic displacement

While the current design is more targeted than previous proposals, there is still a possibility that surcharges are applied to transfers that are not the result of opting in to the AET program. Specifically, there may be WEIM transfers that occur due to economic displacement once a balancing area’s supply is optimized with available supply across the WEIM footprint.[3] The ISO conducted analysis to estimate the percentage of energy transfers that were subject to AET surcharges due to economic displacement, rather than additional supply from the AET program.[4] While this analysis suggests economic displacement may account for a substantial portion of transfers that receive AET surcharges, the magnitude of AET surcharges remains relatively small, and identifying which transfers were subject to AET surcharges due to economic displacement is a complicated exercise. DMM understands the ISO needed to make a number of assumptions in order to disentangle transfers from economic displacement, versus the additional transfers available due to the AET program.

While DMM believes that the economic displacement issue could be addressed through a future enhancement, the ISO’s analysis does not clearly establish an urgent need for such an enhancement. DMM also agrees with the ISO that developing an in-market approach to AET would be a significant and complicated undertaking. Until any such enhancement is developed in the future, DMM believes that limiting surcharges to the RSE shortfall helps to mitigate concerns of excessive surcharges on economic transfers, while still disincentivizing systematic leaning or extensive reliance on assistance energy transfers during tight conditions.

DMM supports extension of the current AET design

If multiple balancing areas failed RSE tests while opting in to the AET program, this could indicate extensive reliance on AET during tight west-wide conditions. WEIM entities have expressed this concern regarding the AET program. Since the implementation of AET functionality in July 2023, DMM has regularly monitored AET utilization and published the results in quarterly WEIM resource sufficiency evaluation reports.[5] In almost two years of monitoring, DMM’s analysis has not indicated that any particular balancing area is systematically relying on the AET functionality to meet capacity shortfalls. In addition, DMM identified very few intervals when there were two or more balancing areas simultaneously failing the RSE test while opting in to receive assistance energy transfers.[6]

Since DMM’s analysis suggests no extensive reliance on AET during tight west-wide conditions, and there is no strong evidence of systemic leaning by any particular balancing area, DMM supports extending the program past December 31, 2025.

[1] DMM Comments on WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Straw Proposal, Department of Market Monitoring, July 28, 2022: https://www.caiso.com/documents/dmm-comments-weim-resource-sufficiency-evaluation-enhancements-phase-2-straw-proposal-july-28-2022.pdf

[2] DMM Comments on WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Final Proposal, Department of Market Monitoring, November 16, 2022:

https://www.caiso.com/documents/dmm-comments-weim-resource-sufficiency-evaluation-enhancements-phase2-revised-final-proposal-2022-11-16.pdf

[3] Second Revised Final Proposal – WEIM Resource Sufficiency Evaluation Enhancements Phase 2, California ISO, December 6, 2022, p 25:

https://stakeholdercenter.caiso.com/InitiativeDocuments/SecondRevisedFinalProposal-WEIMResourceSufficiencyEvaluationEnhancementsPhase2.pdf

[4] WEIM Assistance Energy Transfer Extension, California ISO, April 16, 2025, p 10:

https://stakeholdercenter.caiso.com/InitiativeDocuments/WEIM_AET_04162025.pdf

[5] DMM WEIM Resource Sufficiency Evaluation Reports:

https://www.caiso.com/library/western-energy-imbalance-market-resource-sufficiency-evaluation-reports

[6] WEIM Resource Sufficiency Evaluation Metrics Report covering Q3 2024, Department of Market Monitoring, November 14, 2024, pp 20-21:

https://www.caiso.com/documents/q3-2024-metrics-report-on-resource-sufficiency-evaluation-in-weim-nov-14-2024.pdf

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

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 provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

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 in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

Idaho Power is supportive of continuing the AET offering. Idaho Power requests that CAISO continue to look for ways to improve the AET specifically solving the important issue of the pricing of economic displacement transfers identified in the April 16th meeting (on slide 8). A EDAM entity should not be paying for surcharges when energy coming in is actually economically displacing generation already on their system. Especially given all the tests are on forecasts which are NOT precise. 

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

Idaho Power supports removing the sunset date from the tariff. The AET program has proven its value over the 3 years it has been available. 

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

Idaho Power supports this as an entity should not be financially penalized for following actions requested by the RC for interconnection reliability. 

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

In a February 7, 2022, letter to the WEM Governing Body and the CAISO Board of Governors, NV Energy stated, “[i]f supply is available within the EIM, it should be used to address the reliability need of the EIM Entity at an appropriate scarcity price” and “[t]he CAISO Tariff should not contribute to physical withholding of voluntarily-offered supply to respond to an energy emergency situation.”  NV Energy noted,

With the continued expansion of the EIM, we should be encouraging all supply to be bid into the market, but that leaves less supply to be procured bilaterally to respond to emergencies. This makes this issue even more critical for EIM Entities, including CAISO. As recognized by the Market Surveillance Committee, “the Western EIM FMM and RTD are potentially powerful tools for balancing load across the WECC to use in maintaining reliability in uncertain operating conditions and placing restrictions on their use during unexpected operating conditions has the potential for unacceptable outcomes.”

In response to these concerns, the CAISO initiated a stakeholder process that resulted in the development of the Assistance Energy Transfer Product (AETP) – a surcharge set at the level of CAISO’s bid cap at either $1,000/MWh or $2,000/MWh, depending on the prevailing system conditions, multiplied by a megawatt-hour quantity that equals the lower of:  (i) the quantity of the upward capacity test or the upward flexibility test insufficiency for the EIM BAA, whichever is higher; or (ii) the quantity of net EIM transfers into an EIM BAA, excluding base transfers identified on all after-the-fact E-Tags. Revenue from the EATP is allocated to the entities that passed the resource sufficiency evaluation and are supplying the assistance energy.

Events such as the Bootleg fire in Oregon in July 2021, that led to a substantial derate of the Pacific AC Intertie, demonstrate that an EIM Entity could enter a day fully resourced only to have an unexpected event trigger a shortage condition. If supply is available within the EIM, it should be used to address the reliability need of an EIM Entity at an appropriate scarcity price. The AETP leverages a key benefit of the EIM – the CAISO real time market’s ability to optimally dispatch available supply and provide access to energy that may not otherwise be available in the bilateral market outside of the EIM. The CAISO designed the AETP as an enhancement to ensure:

• The program is voluntary.  Moreover, the program is flexible and a decision to participate can be reversed.
• The program is in addition to and does not replace bilateral procurement options. Importantly, the pricing is designed for an EIM Entity to make every attempt to resolve supply shortfalls before use of the AETP.
• The shortfall of supply in a BAA that fails the resource sufficiency evaluation is not propagated to other BAAs that passed the test. 
• That the scarcity pricing is confined to the BAA that fails the resource sufficiency evaluation. The EIM Assistance Energy Transfer Surcharge is paid as an incremental cost that is in addition to the applicable LMP cleared in the market for assistance energy transfers.
• Appropriate monitoring ensures that BAAs do not overly rely on the AETP as means of meeting resource adequacy requirements.

The AETP tariff amendment was approved by FERC on May 31, 2023, in Docket No. ER23-1534. The Commission found:

We note that under the existing framework, balancing authority areas that fail the resource sufficiency evaluation are entirely ineligible to receive incremental energy transfers from other balancing authority areas even when such supplies are available through WEIM. We find that the proposal provides increased flexibility to WEIM participants and can help WEIM balancing authority areas to meet their resource sufficiency obligations during tight supply conditions. We also find the proposal allows CAISO to optimally dispatch supply and provide access to resources that were not otherwise available. We also accept CAISO’s proposal to implement an after-the-fact EIM Assistance Energy Surcharge, including the design to base it on the existing soft energy bid cap or hard energy bid cap (depending on prevailing market conditions). We find that this surcharge should provide an appropriate incentive for WEIM participants to take all other reasonable measures to ensure their balancing authority area is resource sufficient before using the assistance energy transfer product, while still allowing for a last resort measure for acquiring necessary energy under tight supply conditions. We also note that the assistance energy product is a voluntary option, allowing each WEIM balancing authority area to determine when it is appropriate for opt-in or opt-out of the assistance energy product.

As noted in the CAISO’s April 16, 2025, presentation, the AETP has worked as intended. There has not been excessive reliance, and the AETP has served as an important reliability tool. Moreover, there are “significant technology challenges creating a dynamic parameter that is responsive to market conditions.” Given the ongoing initiatives that could impact future iterations of the AETP, including scarcity pricing and BAA-level market power mitigation, as well as significant work to implement EDAM and the imbalance reserve product, NV Energy strongly supports the proposed extension of the current AETP.

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

See response to (1).

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

NV Energy also supports the proposed clarification that actions taking in response to directions from the Reliability Coordinator should not result in AETP surcharges.

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

PG&E appreciates this opportunity to comment on CAISO’s AET proposal. PG&E supports the extending AET and supports crediting BAs for additional AET surcharge incurred as a result of actions taken in coordination with their Reliability Coordinator.

In addition to CAISO’s proposed changes, whenever CAISO begins the next round of Resource Sufficiency Evaluation Enhancements, PG&E would like to add to the initiative scope the issue of AET overcharges due to economic displacement. During the meeting on 4/16, CAISO explained that some AET surcharges were being assessed to WEIM Balancing Authorities (BAs) due to the market optimization scheduling additional WEIM transfers out, which increased the BA’s net dynamic transfers and therefore increased their AET surcharges. PG&E would like the opportunity to explore potential solutions to the issue.

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

PG&E supports extending AET.

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

PG&E supports crediting BAs for additional AET surcharge incurred as a result of actions taken in coordination with their Reliability Coordinator.

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

PacifiCorp thanks the CAISO for their presentation on the AET program and supports an extension of the current design. The presentation allowed stakeholders to see data on how the program is performing. The presentation gave insight into how the program is behaving and identified an area that warrants attention regarding the surcharge that occurred for transfers into a deficient BAA that were inclusive of the AET transfer quantity in addition to economic displacement. PacifiCorp requests the CAISO create a report through CMRI that would inform the surcharge quantity that was entirely due to economic displacement so that data is tracked, and the impacts of this finding can be evaluated individually by stakeholders. 

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

PacifiCorp supports the removal of the sunset date in the tariff.  

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

PacifiCorp supports the ISO’s proposed tariff revision to allow for market participants to receive a credit against the AET surcharge when participants coordinate with a Reliability Coordinator. 

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

PGE thanks CAISO staff for the prompt attention to the Assistance Energy Transfer (“AET”) design as it approaches the original sunset date. 

While PGE supports a straightforward extension of the AET tool without modifications, PGE proposes a targeted enhancement to improve the opt-in timeline. The current five-day opt-in period may be unnecessarily restrictive for the following reasons: 

1. The five-business day requirement effectively extends to a seven-day timeline when considering weekends. 

2. This extended timeline often results in uncertainty for participating entities. 

PGE asks that the CAISO consider allowing a shorter timeline for AET opt-in. Although this design adjustment would require additional stakeholder input, PGE believes that reducing the opt-in period to 24-72 hours would allow LSEs a more comprehensive reliability evaluation and greater certainty.  

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

PGE believes the removal of the sunset date language outlined in Section 29.34(n)(3)(C) of the existing tariff is an appropriate approach to extend the existing AET design indefinitely. 

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

PGE generally supports tariff and Business Practice Manual (BPM) revisions that enhance the usability of key market tools, including AET. We directionally support design revisions that would exempt Balancing Authority Areas (BAAs) from surcharges when actions are taken in coordination with the Reliability Coordinator (RC) to address reliability conditions. 

However, given the short timeline and the limited frequency of such occurrences, PGE recommends separating this exemption proposal from the current AET proposal. We suggest incorporating the exemption proposal into a more comprehensive future stakeholder process. This process could also address sub-optimization decisions related to AET implementation. 

1. Please provide your organization’s overall feedback in response to the April 16, 2025 WEIM - Assistance Energy Transfer (AET) - Extension Meeting.

SCE supports CAISO’s proposal to extend the current Assistance Energy Transfer (AET) method. While SCE's preferred AET method would involve an in-market solution, SCE recognizes that CAISO must prioritize other high-impact initiatives.  SCE believes those high-impact initiatives are Energy Storage Design and Modeling and EDAM go-live. Nevertheless, it is crucial for CAISO to continue monitoring the performance of the current AET method and to provide quarterly reports to market participants. Continuous monitoring and reporting on the AET’s performance will help identify areas for improvement and ensure that the program continues to meet its reliability objectives.

2. Please provide your organization’s feedback regarding the ISO’s proposed extension to the existing AET design through the removal of the sunset date described in the tariff. (Section 29.34(n)(3)(C).

CAISO’s proposal to remove the sunset date does not appear to be an extension of the existing Assistance Energy Transfer (AET) design, but rather a proposal to make it a permanent feature. The absence of an updated sunset date suggests this intention. Stakeholders would feel more reassured with a defined sunset date, even if it is set for three years or more out in the future. This would provide market participants with confidence that CAISO is committed to ongoing evaluation and monitoring of the current design and that CAISO plans to revisit and enhance the current AET design.

3. Please provide your organization’s feedback regarding the ISO’s proposed tariff revision to allow crediting against the AET surcharge, should surcharges arise due to actions attributable to coordination with a Reliability Coordinator (Section 29.11(t)(1)(A).

CAISO is proposing tariff revisions that would provide AET surcharge exemptions to Balancing Authority Areas (BAAs) that are taking reliability actions in coordination with the Reliability Coordinator (RC).  However, CAISO has not provided clarity on the specific situations in which these exemptions would apply. It is essential for CAISO to offer examples of such situations to ensure transparency and understanding among stakeholders.  Clear guidelines and examples will help market participants better understand the conditions under which surcharge exemptions can be granted and ensure that the process is fair and consistent.